The G4S and Serco contracts with the Ministry of Justice, under which payments were made regardless of the service delivered, are just the most recent examples.
Weaknesses in government procurement
An Institute for Government Report published this week echoes PASC concerns about the systemic weaknesses in government procurement and commissioning.
The public sector spends £227 billion each year buying a range of goods, services and works, £45 billion of which is spent by Whitehall Departments. The Ministry of Defence alone spends £20 billion a year. By improving the efficiency and effectiveness of procurement, the Government has an opportunity not only to save the taxpayer significant sums of money, but also to drive economic growth.
The Committee is concerned that the EU Directives which govern procurement in the UK reinforce a process-oriented, risk-averse culture in procurement, which in the UK results in delay, increased cost and a failure to focus on outcome. Public procurement in the UK takes 50% longer than in France or Germany, a situation which the Committee says is "intolerable".
The Committee says:
- More must be done to facilitate SMEs’ and social enterprises’ access to government contracts;
- The UK Government is behind its EU counterparts in maximising the domestic benefit of public procurement money;
- Major improvements in the Civil Service’s capability and skills around procurement are required;
- The Cabinet Office must urgently set out a clear strategy for public procurement; and
- The Cabinet Office needs to be given the authority to provide effective procurement leadership.
The Committee welcomes reform proposals that will allow criteria such as wider social and environmental impact, and maximising the positive impact of public spending for the UK economy overall, be considered in tendering processes. It says, "The UK has trailed other EU countries in doing this: whilst Bombardier in Derby failed to secure the contract for Thameslink trains, for example, French and German suppliers have for a long time been more successful in securing contracts for domestic producers, to the benefit of their national economies."
Civil Service shortcomings
PASC finds there are clear shortcomings in the ability of the Civil Service to run effective and efficient procurement. The Civil Service shows a consistent lack of understanding about how to gather requirements, evaluate supplier capabilities, develop relationships or specify outcomes. Initiatives to improve capability and skills, such as the Major Projects Leadership Academy, are welcomed but a more fundamental shift is required. Little is known at the centre of Government about the skills and experience—or lack thereof—of 17 of the 61 senior procurement civil servants across Whitehall, and consequently there is little coordination of this vital resource.
PASC says the proposed Ministry of Defence Government Controlled Contractor Operated (GOCO) model, designed to get around outdated restrictions on Civil Service pay, should not be necessary. PASC concludes that "no other Civil Service in a comparable country operates on the basis that the Prime Minister’s salary should be a maximum and such a myopic policy makes the UK Civil Service internationally uncompetitive." The Committee says it is "not convinced that the GOCO concept is sound or would withstand a proper cost-benefit analysis."
Bernard Jenkin MP, Chair of the Committee, said:
"To be fair, there are failures of procurement in the private sector too, but that is no excuse. In Government, the same kind of failures seem to be repeated again and again. In the EU we all operate under the same rules but the UK Government seems to take the longest and we fail to maximise the benefit of public procurement for our own economy. There is no excuse that it takes 50% longer here than it does in France or Germany.
Government has made huge strides in some areas, but there needs to be a more coherent strategy—a change programme—to ensure that improvement is universal and permanent, or the system and culture will just revert to type. Lord Levene’s evidence was striking in this regard: he made big changes in the MoD in the 1980s, but he comes back 25 years later to find things are worse than they were before.
Whilst we welcome the Government’s initiatives to centralise procurement, progress so far has been painfully slow and sporadic. Only a coherent strategic plan, setting out clear objectives and how they are to be achieved, backed by united leadership across the top of government, can achieve the necessary change. The Government has failed to set out a clear strategy for public procurement and it may be impossible to achieve this without changing the relationship between departments and the centre. We find it astonishing that a department should be able to cite legal restrictions as a barrier to collaboration with the Cabinet Office on initiatives that could save the taxpayer money. The Government is a single customer and should behave as such. It is striking how immune departments seem to feel from agreed Cabinet policy. This could explain why there is so much frustration. Our inquiry into the Future of the Civil Service has considered whether a more unified system in Whitehall is now required if we are to have modern government administrative system; we hope to publish that report in the autumn."