Local Government Procurement Report — A Dot to Dot of Key Findings (part 1)

In its most recent report examining the effectiveness of local government procurement methods, the Communities and Local Government Committee responsible for examining expenditure, administration and policy concluded that the sector needs “to step up to the mark and get better value” in the face of cuts in government spending.

That’s a bold statement and probably a tall order too. So what does that actually mean? After all, the local government sector has been attempting uniformly to improve expenditure for years following the National Procurement Strategy and the 2012 Local Government Procurement Pledge, and still results have been less than consistent across the country. Well, the report lasers in on five key areas where it believes efficiency and effectiveness can best be met: Collaboration, Best Value Contract Letting, Standardising PQQs, Outsourcing Management and Fraud.

Collaboration -- between local authorities, people and procurement services companies is identified as a primary means to drive cost savings. The Local Government Association (LGA) is called upon to produce best practice guidance on the most effective means of joining up procurement and supporting councils to pool key spending. While this is a great method in principle, in practice it is not so Utopian. Not all councils choose the collaboration route, despite the “estimated” savings of £1.8 billion. (An annual savings figure cited by the National Outsourcing Association (NOA), based on public sector outsourcing that includes direct sourcing, shared services or using mutual organisations, which “could” be achieved if “all councils were to use collaboration as a default option.”) While we applaud the collaboration ideal, we are keen to see that local flexibility of choice is maintained, and that precise methods are decided by each local area.

Best Value Contract Letting -- the committee urges local authorities to let contracts on the basis of “wider best value not simply lowest price.” Again, fully support this approach – but isn’t that what local authorities are doing anyway? In our opinion it’s a myth that they plump automatically for lowest price, without taking into account other factors, including delivering wider social value or benefiting their local or small businesses. An excellent The Guardian article reminds us, if that is needed, that contracting can never be just a technical exercise. It has knock-on consequences for people and communities.

Surely, as bids are evaluated in accordance with the award criteria set out in the invitation to tender, not purely on price, public bodies are already making informed decisions about how they purchase services. And, since the Public Services (Social Value) Act 2012 provides a mandate for contracting authorities to consider the social value they can achieve in all their services procurement, it becomes more a case of them balancing what they can afford with the social value they can generate and other qualitative factors.

Standardising PQQs – on reducing costs to business, one of the steps the committee identifies is for “the LGA to take the lead in ensuring that Pre-Qualification Questionnaires (PQQs) are standardised and where possible simplified to reduce the excessive burden on suppliers …” While standardisation of PQQs is a very good idea, and especially simplifying them, we agree with the committee that Central Government, in this instance, would be wrong to suggest their removal – even if only within certain value parameters.

The PQQs’ aim is to eliminate bidders early on in the tender process to reduce time and costs for all parties. Understandably, small businesses can’t always comply with the PQQ demands, so they are less likely to be able to compete with larger firms, but that doesn’t mean they are less able. So simplifying the PQQ for lower-priced contracts to accommodate the smaller bidder is surely a welcome step. But the wider implication is that if all bidders go straight to tender, this could be far more time-consuming than the PQQ process itself!

The question of course is, does the LGA really have the capacity and capability to do all the tasks this report sees fit to generate for it?

We’ve another two key focus areas of the report to discuss – look out for 'A Dot to Dot of Key Findings (part 2)'


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Voices (2)

  1. IanR:

    Agree Dan, I’ve seen poor examples of PQQs over the years, including construction related questions for a supply of goods contract, and questions without any criteria or weighting being applied, but that’s not an argument to do away with them, just make them better.

    Many suppliers prefer to have the hurdle of a PQQ because then they know that at the stage where they will really have to expend time and money in putting an offer together they have a 1 in 6 chance rather than a 1 in 50 chance of being taken seriously.

    Peter, in local government the vast majority of services are below the EU threshold for which the Social Values Act is mandatory, I quite like the idea of making councils consider it regardless of value and possibly extending it to works contracts as well, then the benefits will become more widespread and visible, what do you think?

  2. Dan:

    A small point – a PQQ isn’t solely to eliminate bidders early on in the tender process. It also functions as a risk assessment tool – it would be crazy to award a contract to a company without vetting them on things like financial stability, references, their environmental procedures etc. These questions form the vast majority of a PQQ.

    Everyone does this, including the private sector, and yet its only ever a problem when its the public sector. No-one is advising that the private sector does away with these checks or complaining how bad they are for business.

    It does beg the question, how much should the procurement process be distorted in order to satisfy suppliers?

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