Having done his best to make constitutional law interesting, the UK prime minister’s chief adviser Dominic Cummings is now promising to bring excitement to the drab world of the law of public procurement and public projects.
Before Christmas, he was reported as wanting to shake-up defence procurement, and his “job advert” last week sought ambitious project managers, among others. But his interest in the legal framework for public bodies’ purchase of works, goods and services is longstanding and sincere.
This is an area heavily regulated by law, much of which currently comes from the EU. The premise of the law is that government contracts, especially those of high-value, should be available to bidders without any discrimination in favour of incumbents or national champions.
Tenders should be openly advertised, there should be a transparent process, there should be equal treatment of tenderers and consistent application of award criteria. As such, the law of public procurement is as much an element of the EU single market as that of competition and state aid; it helps level the playing field.
But it has many critics, including Mr Cummings. In a March 2019 blog post, before he joined the government, he set out a critique under the characteristic heading: “Government procurement — ‘the horror, the horror’”.
There he made a number of strident assertions about public procurement. To take just one example:
“MPs constantly repeat the absurd SW1 mantra that ‘there’s no money’ while handing out a quarter of a TRILLION pounds every year on procurement and contracting . . . The Whitehall procurement system is embedded in the dominant framework of EU law (the EU law is bad but UK officials have made it worse). It is complex, slow and wasteful. It hugely favours large established companies with powerful political connections — true corporate looters. The likes of Carillion and lawyers love it because they gain from the complexity, delays, and waste.”
I happen to be a former central government public procurement lawyer (and still practise in the area), and there is a lot in what he says. Public procurement is wasteful, it is dominated by a few powerful providers, it is hard for small and medium-sized enterprises to navigate, contracts are expensive to bid for and the qualities of the officials involved can vary.
The difficulty is how best to address the problems — as Mr Cummings admits in the post. He avers that the best lessons are from the Manhattan Project to build the atomic bomb, or how man was put on the Moon. And he has a point: successful large-scale public sector projects are uncommon, so those that work well are worth the attention.
Public procurement is not, however, mainly about such grand affairs so mostly cannot be solved by ambitious project management. Much of it is mundane, from toilet paper to software licences. There are savings to be made, but that would mean having frequent open tenders. The alternative to a legal regime would in practice be few or no procurement contests, as cosy buyer-seller relationships are cemented.
With larger projects, the real problem is often less in the process of appointing a contractor than in failings in the contract itself. The issues with the notorious second Royal Navy aircraft carrier, which Mr Cummings has cited, were because of penalty clauses that made it more expensive to cancel an unwanted new ship than to continue to build it. Such provisions are not exceptional in high-value government contracts.
Getting rid of a public procurement regime would only make one-sided contracts more common. Often, the government’s only leverage against onerous obligations is insisting on the principles of equal treatment and transparency as long as possible, for once there is a preferred bidder its negotiating strength is weakened. When a project has a public dimension, the supplier knows it is too big to fail and will seek favourable renegotiations.
Part of the trouble is that central and local government often do not have access to expert commercial law advice. So they are at the mercy of contract amendments put forward by large suppliers that often eliminate any risk for the provider.
The Cummings critique also fails to recognise that a substantial trade agreement with the EU, or indeed any major economy, will include common provisions on public procurement, which will tie Britain’s hands. And the World Trade Organization’s general procurement regulation will still apply. UK government contracts are lucrative, and are among the most attractive things the country has to offer in international trade negotiations. Foreign suppliers will want access to them in a rules-based way. Britain, desperate for post-Brexit trade deals, cannot easily refuse.
The current public procurement rules can and should be improved, and the processes are far too elaborate and detailed. The general principles of non-discrimination and transparency can be given effect with less bureaucracy, and with less prescriptive procedures, but they cannot be disregarded altogether. Nor should they.
There must still be a rule book, and the problems of one-sided contracts can only be addressed with better legal advice rather than fewer laws. Mr Cummings has rightly set out the specification of the problem, but he has not procured a solution.
The writer, an FT contributing editor, was a legal adviser to the Office of Government Commerce and is now a solicitor at Preiskel & Co LLP
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