To fix procurement, the UK has to open it up

Following a recent National Audit Office report that revealed major weaknesses in governance and transparency for the UK government’s covid-19 procurement, Gavin Hayman, Executive Director of the Open Contracting Partnership and Liz David-Barrett, Director of the Centre for the Study of Corruption, University of Sussex call on the government to learn from other countries and open up government contracting.

The normally sleepy, paper-shuffling world of public procurement has been on the frontline of the global response to the Covid pandemic. The UK media has been awash with hair-raising stories of multi-million pound government contracts awarded to mysterious brokers and tiny, unheard-of companies promising a secret stash of supplies. The profits from one entrepreneur who simply flipped his contract over to somebody else could have paid the bill for extending school meals to poorer children during the holidays. 

The recent National Audit Office report confirmed the lack of basic standards of transparency and documentation, with some contracts even awarded retrospectively. 

We both work around the world helping governments do procurement better. We’ve seen the impact that procurement can have to improve public service delivery and to encourage competition and innovation. We also know how to protect the process from corruption and clientelism, to which it is vulnerable everywhere. 

It’s upsetting to see our own country fall short in its hour of need. Fortunately, what we have seen work elsewhere can help the UK fix things too. Here is our top advice:

1) Close the special channel and return to open competition

One of the oddest features of the UK response was that a special high-priority channel for major awards was set up for companies recommended by certain gatekeepers, including ministers, MPs and peers, as well as health officials. Companies going through that channel were ten times more likely to get a contract. 

In a process where open competition is vital to obtaining quality and value for money, the government seems to have institutionalised favouritism. There is no evidence that politicians anywhere are particularly well placed to decide who has stocks of PPE and who doesn’t. Normally, close connections to a politician are cause for more scrutiny of a contract, not less. So let’s close the channel.

Several months into the pandemic, we need to ask if emergency procedures are still necessary. Needs are no longer unforeseen. We now can plan ahead for the distribution of the vaccine.

Some countries have managed to procure PPE whilst maintaining due process. In Sweden, Slovakia, Estonia and Latvia the amount of contracts awarded using open competition actually went up during the pandemic. 

2) Full investigation and accountability of any underperformance

In its response to the National Audit Office, the government said the failure rate on PPE is currently 0.5%. On a spend of around GBP15 billion, that could still be some GBP75 million. Moreover, the stories of cronyism risk deterring good suppliers with higher-quality products and more competitive prices who do not have connections.

Any suspicion of fraud and profiteering needs to be investigated and any conflicts of interest disclosed and investigated. The government should now convene a ‘star chamber’, staffed with a legal power team to make sure that all the millions disbursed early for contracts that promised vital supplies actually delivered in full.

Six months into the pandemic, the Lithuanian public procurement service published a full review of their efforts, where the gaps were and how to fix them. Let’s see a similar focus on learning and performance in the UK. Because of the scale of public procurement, even small process improvements can lead to huge savings.

3) Improve transparency and open up the data

It is startling that some emergency contracts have still not been published after 100 days. The UK procurement rules mandate publication after 30 days. Despite the contracts being concluded in a hurry under emergency provisions, it’s taken three times longer to make them public. Why?

To cope with the supply shock from the pandemic, nothing can be more important than having reliable and timely information about who buys what, at what price, and from whom.  Some of the other countries where we work require COVID emergency contracts to be published within 24 hours. All the information therein is shared on a public dashboard, thereby helping to connect buyers and suppliers. Open data from those contracts allows analytics to track prices, risks, costs and to flag anomalies. You can even get that information beamed to your phone.  If Ukraine or Colombia can do this, why can’t the UK?

4) Put someone in charge

Part of the challenge for the UK has been that the whole system of awarding public contracts is devolved, fragmented and siloed. Other than publication of major awards on the EU framework, the UK rules are a patchwork of different legislation and policies with no consistent oversight. Everybody has their own system – the NHS, central government, cities, counties, Wales, England, Scotland and Northern Ireland. There is little coordination. Vital data are lost between them.  

Other countries, with clearer governance and oversight, were able to create a single unified emergency framework process for Covid procurement, connecting buyers to suppliers under one set of simplified rules, and ‘call down’ contracts from there. Still others had pre-vetted emergency frameworks in place to cope with surging demand during disasters or avoided opaque direct awards by simply hacking down their processes and running fast competitions. This may not be the last pandemic alas, so let’s prepare for the future. 

Leaving the EU means a fresh start for the UK procurement landscape. 

We need to rethink procurement as a smart digital service, tracking public contracts from end-to-end with open data and using analytics to track performance. Everyone should be able to follow the money. 

Procurement is the single largest area of public spending in the UK, over GBP284 billion every year. That is over one in every three pound of our taxes. Making it better is vital for economic recovery. Local and national budgets will be stretched as never before. Openness, accessibility and better information all help improve competition and inclusion in procurement, saving time and money and improving services. Simple, clear procurement processes and contracts will be vital to spending limited resources wisely and to rebuilding the devastated small business sector. Our health, safety and national security require this money to be spent wisely.

So no excuses Britain: let’s open up the black box of government procurement and make it faster, fairer and smarter in future.

Posted in Governance

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