More from PACAC – We Want More Foreign Suppliers, Says Minister

We reported here on the recent Public Administration and Constitutional Affairs Committee which looked at sourcing public services post-Carillion and outsourcing. That raised some issues around when and whether re-negotiating contracts with suppliers is allowed within the EU and UK procurement regulations (see the “comments” too for some good debate).

But what else did David Lidington, the new-ish “Minister for Procurement”, and top civil servants John Manzoni and Gareth Rhys Williams have to say?

In answering questions about the power that Carillion and other big suppliers have over government, Lidington said he was looking to bring in more competition and would “tell us more in a few months” – but he acknowledged that this isn’t easy in complex areas. Rhys Williams says, “we’ve been successful in splitting up large IT contracts into lots of small contracts” (although we might argue the jury is still out on that), and that  a similar approach might be implemented in other non-IT areas.

What are the advantages of transacting with the big suppliers, asked a Committee member? Manzoni answered in terms of assessing how far you integrate services and brings up IT again. But you might not want to dis-aggregate the prison Facilities Management contract – it would be too much work.

Now while we probably agree with that, the real question is how much would you gain by dis-aggregating and how would that compare with the additional contract management and procurement cost? We should not just say “its too expensive” without that analysis.

What about the 33% spend with smaller firms (SME) target, asked an MP?  Lidington waffled furiously, used some numbers very selectively, but again none of the committee knew enough to get through that. Finally, Lidington said that the realistic opportunity is through the sub-contractor side (i.e. SMEs working for larger prime contractors). We take that as a clear sign that that government has given up on the real direct spend SME target, so watch out for further nonsense around “spend in the supply chain” in future.

But there are serious points here, and Lidington said that the cost of contract management would just be too great if you avoided large firms altogether, and the risks often require government to contract with larger firms. True, but how much of that is because the government packages up work into such large contracts that the risk is also huge? But there is no push back on this from the Committee, again.

The Public Accounts Committee reported a while back that government couldn’t take work away from training provider Learn Direct because of over-dependence – is this a sign that government is over-dependent on certain suppliers, asked another member?  This applies in complex services, says Lidington, and we are examining how to enlarge markets - we might look outside the UK at reputable providers, he says.

Well, apart from smiling at that and wondering how the Daily Mail and the Brexit “little England” camp (keep British contracts British, this is a local procurement for local people) would take that idea, his comment suggests a fundamental misunderstanding of how public procurement works here really.

You don’t “invite” foreign suppliers in to bid or just give them contracts. It’s an open process. Now if he really means “we need to be better at market-making and early engagement and make more effort to attract new and different firms to bid” then that’s fine. But the question of the over-centralisation and aggregation that we have seen over several years now in central government procurement mitigates against this of course.

Rhys Williams says the Learn Direct example actually shows how far we have come in understanding these issues – I have no idea what he means by that. But again, the “work is being done” to sort out these issues.

More to come from PACAC, probably …

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