What is a “British Firm” in the context of public procurement?

We had a bit of a rant last week about Vince Cable, the UK Business secretary (Minister) and his comments about how public procurement should be more “strategic” which seemed to mean “Give more work to British companies”.

Apart from the fact that he seemed to be suggesting public procurement professionals find ways to break or at least get around EU Regulations, there is another very practical issue that gets in the way of implementing such simplistic ideas.  (These statements are of course made simply so politicians can show they have the “correct” views, rather than with any intent of actually changing anything ).

The problem was neatly demonstrated later the same day that Cable made his comments, when he was back on the TV news welcoming the decision of Huawei, the Chinese telecommunications equipment giant, to invest in the UK.  They intend to increase their employees here from 800 now to 1500 by 2017.

But under Cable’s original comments, he presumably wouldn’t want any public bodies buying from Huawei – they’re not a British firm. Or is it OK because they’re employing people in Britain? How many people do you have to employ in the UK before you’re considered acceptable by Cable?  What about if the competition was between a British firm, where the profit would be largely retained here, but who were going to offshore manufacturing to China, and a Chinese firm with a production base in the UK?

Huawei are a particularly sensitive case. There have been fears in the past that telecommunications equipment developed in certain countries might contain inherent security risks. Huawei and others are working to convince western governments and other big buyers that their equipment is ‘clean’.  For example, they recruited John Suffolk, the ex UK Government CIO a while back – an interesting move in that Suffolk was security cleared to the highest level and knew all about the precautions the UK was taking in this area. Not that he would break the official secrets act and pass anything on, I’m sure!

But back to the general point. How do we define a “British” company? Or at a more local level, relevant to local council purchasers, a “local” firm? Is it where the firm is registered, where the HQ is situated, where the main employment takes place, where the business owners spend their disposable cash...?

The impossibility of this is one reason why I’m not a supporter of the idea of putting bias in the procurement process in favour of supporting local or national businesses. It’s virtually impossible to define just what we mean or what we’re trying to achieve.

However, I am more enthusiastic about using some of the social / community value provisions in public procurement – so you can look at how suppliers will help achieve local goals without getting hung up on where they are notionally based. I’m also in favour of government and councils helping small local businesses in more creative ways than introducing bias in procurement, but that’s all for another day.

But I would have loved to ask Cable how he felt about Huawei winning government contracts...

Voices (2)

  1. Clark Kent:

    Bombarier, of course, another great British firm. Headquartered in Canada and traded on the Toronto Stock Exchange. Eh…hang on…

    1. Rob:

      Indeed. But Bombardier maintains a ‘manufacturing’ capability on UK soil, and Government officials love telling the world that we (‘we’ meaning ‘skilled UK-based employees’…) can manufacture trains. I seem to recall though that the Siemens bid guaranteed the employment of considerably more skilled staff in the UK – but they weren’t going to be manufacturing any trains – just maintaining them.

      What can I say – even when boys become ‘big boys’, they still love their train sets…

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