In the dying days of 2020, HM Government published a “Green Paper” on transforming public procurement following the departure of the UK from the European Union. Social enterprises working with the public sector will be aware that under the EU, the UK had been part of a pan-European procurement regime. Now that the UK has left the EU, HM Government wants to use its new powers to change the way that public bodies procurement goods, services and works.
The new regime will cover every penny of public spending apart from the NHS, which is developing its own bespoke regime. So it is important for all social enterprises that receive public sector contracts to take note.
We’ve won a lot of arguments in recent years
It is worth taking a moment to appreciate the arguments that social enterprises have won over the past decade. It wasn’t that long ago that social value was considered a niche sport and there were politicians and officials who saw trying to strategically use public spending to improve society as ‘red tape’.
The Green Paper shows that things have moved forward thanks to the agitation and practice of social enterprises. The paper itself says that the goal of all public procurement is to achieve the “best social value for money” from policies, projects and programmes. The Social Value Act will stay on the statute book, a further indication that social value has been fully embedded into government thinking.
The language of procurement is also changing. Bids will no longer be awarded on the basis of Most Economically Advantageous Tender (MEAT) but on Most Advantageous Tender (MAT). The reason for this change is to provide “clarity” that public bodies can take a broader view of what can be included in the evaluation of tenders, including social value.
There is also a proposal to remove the requirement for tenders to be evaluated solely from the viewpoint of the public body issuing the contract. This should allow public bodies to be more strategic in their spending, thinking about the impact that awarding a contract to X could have on the wider community and other services and projects in an area. This is in line with Danny Kruger’s proposal for public bodies to commission on the basis of “public value”, not just social value. The two are intrinsically linked as to commission for social value, one should think about the whole ecosystem of public services, projects and programmes. In return, to commission for public value, one must understand the social, economic and environmental impact of what is being proposed to see where the connections are.
We need strong processes to maximise the impact of new freedoms
It may seem like a paradox to say that new freedoms and flexibilities require strong processes, but if we are learnt anything from the journey of the Social Value Act it is this truth. Freedoms will not be utilised if there is no confidence in the processes underpinning them.
Our most recent report on social value, Front and Centre, found that one of the key barriers to implementing social value is a lack of confidence in processes related to social value. Whilst public bodies are always “free” to do social value, many are paralysed by fear that they may do it wrong and as a consequence, do nothing. If we want to make the most of Brexit, we need to overcome this.
A simplified, flexible procurement process is not a bad thing and the principles outlined by the Green Paper are generally sensible. But they need to be backed up with a universally adopted “checklist” so that every public body goes through the same steps, but with flexibility about implementation (e.g. how they evaluate for public value, social value, how they engage with local suppliers etc.) and (if there is good reason/evidence) to skip steps (e.g. because there is only one obvious choice or to reward innovation).
Not only would this give every business, social enterprise and charity a clear guide to how procurement is going to work across the UK but it would also give public bodies clarity about how they can turn principles into action. This does not need to be thousands of pages long. It could only be a few pages long, but laying out the steps from commissioning to procurement to contract management and evaluation would help to make best practice, standard practice.
We need to get out of the binary of either 40-page PPQs and over the top target setting bureaucracy inspired by New Public Management Theory or some libertarian dream seeing all processes and procedures as the enemy. The best course is the middle one, balancing flexibility with robust standards and implementation. The Green Paper has created the space to do things differently, but there is a very real risk that little will change unless there is a clear framework for delivery.
Getting true value for money
This is not just some esoteric conversation about processes. The reason why these issues are important is that effective use of public money is one of the most impactful things any government can do. The UK public sector is spending close to £300bn every year, but we have only scratched the surface of what can be achieved.
If we fail to get this right, will continue to waste tens of billions every year. This waste is felt by communities across the country. It is the jobs that are never created, materials unrecycled, green spaces uncared for, communities excluded and places left undeveloped.
We need a cultural shift across the public sector that sees unrealised opportunities as a waste of public money. In effect, the same as overpaying for a service, project or programme. Why? Because the outcome for the taxpayers is the same. A job uncreated is increased cost to the welfare bill. Materials unrecycled is increases landfill cost and blight. Marginalised groups unsupported will need support through other parts of the state. Cutting corners in procurement does not ‘save’ anyone any money.
Eliminating ‘cost-shifting’ through poor procurement practice onto other parts of the state should be the goal of this Green Paper and the UK’s approach to procurement. This would give the UK a true competitive advantage post-Brexit, deliver levelling up and create better outcomes for citizens.
This Green Paper is making the right moves, but there is a gap between principles and practice which needs to be closed. Social enterprises must help the government to fill it.
We are holding a meeting for social enterprises interested in the Green Paper and to get social enterprises views on the future of public procurement on the 1st March 2021 (15.00-16.30) and the 2nd March 2021 (15.00-16.30).
If you want to have your say on this paper, please follow the registration links below.
Andrew O’Brien is Director of External Affairs at Social Enterprise UK