The folly of patriotic purchasing

16 January 2003
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16 January 2003

Prince Charles's call for the public sector to 'buy British' seems reasonable. But, writes David Arminas, it's not quite that simple

Prince Charles has never been one for pulling his punches in public and this time the purchasing profession is in his sights, whether he knows it or not.

In a previous soundbite, the prince had a go at architects. In a speech to the Royal Institute of British Architects in 1984, he called a proposed extension to London's National Gallery "a monstrous carbuncle on the face of a much-loved friend".

His comments naturally infuriated the architects. But they did spark a national debate, both professional and public, about how the design of buildings and work environments affect people.

His latest call for the public sector to favour local food suppliers may have sounded reasonable and suitably patriotic to the general public. But the reality is very different for purchasers who must make buying decisions based on factors other than patriotism.

The key question for procurement is to what extent it should, or even can, promote Britain. Should a "buy British" campaign not stop at public-sector organisations but be spread out to the private sector so they give preference to UK suppliers?

The simple answer to this simple question is no. Many factors in the modern world militate against patriotic purchasing. Even America's motor industry long ago abandoned an attempt to sell its gas-guzzlers by advertising that the vehicles were American-made and kept Americans in jobs.

Purchasers must contend with several issues that mean buying British on principle is not an option.

The legal issue is at the forefront because of European Union rules. Legislation to enforce competition throughout the member states means that buying on national preference is unlawful. If a UK supplier loses some of the British market to an Italian company, for example, that same British supplier has as much chance as an Italian company of securing an Italian contract.

A "buy British" policy would deter an Italian company from bidding for UK contracts, so a UK purchaser would have fewer bids and less information about what is or is not possible for the company. Reinforcing an openly competitive market is the issue at the heart of all procurement reforms carried out in the past decade.

The European Union has been closing loopholes that allow purchasers to eliminate potential suppliers through specifying terms and conditions it knows only a limited number of suppliers can meet. A recent European Court of Justice ruling stated that terms and conditions must be directly related to the contract at hand and not peripheral to the work being tendered.

There was a time when people in Britain would not buy German because of memories from the Second World War. In the US, buying a Japanese car was seen as unpatriotic for the same reason. But consumers have notoriously short memories and national origin is generally not an issue when they decide on best value for themselves. Likewise, purchasers have a duty toward their employers to get the best value.

This does not mean that consumers never favour products on the basis of their national origin. Buyers also have the ability to refuse a product or service for the same reason under the banner of ethical purchasing.

Consider the positive effect on the value of a British company's product if, during the apartheid regime (before sanctions made it illegal), the company refused to buy components made in South Africa. Even though the components were best value when all factors were considered, dealing in South Africa could have sullied the company's corporate image, cost it sales and slashed its share price.

Purchasers should conclude that patriotism has no place in determining best value. The drive towards best value is based on competition and an even playing field for companies of all nationalities.

This does not preclude a purchaser working with current and potential British suppliers to improve their standards of quality and delivery.

In the end, however, the supplier must compete in the open market along with companies across the globe.

Regardless of whether Prince Charles is right or wrong, his entry into the buy-local, support-British debate has highlighted an important issue for the purchasing profession and the public at large.

His 1984 remarks lambasting the design of the National Gallery extension were delivered in front of architects, the very people at whom he was aiming his message. Perhaps at some time in the future we will see him address a conference of purchasing professionals.

• What do you think? Register your vote on SM's online poll at www.supplymanagement.com

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