Another PPN - UK Public Policy Notice PPN11/20 - Reserving Below Threshold Procurements

 One that I missed but Eddie Regan at BIP Solutions didnt...

We know something of the possible future for UK Public Procurement thanks to the Green Paper.  One element of that is being adopted from 1/1/21 - which is that procurements below the thresholds ;

● Reserve the procurement by supplier location, AND/OR

● Reserve the procurement for Small and Medium sized Enterprises (SMEs) / Voluntary, Community and Social Enterprises (VCSEs) -

Thresholds are ;

Supplies & Services - £122,976 

Works - £4,733,252

The second one of these extends the provision in the PCR 2015 for VCSEs to include SMEs and I have few problems with that.  The provisions are currently for central government only, but will surely be extended to Local Authorities who will welcome it.

The first provision though worries me.  In several ways.

Firstly, there is the effect on the Union - this is UK legislation and expressly stops the location being based on the four nations (and procurement is a devolved authority, so Scotland, Wales and particularly Northern Ireland will presumably create their own rules based on the UK ones).  But you can see the problems with Scottish contracts for Scotland, English contracts for England etc.

Secondly, the region should be based on a county.  Now Yorkshire is big.  But Rutland and the Isle of Wight are small.  I can see the sense in restricting IoW contracts to the island.  But Rutland?  Surely there is value to be had in sourcing from Leicestershire or Northamptonshire?  But a political advantage in drawing only from Rutland companies....  (I know nothing about the Rutland apart from the TV comedy programme, so I hope that people there do not think I am suggesting they are particularly likely to have problems.  It just happens to be the smallest county)

Thirdly, the geographical restriction will be loved by councils and councillors who want to spend money in their own constituencies.  There are obvious worries about Value for Money, and of course unethical buying behaviour (much in the news at the moment).

So, I remain to be convinced.

NAO - PPE Procurement: the threat for Public Procurement

There are many things going on at the moment, and so the procurement of PPE is not making as much of a splash as it should.  Though there is still a lot of coverage in the media;

ITV

Guardian

even Dentistry online!

And this should be a big issue.  At a time of national emergency procurement has to move fast, and decisions have to be made quickly.  But this is also the time when unscrupulous suppliers (and even conmen) can take advantage of the situation for gain.  So we have to temper the need for results with a little prudence.

The idea of having "fast track" suppliers is no doubt meant with the best intentions by senior figures in the government, who want to speed up the process - but this approach is fraught with opportunities for graft, corruption and fraud.  None of which have necessarily taken place, but it is a vulnerability.  

If you don't lock your car doors but it isn't stolen, that is not an indication that you were doing the right thing.  It means you got a way with it.  Time will tell if that is the case for PPE procurement.

What IS clear though is that public confidence in public procurement has been further eroded by the failure to deliver, the failure to ensure value for money and the perception of contracts for "mates".  The government should act quickly to restore its reputation.

Sad to say, I'm not holding my breath.

Public Procurement: Award of contracts by UK government

 You might be aware that there is growing concern about the award of contracts by the UK government during the Covid-19 pandemic without going through the usual tender processes.

This is of great concern, because of course the usual processes (mostly tenders) are there to ensure that our taxpayers money is spent in ways that are both effective and fair.  You can argue about the effectiveness, but the "fairness" should not be an issue.

The government's argument is of course that the current crisis requires a different approach.  Research by They Buy For You suggests that the UK government is taking a different line to other European countries who have mostly followed the existing procedures.  In the UK we have directly awarded 99%, resulting in the UK accounting for more than half of the Covid-19 direct awards across Europe.

Now taking such a different approach (one that risks fairness, openness and transparency) can be justified if it produces significantly better results.  

Your opinion may differ, but I don't see our UK Covid-19 response as significantly better than the rest of Europe.

What we have done is justified the award of large contracts (£100m upwards) to people known to the government without a competitive process.  I am sure that the government will say that the contracts went to good people.  But of course they cannot prove that they went to the best people.  Therefore the country risks being damaged by award of contracts on the basis of contacts and personal relationships rather than objective criteria.  No matter the intentions, this is how corruption, fraud and cronyism get into public sector procurement.

Pedro Telles points out that the Public Accounts Committee has been very critical of the government's approach.  

In a time of national crisis we deserve better than this.

More about current poor government procurement

Peter Smith over at badbuying.com is laying out some of the problems with the government's current approach to procurement.

Over at telles.eu Pedro Telles (always worth a read) is laying out some more.  He goes as far as to use the C-word; Corruption.  

This is not something we think about in the UK, but the whole of the EU (and current) UK procurement rules are based around trying to reduce the potential for corruption.  It is the elephant in the room.  The mechanisms chosen are competition and transparency - competition so that unless whole industries are colluding (and it does happen) we will get reasonable offers, and transparency so that everyone (suppliers and public alike) can see what is happening and complain if we see inappropriate behaviour.

Of course you can argue about how effective it is in practice, and whether there are other ways to avoid corruption, but that is the intention.

The Covid-19 pandemic has given an excuse (sometimes justified) to circumvent the usual processes. Sometimes this has happened even when existing frameworks could have been used.  It has become common to have very large direct awards without competition, and limited or no transparency at the time (or limited transparency at a later time when it is too late to do anything about it).

Now, there is a case that government is selecting good quality suppliers without having to go through red tape.  And that is usually the argument made - it is efficient.  Which may be true, but it is also the way you would choose to do things if you were wanting to corruptly appoint suppliers in return for backhanders or favours.  I'm not saying that is going on, I have no idea.  But the rules are there to try and reduce the potential for that sort of crime.

Criminals always seek to exploit difficult situations. We should be very careful, and recognise that the procurement regulations are not "bureaucracy" or "red tape" but a mechanism (however imperfect) for protecting the taxpayer.  That organisations such as The Taxpayer's Alliance are quiet about this, but not about wages for public servants, shows that they are not genuine about their purported purpose but are simply pushing a political agenda. (Which in itself would be fine if they were honest about it)

Power, Corruption and Lies Part 2: DIT and Cultural Fit as an evaluation criteria

I don't want to be seen as regularly knocking the government, but another case has arisen that I think needs greater public scrutiny.

The Department for International Trade has advertised a low value tender (therefore not subject to the full weight of OJEU) that has as one of the award criteria 15% of marks for Cultural Fit - the others are Technical Competence 65% and Price 20%.

So we can see that Cultural fit is almost as important as price.  And we know that in practice the intangible element of culture can have a big impact on how a contract is actually carried out, so there is nothing wrong in principle with the idea.  But the question is of course, how are we defining Cultural Fit?  This could easily be a discriminatory question which would not be allowed ("you are from the North and don't fit into our Southern culture...")

In this case it is determined as;

Be focussed enough to stick to the task at hand and not be side-tracked in a vast and quick-moving field Be committed and hard-working, to deliver under time pressures Be enthused by the prospect of working at the frontline in such an exciting and dynamic area Be committed to the best possible outcome for the United Kingdom following its departure from the European Union

Let's look at these.

Stick to the task - fair enough but rather a given I would have thought.
Be committed - as above. 
Be enthused - as above.   Can you imagine anyone bidding for this who was not enthused by the task?  They would simply not bid.  Likewise if they were not focussed, hard-working etc. then I cannot imagine they would admit that in their tender proposal.  I also find it hard to imagine how we might score these criteria.  Particularly as part of the process is a formal presentation - which is inevitably more subjective than a written proposal, and therefore potentially more open to challenge as not treating bidders equally.

The final point however is of course the real problem.  Be committed to the best possible outcome for the UK...  this sounds suspiciously like a political Brexit loyalty clause.  And therefore it stinks.  What if I believe the best possible post Brexit is to rejoin the EU forthwith?  Am I now excluded from winning?  This is a political vetting clause, and in no way fits with the requirement for non-discrimination.

I expect to see more of these "political loyalty" tests if this one is successful.  Why are they corruption?  Because it amounts to hiring suppliers that the minister likes, and fits his/her views rather than the best one for the job.  Which is classical government corruption.  No money needs to change hands - the minister benefits politically, and the UK taxpayer is not guaranteed best value for money.

A more elegant analysis of why this is illegal comes from Dr. Sanchez-Graellis of Bristol of University on his always interesting blog (well interesting to me) www.howtocrackanut.com.

Power, Corruption and lies

CIPS in their ethics test describe Corruption as "the request, agreeing to or accepting a financial or other advantage intending that, in consequence a relevant function or activity is performed improperly"

This is the definition of Corruption that I am applying when I say that Deloitte deciding not to bid for UK Government contracts for 6 to 18 months in order to appease Ministers is corruption.  Ministers are agreeing to it for political and personal reasons rather than the good of the country.  There is no suggestion that they will benefit financially, though that is not the only definition of corruption.

Deloitte and Public Procurement

Having had a very busy couple of months I find that I am still angry about Deloitte deciding not to bid for UK government contracts for 6 (or 18) months as a result of one of their staff leaking comments on UK government preparations for Brexit.

Let me just go over this again, now it has simmered gently.  Deloitte are a private company and are compelled to do what they think will create value for their shareholders.  They clearly think that NOT doing UK government contracts for 6 months will create value.  That MUST mean they think that there is more value coming as a result of this decision.

The awarding of UK government contracts is supposed to be an impartial process with contracts awarded to the best bidder.  If Deloitte believe that they will benefit from this approach they must believe that the process is open to external influence, otherwise whether they annoyed politicians or not would not matter.

Deloitte is a leading company that has won much government work in fair competition against others.  If they are not bidding then contracts are likely to go to organisations that are not as good as Deloitte would have been.  Potentially at higher prices.  The UK suffers because of Deloitte's decision not to bid.  And they have taken that decision to curry favour with politicians.

This is corruption just as much as if they were stuffing notes into brown envelopes.

I don't Deloitte.  I do blame our politicians.

In order to work effectively (whether in the EU, or not) public procurement must be open and fair, and be seen to be open and fair, with contracts going to the best bidder not people with the best contacts or relationships.  This business  damages all parties, and particularly taxpayers. 

If find myself getting more appalled not less.  Your mileage my vary.

Deloitte and Prime Minister Theresa May

I spat my coffee out when I read that Deloitte decided not to bid for UK government contracts because PM May was angry with them about a leaked document concerning Brexit.

Note that this was a "voluntary" decision by Deloitte - see Guardian here. There was not official sanction for Deloitte for the link, and is in no way linked to Deloitte's performance on current contracts.  For Deloitte this is a commercial decision to appease a politician in the hopes of currying favour.

This is a very slippery slope.  If the public procurement process can be used by politicians to influence contract award, we are well on the way to corruption and influence peddling.  It may be "accepted practice" for businesses who have upset a minister to "voluntarily" suspend bidding.  This corrupts the fairness, openness and transparency required in public procurement.  If only friends of the government bid we are all losers.

I was pleased to see that Pedro Telles of the excellent www.telles.eu  thinks the same (and said it much earlier than me).  And in the interests of political balance he also points out that Jeremy Corbyn's comments on using Public Procurement to influence the pay structure of suppliers is equally preposterous. and would break the WTO Public Procurement Agreement.

Again, it cannot be said enough: If politicians interfere in the public procurement process we are opening the door to corruption, and the losers will be the public.

This is not the same as saying that Public Procurement cannot be used as an instrument of policy - for example to promotes SMEs and apprenticeships.  But once politicians start saying who can and cannot win contracts we are in banana republic territory.