A new report by the National Audit Office (NAO) has criticised the “decentralised” structure of Britain’s public procurement process.
Public procurement in the UK dominated by framework agreements
According to the report, entitled Efficiency in government procurement of common goods and services, the UK government is missing out on opportunities to get better value for the money it spends. It contends that the government could “significantly improve” the value for money it gets when purchasing goods and services.
The report, released earlier this week, highlighted the rise in use of framework agreements throughout UK public sector procurement.
Under the current system, public and private sector organisations bid against one another to secure government contracts. Thousands of these agreements are competed over each year. The winners receive contracts for everything from road repair to providing critical medical supplies. Many of these frameworks are hosted by small contracting authorities like health trusts or academy schools. However, they are operated by private companies. Consequently, the NAO report calls into question the ability for a privatised public procurement sector to create real value for money for the government. It warns that the UK government is experiencing a “missed opportunity for greater efficiency”.
A framework agreement comprises a preapproved list of suppliers that locks in some of the compliance-related details in advance. The logic behind using them is that it relatively easily allows work to be awarded to trusted suppliers, or facilitates a short bidding session between listed companies.
The use of procurement frameworks has risen to dominate UK public spending, with between 8,000 and 12,000 public authorities spending around £125 billion per year through them. UK ministers reportedly lack oversight of the frameworks or their providers.
These providers also charge fees for their services, leading to the government spending £25 billion on Crown Commercial Service (the largest provider, which manages over 200 frameworks for the government) alone in the 2022-23 financial year.
Procurement is “fragmented”
According to the NAO, the current system is fragmented, which prevents the government from acting as a single buyer. This, the report warns, “resulting in duplication of effort and increasing bidding costs for suppliers.”
