CLG Procurement Inquiry could ask 'why bother?'

I have been discussing the oral evidence sessions at the CLG Committee Procurement Inquiry. I assume those of you following my observations can sense my frustration that this excellent opportunity appears to be slipping away. I'm sorry to say the second panel session of the fifth evidence saw some of the same methodological flaws being repeated.

The opening question of this session asked witnesses from the Federation of Small Businesses, Market Dojo, and Bangor University:

Could I just begin with a subject where we have perhaps had slightly different points of view expressed by yourselves and your organisations? It is about trying to achieve greater opportunities for SMEs and micro-businesses to obtain contracts, and the extent to which there is a potential conflict between that and the council getting the best value for money from its contracts.  

So, ask yourself, if that was the exam question, what would the correct answer look like? Set aside that 'best value for money' is frequently 'in the eye of the beholder'. Were the Committee asking: 'Is the objective of achieving greater opportunities for SMEs and micro-businesses incompatible with the objective of achieving best value for money?'

If that was what the Committee were trying to establish, quite simply, they didn't hear. They heard about a new term for me, 'stickability' (that's the amount of contract value which stays in the local community). They heard that local sourcing can lead to better social cohesion. They heard that local businesses employ a range of employees. They heard that there could be growth in the local economy. They heard that local government procurement processes can act as a barrier to SMEs. They heard that "SMEs are the reason why a lot of large companies fail and yet local government procurement does not take account of this very well in the process" (What on earth is that about?). They heard that councils could not take account of innovation in the award process. But did they hear if the objective of achieving greater opportunities for SMEs and micro-businesses is incompatible with the objective of achieving best value for money?' - in a word, 'No'!

To me this is a serious weakness of the oral evidence sessions - poorly focused questions are being asked and the Committee just aren't extracting what they need to know. There are also opinions being expressed which appear to lack any foundation yet are not tested and lack of clarity of definitions which  mean answers are given but there is no shared understanding.

Social Value Act, social benefit clauses & SRO at CLG Committee Inquiry on procurement

And so to the fifth evidence session of the CLG Committee Inquiry into procurement. The first panel representing the Centre for Local Economic Strategies, National Council for Voluntary Organisations, and The Joseph Rowntree Foundation - all organisations which have previously helped move the procurement improvement debate forward.

To set the witnesses off to a good start and feel relaxed, the Chair started with one of those classic sextuple questions witnesses must, by now, be starting to expect:

One of the things we will be looking at is how procurement might be used for a number of objectives. We will begin by looking at how it might be used by local councils to tackle social disadvantage and poverty. Do you think councils are actually doing this effectively? Are they getting it right, or is there more they could be doing? Who would like to start?

Would anyone seriously have expected the witnesses to answer: "Actually, I think councils are really doing the absolute maximum that could be done". 

That reply wasn't heard but instead we heard that making an impact was down to the culture of officers and how procurement and economic development work together. I agree that there needs to be effective linkage between economic development and procurement but there's a flaw in the answers as they suggest officer driven policy and strategy and made no reference to political leadership. To me, in local government, elected members need to drive and lead the initiative - it is elected members who have to decide on competing priorities and then officers implement and are performance managed. If officers lead, to me, there is a high risk that their own personal agenda are pursued contrary to those of the democratically accountable leadership.

Now, let's reflect on that a bit further, three witnesses and not one of them initially mentions political leadership, yet, in the follow-up question, when political leadership is mentioned by the questioner, surprise, surprise, suddenly: "Political leadership is key, because it tells officers this is a high priority on the long agenda of things they have to deal with..." - call me a cynic, but had the questioner not mentioned political leadership would that key ingredient have been identified?

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:

Greening, social benefits and procurement?

Social benefits clauses have been the subject of much discussion over the past decade but in an interesting development today the UK government is said to have claimed they will award the new Crossrail contract taking into consideration the wider benefits to the UK.

Justine Greening, the Transport Secretary, claims:

"This includes a 'responsible procurement' requirement that means bidders will need to set out how they will provide opportunities for training, apprenticeships and for small and medium-size businesses."

I wonder if this is another case of Greening misinterpreting advice? We considered an earlier faux pas some weeks ago. Is it not the case that a non-UK bidder could deliver and possibly exceed the delivery of social benefits yet the beneficiaries may not be in the UK?  If that is the case Greening could find herself having to eat humble pie, again.

Of course, Greening could find wiggle room by saying that she really meant the procurement itself (Crossrail carriages) will benefit the UK and that earlier delivery, better functionality and lowest whole life costs were really all she intended to take into consideration at the award stage - they are certainly benefits to the UK.  I wonder will she?

Nevertheless, this will be worth watching as it is difficult to see how awarding a contract based on UK specific social benefits are not discriminatory and therefore in breach of the Public Contracts Regulations.

Either way, the contract will provide useful learning for the rest of us.  It would be useful though if

On bankers' bonuses, MP expenses and GPS.

Few of us will have missed the furore over Hester’s bonus. He is well paid and recognised by some as doing a good job.  Some of the outrage seems to be driven by the morality of rewarding a banker while SMEs struggle to gain banks favour and access credit.  Nevertheless he decided to forgo his bonus.  There appeared to have been some stirring of his moral compass– his GPS.

Some of the pressure on Hester came from politicians.  To some politicians it was immoral to accept such a bonus while many are suffering as a result of the global financial crisis.  It was also viewed as particularly immoral since RBS is one of the banks indebted to the government for its survival. To some politicians it appeared

Minister admits Public Procurement Litigation Agency overspend

Today the new Secretary of State responsible for procurement was questioned by the influential Public Administration Committee on why there had been a five fold increase in the costs associated with running the Public Procurement Litigation Agency.  She explained that a new industry had grown up on the back of the The Public Contracts (Amendment) Regulations 2009.  The Regs were introduced to implement the Remedies Directive (2007/66/EC) and according to the SoS have changed the dynamics within the public procurement market.  The Regs were the first justification for the overspend.

The SOS then reminded PAC that a former Cabinet Minister had publicly admitted a bias amongst the public procurement community against UK suppliers.  Independent academic research then revealed

A Christmas spin: Investing, giving, shopping

I was always very impressed by Julia Unwin’s ‘The Grant Making Tango’. To me it is a must read for any procurement professional (perhaps a last minute Christmas present) in setting out the options appraisal for the procurement decision of Grant V Contract

The guide basically refers to purchasing as ‘Shopping’ and then differentiates grants as being either ‘investing’ or ‘giving’.

You ‘give’ when