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John Tizard: Transparency and the Nolan Principles should be at the heart of both the governance of procurement and wider governance

Tuesday April 6th, 2021

The recent reporting of government contracts being awarded to people and businesses with personal and political relationships with ministers, special advisers, and others in and around government has predictably led to allegations of cronyism. The creation of a ‘VIP’ route for bidders and contractors has raised some serious questions about probity, adherence (or lack of) to the Nolan Principles of standards in public life, and the fundamental integrity of public procurement.

John Tizard

These are serious questions and, as I have written previously for Government Opportunities, they require comprehensive answers, and should be subject to an independent public enquiry.  The potential undermining of the public’s confidence in public procurement, political ethics, and even in the government’s handling of pandemic is not to be under-estimated.

The issues above relating to COVID-related procurement have, unfortunately, been followed by reports of the role played by the former Prime Minister, David Cameron, in lobbying for Greensill Capital and of access to Whitehall granted during his premiership to Lex Greensill – and in this case the role played by the then Cabinet Secretary. And there have been reports of planning applications being discussed at political party fundraising dinners between a secretary of state responsible for planning and a developer.

Together, these cases raise some important issues about government’s – and indeed the wider public sector’s – relationships with businesses that do/seek to do business with the public sector.

Cronyism and privilege undermine both the country’s international standing and public confidence in the institution of government, not just in the government in office.

Of course, the core issues/behaviours raised above are not new to the current COVID-19 period nor to the post-2010 period. The issues have become more prevalent as the size and scope of government business with the private sector has increased and taken on an increasingly ideological tone. In this area, inevitably, perception can be almost as important as the actuality.

It is both noteworthy and a failure of policy that the current legal requirement for public affairs and lobbying consultants to register their interests with government does not currently apply to employees of companies. Hence, David Cameron was deemed to be an employee when he was reaching out to both the Chancellor of the Exchequer and Treasury officials on behalf of Greensill Capital when government COVID-19 financial support was being allocated.

It does not take a genius to appreciate the ‘read across’ here to public sector contracting, outsourcing and consultancy.

It is not uncommon for companies to second employees to government departments – and vice versa. Relationships have been and presumably still are developed between politicians − including ministers and, at the local level, council leaders − and company officials. 

Companies involved in outsourcing may seek to persuade governments and other public bodies (including local authorities) to adopt policies and/or service delivery models that suit their own commercial interests. They may pitch ideas to politicians and officials well before there has been any consideration of a procurement process.  Of course, it can reasonably be argued that this is in the public interest as it can provide fresh ideas and new thinking based on expertise and skills that are either not available or in short supply within the public sector. However, it can also (at times) be construed as anti-competitive and potentially undermines both the principles of good governance and good procurement.

Once contracts are awarded, relationships that are or are perceived as ‘too close’ may be seen to influence the objectivity required to underpin effective contract management. These relationships are hardly ever revealed publicly.  And in such cases, there are bound to be concerns and questions asked.

As the government reviews and moves towards reforming public procurement legislation and considers lessons to be learnt from the management of COVID-19, I do think that there is an opportunity to consider how best to protect the public interest, ensure the integrity of the people and organisations involved (and the procurement process itself), and maintain/restore public trust. Of course, these matters go beyond procurement to wider issues of governance and standards in public life.

With the latter thoughts in mind, I suggest that there are several measures/regulations that could be considered:

  • companies being required to register employees who are engaged in lobbying and influencing politicians and public officials, both through direct contacts and other means that are not openly in the public domain.  For example, writing a published article is somewhat different from presenting a briefing paper privately to a politician or official
  • both the public sector and companies to be required to publish details of meetings and exchanges of emails, etc.
  • details of any secondments between the business and public sectors should be published
  • both the public sector and companies should be required to publish, on a regular basis, details of any gifts or hospitality offered by the latter to the former ahead of procurements, during the time of contractual relations and if companies are pursuing financial support, planning permission or similar
  • senior executives in companies being required to declare any membership of political parties if their companies are bidding for or in receipt of government funding or contracts.  Such membership when transparent is to be encouraged and should not be a barrier to doing business with government or the wider public sector – but it should be disclosed
  • strengthening the powers and authority of the various regulators and auditors to monitor the kind of relationships described in this piece, and where necessary, to intervene and hold those in violation of the regulations to account

Consideration should also be given to the situation when a company that has contributed funding or gifts in kind to a political party (and especially a party in office). There is a strong case for companies being excluded from bidding for public contracts for a minimum period of say three or may be five years after the last donation. But if such donations are to be allowed there must be rigorous rules which are equally rigorously enforced to protect the integrity of public procurement and government.

There is an urgent need to review and strengthen the rules applying to former ministers and senior civil servants taking jobs in the private sector on leaving public service; and, given the reports relating to a former Cabinet Secretary, to consider the relationships, and potential influence when the move is in the other direction. Applications for permission to make such moves and the basis for granting such permission should be published.

These issues described in this piece are not unique to the UK so it would be sensible to review and learn from the actions of governments globally and to address some of these issues via international bodies.

While historically there may have been few examples of corruption through public procurement, some has now occurred so let’s not be complacent.  We have to look to the present and to the future, and recent events have raised serious questions. It has been the media and publicly minded groups such as the Good Law Project, which have been able to shine light into the pool of COVID-19 related procurement. The Sunday Times and FT have brought the Cameron relationship and activities on behalf of Greensill Capital, whilst he was Prime Minister and since, to the attention of the public. In future this should be a matter for government to ensure full transparency.

Public money needs to be accounted for and so do relationships between businesses and politicians and senior officials. The public needs trust in the political and wider government processes. Transparency is not some nice to have luxury. It is the antidote to cronyism. It is fundamental to good governance.

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