Curing Procurement: Building a Government System Fit For The Future
Government plans for procurement will mean worse value for money for taxpayers and will prevent SMEs from winning government contracts.
The Government has pledged to save millions of pounds on procurement, ensure better value for taxpayers and give SMEs more opportunities to win public sector contracts.
But a new paper from the Adam Smith Institute (ASI) warns that the Government’s own proposals will have the exact opposite effect.
Procurement errors have already cost the British taxpayer over £140 billion over the last thirty years, and today only 9% of major government projects are running to time and on budget.
And despite successive governments promising to make sure that more SMEs win government contracts, the percentage of central government spending on SMEs has actually fallen since 2010.
This is because the procurement system requires businesses to prove that they are creating social value by reducing inequality and protecting the environment. This places an impossible administrative burden on small businesses, and reduces competitiveness and value for money.
And now the situation will become worse. Plans to centralise consultancy procurement through the Crown Commercial Service (CCS) will crush departmental flexibility and add yet another layer of red tape to the process.
This could reroute £1.6bn to the big six consultancy procurement suppliers and increase bid costs by over £129 million annually due to reduced competition.
Deprived of the opportunity to win contracts, many small businesses, already struggling with NICs hikes and high energy costs, will go bust, damaging the UK economy.
SMEs are less bureaucratic, and have sector-specific expertise which help to make the government more innovative. Reducing the number of SMEs in procurement will only mean that more taxpayers’ money is wasted.
A new paper from the ASI is calling on the Government to block the plan to reroute all consultancy spending through the CCS, axe the Social Value Act and make sure that the government pays businesses on time for their services.