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Government should use procurement clout to influence a fairer economy, says new report
The government should use its significant procurement spend to bring about a fairer economy and give more opportunities to SME firms, especially when appointing external suppliers, says a new report by Demos.
Infrastructure Intelligence has released their comment regarding the new Demos report.
With current spend on external suppliers at £284bn, procurement is the UK government’s largest expenditure, equal to 13.4% of the UK’s GDP. Influencing how this money is spent represents a significant opportunity for government to shape the nature of business and the wider economy, says the report, which looks at how central government could use public procurement more strategically to bring about a fairer economy and more efficient, effective government.
To deepen and embed social value in public procurement and improve transparency and a more level bidding playing field, the report makes ten recommendations.
- Government should establish priority social value standards for departments in order to pursue select, strategic cross-government objectives, for example related to carbon emissions and fair tax practice.
- Central government departments should include social value bare minimum standards that are pass or fail in the pre-qualification criteria.
- The three central government departments with the highest procurement spend (Department of Health and Social Care, Ministry of Defence and Department for Transport) should create an SME advisory panel to help departments make it easier for SMEs to bid and win contracts with them.
- Social value minimum standards for public procurement should include criteria relating to a bidder’s exchequer contribution. For example, bidders could be expected to meet a certain Effective Tax Rate to pre-qualify for that procurement round.
- The government should take advantage of existing provisions in EU competition law to ensure that companies do not gain an unfair advantage over their competitors by using international tax arrangements.
- The government should take advantage of anti-corruption provisions to exclude from any public contract a supplier whose ultimate beneficial ownership is secret above the value of 5%, in order to ensure that no conflict of interest is entailed.
- Central government should move to an Open Data Model for spending data. This should include Open Data standards covering every government contract and award notice and a clear, transparent register of public sector procurement authorities.
- To incentivise buy-in from companies for the Open Data Model, the extra administrative burdens of transparency should be written into the costs of the contract by default.
- The National Audit Office should conduct an annual report on central government procurement transparency, presented to parliament. This should include a ‘league table’ ranking of departments, with the bottom three departments having to make an oral statement to the House.
- The requirements of the Freedom of Information Act (FOIA) should be extended to public sector contractors, through an amendment to the FOIA stipulating that all information held in connection with the performance or future performance of the contract should be considered under the domain of the FOIA.
You can read the article from Infrastructure Intelligence and download the full Demos report here.