Exclusive! Government Introduces Supplier Blacklist – Bad News for G4S?

This has, I suspect, been in the pipeline for some time, and Francis Maude, the Minister with responsibility  for UK public sector procurement, has mentioned the idea at previous events. But the timing is immaculate as we see the G4S failure becoming the big story of the Olympics (so far at least).  Last Thursday, Maude sent a letter to all Cabinet Ministers, explaining a new process for “blacklisting” errant suppliers, to make it more difficult for them to win further Government work.

We’ve given the key text from the letter below.  We have questions about whether all of this is strictly legal under EU procurement regulations, although we in general sympathise with the sentiments. The problem will be, except in a few extreme cases, pinning the blame on a supplier who will no doubt claim that any problem was all the fault of the Minister who kept changing her / his mind, or the incompetent civil  servants who didn’t understand the nature of the work. So expect some legal challenges if anyone actually gets blacklisted.

My analysis – let’s look at this in a year’s time. While G4S have put themselves in pole position to be the first supplier to suffer this fate, I’ll be very surprised if there are more than one or two others on the list by then. It’s just too difficult to prove guilt, making it a good concept – but difficult to execute.

To Cabinet Colleagues

Commercial Strategic Supplier Performance

....... To strengthen commercial capability at the heart of Government I have recently created a new Commercial Procurement and Relationships Directorate in the Cabinet Office led by Bill Crothers. ..

An early focus for the directorate will be to improve how we manage the performance of our strategic suppliers. When awarding new contracts to large suppliers, Government has not always taken existing performance into account. Too often this has resulted in suppliers winning new business, even when they were materially underperforming on critical work elsewhere in Government. This is something that the best-run private sector businesses would not tolerate, and nor should we.

The vast majority of our suppliers deliver high quality services. Yet instances of underperformance, however rare, must be tackled robustly and resolved swiftly particularly as we move to open up public services. Therefore the Chief Secretary and I have agreed a mechanisms for officials to recommend that a supplier be regarded as “high risk” where material and substantial underperformance is evident. In these cases Departments will be asked to engage with the Cabinet Office at each stage of any procurement process involving the affected supplier to ensure that performance concerns are taken fully into account before proceeding. Bill Crothers will be in touch with procurement officials imminently to provide further details.

...    I am copying this letter to Members  of Cabinet, Sir Jeremy Heywood and Bill Crothers.

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Voices (8)

  1. anonymouse:

    The last Conservative Government had a supplier blacklist – barred from new business. It was headed by the consulting arm of the Del Lorean Auditors … now what were they called and what did they change their name to …

  2. Billy:

    A good concept, and one that is long overdue – but typically, the details of how this will work are nowhere to be seen, making it nigh on impossible for us to adopt it!

    Re EU law and legality – there may be some room for optimism as this concept was included in the draft EU regulations, due in 2013. I’ve just dug out my notes and Article 55 (3d) talks of us being able to use “significant or persistent deficiencies” in past performance as a criterion to exclude suppliers. However, it also states that this applies “for a contract or contracts of a similar nature with the same authority”.

    There goes my optimism! (and any possible wriggle room for Francis Maude and co?)

  3. SavingsRUS:

    Would you buy another car from the same place that sold you a lemon? I think not so why should Government dance around on the head of a pin when it knows damn well that the supplier is poor, difficult to deal with and undeserving of further business? I would like to see suppliers put on tempoary blacklists until their current Government clients are satisfied with their performance. Would they want to sue a major client on this basis and become a laughing stock in the media? Let’s do it and see.

  4. BrianSJ:

    Wot no Spice/CMM/15288/15504 process capability evaluation? Oh, I suppose that might actually work and couldn’t be subborned by Sir Humphrey. After all, blackballing works at the Club. No need to use decades of hard technical work by the international community of people who know what they are doing.

  5. Dr Gordy:

    “There may be trouble ahead, but let’s make the music and dance”.
    These lists are not new in local government and date back many years. Funny thing is how rarely procurement staff are aware of, consult or add to them. I suppose the next logical step is a new adjudication panel to determine where the fault lies. Then we will also need to be clear how long past poor performance is deemed relevant. I’m sure many readers will remember a leading consultancy having been blacklisted from all public sector work – that didn’t stop a name change and subsequent winning of contracts.

  6. Final Furlong:

    Personally, I would happy to see Minister Maude burn the EU Procurement Regs – fuelled by the mountain of other onerous, useless legislation.

    Back to reality. If they adhere to the regulations (they do not want to spend months in court…) then such ‘filtering’ will have to be carefully introduced during the PQQ stage? (Past peformance?) Perhaps a new ‘criteria’ not yet developed/tested? Interestingly, they also want to eradicate onerous PQQ processes (to encourage SMEs to bid…), so I’ll be keen to see the new guidance.

    Perhaps it will simply be a phone call…”Hi, it’s Francis. Yes, Francis Maude. Look, off-the-record, just had a chat with Bill. Yes, Bill. Bill Crothers? Really, never heard of him? He’s our new CPO? He’s from Wales, or Belfast, or somewhere like that. Nice chap. He’s told me that your performance on the Olympics was truly woeful. In fact, I will quote him, “it was pants” he said. Well, we don’t want you to bid for the Home Office security contract. Well, because, it would simply be embarrassing. Yes, I know it’s a £200m contract, and I know it’s what you do as a core business, but I’ve got a gun at my head on this one. No, not literally. No, you don’t need to send an ex-SAS chap down to protect me. If fact, if you’d been that responsive on the Olympics contract, I wouldn’t have a gun to my head. No, no, not literally. Look, I know this is against the rules, but you’ve got no chance of winning, even if you scored the most points. We would just fiddle them to make sure you didn’t win. Sorry? What do you mean, you’ve been recording the whole of our conversation. Well, yes, I know you’re a security company, but….”

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