Practical Law

PLC Public Sector reports:

Attempting to achieve policy goals through public procurement spend is becoming increasingly popular (for example, see OGC guidance on social, equality and green issues and a recent Private Members’ Bill).  It is very difficult to argue with the concept, why shouldn’t taxpayers’ money be spent in a way that achieves the maximum possible effect? However, attempts to do so have generally fallen short of the mark, with the onus being placed on procurement officers to interpret very general guidance, rather than setting out simple steps to take or requirements to fulfil. 

Two recent examples of action taken in this area suggest that lessons may not have been learnt.

Strange way of doing things number one

Having spent much of the summer squeezing key suppliers into making savings on existing contracts, Francis Maude has moved on to championing the role of SMEs and the voluntary and community sectors in delivering public services.  The latest instance saw Mr Maude gather together CEOs and senior representatives from 31 of the government’s key (and uniformly large) suppliers and tell them that “the easy margins of the past” were gone and that the government intends to “open up the market to smaller suppliers and mutuals and we will expect you to partner with them as equals, not as sub-ordinates.” 

The key suppliers were then asked for tips on how to achieve this re-balancing of the government’s supplier base.  That is, how the suppliers could reduce their margins and give more work to other, smaller suppliers.  Rumours that Mr Maude left the meeting to speak at a turkey farm asking for tips on how to cook Christmas dinner are as yet unconfirmed.

Mr Maude also promised the gathering that procurement processes would be faster and far more cost efficient and sought views on how to achieve this.  At first glance this incentive could be seen as a worthwhile trade off for engaging in the government’s supplier realignment plans.  However, any such assumptions should be tempered by the fact that the bid teams at these major suppliers are indirectly funded by the margins they make on the contracts they win from the government.  It is not them that are suffering as a result of drawn out, expensive bidding processes, as they actually increase their turnover and also lock out the smaller suppliers and those new to tendering for public sector work who are not able to recoup bid costs when they lose.  The carrot being offered by Mr Maude may not be as attractive as he thinks it is.

Strange way of doing things number two

The European Commission has recently published a “staff working document” setting out advice to all contracting authorities on how they can “buy social” and comply with the public procurement regime.  The guide is well structured, dealing in turn with each stage of the procurement process and setting out:

• the applicable constraints;
• what can be done when operating within those restraints; and
• giving examples of action taken by contracting authorities in various member states.

In comparison to various other “policy through procurement” guides the document is of practical use and one that contracting authorities looking to develop strategies in this area should consult. 

Why therefore does it feature in this blog post? It was published by the Commission 19 October 2010 but has been given virtually no publicity and is all but impossible to find on the Commission’s websites (even if you know it is there).  There is a certain irony in this as the guide itself promotes the importance of authorities communicating their policies to “the outside world”.