Reserved contracts: Disabling Article 19 and Regulation 7?

The government have announced the closure of 36 of Remploy's 54 factories.  Supposedly the rationale behind this being that it is wrong to subsidise Victorian era segregated employment of those with disabilities.  On the back of questions over the success of assisting those with disabilities back into employment and the perceived attacks on disability benefits claimants, this seems inconsistent with 'Compassionate Conservatism'.

Yet there is also a procurement dimension.

Within Regulation 7 of the Public Contracts Regulations (sometimes known as Article 19 of the Directive) there was the option of reserving contracts to those businesses considered to be 'sheltered workshops'. Eligible UK businesses are listed in the Supported Business Directory.

A quick scan of the Directory would suggest that if you delete 'Remploy' there will be questions over how competitive reserved contracts can be in the future. For many areas of the market there there will now be a monopoly. That will bring real problems for ensuring value for money.

The previous aspiration of every public sector body having at least one contract with a supported business also seems to have been forgotten about - that shouldn't surprise readers as I have already discussed this type of policy ignorance and contradiction in the past.

Equally, for many public sector bodies hoping to deliver social benefits, an easy way of achieving that aspiration is now going to be lost.

There are also risks which procurement practitioners now have to consider:

1. If you have a policy commitment to have at least one sheltered workshop contract, how achievable will that be in the future?
2. If you have contracts with Remploy, what steps need to be taken to ensure security of supply in the future?
3. If you are in the process of awarding a reserved contract what impact will the Remploy announcements have for you?

For those in the policy world:

1. How is this perceived dysfunctionalism going to be played out, will non-UK based sheltered workshops now have a competitive advantage for these contracts in the future?
2. Do/should 'reserved contracts' have a UK future?
3. If Remploy's 'segregated employment' is now considered an anathema, what effective panaceas are now being put in place?

Background reading:
Bennett, R. (2012) 'Factory closures put 1,700 disabled staff on the dole', The Times, 8 March, p3.
Martin, D. (2012) 'Factories that give work to disabled people are facing the axe as Government pulls plug on funding'.
OGC (2009) Guidance on reserved contracts in the Procurement Regulations, 'Supported Factories and Businesses'
Stacey, K. (2012) 'Remploy factory closures threaten 1,700 disabled jobs', Financial Times, 8 March, p.4.