A note on transparency in public contracts

Once the contract is agreed how much government pays to suppliers should be a matter of public record. Yet government - especially local government - still hides behind the provision in the 1972 Local Government Act allowing secrecy in the case of 'commercial confidentiality'.

Here Transparency International reports a couple of pretty shocking examples:

Transparency International cited Hackney London Borough Council as one case where redactions had made scrutiny difficult. In one month alone the council reported £14m worth of redacted transaction data that did not identify suppliers.

It also reported that Lancashire CC redacted numerous payments for a multi-billion pound PFI scheme, leaving no information about the name of the contractor, and Nottingham CC redacted the details of £10m - worth of expenditure.

The provision in the Act, in my view, is there to allow fair negotiation of contracts not to privilege price information about public contracts. It is in everyone's interests - the public, organisations competing for public contracts, public employees - for this information to be available for scrutiny.



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Defining 'social enterprise' - the next pointless challenge for our lawmakers!

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Our masters, having set about trying to define "sustainable development" and now being urged - by Hazel Blears no less - to set out a legal definition of that tricksy term, "social enterprise":

Former Communities Secretary Hazel Blears MP has called for a legal definition for social enterprises, while minister for civil society Nick Hurd has conceded that such a definition may be required. 

Hazel Blears went on to refer to the "social enterprise sector" - showing just how much momentum there is behind this need for definition.

It seems that Hazel is concerned that wicked and evil capitalists will sneak in by calling themselves "social enterprises" thereby tarnishing the principle that the tern enshrines (or something like that).

I stick firmly to the view that all businesses - indeed every enterprise whether constituted or not - has to be 'social'. What should concern us isn't to try and separate the enterprise sheep from the enterprise goats through some form of legal definition but to focus instead on ethics - on whether the enterprise behaves ethically.

And the core elements of ethical business have nothing to do with the chunterings of "fair trade" - these are essentially political considerations - but concern the way in which the business operates. Does it comply with the law? How well does it treat those who work for it? Does it 'exploit' - through deception or dissembling - its customers, shareholders or investors (and this group would include donors)?

Such matters relate to the moral standing of the business - its managers, its directors and its owners - rather than to the precise legal structure adopted. It is nonsense to suggest that defining an operation as a "social enterprise" suddenly waves a magical wand over its affairs thereby making it a paragon of ethical virtues.

There are some enterprises where the operation of the business delivers a wider social purpose - Remploy, Jamie Oliver's, Fifteen restaurants and Bradford Councils-owned, ISG are examples - but whether these are established as for-profit businesses owned by shareholders, charities or some other legal structure is of no consequence.

The point and purpose of Hazel Blears call is to allow government to create a set of favoured organisations - "social enterprises" - that can be granted preference in bidding for contracts within, for example, the NHS.

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

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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.

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Why doesn't the "voluntary sector" want volunteers?

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Yesterday I went to a particularly untidy briefing on the changes and developments within the health service. Amongst general moaning about GPs (not helped by the fact that the GP who was supposed to be there wasn’t  - with the resulting disgruntlement from the seven councillors at the briefing very evident) and especially their tendency to resort to medication at the start of treating mental health patients rather than make use of community-based support services.

But this isn’t what I want to talk about. I want to talk about volunteering and why so many in the “third sector” seem to have some sort of ethical problem with the idea of someone doing something to help out without getting paid.

During the discussion the matter of volunteering by individuals on Job seekers Allowance was raised – part of the work programme is to encourage people looking for work to do some voluntary work while they’re looking for paid work.

“We didn’t go on the programme on principle”

The programme seems reasonable to me but for some in the so-called voluntary sector we have this weird, warped ethical barrier – and this appears to be supported by some administering the programme as this answer from the responsible minister at another event suggests:

An audience member questioned Hurd on her personal experience of barriers to volunteering, especially for jobseekers.

Hurd agreed, saying that there was enough evidence that there was a big problem in job centres: “I’ve heard it so often it’s got to be true,” he said. “There is a big problem in some job centres where fear spreads that if you volunteer, you could lose some benefits.

“The Department for Work and Pensions has issued guidance but this is a cultural thing. It needs to go way beyond guidance and look at changing the culture within job centres.”

The problem is that the DWP staff don’t want the hassle of finding placements and the “voluntary” groups will only do it if they’re paid.

It seems to me – and has done for a long while – that the voluntary sector is, in great part, indistinguishable (other than rhetorically) from for-profit businesses competing to deliver public contracts. Much is made of being “not-for-profit” and of “social responsibility” but these are quickly set aside in the unseemly scramble for contracts.

I completely fail to see what “principle” is involved in a voluntary sector organisation refusing to take on a volunteer – I really do.

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