Taxpayers ultimately foot the bill for public sector spending so it is no surprise that the Taxpayers’ Alliance has responded to widespread concerns with the problems afflicting procurement of large public sector funded schemes with a fairly damning report.
Its report ‘Reforming Public Sector Procurement’ draws attention to the failure to address the damage done to smaller companies by the trend towards ever larger frameworks. The UK has gone down the large framework type contract route with far more enthusiasm than other major European economies.
Companies like Capita, Atos, G4 and Serco have been major beneficiaries; at least, their workloads have benefitted, but major damage has been done to some of these brands by the well publicised scandals that have erupted over failures to deliver services as promised. G4 has fared possibly worse than the others on this score, but few have escaped controversy.
The trend towards larger, longer term contracts is continuing, with Highways England for example reportedly considering extending its frameworks to eight years. The government says it is committed to opening up access to public sector procurement for small and medium-sized enterprises (SMEs). The Taxpayers’ Alliance however finds that the UK is so seriously out of step with the rest of the European Union as to give cause for concern.
The report highlights that the UK published 167 contract award notices on contracts worth €100m or above in 2015, adding up to a total of almost €74bn, which represented over 50% of all such notices published in the entire EU. France awarded just 29, Italy 25 and Europe’s economic powerhouse economy, Germany, only five.
Most SMEs will be barred from tendering for these large contracts due to the relatively small size of their balance sheets but even when they do qualify the UK’s smaller firms seem to be increasingly reluctant to even try to win this sort of work due to the burdensome bureaucratic procedures involved. Larger firms can afford to have entire departments to help win the projects, and can call on external consultants as required.
The Taxpayers’ Alliance says the UK must start to ‘partition’ contracts to allow SMEs to get involved. It wants to see the market opened up with a policy to set limits on the maximum value of contracts, reductions in the administrative burdens associated with tendering, and the decision-making process made more transparent and flexible.
It recommends that public sector procurement should involve more ‘agile procurement’, which among other things would mean open ended contracts that allow adjustments to be made when circumstances change.
On the plus side, this report says that the legal regime governing public procurement has improved in the past couple of years and is geared to a large extent towards the principles of openness and competition. Expansion of e-procurement is urged, as this is being found to be an effective way to make procurement more efficient.
Opinions on whether this apparent over reliance on ever larger contracts might depend largely on the size of company an individual presently works for. Things do seem to have become a bit lopsided though, as this report highlights, and given the poor performance of the UK on public procurement generally bigger contracts do not seem to be delivering more efficiency. Time to rein in the big battalions?
Nick Barrett
Editor