British contracts for British firms?

6 July 2011
Public procurements always seem to get a bad press. Despite the great achievements of everyone involved in public purchasing to do more every day with ever-decreasing budgets, it is only the failures that grab the column inches. Bombardier's defeat in the Government's procurement of £1.4 billion of rolling stock for Thameslink is being blamed on the EU procurement rules, on the basis that there was no scope to consider location of the contractor as an evaluation criteria, and that without the rules the UK economy would be flourishing. The more vocal unions have also come out accusing other member states of following the rules less rigorously than we do in the UK. While it is correct that it would be discriminatory to choose a contractor simply on the basis of their location, this over-simplifies the issue. The purpose of the EU directives is to break down barriers to free movement of people and services. Without the directives, the argument goes, there is no way to prevent protectionist “local” purchasing and every member state would simply buy from their home market. This is cold comfort for the UK subsidiary of Canadian Bombardier. But, in fact, without the directives, the UK would suffer more. The EU is a huge market for UK companies, which are already successful in winning public contracts in all member states. That said, there is more British companies can do to make sure that they identify opportunities - including investing in foreign language skills for bid teams and "internationalising" their businesses still further. Bidders win contracts when they score highest against the evaluation criteria, which is what Siemens has done in their bid for the Thameslink deal. But the question remains, what can purchasers do to include community benefit or other social provisions such as reduction in worklessness into public contracts? It is wrong to say that the procurement directives simply prevent public bodies from looking these issues, but care is needed to make sure the requirements are not discriminatory. For example, it would be a breach of the directives to bluntly make nationality of contractor a reason for selection. That said, it is possible to look at issues such as the methods proposed by bidders to promote the development of their local community, to target unemployment, the supply chain, proposals to target SMEs or the contractor's proposals to deliver targets on sustainability. The only limitations on the use of such socio-economic criteria is that they must be relevant and proportionate to the contract and be non-discriminatory. Creativity in procurement can make a real difference - the outcome of the Thameslink process was that, against the evaluation criteria set, Siemens produced the strongest bid because it submitted the most economically advantageous tender. Had the evaluation criteria been looking at wider socio-economic issues, the outcome may have been very different. ☛ David Hansom is a partner and head of the specialist public sector team at Veale Wasbrough Vizards
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