Some might say that like oil and water, politicians and procurement should never be mixed together, as frequently the outcome can be really messy.
This year has seen a plethora of ministers and politicians espousing their opinions on procurement-related matters, without, in many instances, any clear understanding of what the implications of their pontificating might be.
Back in February 2011, David Cameron announced his plans for the Big Society, stating that: “We’re sweeping away ridiculous rules and bureaucracy and seeking to eliminate, for smaller contracts, assessment hurdles at the beginning of the process”, but forgot to confirm that the EU and UK procurement rules would still apply across the board. He further declared: “We need to make the system much more open, competitive and transparent”, forgetting to add that this is exactly what the EU Treaty principles require it to be, before continuing, “wherever possible, we’re going to break up large contracts into smaller elements, so that SMEs can make a bid and get involved”, so long as we aren’t looking at breaching the EU disaggregation laws along the way, one presumes.
Meanwhile, Cabinet Office Minister Francis Maude initiated an, on the face of it, laudable renegotiation process with major suppliers to central government, pushing for price reductions in contracts. However, did anyone consider that this could be tantamount to Material Contract Variation and in clear breach of the Remedies Directive?
Come June, we had multiple politicos frothing at the mouth, complaining about Siemens (a German company) stealing British jobs from Bombardier (a Canadian company, incidentally) and promising that it would never happen again, we would be protecting jobs in the UK, etc. Yet again, there appears to be a clear breakdown in their understanding of the EU Treaty, which enshrines the Freedoms; of Establishment; to Provide Services; of Movement of People; and of Movement of Goods; and which provides us with a market which constitutes 40% of our exports. Any form of protectionism would automatically lead to action by the European Commission and a date to visit the Court of Justice of the European Union (CJEU). Indeed, come July we even had a Commons debate where suggestions were made that the National Audit Office should look closely at the procurement exercise, criticism was heaped on the Department for Transport and accusations of parochialism were raised against other EU countries.
On to September and it was the turn of Labour leader Ed Milliband to suggest that the public sector should look at distinguishing between ethical and non-ethical companies. While the idea of ethical procurement is one to be applauded, the unfortunate reality is that there is a real chance of breaching the EU principles when trying to determine how to procure ethically sourced products and services. Indeed, we have been there already with the well-meaning but flawed ‘Food Miles’ programme. The simple truth is that ethical procurement, without sound policy and detail, can be discriminatory in the extreme.
And so to October and the latest political foray into the procurement arena, as the Minister of State for Universities and Science, David Willetts, suggested that there is a benefit to be derived by universities when government funding is effectively reduced with additional income now to be derived from student tuition fees. Mr Willetts intimated that, when their direct funding from government is cut to 40%, universities will be exempt from EU procurement rules, since these have a public funding test of 50%.and above. Unfortunately, no consideration seems to have been given to all the other sources of public funding that universities currently receive, such European Regional Development Fund (ERDF) grants, research grants and so forth. Add these back into the equation and suddenly the funding percentage could well rise back over 50%.
The reality is that, when politicians make pronouncements on procurement issues, their views, although well meaning, can often present a real risk to the public sector and land public procurement with the impossible task of trying to satisfy political aspirations, while remaining compliant with both the European and UK procurement rules.
