Consistently inconsistent on contracts, by Roger West

8 Apr 11
What happens in public sector procurement when the 'fair and open tender' meets the 'favoured supplier'? Both situations cannot co-exist at the same time. At least not without the lawyers getting involved.

Should we worry about inconsistency? I don’t pose this as a question for first-year philosophy undergraduates, but as a practical challenge to our politicians and the government organisations that they lead.

On the one hand, UK politicians have formally committed our public bodies to the Public Contracts Regulations, the key precept of which states that all public sector spend within the European Union shall be advertised to suppliers throughout all member states, where everyone has a fair and open chance to win. The fairness and openness of the bidding process is enshrined in law. No one shall be inappropriately favoured.

On the other hand, government ministers are arguing that UK-based small- and medium-sized enterprises in general, and locally based SMEs in particular, shall be favoured suppliers, that should be nourished and encouraged to win public sector contracts. The prime minister himself is very vocal on the subject.

While Aristotle or Adam Smith might have the power and mental flexibility to reconcile these contradictory positions, I haven’t. I experience the kind of mental confusion faced when considering philosophical questions such as: ‘What happens when the irresistible force meets the immovable object?’ My best answer is that they can’t both exist at the same time. And that’s what I think about the, ‘what happens when the fair and open tender meets the favoured supplier?’ question. Both situations cannot co-exist at the same time. At least not without the lawyers getting involved.

Of course, politicians and their advisors would argue that they do not want favouritism, merely a level playing field. The problem is letting large contracts on a national basis – often good from a value and efficiency perspective – creates a steeply sloping playing field if you happen to be a small company. Big companies tend to win big contracts. Now perhaps this is OK as the government seems more focused on small companies winning small contracts, but I am not so sure that an SME with 249 employees would want to be placed in the ‘small contract bidder’ box.

This is the conundrum as many public sector contracts are simply awarded on a national basis – without considering regional supply opportunities, varying needs of regional customers or the benefits of providing SMEs with access to a larger public sector market. I think these are the issues that our politicians need to address.

There can be a compromise and the key point is that it is not necessary to move away from efficient national contracts to the fragmentation arising from hundreds of local contracts to open up opportunities for SMEs. But a different model is required to achieve balance. Be compliant, be fair, be SME friendly. Consistently.

Roger West is head of outsourced procurement at DHL

Did you enjoy this article?

AddToAny

Top