Cabinet Office to blacklist underperforming outsourcers under new procurement rules

Department announces plan to punish firms that fail to deliver on contractual criteria

Credit: Nick Youngson/Alpha Stock Images/CC BY-SA 3.0

Outsourcers that fail to fulfil the conditions of their contracts could end up on a “banned list” barring them from future government work under new measures to improve public procurement.

The Cabinet Office has announced plans for an overhaul of procurement procedures and rules that would also see bids given more scrutiny during emergencies, following widespread criticism of contract awards during the coronavirus pandemic.

A centrally managed “debarment list” is one of several measures are being considered to increase transparency, prevent fraud and corruption and improve the quality of services bought by government.

A new unit would be responsible for overseeing public procurement, with powers to review and intervene to improve the commercial capability of public bodies seeking to award contracts. The unit would sit in the Cabinet Office and would be supported by an independent panel of experts.

The green paper sets out plans for a “single, uniform framework” for public procurement to replace the more than 350 regulations currently in place. It would also enshrine the principles of public procurement – value for money, the public good, transparency, integrity, efficiency, fair treatment of suppliers and non-discrimination – in law.

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The framework would include three procedures that departments could choose from when procuring goods and services: a flexible procedure “that gives buyers freedom to negotiate and innovate to get the best from the private, charity and social enterprise sectors”; an open procedure for simpler, “off the shelf” competitions; and a limited tendering procedure for use in crises or where services are needed urgently.

The measures aim to embed a principle of “transparency by default” into the whole procurement process, according to the green paper, which opened the measures to consultation this week.

They would strengthen existing rules requiring public bodies to publish the details of contracts they award to external suppliers.

Contracting authorities would also be required to record and publish information about suppliers’ performance on contracts, including key performance indicators and contract amendments’ prices and volumes. The government is also considering whether to set up new registers of complaints and legal challenges, as well as the debarment list.

The measures have been unveiled after months of criticism of the way government has handled procurement of personal protective equipment.

Last month, the National Audit Office revealed that companies with connections to ministers and civil servants that had bid for PPE contracts during the pandemic had been referred to a “high-priority lane” where they were 14 times more likely to win contracts than other suppliers.

Last week, government chief commercial officer Gareth Rhys Williams told MPs he acknowledged flaws in the procurement process. He said civil servants should have documented their decisions to refer suppliers to the priority route more effectively, at a time when the government was “desperate to buy from anybody” because the need for PPE was so great.

Appearing before the Public Accounts Committee last week Rhys Williams admitted the government was investigating “three or four” companies that had won contracts to supply PPE that turned out not to meet the required clinical standards.

PPE problems?
DHSC director general of PPE Jonathan Marron told MPs that 0.5% of orders the government had checked so far “do not meet standards as fit for use”.

“We had some level of risk in the companies we worked with… at the time we most needed it,” he said.

Pressed to provide a precise number of investigations the government is conducting, Marron said: “We have some ongoing issues where we’ve not completed the process of checking whether we can certify whether the goods received do meet clinical standards. So that process isn’t finished so I can’t give you a final number [of investigations].”

Asked if the government was planning to blacklist companies that had defrauded departments by providing PPE that did not meet clinical standards, Marron said: “We are certainly pursuing companies if they have provided goods that do not meet the specifications, or indeed if there is any suggestion of fraud.”

He said fraudulent contracts represented “tiny, tiny percentages” of the total, but conceded that this could represent “millions of pounds”.

The measures in the green paper will meanwhile give departments greater freedom to block companies from bidding for contracts in the future.

As well as “cutting red tape” for small businesses and encouraging awards to a more diverse range of suppliers, the framework would give departments more power to exclude suppliers from bidding, in a bid to tackle “unacceptable behaviour in public procurement such as fraud”, the document said.

It would give government buyers “the tools to properly take account of a bidder’s past performance and exclude them if they clearly do not have the capability to deliver”, it added.

In the foreword to the green paper, Cabinet Office minister Theodore Agnew, said that commercial teams had been forced to procure contracts with “extreme urgency” amid the coronavirus crisis.

“I make no apology for that but there are lessons we can learn and the reforms in this green paper will strengthen our longstanding and essential principles in public procurement of transparency, ensuring value for money and fair treatment of suppliers,” he said.

And in an article for the Telegraph, Lord Agnew, who has been extremely critical of how the civil service handles procurement, said the measures would “reduce red tape, level the playing field for small businesses and ensure taxpayers get better value for money”.

He said at the moment, small firms are “often put off from bidding because of the complicated procedures and the lack of time that they have to navigate the numerous systems to bid for contracts”.

The proposed changes would also tackle problems including “companies being locked out of bidding for contracts because of minor technicalities, despite offering the best service; poorly performing companies being allowed to bid again and again for contracts they have already failed to deliver on properly; authorities not being able to block bids from companies despite having genuine concerns about their ethical standards”, he added.


Sam Trendall

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