Ministers get just 5/10 in CBI report on procurement

By ERIKKA ASKELAND
Published on 12/11/2012 00:00

PRIVATE-SECTOR companies have delivered a verdict of “needs improvement” on the UK government’s reform of how it procures contracts in the wake of the aborted West Coast mainline rail franchise, a new survey out today shows.

The government’s implementation of procurement reform was given an average score of only five out of ten by businesses surveyed by the Confederation of British Industry (CBI).

Respondents said that reform is heading in the right direction – with an overall score of 8/10 – but implementation is slow. The government’s record of achieving faster procurement scored just 4/10.

Although the government has pledged to reduce the complexity of the procurement process, this has had the least impact so far, with a score of just 3/10 for implementation to date, the report added.

The UK public sector spends £230 billion a year buying goods and services from the independent sector. The CBI said that driving growth through “smarter” procurement could have a significant impact on the health of the private sector, but the government only managed a score of only 4/10 on this count.

John Cridland, CBI director-general, said: “The recent problems over the procurement of the West Coast franchise have once again highlighted the challenge the public sector faces in its relationship with the private sector.

“As the complexity of deals increases, we need to see urgent improvement in the level of commercial skills that are ­second-nature to businesses, but are too often absent in public sector procurement.

“And more contracts should be focused on agreed outcomes, which deliver certainty and value for the taxpayer.”

Kevin Craven, chief executive of Balfour Beatty Services and chairman of the CBI procurement panel, said: “The government has the right policy solutions but, as suppliers, we are yet to feel the changes on the ground. Procurement reform needs to be part of a larger conversation about industrial policy and public service reform where industry wants to play its part.”

Businesses in the survey highlighted the need for bid documents to be simplified and standardised and the number of bid portals to be reduced. Individual departments can drive reform further by keeping to deadlines and publishing procurement performance metrics, the report added.

Sam Laidlaw, chief executive of Centrica, is currently leading an investigation into the West Coast Mainline franchise bidding process which collapsed last month. He is due to file his report by the end of the month.

The Department of Transport scrapped its decision to award the 13-year franchise to ­Aberdeen-based First Group and not the incumbent, Virgin Trains, which is part-owned by Stagecoach.

Estimates suggest the taxpayer will be landed with a bill of more than £40m to pay back the companies’ tendering costs.

Patrick McLoughlin, the new transport secretary, who took over from Justine Greening, said of the department’s blunders in auctioning off the West Coast rail franchise: “It’s embarrassing, it’s deeply regrettable and basically it’s unacceptable.”