Government procurement in the United Kingdom

Gershon noted in his findings that previous governments had decentralised procurement and delegated expenditure decisions to Departments without creating a framework for controlling how they spent public funds.

The Office of Government Commerce (OGC) set up a "Collaborative Procurement Programme" in 2007, managing over £18 billion of expenditure falling within eight categories of goods and services frequently purchased across the public sector, namely energy, vehicle fleet, travel, office solutions, information and communications technology, professional services, food and construction.

[9] The National Audit Office (NAO) argues that collaborative procurement begins with standardising specifications, whichallows public bodies to aggregate demand and compare unit costs.

Collaboration should result in fewer tendering exercises, leading to lower administrative costs, and allow public bodies to concentrate on more specialised purchases that are unique to them.

[16] In the March 2008 budget statement, the government announced that it wanted to see small and medium-sized enterprises (SMEs) "compete more effectively for public sector contracts".

A review of progress with this initiative published in 2013 found that "against a backdrop of falling procurement spend", there had been a slight increase in direct expenditure with SMEs between 2011/12 (£4.4bn) and 2012/13 (£4.5bn).

[17] The 2008 budget statement also announced that businesses supplying services to Government would be able to sell their public sector invoices to debt specialists, a change which was expected to be "particularly advantageous to SMEs in managing their cash flow".

[19] Government suppliers who act as prime contractors for major contracts should also engage with SME's in their supply chains to ensure opportunities are available and fairly awarded.

[22] In August 2010, David Cameron, then recently elected as prime minister, invited businessman Sir Philip Green to carry out a review of UK government spending and procurement.

Green argued that the report gave "a fair reflection" of government waste and inefficiency in practice, for which "very poor data and process" were seen as the main causes.

[27] The government promoted and welcomed reform during the period from 2010 onwards, especially the development and implementation of European Commission's proposals to modernise procurement legislation published in 2011.

[29] In February 2011 the UK Government stated its view that "the public procurement regime needs to be radically simplified to reduce red tape and improve value for money".

[30] Part 3 of the Small Business, Enterprise and Employment Act 2015 allows the Minister for the Cabinet Office or relevant Secretary of State to impose further regulations on public bodies regarding how they undertake procurement.

[43] In 2011, Francis Maude, then Minister for the Cabinet Office, raised concerns that public procurers were using this procedure in cases which did not meet the "particularly complex" threshold, where pre-market engagement with suppliers would be more appropriate.

[45] Guidance states that Accounting Officers should not sign off a competitive dialogue request if further pre-market engagement would better support the process of defining the nature or function of the goods or services required.

[48] A Select Committee report published in 2021 noted that the government continued to expect that "food procurement should provide value for money while also ensuring 'high standards of production, animal welfare, traceability and sustainability to support our agricultural industry'.

[58] The House of Commons Committee of Public Accounts noted in a report issued in 2012 that at that time, all seventeen central government departments were operating their own procurement card programmes.

The 2011 Autumn Statement incorporated a series of supply-side measures which the government was undertaking "to rebalance and strengthen the economy in the medium term", which included extension of the existing pipelines in the construction and ICT fields to cover the publication of plans setting out the procurement needs for other categories by April 2012, "to give suppliers the confidence to invest for the future and compete on a level playing field".

[73] A case raised by Turning Point Ltd. against Norfolk County Council in 2012 confirmed that it is legitimate and fair to include a requirement in a tender barring caveats and qualified bids.

[75] General transparency principles applicable to government procurement were published in March 2015,[76] and updated in February 2017, stating that there is a presumption in favour of contractual information being made publicly available (except in matters of commercial confidentiality such as pricing, intellectual property and business plans).

[77] The 2015 guidance made provision for a "safety valve" allowing suppliers to raise concerns if they felt that contractual information was being requested which did not add value, represented poor contract management practice or otherwise seemed unreasonable.

The Appeal Court found that the assumption being made was incorrect, and the conclusion of the framework agreement on that basis and various qualitative evaluation criteria had been a "manifest error".

[96] International labour standards, including those set by the ILO and by the European Union, should be respected by public sector contractors and sub-contractors.

The report noted the importance of public sector construction within Scotland but highlighted that procurement practices were often over-elaborate and documentation excessive in length.

[98] Guidance on the use of pain share/pain gain arrangements and target cost contracting, formulated as a result of the review, was issued to public sector procurers in 2017.

Around 4,000 civil servants who undertake or support the procurement of goods and services for government form the GCF alongside the more senior GCO professionals.

[103] The GCF is responsible for the Government Commercial Operating Standards,[104] whose purpose is "to set expectations and drive consistency in the planning, management and execution of commercial activities, ensuring contracts and relationships with suppliers realise value for money and result in delivery of high quality public services",[105] and for optimising use of procurement information across UK government.

[113] Subsequently, on 3 June 2021, a "National Procurement Policy Statement" was published, establishing that public procurement "should be leveraged to support priority national and local outcomes for the public benefit", in order to secure the creation of new businesses, jobs and skills, waste reduction, climate change mitigation, supplier diversity, resilience and innovation.

The Unit will create a new layer of protection, by assessing whether companies should be struck off from competing to supply goods and services to the public sector where they pose a threat.

"[116] A written answer given in the House of Lords in December 2023 confirmed that the unit was expected to become operational in the autumn of 2024 in conjunction with the implementation of the Procurement Act 2023.