When secret deals are a public issue

23 April 2003
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24 April 2003

Few purchasing decisions are so important that they are an issue of national security. But when they are, should purchasers be able to jettison the rule book? Robin Parker reports

In its recent report on the Department of Health's (DoH) procedures for purchasing vaccines, the National Audit Office (NAO) questioned inconsistencies in attitudes to security. The issue was particularly highlighted last year by the confidential award of a smallpox vaccine contract to PowderJect, a financial donor to Labour.

The NAO does not doubt that the government has a right to override accepted procurement practices in rare cases at times of heightened national security, as enshrined in European law. But it is concerned that purchasers called upon to handle such contracts have no clear guidance of when they can, or should, keep their activities secret and bypass the usual procurement processes of advertisements for tender and open competition.

Without clear advice, there is a fear that "national security" could become an excuse to bypass the transparent procurement processes that aim to ensure value for money for taxpayers and a level playing field for suppliers within the European Union.

Despite being the stewards of the public's money, the civil service has a notorious reputation for secrecy, and more confidential agreements would be a retrograde step that could accentuate this image.

The NAO says that guidance on such matters would ensure that suppliers and the public alike would at least understand the government's motives, fostering a culture of mutual respect.

For some, this does not go far enough. Anti-corruption campaigners such as Transparency International argue that cases where open procurement could genuinely undermine security are so rare that civil servants should always be held to account for any information they withhold.

Cloak-and-dagger politics, they argue, engenders a culture of mistrust in which the public will always think the worst once information leaks out, as it often does.

The current bidding war for the next tranche of smallpox vaccines, for example, is a fully open competition, even though, as the NAO notes, the DoH could have chosen to keep it confidential.

The furore over the earlier PowderJect contract became so public that DoH officials decided to put all their cards on the table for fear of a further backlash. The safety of the nation suddenly seemed to have taken a back seat and the media, and ultimately voters, sensed it was politically motivated.

Secure transactions

UK government purchasers are not alone in this. "National security" is the catch-all phrase also used by the US government. Its federal procurement rules require domestic firms to be the preferred bidders for government contracts, a policy currently being questioned by the European Commission.

When Halliburton, a firm once headed by Dick Cheney, the vice-president, won lucrative reconstruction contracts in Iraq without competition, eyebrows were understandably raised. Politicians have called for an official inquiry into whether the firm received special treatment.

As with PowderJect, the effect of signing a deal in secret is to cause right-thinking members of the public to question, fairly or not, the government's motives for cutting a deal under cover of national security.

Procurement is an integral part of this damage-limitation process, and public-sector purchasers should use their skills to foster as much of an ethos of "open government" as it can in a political and economic environment haunted by the permanent threat of terrorism since 11 September 2001.

And like it or not, they will get more involved, not least when the mammoth task of rebuilding Iraq gets fully under way.

This appears to be a clear-cut instance in which a good case has been made for a bypass mechanism to normal purchasing practices, albeit with the strong proviso not to exploit it.

Procurement is always being told it should link into the business strategy at all levels. For many in the public sector, this strategy is the most important of all: the nation's safety. Security and the need to reassure the public that it is doing the "right thing" will increasingly go hand-in-hand.

As the global political landscape redefines itself once again with the toppling of Saddam Hussein's regime, it is unlikely this will be the last time purchasers have to tread delicately along this line.


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