True Value
Towards ethical public service commissioning
Author: Callin McLinden |
Public procurement and outsourcing have great potential when managed well, with the volume of public sector spend across the country creating many opportunitites to advance strategic economic goals. Unfortunately, for decades, successive governments have been unable to tap systematically into this potential. Now, free of the EU rulebook, with reforms on the way and a newfound appreciation of procurement’s strategic power post-pandemic, the practice finds itself at its most interesting yet precarious pivot point in decades. What is to be made of this potential – and what are the implications for ‘levelling up’?
‘True Value – towards ethical public service commissioning’ explores how the public, private, and third sector can deliver for communities through a more socially conscious approach to public procurement. The report investigates procurement’s recent history, Brexit implications, an increasing recognition of its strategic power, and the government’s Green Paper and ongoing procurement reform agenda. It makes the case for social procurement that is underpinned by conscious ethics, social value, climate impact, and circular economics.
Download the executive summary
KEY POINTS
THE CASE FOR SOCIAL PROCUREMENT
The reorientation of procurement from a contract-by-contract consideration centred on value for money to a strategic function has antecedents in the turn to social value of the 2010s. The consideration of social value, as well as economic value, in procurement was introduced by the Social Value Act almost a decade ago. The act enshrined into law the duty of paying regard to social value when making procurement decisions. Since then, the incorporation of a social value element into the assessment of contracts has become a universally recognised consideration, particularly in the recent context of a national need for economic recovery.
It is time to seize the opportunity and take advantage of the positive drive of recent years to pursue a new model of ‘social procurement’ that is built around and further entrenches existing ethical principles, as well as incorporating new commitments regarding collaboration, social value, sustainability, probity, higher labour standards, and a prioritisation of prevention over penalisation. These commitments will be crucial for public procurement to serve society in recovery and beyond and will be driven by outcomes-focused approaches. This model would take social procurement which focuses on benefits for local communities from being an activity of trailblazing councils to being the baseline for all local spend.
Within ‘True Value’ we have put forward a 7-point local English charter, with relevant guidance, to this end. This policy must be easily accessible and understood by staff and stakeholders, with systematic inclusion in subsequent reporting and other scrutiny processes.
PROCURING LOCAL
In recent years, views of public procurement have begun to shift towards an understanding of its power to achieve long-term strategic goals, particularly at the local level. Procurement does not just sit in isolation, it can be a tool at the disposal of a contracting authority, used towards the delivery of strategic priorities and public value.
Making use of economies of scale, the sharing of good practice and expertise, and working to understand shared local and regional needs are all collaborative practices that – whilst becoming increasingly prevalent – still need to become much more widespread and embedded in each local authority’s procurement process. This can be facilitated by cutting procedural costs, driving and managing down supplier prices, engaging in acute market analysis and subsequent shaping, and being mindful of commercial skills when recruiting or investing in the skills and training of existing staff members.
LEVELLING UP PROCUREMENT
It is imperative that central government departments go on to use their own procurement spend as a means of achieving key ‘levelling up’ goals. Marrying up procurement with the ‘levelling up’ agenda would match rhetoric with practice and send a profound message to the UK’s private sector.
The challenge of a cultural shift in procurement must be met both in individual local authorities and across the network of local government, in a way that is guided by central government priorities and resources as part of the wider push to level up. Individual authorities must be able to determine what the role of procurement should be in their broader economic development strategy, in a way which aligns with the goals of the levelling up agenda. Alongside these individual efforts, councils must share best practice and experience, making use of the local government network so that organisations working with councils across the country can observe a consistency in principles even if the approaches differ depending on locality. This cannot be an entirely optional endeavour if levelling up is to work across the country, guidelines must be set by central government for both training and networking to ensure a minimum standard.
Beyond enabling action through legislation, central government must also modify its approach to the capacity funding of local government, which must be adjusted in terms of both scale and timeframe if local procurement is to work towards the goal of levelling up. The serial underfunding of local government has been a theme of British politics for over a decade, and the impact on capacity for developing and implementing strategies has been significant. Furthermore, a reorientation of how the job is carried out in local government is required. This can be enabled by legislation, but it cannot be implemented without the resources, long-term vision, and steady finance required for widespread organisational change
RECOMMENDATIONS
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- For local government to build its strategic procurement capacity, the sector needs long-term, stable funding that moves away from ring-fenced and competition-based capital injections.
- Changing the emphasis and principles of public procurement must be accompanied by appropriate skills pathways and training for procurement officers. The government should ensure that all council procurement teams are brought up to speed, using institutions like CIPFA or the LGA to provide training and set standards.
- With the UK no longer subject to EU competition law, there is an opportunity for central government to rework the rules for local procurement on a regional basis, in line with the aims to be outlined in the Levelling Up White Paper.
- An explicit and statutory duty should be placed upon local procurement departments to consider the local impacts – economic and social – of procurement first, and value-for-money second.
- Levelling Up White Paper should definitively state the metrics for measuring places need for and success in levelling up, which should be aligned with guidelines for measuring impact in the procurement reforms.
- As major contracting authorities, central government departments should have to demonstrate how their spend has been targeted to help achieve levelling up goals as outlined in the White Paper.
- Lastly, there should be an independent review of how local authorities approach scoring and evaluating bids. This will contribute greatly to achieving consistency and transparency across the sector and could reveal important practical lessons.
A Local English Charter for Ethical Procurement
- Good jobs
- Suppliers should all pay the Living Wage, as determined regularly by the Living Wage Foundation.
- Councils should commit to a diverse workforce and expect the same of suppliers.
- In case of large suppliers, workers should be represented on company boards wherever possible.
- Career progression opportunities should be available to all the employees of council suppliers.
- Transparency
- Councils must take a proactive, not reactive, approach to transparency.
- Contract registers should be made publicly available in the simplest form possible, with a dashboard overview of council spend and impact available to residents.
- Key performance indicators for public value should be agreed by the council.
- Weighting for social value in tendering should be applied equally and consistently throughout the process.
- Good business
- At the front end of the contracting process, councils should engage and consult with the market to ensure opportunities are well communicated and tailored to local specifications.
- At the point of application, councils should ensure that the application and tendering process is as simple as possible and consistent across council contracts.
- At the back end of the contracting process, it is vital that councils commit to prompt and timely payment of suppliers, with suppliers carrying this commitment onto their own supply chain.
- Councils should sign up to the ISO 44001, which details requirements for the effective identification, development, and management of collaborative relationships within or between organisations.
- Understanding local impact
- When dealing with large suppliers, councils should understand the impact the supplier could have locally, on the labour market and in the community.
- Councils must seek to maximise the ‘multiplier effect’ of spreading SME spending across as many local firms as possible.
- Carbon commitment
- Councils should ensure that all smaller suppliers, within reason, undertake carbon accounting and are aware of their carbon footprint.
- In the case of major suppliers, councils should wherever possible ensure that large suppliers are on a path to net-zero emissions before 2030.
- This information should be aggregated and made available so residents can be aware of the carbon impact of their council’s procurement.
- Good training
- Councils must be aware of and communicate to suppliers the desired outcomes of procurement policy on the local labour market, using a robust evidence base.
- Councils must act as a coordinator between suppliers and local educational institutions to ensure commitments around training and skills provision are upheld in the most constructive and effective way possible.
- High standards
- Upon signing up to this charter, councils should, wherever possible, ensure that the standards of doing business with the council are passed down the supply chain of large suppliers.
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