The Procurement Bill risks becoming window dressing
Post Brexit changes should allow councils to strengthen their focus on social value, but the legislation falls short on transparency.
This article originally appeared in Local Government Chronicle.
The government’s Procurement Bill – which had its second reading in the House of Commons earlier this month – is a long, complex piece of legislation which, at its core, has the ambition of creating greater flexibility for how the UK spends public money.
A necessary post-Brexit legal framework, commentators have raised concerns about the bill’s potential to become a “charter for cronies”, legalising the so-called “Covid VIP lane”. An equally pressing question, however, is whether, by enabling the UK’s small businesses and VCSE organisations to win more of the £300bn of goods and services the government buys each year, the bill will help our local economies to thrive.
There are definitely positive elements in the bill as it is currently proposed. It provides solutions to some of the common barriers that SMEs have encountered in their attempts to access public sector supply chains – such as contracts being too large and overly bureaucratic tender processes.
To address these, the bill creates a requirement for public sector buyers to break down contracts and increases the thresholds at which formal procurement processes kick in. The bill also formalises the ability to “reserve” contracts for UK SMEs and/or social businesses, making it harder for international suppliers with huge economies of scale but few roots in an area to undercut local suppliers.
“increase the opportunities for local and social small businesses to enter the public sector supply chain”
All else being equal, these measures alone should increase the opportunities for local and social small businesses to enter the public sector supply chain.
There is, too, a welcome shift away from narrow considerations on price mandating selection of the “most economically advantageous tender” (MEAT), preferencing instead the “most advantageous tender” (MAT) – a broader definition of value that includes contributions to solving social and environmental challenges. It also intends to make it easier to mark or actively exclude suppliers who have underperformed on contracts, with a publicly accessible “debarment register” showing poor performance on pre-defined KPIs.
Nevertheless, the proposed bill leaves much to be desired. While it includes a number of provisions to increase transparency, including public access to procurement data, the UK Anti-Corruption Coalition (UKACC) have said that there are “ongoing gaps in the bill which leave procurement vulnerable to corruption”.
“there is nothing in the bill to prevent another unethical procurement scandal”
During the pandemic, companies referred for PPE contracts by ministers, senior MPs and peers were 10 times more successful compared with other companies, many of which had a history of supplying through traditional procurement routes. Half of these “VIP referral” companies, awarded contracts worth £1bn, supplied PPE that “was not fit for purpose”. UKACC argues that adjusting conflict of interest declarations to be mandatory rather than voluntary would “significantly strengthen integrity in procurement”. Yet as it stands, there is nothing in the bill to prevent another unethical procurement scandal like that seen during the pandemic.
While the shift from MEAT to MAT is a good thing, this principle has been present in legislation (via the Social Value Act) for 10 years and has been embraced by many local authorities for some time now. As such, the proposed legislation might be described as more of a legislative clarification and emphasis for risk averse procurement officials than anything truly revolutionary.
Furthermore, because the Scottish government will not adopt the bill, the substance of the law will not change substantially across the border. Policy flexibility may be seen as positive, insofar as it enables a focus on local priorities, but if one of the points of the regulation is to facilitate trade across borders, a decline in trade between English and Scottish organisations may be an unintended consequence of such divergence.
…and how to make it count
Whilst some of the weaknesses outlined above may be amended as the bill continues its journey through Parliament, it is important that we do not consider it to be a “silver bullet”.
“more than just a change in the rules will be required: it will need progressive intent”
For the spend of the local public state to fulfil its potential to create positive local change, more than just a change in the rules will be required: it will need progressive intent. For our recent paper, A Light In The Dark, our researchers spoke to local authorities who have long viewed public sector procurement as a key asset to harness as part of a place-based economic strategy.
In those places they are using their power as a purchaser of goods and services to stimulate local economic development. The bill should help them on their journey but their broader progressive intent is what lies at the root of their success to date and will be imperative for any local authority setting out on a similar journey.
There is also the question of the broader architecture that enables change. Progressive council leaders are finding it harder to justify slightly higher costs for contracts, even those which will deliver far greater social and environmental value.
“properly funded local government is a prerequisite to creating healthy local economies”
If local government continues to be cut to the bone, how will staff have the capacity to split contracts into lots that will be accessible for SMEs, let alone to lead the kind of culture shift required to imbed the intent needed for a change in approach?
Properly funded local government is a prerequisite to creating healthy local economies. Without that funding, any change in legislation risks becoming merely window dressing.