Total UK public sector procurement spend amounts to £290bn a year. I have long argued that public sector procurement is the greatest resource that the government has to promote innovation, economic growth, employment and skills development.
The UK must make full use of this resource if it is to thrive in the highly competitive international environment of a Brexit world. It should be set within an overall integrated government strategy to deliver these objectives.
However, despite some welcome proposals, the Transforming public procurement green paper fails to live up to its title and proposes some incremental changes rather than transformation. There are some significant omissions. Some of its proposals risk increasing bureaucracy for procurement organisations, private sector businesses and charities, with smaller ones being most affected. Some are not practicable. There is nothing in the green paper that would prevent another Grenfell Tower happening.
Transforming public sector procurement should be treated as a massive and massively important project. Project techniques should be applied. There should be clear, measurable and practical objectives and the use of data to determine the starting point, the destination and how one knows when one gets there.
For example, what would be the key industries where investment can maximise economic benefit? What might be the scale of those benefits? What sort of procurement strategies might help achieve them without conflicting with the regulations of the World Trade Organisation, which the UK joined last year, or the free trade deal with the EU?
There should be a clear and practical route map. There is plenty of data that can be accessed to enable this to be determined. Objective data will likely challenge assumptions underlying some of the proposals and no doubt reveal some new opportunities.
Notwithstanding the need for transforming public procurement to be project managed, some improvements should be implemented quickly. These include making it easier to bar poorly performing suppliers from obtaining public sector contracts and the greatly-extended use of dynamic purchasing systems and tribunals, rather than courts, to adjudicate contracting disputes.
The proposals for simplifying contracting regulations are well intentioned. On the plus side, combining the various existing ‘negotiation’ procedures makes much sense. However, a pre-qualification procedure (currently called the Restricted Procedure) needs to be retained. Tendering is time consuming and expensive and having ‘open’ tenders for which any business or charity can apply makes evaluation costly where there are many tenders, but not worth tendering for if there is little chance of winning due to so many competitors.
There are significant omissions from the green paper. The public sector has well over 1,000 procurement and contracting organisations and possibly over 2,000. They have their own standing orders for contracts of less than £188,000, often their own contract terms and conditions, differing tendering and quotation limits, and there is no way that they could ever possess many of the capabilities required to secure value in the modern world. Such diversity is confusing for suppliers. Harmonisation is long overdue, but is not addressed satisfactorily in the green paper.
Effective supply chain and market management is an important omission. For evidence of what it can achieve, look no further than the contracts for vaccine procurements – a single procurement team procuring on behalf of the many.
The potential impact and opportunities of the ‘Fourth Industrial Revolution’ have been ignored. The UK should aim to lead on this.
There needs to be an explanation of how aspirations such as a single digital platform, a common data model for all 1,000-2,000 contracting authorities, and a timetable for all e-procurement and related systems to become Open Contracting Standard Data Compliant might be implemented. Perhaps the 80:20 rule might best be applied.
The many refences to transparency are to be welcomed. However, the reference to combating corruption needs beefing up and preventing conflicts of interest is not specifically mentioned. The global company, 3Ms, has a great policy on this.
The proposal to establish a new unit in the Cabinet Office to oversee public procurement with powers to intervene to improve the commercial capability of the 1,000 plus contracting authorities is a 1980s solution and a weak substitute for dealing effectively with the major issue of the fragmentation of the management of public sector procurement.
Such an approach has been tried for most of the past 35 years. The first unit, the Central Unit on Purchasing (the CUP), of which I was an original member, was set up in 1985 in HM Treasury. It had an original life of three years and in its early years was a force for change in central government. It transformed into the Office of Government Commerce in the late 1990s. The latter did some good work, but also imposed a dubious and bureaucratic approach to assessing ‘savings’ and created a gravy train for consultants.
An alternative and more effective model can be found in my paper for Parliament that led to the creation of the Crown Commercial Service (CCS) in 2013. It should be built on the back of existing major procurement and contracting organisations such as the CCS, SCAPE for construction, the UK Shared Business Service (for science and technology) and the Cabinet Office team led by Gareth Rhys Williams.
☛ Colin Cram is chief executive at consultancy Marc1.