It will take more than new rules to bring transparency to public procurement in post-Brexit Britain
8 Jun 2021, 9:55 a.m.
Nigel BallExecutive Director, Government Outcomes Lab
Procurement and social value
From the Executive Director
Share this article:
Transparency in public procurement is rarely a topic that makes the papers, but the last few months in the UK have given it a season ticket to the headlines. Our Executive Director Nigel Ball reflects on recent events in the UK which have brought transparency in public procurement to the fore.
Procurement in the spotlight
In February the Health Secretary, Matt Hancock, felt the heat when his department was found by the High Court to have flouted procurement rules by failing to publish information on time about contracts awarded under emergency procedures at the start of the covid-19 pandemic. In March, former Prime Minister David Cameron was under fire for personally lobbying friends in government on behalf of a now-defunct supply chain financing company he was working for (he denies wrongdoing). And in April the Prime Minister was feeling the glare as questions were asked about how the redecoration of Number 10, his official residence, was paid for. All three have remained defiant, and buoyant polls suggest voters don’t care much about the alleged slips in probity. They should.
Public procurement is big business. The UK government estimates that it spends an estimated £290bn ($406bn) a year on goods and services from external suppliers, which is almost 15% of GDP. Emergency procurement in the months following the outbreak of the pandemic in Spring 2020 amounted to £18bn, and £15bn was set aside for the procurement of personal protective equipment (PPE) alone this financial year. The National Audit Office estimates that the country will spend almost £3bn with vaccine suppliers (plus another £8.7bn deploying them).
Given the sums of taxpayer money involved, it is clear that probity matters. But to fulfil this, are we setting up rules that get in the way of buying the right things, in the right way, at the right time? Yes, according to the government. Before Brexit, the EU’s procurement rules were frequently blamed by Ministers for crimping their capacity to work effectively with outside suppliers. Billed as another example of stifling bureaucratic interference, the regulations neatly fitted the caricature of the EU drawn by Brexit’s promoters. But as with many similarly crude claims, the exaggeration stretched reality. The EU’s directives on procurement are based on the principles of its single market treaty, and are intentionally broad, leaving lots of scope for public authorities in member nations to design award processes that fit with whatever they are buying. Malcolm Harbour, a former British Conservative Member of the European Parliament, chaired the committee that oversaw the most recent European regulatory reform in 2014, which Britain’s ensuing 2015 domestic legislation followed closely.
Culture and capacity
The problem, then, may not be the rules, but the culture and capacity of those implementing them. The decades since Thatcher’s market-based reforms of the public sector in the 1980s have created a strong culture amongst Britain’s public buyers of ensuring open competition amongst suppliers. Many fear damaging litigation if a spurned supplier claims the award process was unfair, which further discourages innovative practice.
But typical ‘open competition’ award processes are not always the surest route to public value. The direct awards used at the start of covid-19 were allowed under a provision in the existing legislation. Britain’s head start on vaccination was enabled by its successful early procurement of adequate supplies - a further example where a broader interpretation of the rules adds value. As I noted in my last blog, this sits in contrast with the European Commission, which spent precious months negotiating liability protections that may have delayed supply and contributed to second or third waves in some member states. Of course, letting purchasers buy whatever they choose from whomever they wish is unlikely to lead to the best outcomes for taxpayers, and opens the door to corruption. But provided the principle of transparency is upheld, suppliers will feel competitive pressure, and vice will be tricky.
POGO Club's response
The UK government wants to show the benefits of divergence from EU procurement regulation as one of its big wins from Brexit, and has recently published a Green Paper on the topic, which the Procurement of Government Outcomes (POGO) Club, hosted by the GO Lab, submitted a response to. The Green Paper emphasises the importance of transparency. The recent Ministerial slips up, and the prevailing culture amongst Britain’s public buyers, both suggest that it is not the rules themselves, but how they are interpreted, that matters.