Thread/ So I promised to go through what I thought the Government could do to prevent this in the future. This gets a bit wonkish, but bear with me.
1/ I’m writing as someone who has been working with procurement and public spending data for 15 years. I’ll start by showing you why we’re failing to prevent events like #Carillion, I'll finish with some ideas for improvements.
2/ The biggest problem that we face is that more and more money is going to fewer and fewer suppliers. In Local Government, 20 companies earn more than the 75,000 small businesses that supply the sector.
3/ This creeping consolidation has been happening for many years, long before this government came to power. It is giving small clutches of 'super suppliers' near monopoly status.
4/ We’ve analysed the spend of 300 public bodies, between 2011 and 2016 just three of them had no trade at all with Capita, another major outsourcing firm. We're becoming dependent on firms like this.
5/ We know it is common for suppliers to provide services for free to Departments in advance of a big project. This apparently charitable offer actually gives them a huge advantage in the upcoming higher value tenders.
6/ Competition isn’t just a UK problem the Economist looked at tenders across Europe and found that the total number of tenders receiving just one bid rose from 17% in 2006 to 30% in 2015. economist.com/news/europe/21…
7/ I’m not suggesting that there’s a structured plan to reduce competition, it’s creeping, collective failure that means we’re sleepwalking into a situation where uncompetitiveness is becoming the norm.
8/ This is because we’re not paying attention to the large scale changes that are happening.
9/ The devil is in the detail here, and some of the things we’re doing are pretty worrying. For example, some very large tenders have been let with some worryingly short timescales. openopps.com/blog/post/68/h…
10/ And some of the tenders that are being published aren’t giving suppliers enough information to even find the opportunities. As before, this creates a failure of competition: openopps.com/blog/post/80/h…
11/ If you’re on the ground, letting contracts for a council or a university, you can’t see a creeping change in competitiveness, but if you take a macro view of the market, it is startlingly clear that we have a problem.
12/ There’s something genuinely wrong here, but solving this isn’t about policies or politics. For instance, we have very strong policies for awarding contracts to small and medium enterprises (SMEs).
13/ The problem is that its not working, here’s the outcome, 23% fewer contracts were awarded to SMEs in 2017 than in 2016 Contracts Finder.
14/ Its not necessarily the buyers that are failing, they have a very difficult job with competing priorities, they’re doing the job that they’re required to do. Its about not having a clear macro view.
15/ At @open_opps we have that macro view and it shows we’re giving a significant advantage to incumbent suppliers or suppliers with a long history of trading with the public sector.
16/ So how to fix this? What we have to do is relatively simple, but making it stick will be hard.
17/ Firstly, we need much, much better data. If you have good data, decisions are easy. We’re currently working with our hands tied behind our backs. If you want to know who won a contract, the chances are that you can't find out. openopps.com/blog/post/75/w…
18/ If you want to know who won a contract, the chances are that you can’t find it. openopps.com/blog/post/75/w…
19/ If you go to Contracts Finder, the central repository for public tenders, you’ll find 28 contracts mentioning #Carillion. That’s just 5% of the estimated total number of #Carillion contracts.
20/ How can we fix this problem if we don’t know where the contracts are?
21/ In 15 years of working in public contracting, I can count on two hands the number of organisations that are confident that they have an up to date register of all of their contracts.
22/ In most organisations, there is no real understanding the contracts in place, their value is and when they end.
23/ I previously worked on an excellent counter-fraud project set up to analyse fraud in public procurement. That project achieved less than it should because buyers felt they weren’t allowed to share data with each other.
24/ We need an honest conversation about how to improve the data we have on contracts, each sector within Government thinks that they just need to understand their own spending, but each of them are trading with this clutch of super-suppliers.
25/ We can't afford to monitor contracts on a piecemeal basis, we need a view of the whole market.
26/ Secondly, this data needs to be open. This is not a nice to have, its a critical part of repairing the imbalance between incumbents and the businesses and will drive forwards competition. openopps.com/blog/post/26/w…
27/ The public also needs to know much more about the performance of these contracts. We should be able to see every contract awarded to a supplier across all parts of government in an instance.
28/ We should be able analyse past performance and to monitor overspend daily. This holds buyers and suppliers to account and shows whether suppliers are performing properly.
29/ We should be able to see when buyers are routinely breaking budgets and when suppliers are routinely expanding contracts beyond the budgeted value.
30/ Transparency will allow us to independently verify the progress of these contracts and the whole market. If the analysis is left solely to the Government, we’ll just get a bunch of soviet style tractor production statistics.
31/ Finally, we have to set up a programme of improvements based on the data. We need to watch the spread of the largest suppliers and to monitor their risk. But also we need to see when buyers are letting uncompetitive tenders.
32/ With good data, we can know what works, e.g. we can test what factors are engaging SMEs and which factors are preventing them from bidding on tenders.
33/ Effectively we need a much more scientific, data led approach to find out how to deliver the key priorities for our public contracts. It doesn’t matter if they’re large or small, we should be watching and nudging them to improve.
34/ I’m currently in Norway at the launch of an EU funded project called “They Buy For You”, this project has been set up to do just this, to test and analyse public procurement data across Europe to help governments improve their purchasing.
35/ We’re just 20 people in a room, but we’re confident that we can gain new insights for a whole continent’s contracting. So this doesn’t have to be hard.
36/ @Open_Opps has already built many of the tools we need to succeed in this space. Government will say “its too hard” or “we can’t afford to monitor all of our contracts” but the reality is that we can’t afford not to.
