Minister Announces New Measures for Government Procurement

An article in the Times last week from Oliver Dowden, who is the Minister for Implementation at the Cabinet Office, was the first we’ve heard from the politician who presumably is the nearest we have to a “Minister for Procurement”.

It was written in response to the Carillion bankruptcy, and made some sensible comments along with some vague promises of further action and some wishful thinking. There were also one or two questionable comments - he says that “reports by the National Audit Office and MPs recognised the strength of the government’s handling of Carillion’s liquidation”.  I think if you read the NAO report, you will find it is a balanced report that criticises the government in some places and has some positives too.

Then we have this: “Economies of scale mean services can be provided at better value for the taxpayer; indeed, academic research has shown that outsourcing delivers savings of 20 per cent compared with bringing services in-house”.

Now there is some positive research about outsourcing out there; however, much of it goes back to the “compulsory competitive tendering” days or is not UK-based. There is little to say that recent UK experience has been positive. However, we’re not anti-outsourcing ideologically and someone does need to stand up and defend its appropriate and skilful use, so we can understand that Dowden wants to marshal what positive information he can!

He then goes on to some new measures that are being taken. There are new measures which will “ensure that all major government procurements take into account “social value” rather than just cost”.

There is merit in that idea although it may have unintended consequences; providing social value can be another barrier to entry for smaller firms looking to win government work, for instance. But this will be an interesting approach and we’ll see how it goes. But them he goes on to say “By doing so, we are will create new marketplaces featuring mutuals, charities, co-operatives and social enterprises that will harness the best of talent from around the whole United Kingdom”.

Well, that is pure fantasy – as if mutuals are suddenly going to spring up because there is a 5% weighting for “social value” in a few more large government tenders.

Then he says this – “we are improving how we manage contracts by increasing transparency and are strengthening how suppliers are held to account by the public for their performance. We will now require a number of key performance indicators to be published so that taxpayers can monitor outcomes and track how their money is being spent”.

That is good news but somewhat undercut by his own backbenchers who ensured that a recent private members bill which would have seen contractors bound by Freedom of Information rules was rejected. But it will be interesting to see what KPIs will be published and what they tell us. If I know civil servants, they will try to make sure that nothing really useful is exposed!

Third, “we are developing proposals for government’s biggest suppliers to publish data and action plans for how they plan to address key social disparities such as modern slavery, gender pay and ethnic minority representation in their workforces. We have commissioned a review into these areas which will report back later this year”.

Interesting again – let’s see what the review says.

Fourth, we have also taken action to level the playing field for small businesses. This includes breaking down contracts into smaller lots to make them more accessible and preventing bidders from major government procurements if they cannot demonstrate prompt payment to their subcontractors”.

There is little evidence that contracts are being broken down into lots with any real effect for SMEs and as we know, SMEs are going backwards in terms of (central) government business. We applaud the prompt payment idea but the devil is in the enforcement detail – we’ll believe it is working when we first see a prime contractor lose a contract because of this issue.

And finally, there will be a meeting for the first time of “ ministers from every government department all appointed by the prime minister to champion government spend with small businesses”.  Jolly good. I’m sure Sally Collier and I tried that idea in OGC in 2009 after the Glover report on SMEs.

We don’t want to be too negative, there are decent ideas here, and he does include the words “help us” in this statement, thank goodness – “these measures will help us build a stable, diversified marketplace that fosters greater competition and innovation” – because these steps certainly aren’t enough in themselves to achieve that goal, even if they are in the main directionally sensible.

Is Dowden going to be the Minister who will really grasp the public procurement nettle, which no-one has done since Francis Maude? The lack of grasping is not surprising given the rate of ministerial shuffling in recent years, but maybe Dowden will be the one – we hope he hangs around long enough to get stuck in, anyway.



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