The conflicts of interest recently highlighted by MPs could be just the tip of the iceberg when it comes to academy procurement
The recent House of Commons’ Education Select Committee report into academy governance issues rightly highlighted academies’ conflicts of interest - and some outright abuses of the system.
But trusts’ real difficulties go beyond a bad choice by a head teacher, or a senior executive failing to declare a stake in a supplier. The vast majority of academies want to follow the rules, but these headline cases are the tip of a purchasing iceberg where schools are exposing themselves to risk and failing to make the most of their growing buying power. Academy trusts need to better manage procurement risk, organise their management resources to drive better purchasing outcomes and address their ever more sophisticated procurement needs.
The speed and scale of trusts’ growth has outstripped their ability to organise best practice buying of goods and services - and find the right suppliers to get it all done. Whilst procurement has perhaps been a low priority until now, many schools are inevitably starting to get to grips with the best ways of buying classroom equipment at greater scale, or working out better approaches to professional services contracts.
With the new freedom of direct funding to academies a huge amount of power has been concentrated in small management teams. But with power comes a responsibility to the public purse and a legal requirement to comply with procurement law. As academies’ supply needs expand, senior executives will need to better control buying through wider management teams to avoid unwanted contract lock-ins, poor value for money, and stumbling into those conflicts of interest.
The Select Committee report concludes that 'very large sums of public money are being paid to trust board members and their companies as well as the trading arms of academy chains'. This, together with the observation that the EFA Handbook requirement for competitive tendering is hard to evidence as either happening or being monitored by auditors or the EFA, sounds a warning bell. Finance and procurement professionals must play a bigger role in academies’ planning and purchasing. Academy trusts will need to build in-house capabilities, following the lead of central and local government that are upskilling through the Cabinet Office’s Commissioning Academy or other approved public sector buying organisations.
Public procurement itself has devils lurking in the detail. Buying professionals know that the Public Contract Regulations (2006) are due for change in the next few months, and that recommendations made by Lord Young are highly likely to be adopted into UK law, but academy management teams may not have fully grasped the consequences. If all items over £10,000 in value must be published, will academies organise compliant processes? Will trusts be ready to implement the new requirements and commit appropriate resource? Heads may not appreciate the resources they will need to allocate to strategic buying policies once the regulations do change.
Sharpening teams’ expertise in public procurement could open up new options. Schools still struggle with transparent and compliant procurement, but trusts have yet to fully recognise and tap into ‘ready-made’ supply frameworks for many different goods and services operated by professional buying organisations (PBOs). Taking the example of catering, PBOs’ experts have already ‘done the legwork’, agreeing specifications for school meals. Suppliers accepted onto these frameworks don’t have to reinvent pre-agreed specifications either.
Some academies will also seek private sector advice; the education market positively hums with the sound of consultants setting up support services. But outsourcing carries its own risks in an increasingly litigious supply market, since the school itself is liable if a supplier takes issue with the way that a contract notice or tender has been operated on their behalf.
The Select Committee report confirmed that larger trusts have better governance than smaller ones. But academy heads may need to centralise, fine tune or simply beef up their procurement knowledge and processes. Importantly, they need to protect themselves from challenge by not only procuring goods and services correctly, but by ensuring they can demonstrate this when asked. They will need to bring finance and procurement into their strategic planning to drive value for money across all operations – and avoid other such critical reports from MPs in the future.
Rowena Thomas is head of education at Eastern Shires Purchasing Organisation
