Large scale review of public procurement needed, says think tank

The UK government should carry out a “large-scale and comprehensive review” of public procurement, according to a think tank.

A report on the state of public service commissioning by Reform said it had identified “several key areas where weak or underperforming elements in the commissioning cycle have led to failings in the procurement of public services”.

Roughly a third of all public service expenditure goes on outsourcing, equalling some £284bn per year, said Reform, and recent outsourcing failures indicated improvements need to be made to ensure high-quality, value-for-money services. 

The report built on the guidance and improvements provided by the Cabinet Office’s (CO) Outsourcing Playbook and identified shortcomings that still needed to be resolved.

Reform cited the lack of attention paid to the “make or buy” process, resulting in unnecessary outsourcing of services. The report said The Public Administration and Constitutional Affairs Committee (PACAC) found that the collapse of Carillion was due to the government’s failure to make good make or buy decisions.

While the government’s Playbook achieved progress in terms of an outlined process for make or buy decision-making, the language used assumed that the service will be outsourced, according to the report.

Reform’s paper has proposed the CO create extra criteria and establish an alternative flowchart in order to create better informed make or buy processes that assess whether to provide a service in-house or contract out.

The next step is to conduct a comprehensive, large-scale review on public procurement services, and an independent review of the regulatory landscape, said Reform, highlighting the need to understand where exactly the system is broken before attempts can be made to fix it.

The report said that regulations don’t do enough to increase supplier diversity and offer easier bidding processes for SMEs, and Voluntary, Community, and Social Enterprises (VCSEs), “with the PACAC revealing its concerns that large firms were able to utilise their size to expertly bid for contracts which they had limited ability to fulfil”.

It highlighted that too many resources are invested in the outsourcing phase, to the detriment of contract management. Lack of emphasis on contract management had risked the efficiency of monitoring and evaluation processes, according to the report.

Meanwhile, lack of data is creating barriers to effective monitoring and evaluation of contracts as they can’t be measured effectively, and providers are struggling to make accurate decisions on bidding because of inadequate assessments of costs of service delivery, revealed the report.

“Improving the quality and types of data being collected and assessed is crucial to improving public service commissioning, and thereby the public services themselves,” said Reform.

Transparency and accountability processes were also highlighted as an area to be improved beyond the level of the Playbook. The report encouraged government departments to adopt accountability mechanisms such as responsibility maps and statements, similar to the measures taken by the financial sector.

The report called for upskilling of contract authorities to improve commercial expertise and ensure understanding of risk. “In partnership with the Public Service Transformation Academy and Government Commercial Function, the Cabinet Office should take steps to introduce a national training framework for public service commissioners who contract over the Official Journal of the European Union financial thresholds for public service contracts.”

The report concluded: “Public procurement can resolve many of the issues it currently has by ensuring that transparency is installed into the heart of the system. But doing so requires a better focus on data, risk, accountability, contracting, and skills to enable commissioners to be more transparent and more effective in their commissioning.”

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