Nearly 40 years ago, the European Commission published its first public procurement directive, arguing that the billions spent every year by public bodies could, if opened up to more competition, provide a huge boost to the economy. The same ideas are perhaps even more valid today. Paul Clarke examines the current state of play with regard to harnessing the spending power of central and local government and looks at recent ideas such as using procurement to promote the drive towards sustainability.
Value for money
Over £150 billion a year is spent in the UK on the goods and services needed to deliver public services. To achieve value for money for the taxpayer, a key government objective, effectively managed procurement is seen as essential. Public procurement ranges from basic requirements such as stationery, food and furniture to complex projects such as new hospitals, schools or even aircraft carriers. It also includes important services in areas such as welfare-to-work, further education, social care and health. The Government argues that it must apply the highest professional standards when it spends money on behalf of taxpayers, to ensure it gets a good deal and to provide appropriate goods and services to the quality required to meet user needs.
The Cabinet Office has a particular role in this regard with a remit to "better manage procurement expenditure as part of the Government’s deficit reduction and growth agenda". Responsible for managing the relationship between government and its strategic suppliers, leveraging buying power to deliver a better deal for taxpayers and to resolve any disputes swiftly, it claims to have saved £800 million in just one year.
Doing business with the Government
As part of its role, the Cabinet Office now makes available the tools and information intended to help businesses take part more efficiently in the procurement process.
Contracts Finder: a one-stop-shop for suppliers to access live procurement opportunities and to see potential opportunities that have still to be finalised. The system takes feeds from a number of regional procurement portals across the country, as well as the EU's Tenders Electronic Daily (TED), which includes contracts from all 27 Member States and from a number of other countries that have trading agreements with the EU.
Mystery Shopper Scheme: a way for businesses to tell the Government where there are problems with the system. Suppliers can use this service anonymously to tell the Cabinet Office about problems in government supply chains. It promises to provide reasoned feedback to enquirers on their concerns.
Help for SMEs: this includes the abolition of pre-qualification questionnaires (PQQs) for contracts under £100,000 in value and the introduction of product surgeries. These are designed to enable selected smaller firms to pitch innovative products and services to a panel of senior decision-makers in government departments.
Government Procurement Service
An executive agency of the Cabinet Office, the Government Procurement Service (GPS) provides commercial procurement solutions, which are fully EU compliant. These cover energy, travel, fleet, office solutions, communications services, print, professional services, ICT, eCommerce and property and facilities management. Strategic alliances with other public sector buying organisations in local government, health and the devolved administrations in Scotland, Wales and Northern Ireland have helped to improve procurement efficiency and drive increased savings across the public sector. The GPS website provides useful information for both suppliers and buyers.
In 2011, the Cabinet Office introduced a new approach to how the Government engages with its key suppliers, introducing the Crown Representative network to act as a focal point for particular groups of providers looking to supply the public sector. This network co-ordinates across departments to ensure that a single and strategic view of the Government’s needs is communicated to the market, to identify areas for cost savings and to act as a point of focus for cross-cutting supplier-related issues. Crown representatives work with departments’ existing commercial teams. Often they will step in to resolve disputes or lead on negotiations where a government-wide deal is being sought.
Ministers have stressed the importance of the Government acting as a “single customer”. The Crown representatives play a key role in this regard by ensuring that areas for cost savings are identified. The network was strengthened in May 2013 when six senior private sector leaders were appointed. They include: Ian Tyler, until recently the chief executive of Balfour Beatty; James Hall, previous UK managing partner of Accenture; and Graham Jackson, who was the head of UK commercial contracting for HP. Their role is to use their business experience to engage with suppliers at an early stage, to improve commercial relationships and to negotiate the best possible contracts.
Basically, public procurement rules are meant to regulate the purchasing activities of contracting authorities with a view to making them more efficient. However, increasingly, there is a move towards complementing this requirement with the addition of useful societal goals. Operated by the Department for Environment, Food and Rural Affairs (Defra), the National Sustainable Public Procurement Programme (NSPPP) is a good example of this change in emphasis. It seeks to make clear to civil servants and others that sustainable procurement is good practice that can generate significant benefits as well as save money. The programme demonstrates how to apply sustainable good practice throughout the purchasing cycle. A series of e-learning modules can be accessed via http://moodle.wrap.org.uk. These include good practice procurement wording and sample contract clauses, to help users implement sustainable procurement decisions.
Using public contracts to boost employment
The Scottish Government recently launched a consultation on new laws designed to improve the way the public sector buys goods, works and services, arguing that public contracts could do much more to boost jobs, apprenticeships and the economy. In Scotland, the public sector spends over £9 billion every year and, in 2011, over 45% of this spending was with small and medium enterprises. A Procurement Reform Bill will seek to ensure that all public bodies adopt transparent, streamlined and standardised procurement processes that are "friendly to Scottish businesses". A recently-launched consultation on the Bill explores ways of substantially expanding the use of community-benefit clauses in higher-value contracts, with the aim of promoting training, apprenticeships and opportunities for the disabled and long-term unemployed.
The EU moves on
Several of the ideas described above — using procurement for environmental gains and to encourage employment and training — originated from the European Commission. In 2011, having first published a Green Paper on procurement, which opened these concepts up to wider debate, it brought forward proposals to modernise existing EU procurement legislation in order to make it better suited to deal with “the evolving political, social and economic context”.
As well as protection of the environment and employment and social inclusion, its draft directive provides for public contracts to be used to encourage higher resource and energy efficiency, to combat climate change, promote innovation and to ensure "the best possible conditions for the provision of high quality social services". The proposal will not receive its first reading by the European Parliament until September 2013 but the European Commission is used to playing a long game. After all, Harold Wilson was still Prime Minister when it began the move to open up public procurement to wider competition.