On 4th February we published a major new report on procurement. Beyond contracting: public service stewardship to maximise public value argues that politicians and chief executives need to use procurement strategically to maximise economic, social and environmental outcomes for their local communities, rather than just going for the lowest cost option.
The launch event with senior academics, Welsh Government officers, local authority managers and an expert panel comprising John Tizard (co-author of the report), Liz Lucas (Head of Customer and Digital Services at Caerphilly County Borough Council) and Benoit Guerin (Senior Researcher at the Institute for Government) highlighted some important messages.
Our panellist John Tizard argued that in-house provision should be the default option for the provision of public services, particularly those that are people oriented, such as health and social care. Where a strong public interest case can be made for contracting out a service, councils need to retain in-house capacity to set standards and manage contracts effectively. Participants at our event emphasised that outsourcing or insourcing are not the only options: public bodies can award and manage grants, which often suit voluntary, community and social enterprises better, and which local authorities are required to promote as providers of care and support services under the Social Services and Well-being Act. Grants can be used to encourage innovation and support experimentation.
With an annual procurement expenditure of £6 billion, the Welsh public sector has a responsibility to safeguard citizens’ interests in the delivery of services and to maximise the public value of its investments. Reflecting on the failings of recent outsourcing scandals, our panellists Benoit Guerin and John Tizard outlined their recommendations for open data reporting and a central repository, or ‘Domesday book’, detailing who is buying what from whom and how well the contract is performing. The benefits of access to such information are wide ranging: better informed spending and risk management decisions; evidence with which to scrutinise and challenge suppliers; and accountability to the taxpayer. Research also suggests that contract transparency leads to more and varied bidders, resulting in better deals. There were concerns about commercially sensitive information and possible breaches of competition law, however our panellists maintained that as a point of public interest, detailed and standardised information on all public contracts should be published and contractors held to the same standards as the contracting public bodies.
Last September, the then Finance Minister announced the development of a new procurement strategy, updating the 2015 Procurement Policy Statement, but our local government panellist Liz Lucas questioned the need for a new strategy, citing existing clear direction under the Wellbeing of Future Generations Act. The Act specifies procurement as a key lever for promoting sustainable development and the Future Generations Commissioner’s team is developing guidance for public bodies through their Art of the Possible programme. So, instead of a new strategy, Liz called on the Welsh Government to support programmes to build up procurement capacity across public services.
Our panellists argued that leading politicians and chief executives need to take procurement more seriously and give procurement officers permission to innovate, particularly in cases where benefits or savings accrue over the longer-term or outside their own department or organisation. Whilst procurement continues to be seen as the poor relation of finance, a technical and transactional function that focuses on the lowest cost options, we will miss opportunities to undertake value adding pre-procurement and contract management/execution activities.
A decade of austerity has stripped out procurement capacity. As a result, councils don’t have the ability or time to think differently about how to deliver best value. Our panellists called for a new kind of procurement officer who understands the power of procurement as an enabler of social, environmental and economic sustainability and can operate at a strategic level. Dedicated training programmes are part of the answer but to attract and retain talent we need to raise the profile of procurement in the public sector and encourage professional networks to foster good practice. And we need to work more flexibly and collaboratively so that councils and other public services share specialist procurement expertise that they cannot not afford operating on their own.
So, what’s next?
Participants at our event agreed on the need for fundamental changes in the way we procure public services in Wales. Here at the Wales Centre for Public Policy we aim to help support this and look forward to continuing the conversation when we launch our next report on Sustainable Public Procurement in due course.