Public procurement reforms offer clue to Britain after Brexit

” NOTO PURCHASE, NO lawyers, no meetings, no delays please, just send immediately, ”wrote Dominic Cummings, Boris Johnson’s chief assistant at the time, as he sent a grant of £ 530,000 ( $ 740,000) to researchers at the onset of the pandemic. Those who feared Brexit would spell protectionism, government bloat and conceited plans found much to hate in Mr Johnson’s approach to procurement. During his election campaign in 2019, he pledged a ‘Buy some British’ policy for state contracts once Britain was freed from European Union rules. On June 9, a judge declared a contract for the newsgroups tainted with “apparent bias” and declared it illegal. Jolyon Maugham, the campaign lawyer who carried the case, has more going on what he calls “institutionalized cronyism”.

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The government’s plans for a dramatic post-Brexit regulatory divergence are still unclear. But the proposed public procurement legislation puts more emphasis on the vision: a mix of administrative reforms that could have been implemented as part of the EU, and legal adjustments that could not. This is neither a wholesale tear up of the paperwork, nor a trivial tinkering. the EUThe fundamental principles of value for money, transparency and fair competition remain, but procedures will be simplified. The central government will become more powerful, with its purchasing power destined to meet Mr Johnson’s priorities. At the same time, controls over the executive will be weakened, as the reputation for waste poses growing political risk.

The modern procurement regime is the legacy of Margaret Thatcher, who introduced mandatory tenders to UK councils and hospitals. Arthur Cockfield, British European Commissioner at the time, integrated it across the continent. Purchases now represent 32% of British public spending, a little above the average for OECD, a club of rich countries.

Thatcher’s revolution was based on the idea that the market provides a degree of efficiency that governments cannot achieve on their own. But this requires competition, which is often lacking, some departments relying on a few giants HE and construction companies. The result is market concentration, less innovation and more risk. Carillion, the government’s second-largest supplier when it collapsed in January 2018, had around 420 contracts, including serving school lunches, building railroads and cleaning prisons.

Lord Agnew, the minister behind the latest reforms, says simplified procedures will make auctions less intimidating. This should attract smaller suppliers, increase competition and improve resilience. Companies will have to submit the common information needed for procurement once on a single platform. The authorities will be obliged to publish upcoming contracts and make data on their purchases much more accessible.

Mr Johnson’s plans to “buy British” are more modest than feared by his fellow Liberals. Britain is a party to the World Trade Organization Agreement on Government Procurement and additional competition measures as part of its agreement with the EU. This means not discriminating against foreign bidders for most contracts. But more of the government’s £ 290 billion procurement budget will go to British small businesses, as part of Mr Johnson’s ‘leveling out’ scheme, which has seen spending rules changed to guide the state funding to less productive areas. Civil servants will be able to reserve low-value contracts for local businesses. Such explicit exclusions would probably have violated European law.

Buyers will be urged to place much more emphasis on “social value” when comparing bids and consider government goals of reducing greenhouse gas emissions and upgrading skills. They will not have, the ministers underline, to choose the cheapest offer. The Competition and Markets Authority, the UK’s antitrust regulator, has made noises of approval: it says too much emphasis on the cheap can encourage big contractors to bid below cost, thus blocking the smaller and entrenched competitors. A new thread will monitor compliance and create a blacklist of failing contractors.

Britain had already started to move in this more interventionist direction. As Prime Minister between 2010 and 2016, David Cameron championed small traders and high social value. But writing new laws is much easier than changing the behavior of health authorities and local governments that control most spending, especially when budgets are tight, says Tom Sasse of the Institute for Government. “Over the past decade, the big government signals have been, ‘We want you to focus on social value, but in fact we’re going to cut your budget by a third.’ “

Shifting from objective measures such as cost to more subjective measures also increases the risk of cronyism. In addition, the bill relaxes the constraints imposed on ministers and public servants. A “crisis” clause will give them more freedom in an emergency than what is offered by EU law. (In his newsletter, Mr. Cummings, now out of government and furious with him, says he was right to send the “no-buy” email, and that the “due process” during the pandemic was to “kill people.”) The government believes frivolous court cases over the loss of incumbents are obstructing government markets and deterring small businesses. It proposes new accelerated procedures and a cap on the damages available to injured parties.

The government’s view is that the strict EU The regime reflects unjustified fears of corruption in Britain. Mr Maugham says the result of the damage cap will be less court challenges and more cronyism. A lawyer likens the British state to an old house, supported for decades by a scaffolding of European law. Only when this is removed will it become clear whether the antlers are still healthy or rotten.

For more information on Brexit issues, visit our Brexit hub

This article appeared in the Great Britain section of the print edition under the headline “How To Spend It”


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About Aldrich Stanley

Aldrich Stanley

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