public procurement – Hinterland

Carillion collapse: Why we shouldn’t blame it on the banks

Ivan Annibal — Wed, 17 Jan 2018 21:24:45 +0000

Any number of people will have views about who is to blame for the collapse of Carillion. This article highlights some targets. I truly hope this episode gives very deep pause for thought for those in local government who celebrate procurement for its own sake and often have very little knowledge of the things they are buying and the professional context associated with them. When procurement becomes an end rather than a means we run the risk of this happening. This story tells us:

The banks shouldn’t escape criticism over Carillion. They backed a deeply flawed model, and lent too generously to it.

But, if we’re assigning blame for what went wrong they’re way down the list and they will pay a price for their mistakes by incurring substantial losses.

At the front of the queue should be Carillon’s executives, for allowing the business to get into such a dire state in the first place. By the way, several of them are in receipt of generous payoffs while workers, many of whom will today be losing their jobs, have to make do with small cheques from the Insolvency Services to tide them over while their unemployment claims are processed.

Then there are the ministers and civil servants who handed a vast array of vital services to Carillion, including after its problems emerged.

Want more? How about the accountancy firms who advised on the scandalous private finance initiative (PFI) contracts Carillon was such a big player in.

SMEs still being shut out as half of Whitehall spend goes on mega-deals, report claims

Ivan Annibal — Wed, 23 Aug 2017 20:10:58 +0000

This is a national scandal and needs addressing – procurement should always be a means not an end. I’m afraid, driven by very narrow interpretations of the best way to respond to austerity, the public sector in many areas has made the process of buying things rather understanding them its modus operandi. Three cheers for Barnsley and their far more insightful approach to empowering local people to choose more of the service they receive for themselves. I can provide more details for those with an interest…..

Taxpayers’ Alliance claims that the UK’s procurement spending on €100m-plus contracts far exceeds that of the rest of the EU combined

The government’s direct spending with SMEs still stood at just 10.9% of the overall total in 2014/15, Cabinet Office figures reveal

More than half of the contracts awarded by the UK government in 2015 were worth at least €100m, despite Whitehall efforts to boost the involvement of small- and medium-sized businesses in public procurement, according to a report by the Taxpayers’ Alliance.

The low-tax campaign group found that Whitehall is vastly more dependent on large public contracts – which tend to be scooped up by outsourcing giants such as Serco, Capita and G4S – than any other EU country.

In 2015, the latest year for which figures were available, the UK advertised 167 contracts of over €100m, while France – with the next highest number – advertised only 29, Italy 25, and Germany just five. Combined, the UK’s large contracts were worth €73.77bn (£80.48bn), or 52% of the total contract spend that year.

Capita accused of using major government contract to short-change small companies, driving some out of business

Ivan Annibal — Wed, 11 Feb 2015 22:27:29 +0000

This article raises some interesting questions about the role of public sector procurement. I have always thought that getting the greatest resources to the point of delivery, particularly in rural areas, where the money stretches less far, is a real challenges. Approaches like those in this article have a diametrically opposite effect and impact negatively on the sort of small businesses we have in rural locations who become part of bigger supply chains. How many RSN members have signed up to deals of this nature?

The controversial outsourcing giant Capita is facing an investigation into allegations that it used a major government contract to short-change small companies, resulting in some going out of business.

The company has been hit by allegations that it exploited its dominant position at the expense of the small suppliers it works with – while taking a minimum 20 per cent cut of the value of all contracts to administer a lucrative civil service training scheme. Three years ago ministers hailed the £250m contract to provide all civil service learning and development training as a model of how to open up the public sector to small businesses and provide better value to the taxpayer.

Under the deal, Capita took over responsibility from individual government departments for procuring training while ensuring that the majority of the work was delivered through “an open and competitive supply chain” to allow small and medium enterprises (SMEs) access to government business.

But a group of 12 companies involved in the scheme have now formed a group to take their complaints to the Cabinet Office and the National Audit Office and demand an investigation into Capita.