02 February 2006 | Anusha Bradley
Public-sector purchasers must ensure there is a "clear separation" between themselves and colleagues preparing in-house bids to help secure fairness in the procurement process.
This is among recommendations made in a CBI report which concluded current public procurement procedures and tax rules are biased in favour of public-sector providers. A fair field and no favour: competitive neutrality in UK public service market
said the new EC procurement directives - scheduled to have been implemented from 31 January - do not address the issue of public-sector bidders having an unfair advantage. For example, it cites how tax rules create an uncompetitive environment whereby local authorities can claim refunds on VAT for repairs and maintenance but housing associations cannot.
Further, in some cases, public-sector bodies are permitted to view rival bids before submitting their own and in others they fail to give a complete account of costs, making their bid artificially attractive. This may damage the quality of services and the value for money for the taxpayer, the CBI said.
The research said existing procedure is to the detriment of private and voluntary sector suppliers and joins others, including the Social Enterprise Coalition, in calling for "competitive neutrality". It has also called for a full inquiry into the issue.
Author of the report, Gary Sturgess, is executive director of think-tank the Serco Institute and a member of the CBI's public services strategy board.
He told SM
that while buyers cannot do anything about taxation, they can ensure there is a clear separation between those who are conducting the procurement, monitoring the contract and preparing the in-house bid.
The study found organisations were reluctant to complain and suggested an informal grievance procedure be set up.
"Procurement officers would, we hope, know much earlier in the process whether bidders were concerned about level playing field issues," said Sturgess.
An OGC spokesman told SM
it is considering the procurement-related aspects of the report.