Department indicates clauses in Small Business Act are not about centralising procurement, but streamlining it so that small businesses can gain better access to public sector contracts
The Cabinet Office has sought to clarify the appearance of two key clauses in the government’s Small Business, Enterprise and Employment Act which it was thought could shake-up local government procurement.
The two clauses in the Act, which became law last month, appeared to give the Cabinet Office authority to investigate and challenge local authority procurements, according to a report last week.
The first clause says: “The Minister for the Cabinet Office or the Secretary of State may by regulations impose on a contracting authority duties in respect of the exercise of its functions relating to procurement.” The implication from this clause could be that the Cabinet Office may require local authorities to comply with its requirements and decisions on procurement.
The second clause says: “A Minister may investigate the exercise by a contracting authority of relevant functions relating to procurement.” The further implication here is that the Cabinet Office could take steps to investigate the outcome of local authority procurements.
Now the Cabinet Office has sought to explain its thinking. Although the Cabinet Office is unable to comment publicly because of purdah, it is understood that the insertion of the clauses in the Act is not so much about centralising procurement, but in ensuring that high-quality procurement processes are in place across the public sector. The regulations will not remove the autonomy of local authorities to run their own processes and take responsibility for procurement decisions.
Government Computing further understands that Section 39, and regulations made under it, will not prevent a contracting authority from being able to use all of the relevant criteria it can already use when deciding how to award a contract. The section is about streamlining public procurement so that small businesses can gain better, more direct access to public sector contracts.
On asking whether there was any intention, or implied powers, for the Cabinet Office to be able to review a local authority procurement, Government Computing was led to believe that Section 40 of the Act gives ministers the power to require contracting authorities to provide information relating to the matters of a procurement being investigated. It sets out legal requirements on contracting authorities to provide reasonable assistance with the investigation, with the powers designed to ensure that contracting authorities are engaging in good procurement practice.
Commenting on the clauses, Andy Haigh, founder of public sector bidding specialist Sixfold International said, “To be fair, I have not read or even followed the UK’s Small Business, Enterprise and Employment Bill. So finding what is claimed to have a major impact upon UK public sector procurement practice buried deeply in the text was a surprise.
“My immediate reaction is twofold: Firstly, all UK public sector procurement above the threshold is ultimately subject to EU law. The new procurement rules reflect this. My expectation is that this, alone, will prevent the apocalyptic situation postulated. However, local authorities have not always been totally transparent in their procurement activities. Cabinet Office requirements upon them, such as the need to advertise all procurements on Contract Finder, is the type of situation where the identified clauses may improve procurement results.
He added, “Secondly, with the government’s push for more SME access to public sector contracts, the government has to balance the risk avoidance procurement teams see in giving all the work to the big (with sufficient resources to be sued) type companies rather than the smaller ones. These clauses would give the likes of Francis Maude and similar procurement innovators some leverage to pursue a pro SME agenda. I see no Machiavellian plot yet. But I will continue to watch to see what happens.”
Procurement News – Europe
The biggest enemy of SMEs trying to break into government IT are the procurement teams that work in Whitehall departments, claims former HMRC CIO Phil Pavitt.
Pavitt, who is now global CIO of Specsavers, worked at HMRC between 2009 and 2012, before moving to insurance firm Aviva in 2013.
A quarter of government ICT procurement to involve SMEs by 2015
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Francis Maude claims G-Cloud procurement spend now over £175m
In an interview with Computing, Pavitt explained that procurement teams in Whitehall departments and in central government have been talking up the use of SMEs rather than larger companies, but that this “talk” doesn’t turn into actions.
“They talk about SMEs, and then every process and decision including G-Cloud goes against it. The biggest enemy of SMEs breaking into the government supply side is the procurement teams; they don’t want it, they actively fight it, and you talk to SMEs who are trying to do business with government and it is almost as hard today as it was five years ago,” he said.
Back in 2011, the government outlined how it would seek to achieve the government’s objective to do 25 per cent of its business with SMEs, and Cabinet Office minister Francis Maude has continually stated that government is trying to create a level playing field with many of the larger IT companies.
G-Cloud was one of the initiatives that was supposed to help achieve this; it was set up as a framework that listed approved service providers. Public-sector organisations could procure cloud-based services from suppliers listed in the framework’s CloudStore, cutting short the typically lengthy government tender process, and SMEs were in for a slice of the business.
But Pavitt believes that while G-Cloud gives SMEs a forum on which to advertise their services – very little is being spent with them. “If you find out how much of the £15bn-£16bn they spend on IT from SMEs, and I’ll tell you – it’s tens of millions, which is an absolute joke,” he said.
The government has released statistics that suggested that 25 per cent or £11.4bn of its overall spend between 2013 and 2014 was with SMEs (that includes non-IT related contracts too). But the breakdown of the statistics it released was unclear. The G-Cloud itself has awarded more than 50 per cent of its spending to SMEs – but the £431m total that has been spent to the end of 2014 is not much in the grand scheme of things.
Pavitt continued: “Five years after making a huge statement on SMEs, and at HMRC, we did the first SME supplier ever to join – which was a huge battle by the way to get [through the procurement hurdles] – and the numbers that followed them are less than double-digit.”
The reason for this, he said, was because the last thing procurement teams wanted was to do business with SMEs.
“Forget the hype, the last thing they want are SMEs in procurement in a department because the headache, the issue, the contract management, the overheads – they are just not geared up to do it, and most SMEs are giving up working with government,” Pavitt said.
He added that G-Cloud was a great idea, but that much like the digital transformation in government, they have changed the front-end but not the (procurement) back-end.
“That’s been very typical with the IT department under Liam Maxwell and the others: it has all been about the way it looks, there has been no fundamental DNA change, it has just been window dressing. It is the right window dressing, but it will never stick because they haven’t changed the fundamentals,” he concluded.
Source: www.computing.co.ukRead More
As we all know, local and national politicians are fond of saying that small firms are the backbone of the economy.
Yet a recent Freedom of Information request from the Federation of Small Businesses (FSB) revealed that despite such sentiments, a significant part of the public sector in Wales simply has no idea of what it was spending with small to medium-sized enterprises (SMEs).
According to the business representative organisation, which has more than 10,000 members in Wales, only two Welsh local authorities were able to provide a detailed breakdown of their spending with SMEs, namely Gwynedd (60%) and Powys (58%).
Some said they don’t even record the information
Incredibly, some said that they did not even record the information on their IT systems, while one council admitted that they would have to
go through their paper records manually to get the data.
Given the importance of SMEs to local economies, and the role of local councils in supporting their creation and growth through their economic development strategies, it is frankly unacceptable that the vast majority of Welsh councils simply didn’t have any idea of how they were supporting these firms through their own procurement spending.
Data from an earlier FSB report found that SMEs re-spend 49p in every £1 they receive back into their local economy, as compared to 31p for every £1 received by large firms. More importantly, around a quarter of this re-spending by SMEs will be on labour and therefore supporting local jobs.
It’s critical as many local firms as possible get the chance to tender
Given this, it is critical as many local firms as possible get the chance to tender for public contracts, and a range of different approaches have been suggested by the FSB to ensure this happens.
One of the more practical suggestions is to ensure that contracts are broken down into smaller lots so that a small firm can realistically bid for such work.
Local councils must also ensure that it is easy for small firms to access the procurement process by making it as simple as possible.
A key part of this is ensuring that they engage fully with the SME community at all times, to ensure that local firms get full support with accessing the relevant information to be able to bid for contracts and that there are regular training opportunities in the tender process.
This will enable councils to not only develop the potential of their local supplier base, but also help them to build local capacity ahead of any major tender which firms could apply for.
Councils should record where citizens’ money is spent
But as the FSB pointed out, the citizens of every local authority should also be able to know how their elected council is supporting the local business community, and it should become compulsory for all authorities to have mechanisms in place to record and analyse where and with which businesses (including the size of the firm) their money is spent.
Adopting this practice would also enable councils to monitor the economic impact of their spending decisions on the local economy.
To counter such arguments on supporting local firms, some of those responsible within the public sector keep coming up with excuses as to why they cannot work with SMEs.
There’s no legal barrier to letting new businesses apply for contracts
For example, many new firms are told that they must be excluded from applying for public sector contracts because they do not have a sufficient track record. Yet there is no legal barrier to enabling new businesses to apply for public sector contracts.
It’s just that buyers within public bodies seem to view such an arrangement as risky, rather than as a way of engaging with entrepreneurs who would prefer to get a contract rather than a grant from a local council.
There is also the red herring of value for money that is raised as an excuse not to work with local firms, with some saying that they are usually more expensive than those larger organisations from outside the area that are competing for contracts.
But even if this is true in most cases, there remains a duty for councils to consider the wider impact of such contracts on the local economy.
More needs to be done to ensure small firms get a fair crack of the whip
For example, bidders should be asked about the impact of the contract on issues such as sustainability or local employment creation, although it would seem that this rarely happens.
So more needs to be done within the current system to ensure that smaller firms get a fair crack of the whip and that there is a greater focus on utilising the procurement system for local wealth creation.
In fact, if an additional 10% of all Welsh public sector contracts were to be awarded to SMEs, then that could generate funding that is more than twice the annual business support budget of the Welsh Government.
Yet we seem to have a situation where the vast majority of local authorities in Wales have no idea of how their own procurement spending could, and should, be helping local firms to create wealth and employment in their areas.
As a result, they seem to have no strategy in place to ensure that their approach to procurement can be focused on supporting the local economy.
That needs to end now and many small firms across Wales will hope that this is something that Leighton Andrews, the Minister for Public Services in Cardiff Bay, will take into account during his review on how local authorities will be organised in the future.
Source: www.walesonline.co.ukRead More
The search is on for an external organisation to deliver library services on behalf of Lincolnshire County Council.
The authority is undertaking a competitive procurement process after an approach by Greenwich Leisure Limited – a not-for-profit organisation interested in running local libraries.
The contract notice for this procurement will be published today, Thursday, April 16.
Lincolnshire County Council officer Tony McGinty said: “Although we potentially face a second legal challenge, we intend to continue working on the procurement of the new-look service.
“The need to make substantial savings within the service remains, and it’s important we do what we can to achieve this.
“And we’re confident that, under our proposals, we can do this in a way that both saves money and creates a library service that is fit for the 21st century.”
Council-operated heritage sites will be included in the contract notice, although no decision has been taken on their future.
Mr McGinty added: “The council is currently considering how best to make the £120 million of annual savings required as a result of reduced funding and rising demand for services.
“That means looking at how all our services are delivered, including those relating to culture and heritage.
“One thing we may want to consider at some point in the future is whether these services could potentially be delivered by someone else on our behalf.
“And by mentioning them in this contract notice we simply leave that door open.
“If we do eventually decide to go down that route, this will avoid unnecessarily duplicating work, enable us to explore with bidders potential alternative ways of delivering these services and give us the flexibility to extend the contract if the proposals have merit.
“However, I must stress that at this stage, no decisions have been taken, and none will be taken until we have consulted with stakeholders.
“Identifying the best approach will require extensive preparatory work, and it is unlikely that a decision on the best way forward for these services will be taken before 2016.”
Campaigner and former headteacher Julie Harrison has issued a statement on the latest activities by the Save Lincolnshire Libraries campaign group.
She said: “Our position is that we are exploring the possibility of launching further legal action. However we are exploring not only action against the council but also against the Department for Culture, Media, and Sport who seem blind to the effect of cuts by councils crippled by central government cuts.
“DCMS’s decision to accept the complaint by Maurice Nauta but then be minded not to set up an enquiry is a disgrace. We are submitting further evidence and considering our options.”
Source: www.granthamjournal.co.ukRead More
New procurement directives are due to be implemented across the EU. The UK government has published new Public Contracts Regulations, which incorporate both the EU directives and recommendations by Lord Young of Graffham on improving access to procurement contracts by SMEs.
exempting certain contracts between contracting authorities where they are for genuine in-house requirements
provisions to facilitate SME participation, such as encouraging contracting authorities to break contracts into lots
provisions relating to the selection of suppliers including a much simpler process of assessing bidders’ credential
introduction of the ‘Innovation Partnership’…
Click the link to The Lawyer to read more about the changes…
Source: www.thelawyer.comRead More