Public Services > Central Government

Why Michael Gove is wrong about EU procurement rules

Published 31 May 2016

Vote Leave's claim that EU public procurement legislation creates a multibillion pound bill for the taxpayer may have generated some heat, but not much light. And its argument for procurement change is misleading, says Andy Haigh of Sixfold International

 

The Vote Leave campaign has sought to broaden its argument on the cost of EU membership, saying the bloc's procurement rules increase government spending by "billions" of pounds. Michael Gove, the justice secretary, said he had seen in his former role as education minister how tendering processes "add significant operational costs and generate expensive delays to construction projects".

There is no doubt that the EU tendering processes, as adopted into UK legislation, impose processes and burdens upon public sector organisations and those commercial suppliers looking to win contracts with them, alike. The fundamental principles underpinning the tendering processes seek to provide an unbiased, open and fair environment within which any supplier can have an equal chance of competing.

They also seek to eradicate any possibility of corruption influencing the outcome whilst regularly evolving the processes and options within them to reduce the costs on all parties. To do this, there are a multitude of processes and systems which have to be followed by everyone involved and these all take time with the ensuing costs. Then, when the rules are updated as happened recently, there are additional costs of responding to the changes.

The implication of Gove's comment is that, somehow, these costs and procurement times would be removed from the procurement process if the UK was to leave the EU. This cannot be correct.

I find it inconceivable that the public sector would abandon the majority of the systems and approaches to procurement that it currently operates. Albeit somewhat cumbersome, they have been proven to work and no right minded person would want to go back to the possibly biased and corrupt practices of the past. Moreover, if we ignore those cases where the underlying specification may be wrong or unwise, the current systems do get good value for money for the taxpayer.

Indeed, you can argue that they always achieve best value in terms of what is asked for at the time it is being asked. We often hear about procurement disasters. However, the core procurement system design or process is never the culprit. It is the people who cannot decide what they want, or who change their minds after the procurement activity starts.

In any case, should we leave the EU, my sense is that the immediate impact upon the procurement processes would be zero. There would be considerable pressure to maintain the underlying principles of public sector procurement and the simplest way of achieving that is to continue with what is already working.

Of course, if we stay in, we will be subject to the existing evolving EU procurement regime. If we leave, I would expect to see enabling legislation to keep the current procurement act in force, very early after the leave decision is made. Then, in time, the procurement systems may slowly diverge, but I would expect the essence of the rules to stay completely in line with the EU public sector procurement legislation development.We want a fair system. In any case, any subsequent trade agreement with the EU would probably require the wholesale adoption of the EU public sector procurement systems as a part of that agreement.

Therefore, I believe that Gove's comment is wrong. If there has been an increase in government spending by "billions" of pounds because of the procurement rules (and I think that this claim will be impossible to justify), this increase would have occurred whatever procurement regime was in force, EU or national.

Moreover, if we suppose that the procurement rules have added significant operational costs and generated expensive delays to construction projectsover that which a different procurement system would have generated, (again, a supposition which needs justification), then my experience is that these issues will have arisen because someone has tried to avoid the procurement processes. These will be thecosts and time delayswhich have arisen whilst such issues are being sorted out!

Lastly, if significant operational costs and expensive delays have come from the procurement processes, I believe that the real impact in time and money of having a less robust public sector procurement system would have been considerably greater. The value for the taxpayer would have been reduced far more by those involved sidestepping a fair procurement process, than any impact which may have arisen fromthe current procurement systems which seek tokeep all the participants honest.

Andy Haigh is a director and public sector bid consultant at Sixfold International








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