Centralised Public Sector Procurement Data and Spend Visibility Will Bring Many Benefits to the Taxpayer
The needs of the various central government departments are many and varied. For example, much of the Ministry of Justice’s high level of spending is specific to that department, notably private sector-managed prisons. But there is also a lot of overlap and shared contract information and spend visibility across departments will give the taxpayer much better value.
For example, every department needs stationery, legal services and information technology, so it makes sense to consolidate this on a national level, while other categories (such as medical equipment) cross institutional boundaries (such as, in this case, different regional NHS authorities but also other departments such as the Ministry of Defence) and could sensibly be consolidated at a sectoral level. There are certainly powerful arguments for centralising spend where it makes sense. But to make progress, data on contracts and visibility over spend is needed in government and that would require the central Government department with overall responsibility, the Cabinet Office, to establish and maintain the right executive-level relationship with the various other departments. A mission that is easy to state, but difficult to execute, given the complexities.
Considerable Gaps in Public Sector Spend Data Persist. What is to be Done?
“There is a tension between the government’s drive to centralise procurement and its commitment to localism,” stated the 2013 House of Commons Committee of Public Accounts Report, “Cabinet Office: Improving government procurement and the impact of government’s ICT savings initiatives”. It is a tension that persists, and not just on ICT. The UK Government spends approximately £300 billion per year on buying goods and services from external suppliers, around a third of the total public sector spend, which is projected to reach £847.6 billion in fiscal year 2020. Funds are spent on everything from stationery to the construction of schools, hospitals and infrastructure, information technology, human resources and front-line services such as social care. Yet a relatively small proportion of that spend is centrally managed and data is not shared, which means limited visibility.
Of course, this is not easy to resolve. It requires readiness for each department to follow a central lead to “put their own houses in order” and an openness to sharing information. That said, a lot of data on contracts is now available. Under the Public Contracts Regulations 2006, public bodies were required to send contracting opportunities above certain thresholds to the Official Journal of the European Union. New regulations that came into force in 2015 added a requirement for public bodies to publish on Contracts Finder, a portal that allows people to search for contracts. In 2018, 76% of central government thresholds were published on the portal, (the figure for local government and the NHS is lower, largely reflecting the threshold).
At present, the UK Government lacks the technical infrastructure to compile and consolidate the vast amounts of data on public sector contracts and spend. Data is scattered across a variety of transactional systems in various departments and agencies, in different file formats, definitions and set-ups, processes and charts of accounts coded at the detailed level. Admittedly, this is a huge challenge that will require a significant investment in IT, but the technology does exist. Political obstacles – resolving that tension between centralising efficiency and local flexibility – may be greater. A further challenge is the lack of procurement expertise in general, and spend analysis and contract management in particular, in some departments. The consolidated data may be available, but that does not necessarily mean it will be used effectively.
Six Reasons to Create a Central Repository
Here are some of the reasons why it makes sense to create a common space for Government departments to share, view and analyse procurement contract data:
- Savings and better value for money. Without data, Government departments cannot use their combined buying power with suppliers to get the best deal for the taxpayer. And by “best deal” we mean not just lowest cost, but best value. This extends beyond procurement. For example, it includes ensuring that large suppliers are paying the right amount of tax on their UK profits.
- Enhanced competition. A lot of public sector contracts go back to the same supplier, or small group of suppliers, for a number of reasons, but the availability of data on alternatives would help admit other suppliers to enter the bid process. This is unhealthy and leads to poor value.
- Data is essential to enable the Government to track and meet targets such as a 25% share of procurement spend for small and medium sized enterprises (SMEs). The information would also enable Government procurement officers to identify barriers that are currently preventing SMEs (and other target suppliers, e.g. from economically disadvantaged communities) from taking part in competitive bids.
- To promote innovation. Greater shared visibility between departments over changing supplier markets, such as which new suppliers are entering the market with new solutions for a given category.
- High quality data in a centralised repository, updated at every stage of the procurement process, will make it easier to identify corruption.
- Only with complete and reliable data can Government achieve its objectives of greater transparency and accountability, the basis of public trust.