What Westminster can learn from local government procurement

For ten years I’ve worked with procurement practitioners in local government and other place-based institutions, helping them to shift their mindset and behaviour, so they don’t just think about cost and efficiency in procurement decisions but a whole range of wider factors, including effectiveness, quality and social value.

On the whole, procurement practice at the local level has changed for the better. Strategies consider social value and the challenges facing places, as well as more traditional considerations around cost and compliance.

Local authorities now have more effective evidence bases of where their spend goes geographically and the types of organisations they are spending with.

Commissioners of goods and services now liaise more closely with procurers to embed social value into service design and ask questions around it in tender documents, with subsequent weighting in decision-making. And monitoring of the outputs and outcomes associated with procurement spend is beginning to develop.

‘Central government has undertaken procurement

in a very blinkered way over the last ten years’

The demise of Carillion points to significant problems with central government procurement and suggests an immaturity when compared to the practice of local government.

Despite rhetoric to the contrary, central government procurement remains: dominated by a narrow group of large multinational corporations; framed by considerations of cost and efficiency savings; for values that do not enable smaller organisations to compete; and without due consideration of the way in which procurement can be used as a lever to address wider economic, social and environmental challenges.

As highlighted in the Centre for Local Economic Strategies’ recent publication ‘Opportunities for Public Procurement Post-Brexit’, we need to significantly change central government procurement to avoid a repeat of the Carillion debacle.

Several things need to happen:

1. New legislation around public procurement – effectively a beefed up social value act, applicable to local public procurers AND central government;
2. Central government needs to consider social value in all its own procurement, from commissioning and tendering to delivery and monitoring;
3. An end to the idea in central government that large multinational corporation delivery always leads to more cost-efficient services;
4. Public procurement at the central level needs to become more competitive and opened up to markets beyond outsourcing giants, including SMEs and other types of organisations. Contracts need to be broken down into smaller values;
5. Greater consideration in tendering processes to the quality and effectiveness of goods and services being procured and contract conditions which protect and support workers of contractors and supply chains;
6. A specific unit within central government to shape the implementation of beefed-up social value legislation as described above.

Central government has undertaken public procurement in a very blinkered way over the last ten years. It has taken the liquidation of a major multi-billion pound supplier for them to realise that, but now is an opportune moment to draw on the practice of local places to really refresh and change public procurement process and practice at the central level for the better.