Is the PM's direct commissioning plan sound?

The Prime Minister will announce today a landmark scheme of direct commissioning of affordable homes. The idea appears to be that the government will secure planning approvals for houses on publicly owned land, and then directly commission builders to build.  That sounds like a really good idea and goes some way to address some of the risks of planning approvals I have previously discussed. However, the idea goes further and suggests that the government will ring-fence the competitions to build the houses to small building firms in the hope of undermining the market dominance of the eight biggest building companies.

Before anyone seeks to replicate this strategy, perhaps it would be worth getting a legal opinion on whether or not such distortion/exclusion of part of the market is legal and doesn't contravene the EU Rules, or better, perhaps the government could share their legal advice on how others can follow their lead without falling foul of the law.

Is it responsible to start procurement without having the funding?

Is it responsible to start procurement processes without having the money? I suppose the answer depends on what you mean by procurement. 

I ask the question as Danny Kenndy, the Minister for Regional Development in Northern Ireland, is reported to have stated the procurement and planning process for several [road] schemes was "well advanced", but "then we need the money".

In the procurement cycle which starts with defining the need, I would be happy that the business case stage ensures the money is available, and if that is what is meant by the procurement process, then so be it. It could also be that the Minister is referring to soft market testing and establishing the budget robustness - that would be okay too provided al the relevant stakeholders are clear on what is happening. However, if, as I suspect in this case, 'the procurement process' is really the tendering process, then, while I think there is a need to have the necessary planning approval, I do not think it is responsible to start a procurement process before confirmation the required finance is available.

We've heard so much about making it easier for SMEs to do business with the public sector and reducing the costs of doing so, but surely starting a tendering process without the required funding is placing an unnecessary risk and burden on the bidding community - that's not responsible. The only circumstances in which I think it is justifiable to place that cost on bidders would be if the buying organisation agreed to cover the cost of bidding should the procurement process not be progressed through to award. Would the NI Assembly be prepared to accept that cost?

Planning for uncertainty

We've previously highlighted the problems encountered when a procurement takes place on the assumption that planning permission will be granted and then the approval isn't received. Money is wasted as a result of a poor risk management.

Given that history, I would have hoped that there would be a wariness of being too presumptuous of the planning approval process.

So, if you were going to take over one landmark, listed, art deco building which has survived the worse of the Belfast blitz and the bombing campaign of 'The Troubles', you may be cautious of assuming a clean run in the planning approval process. Yet, in Belfast, it is alleged Tesco have started to demolish internal walls of such a building prior to receiving planning approval. I may be risk averse, but to me that is a risk too far unless there is a real business case which demonstrates the expected benefits of earlier completion outweigh the potential costs which will be incurred if approval isn't received.

Tesco are so often held up as exemplary yet they also seem to have a remarkably high percentage of procurements which have not been exemplar.  Is it that they are prepared to sail very close to the wind or are they just caviller?