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John Tizard: The Public Procurement Bill – an opportunity, but only if government puts public interest first

Monday June 7th, 2021

In response to Brexit and consultation on the Public Procurement green paper, the Government announced a new Public Procurement Bill in the recent Queen’s speech.

John Tizard

Whilst this offers an opportunity to reform public procurement, there must be an underlying ‘purpose’ to any reform. Change for its own sake (and especially change simply enacted to distinguish UK regulations from those in the EU) would, in my view, be a serious error, be costly and have the potential to lead to much confusion.

In reality, many of the alleged/perceived problems with the EU rules have been more due to the UK’s interpretation of these rules (and an excuse for some lazy practice) – and commonly more a result of a specific culture in public procurement than of the actual legal requirements. In fact, much more social benefit is possible under the EU rules than many currently recognise (or want to recognise).

Of course, some reform would be helpful. Indeed, I have previously indicated for Government Opportunities some areas where this could be beneficial in places.

In January of this year I noted:

“… the UK government in consultation with the devolved governments and administrations, local government and the wider public sector should have a duty to ensure that all public procurement expenditure secures long-term public benefit.  And that prior to all significant procurement exercises, public bodies should assess the public benefit and publish these assessments, which in turn should be subject to independent audit, including testing, to see if the stated benefit is subsequently realised over time.”

The proposed new Public Procurement Bill offers an opportunity for bold radical reform which puts the public interest first and foremost.

There is an opportunity for the newregulations to place a duty on public bodies to:

  • put the quality of services and goods, and the wider public interest, ahead of lowest price-driven procurement  
  • consider the wider local and national economic, social and environmental impact of contracting, including any costs or other consequences for the wider public sector and local economy
  • only contract with providers of goods and services that meet high standards of employment practice, including for example paying the Real Living Wage, not using involuntary precarious employment contracts, quality pension entitlements, apprenticeships and employee development programmes, as well as trade union recognition, access and facilities
  • set maximum remuneration ratios within contracting companies – for example, the ratio between the highest remuneration and the median and/or the lowest
  • take into account when evaluating bids:
    • governance arrangements within bidding companies
    • bidders’ previous performance in public service contracting and other activities
    • bidders’ market share so as to avoid over-reliance on suppliers which are ‘too big to fail’
    • bidders’ record and policy on environmental sustainability and set targets for those awarded contracts
    • tax policy and practices
  • require all the above to apply throughout the supply chain, including international supply chains
  • set the default for service delivery as ‘in-house’
  • undertake a comprehensive strategic ‘make or buy’ decision before embarking on any outsourcing – and to involve staff, trade unions and service users in this decision-making
  • prioritise social enterprises, community organisations, charities and local SMEs where contracts for services and goods are let 

Given the many reports of poor practice and worse with some of the Covid-19 related procurement, there is a need for the forthcoming legislation to include mandatory application of the Nolan Principles for Public Life, maximum transparency of procurement, contract management and performance, and rigorous audit of all these and their application.

The Covid-19 pandemic has shown that there will be occasions when public procurement must be undertaken at speed, and sometimes there will not be time for lengthy and complex procurement arrangements. The new legislation should address this and set out the conditions for when the rules can be relaxed, for how long and what rigour would still be required; and how there would be transparency, including a clear justification and accountability for applying such an approach.

Of course, the UK regulations should acknowledge the desirability for the application of such an approach to be proportionate and ensure that it does not create barriers for SMEs, social enterprises, charities and community groups to bid for contracts where appropriate.

Specifically, when involving charities and the voluntary and community sector (VCS) in public service delivery, the regulations should allow and encourage the public sector to avoid competitive procurement and contracting, and to adopt a relational partnership approach with accountabilities and some deliverables rather than cumbersome restrictive contracts.

As part of the reforms the Government should introduce independent audit arrangements as well as parliamentary or local government scrutiny for all significant public procurement, and consequential delivery and client management at both the national and local level.

I suggest that there is an opportunity for wide consultation with providers from all sectors, the wider public sector beyond central government and stakeholders such as trade unions and professional bodies to explore how the above could be incorporated into practical and robust legislation; and how procurement processes could be rationalised and made less burdensome whilst meeting the objectives set out in this article.

My worry is that despite some warm words, the Government will not be as bold as I am proposing it could be. This would be disappointing and a wasted opportunity.

Any reform of public procurement should be driven by the long-term public interest rather than by short-term financial expediency, an ideological love for markets or the interests of major contracting companies. The Government could be radical. It could be bold. It must put the public interest first. But will it?

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