Friday, 15 November 2013

What will CLG Committee recommend on tackling fraud and corruption?

Last month we discussed the perceived rise in procurement fraud and corruption. On 11 November the Communities and Local Government Procurement Inquiry took evidence on tackling fraud and corruption. This was the third of oral evidence sessions, two of which I have already discussed. I expected the evidence to go some way to answering the following questions:
  1. Is fraud in local government procurement increasing or decreasing?
  2. Is corruption in local government procurement increasing or decreasing?
  3. How does UK local government procurement compare with the world best in tacking fraud and corruption? 
  4. What would an effective strategy for tackling fraud and corruption strategy in local government procurement look like?
  5. In what ways are councillors part of the problem and the solution?
Unfortunately those questions weren't asked. Why?

Like the first session the witnesses were asked what is driving local government to improve their procurement approaches? My own impression was this was a general question and not specific to fraud and corruption, so it was unfortunate the witnesses weren't particularly explicit, however, the best I could conclude was the drivers were viewed as the current economic climate with the associated reduction in resources, the EU, the focus on delivering outcomes, fear of failure and the increasing demands of the electorate for better public services.

The witnesses were then asked what struck me as a very mixed up question/s 

how should we judge whether a council is effective in its procurement—or, indeed, how should councils themselves judge that? Is value for money so important now that it almost overwhelms everything else in terms of procurement and looking at what is good practice and what is not?
When you think that the witnesses were hardly in their normal environment that's quite a mouthful of a question to try and answer. Trying to unravel the answers, to me, was quite a challenge - I honestly can't come to a conclusion how the witnesses defined procurement effectiveness. 

So that's two questions which the Committee appear to have asked on two occasions, namely, drivers for improvement and definition of procurement effectiveness, which so far, to me, none of the witnesses seemed able to provide a succinct answer to - very, very worrying.  

It did strike me that the witnesses may well have been best to have answered some of those questions and others by just saying, "actually, I am neither qualified or competent that question" but they didn't. I don't blame the witnesses, I blame the Committee for poorly focussed questions.

However the Committee eventually did get round to focussing on what was supposed to be the focus of the session, namely, fraud and corruption.

We heard that the annual loss in councils due to fraud is thought to be  £2.1bn of which £876m is on procurement fraud. Now you need to read that figure again, the estimate of procurement fraud is £876m per year, but the Committee were also informed of the Audit Commission conclusion of reported  procurement fraud amounting to £1.9m - that's an unbelievable gap!

There was then a wonderful exchange between the Committee and the spokesman for International Association for Contract and Commercial Management - they have never uncovered an instance of fraud and never had to discipline any of their members. Tell me this, what were their credentials for giving evidence?

Eventually the collective meandered to Whistle-blowing. It is a key tool but not well supported, apparently. How do we know?

The assertion was made that most loses due to fraud are during the post-award delivery phase. No one seemed to ask "why would that surprise anyone, given that's when the flows of money take place?" nor "but is it not likely that the environment for fraud and corruption must be created in the pre-award activities?". But then again, when case study evidence was invited, none could be provided. Issues of abnormally low bids were discussed but no mention made of the existing legislative approach for addressing those!

The Living Wage appeared in the discussion and we heard Ealing have signed up to it, however, when asked is that cascaded to suppliers, the answer was no. I really don't understand how Ealing's commitment to the Living Wage is relevant to the Inquiry if it is not applied to contracts?

There's a strange thought in my mind, on virtually every occasion the witness were asked for evidence to back up claims, they were unable to cite any - wasn't the focus of the session supposed to be on fraud!

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