Making procurement work for everyone
By Clive Betts MP, Chair of Communities and Local Government Select Committee
Many parts of the business sector rely significantly on the huge public sector spend on goods and services. CBI Public Servives Network members will be interested in the findings of the House of Commons CLG committee report published in March on how effectively local government conducts its procurement operations.
We found the best local authorities are working hard to improve their procurement operations to cut costs and reduce the burdens on those doing business with them and also to deliver community objectives. But the picture is patchy. Procurement is too often seen as a niche activity conducted in council back offices. It is, however, central to delivering and managing the services that we rely on.
The main thrust of our report was to call on local government to step up to the mark and get better value from the £45 billion it spends each year procuring goods and services. We resisted the urge to reach for central levers to require local authorities to centralise procurement. Voluntary collaboration can deliver economies of scale by cutting process costs and improving access to commercially skilled staff. On a conservative estimate it could achieve savings of £1.8 billion.
The Committee was clear that councils should fully exploit the potential of their procurement spend to deliver local social, economic and environmental objectives, by letting contracts, as appropriate locally, on the basis of wider best value not simply lowest price.
We found too many authorities lacked the skills to integrate social value into their procurement processes.
In addition, every local authority should have a procurement strategy which they review each year. Other problems identified were, too often authorities hide behind, or over interpret, EU procurement rules which do not apply, and strangle procurement with bureaucracy rather than intelligently manage the process and risks. Councils cannot ‘let and forget’ contracts but must pro-actively tackle fraud throughout the lifetime of a contract. Those staff managing contracts must have the commercial acumen to detect fraud, including cartel operations.
There is a clear need for the dissemination of good practice and guidance to show how councils can use public procurement to deliver social value such as trainee opportunities for local people without compromising value for money or undermining the effective operation of markets. Organisations such as the LGA and CBI can take a leading role. Renewed efforts are needed from the local government, and from its partners in central government and the private and voluntary sectors, to ensure that all council procurement is raised to the level of the best.
Clive Betts MP began his political career in 1973 and in 1976 was elected as a member of Sheffield City Council. He became Leader of the Council in 1987, having served on the Housing and Finance committees for several years. He remained on the Council until his election as Labour Member of Parliament for Sheffield Attercliffe in 1992.