Local authorities could save £1.8bn a year by improving the way they collaborate in procuring goods and services, a hard-hitting report from MPs says today. The Communities and Local Government committee also calls for more transparency in contracting.
Councils spend £45bn a year on goods and services the report says. To get better value for money it recommends:
- More collaboration. The Local Government Association (LGA) should produce best practice guidance on the most effective means of joining up procurement to deliver savings. However the report warns that collaboration should be left to local initiative: "Compulsorily centralising procurement operation would not only produce practical difficulties but also severely limit the flexibility of councils to deliver local objectives."
- More emphasis on social value and local business. Councils must exploit the potential of procurement to deliver local priorities by letting contracts not just on the basis of price, but on the basis of wider social value. "Councils should present an annual report to a full council meeting setting out their strategy for incorporating economic, social and environmental value in its procurement, including the impact on local economies and small businesses."
- Reducing the burden on businesses. It says the LGA and central government "should clearly spell out what is a proportionate approach that will both meet EU requirements and streamline approaches". Paperwork should be standardised, particularly pre-qualification questionnaires. "Suppliers wanting to work with more than one council often have to complete multiple, complex forms that demand excessive information. If pre-qualification questionnaires are to continue they have to be simplified and standardised so companies can reuse a completed PQQ across the sector".
- Firmer action against fraud. "Councils must not 'let and forget' contracts but should pro-actively tackle fraud throughout the lifetime of a contract, not just at the tender stage. More must also be done to encourage whistleblowers and an anonymous reporting channel should be created."
- More transparency. "The LGA should consider how to increase the transparency of commercial contracts and local authorities should make greater use of open book accounting and consider placing similar requirements on information provision by contractors as apply to a public body." The report warns that outsourcing can dilute transparency if commercial confidentiality is used as an excuse for inhibiting scrutiny of outsourced co"Increasing transparency is essential if fraud is to be identified and the public is to see what value the council is getting from contracts."
Clive Betts, the committee's chair, said: "Procurement is too important to be viewed as a niche function conducted in back offices. We need investment now so that staff right across councils gain the skills needed for effective procurement. At times staff, unsure of the needs of local residents and business -- especially small local businesses -- fall back on wasteful bureaucracy. This has to stop."
The report coincides with a blistering attack by the Public Accounts Committee on central government's record on managing outsourcing. Its report says that the government needs a far more professional and skilled approach to managing contracts and contractors, and contractors need to demonstrate the high standards of ethics expected in the conduct of public business, and be more transparent about their performance and costs.