Public procurement and framework contracts - inefficient, anti-competitive and expensive

****

In public sector procurement we have got used now to the system of “framework contracts”:

A ‘framework agreement’ is an agreement between one or more contracting authorities and one or more economic operators, the purpose of which is to establish the terms governing contracts to be awarded during a given period, in particular with regard to price and, where appropriate, the quantity envisaged.

In layman’s terms a framework agreement limits the market from which the public body procures its goods or services in a given time period. Rather than a long-winded procurement process for each contract, the public body can “call off” for each purchase from the organisations in the framework. Nobody else can bid.

And these frameworks are used for multi-billion pound contracts:

Willmott Dixon, Morgan Sindall, Mansell and Thomas Vale have all been appointed to a regional framework worth up to £3 billion.

The companies were chosen by Birmingham Council to work on projects secured through the Constructing West Midlands Framework.

The quartet will work on the four-year framework covering work costing more than £500,000-a-year.

The framework has the potential to be extended to eight years and is available to all public sector bodies in the West Midlands.

So there you are – a small group of construction businesses have been given the exclusive right to bid for £3 billion in public contracts. During that time no other organisations can bid for that work – the councils involved have granted to those in the framework a degree of protection that should not apply, is anti-competitive and cannot possibly represent value for taxpayers’ money.

These contracts are done for reasons of procurement efficiency and administrative convenience. They cut out smaller contractors – the ones for whom £500,000 is a big contract but who do not have the financial elbow to get chosen for a large framework. Yet nothing is done. There is no outcry when the DWP carves up valuable contracts for delivering the Work Programme between fewer than 20 organisations – a process that allows BEST, A4e and others the opportunity to further extend their market dominance. Mostly at the expense of smaller, regional and local providers.

Framework agreements are now standard practice and the numbers of businesses on frameworks gets smaller and smaller. One “pre-qualification questionnaire” (PQQ) run by Leeds City Council to procure a framework for redundancy support across Yorkshire was explicit in seeking to limit the tender to just six organisations from which five would be selected to form the framework.

This is an example – increasingly common with large authorities like Leeds and Manchester – of the use of the PQQ as a shortlisting device rather than as a means of established whether an organisation is qualified and has the capacity to deliver. This is an abuse of the process and misrepresents the PQQ – it is not pre-qualification but a two-stage tender process. Again it is designed for reasons of administrative convenience and procurement efficiency rather than for reasons of good purchasing practice.

If there is one area in desperate need of reform, that is ill-managed and run for producer interests rather than for the good use of taxpayers’ money, it is the system of public procurement overseen by the Office for Government Commerce and implemented by local authorities, government departments and quangos up and down the country. It may not be corrupt but it is certainly anti-competitive, wasteful and produces overpriced and inflexible contracts.

....

How to prevent small business getting public contracts the Manchester City Council way

I know, dear reader, that you love the great city of Manchester. I know that my criticisms of that city's civic leadership have focused on their budgetary incompetence but today I want to use their procurement processes to show just how anti-business - or rather anti-small business - Manchester City Council has become.

I spent quite a lot of today - on top of a previous frustrating day - trying to complete a 'pre-qualification questionnaire' for a research and analysis 'framework' contract. Now it seems to me that this sort of contract - in essence an approved list of research, evaluation, intelligence and analysis providers - is an area where there are a multitude of smaller providers, one man bands, partnerships and social enterprises. Manchester however has clearly decided that these smaller providers are beneath them for they require the following documents:

• Two years of audited accounts - bit tricky for a start-up business, maybe a couple of recently redundant council officers just starting out!
• Insurance documents showing £10m public liability, £5m employee liability and £2million professional indemnity - that's a grands worth of insurance just to bid!
• Signed and dated policies covering equal opportunities, quality, health & safety, environmental and sustainability
• Three testimonials and three public sector references for work done for each lot - if you're bidding for all the lots on offer that's nine testimonials and nine public sector references
• Certificates, qualifications and profiles of all the people who have worked on the projects referred to in the testimonials

And in the City council's PQQ documents there's a whole sector on "sustainability" (bear in mind this is a tender process for research and consultancy rather than supplying products, digging roads or such) including such gems as:

Please summarise how you minimise the environmental impact of your work activities, including any procedures for life cycle analysis of the procurement, use and disposal of products.

And:

What environmental objectives and targets have your organisation set against which performance is measured? Where appropriate, please state your current top three objectives and their relevance to your industry.

We're talking here about small consultancies providing research expertise - these sort of questions are simply not appropriate nor to they contribute anything to making Manchester City Council more sustainable - whatever that means. It does, however, get even better:

Please summarise how your business can help the city support the Council’s Sustainable Procurement Policy’s key objectives? A copy of the Sustainability Policy can be found here: www.manchester.gov.uk

And:

Please detail your willingness to work with the city council to contribute to the city’s Climate Change Action Plan target to reduce the city’s CO2 by 41% by 2020. A copy of Manchester’s Climate Change Action Plan can be found here: www.manchesterclimate.com

This approach to procurement - adding in spurious idiocies about "sustainable procurement" and "climate change" that might make some sort of sense in the buying of gas supplies, building materials or road construction but just put off small suppliers of consultancy and research.

Councils and other public sector bodies talk a great deal about opening up procurement, about supporting small business and the voluntary sector in the procurement process and about local purchasing strategies. This one PQQ demonstrates to me that - in Manchester's case - this is just talk. The procurement process merely suits the bureaucrat and the big business, it prevents innovation, discourages small and start up business and excludes new entrants through the use of frameworks and approved lists.

But then, why am I surprised? It is Manchester City Council after all and we know they can't manage their way out from a wet paper bag!


....