You are buying a widget. Do you spec it by setting detailed technical requirements? Or by stipulating what you want it to achieve?
Much of the time it makes sense to specify by desired outcome, or give key performance indicators (KPIs), rather than second-guessing the supplier’s route to that outcome. Concentrate on technical detail and you risk missing the wood for the trees. Possible result? Concrete life jackets.
Regulators face the same dilemma. The Financial Services Authority has moved radically away from detailed technical requirements to an outcome-based (“principles-based”) approach. Regulation of solicitors is going the same way. And some years back the EU realised what mattered was the straightness of European markets, not the straightness of bananas.
Re-focusing on what really counts is a constant battle. Surely it’s time for a fundamental re-evaluation of public sector procurement law.
The key regulatory KPIs for public sector buying are simple: best value and open competition. Best value is the purchaser preoccupation. Open competition is the EU’s hobbyhorse, establishing a single European market. However EU procurement law doesn’t focus on outcomes but on process.
That process is complicated and fraught, particularly now the Remedies Directive, brought into UK law last year, enables courts to nullify contracts altogether on grounds of procedural breach. The result is a minefield. That might be a price worth paying if the two key outcomes are achieved. But are they?
Does the regulatory public procurement regime achieve “best value”? No. If it did, the private sector would be doing the same. The phrase “best value” doesn’t even appear in the 2006 Public Contracts Regulations, which are really all about the EU’s level playing field.
Open competition? No. The
high tendering cost and risk
put off many suppliers. Even non-strategic areas of spend are tied up for years to a single framework agreement supplier, just to save the buyer from a nightmare of constant re-tendering. Contracts are going to businesses whose key skill is playing the tendering game successfully, not delivering the goods.
It’s like asking Lewis Hamilton to drive in a Formula One race and simultaneously pass a driving test. The constant need to do things by the book would turn him into an also-ran. Public sector buyers, even the best, are in the same position.
If Europe’s challenge is to make its public spending efficient and economy competitive it should re-draw public procurement law to focus on outcomes not procedure.
Purchasers are perfectly placed to campaign for this. If the EU were to regulate public procurement by outcome, and require it to be led by professionally qualified and regulated buyers with the CIPS ethos, those buyers could get on with the job, supported by regulation rather than hampered by it.
Dick Jennings is a solicitor at RDY Jennings & Co Solicitors