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Social value test for Whitehall procurements

26/06/18

Cabinet Office minister outlines ambition to create diverse marketplace - but with loopholes

Five-year-old legislation designed to reduce big business's grip on government contracts is to be strengthened as part of a package of measures to rebuild public confidence following the collapse of construction giant Carillion. However, the "major changes" announced by the Cabinet Office minister, David Lidington MP, appear to have several loopholes.

Lidington told the thinktank Reform that the Government is committed to building a "diverse, vibrant marketplace of different suppliers". To level the field for small businesses, charities, co-operatives and social enterprises he announced that the Social Value Act, passed by the coalition in 2012, would be strengthened to ensure that all major procurements explicitly evaluate social value - "where appropriate" - rather than just "consider" it.

“By doing so, we will ensure that contracts are awarded on the basis of more than just value for money,” Lidington said.

Carillion bankruptcy

The announcement builds on work by Lidington's predecessor in the 2010-15 Coalition Government, Francis Maude, to open the government procurement market to small and medium sized enterprises. Whitehall's current target is for 33% of government spend to go to SMEs by 2022. However, this commitment has been questioned in the wake of the Carillion bankruptcy and other scandals involving large near-monopoly suppliers.

Lidington also announced that central government will use its purchasing power to ensure major suppliers do better on equality and diversity.

“We will now develop proposals for government’s biggest suppliers to publish data and provide action plans for how they plan to address key social issues and disparities - such as ethnic minority representation, gender pay, and what they are doing to tackle the scourge of modern slavery,” he said.

Living wills

Other measures in the package include requiring key suppliers to draw up "living wills" which will allow contingency plans to be rapidly put into place if needed, increased transparency for major contracts by publishing key performance indicators, improved training for government procurers, and enhanced measures to protect suppliers from cyber attacks.

Meanwhile, a report on public sector procurement by the Confederation of British Industry and law firm Browne Jacobson, Partnering for Prosperity, concludes today that the key to success in government contracts is creating long term partnerships rather than short term savings.

Greater consistency in embedding good commercial practices across the public sector would help to augment the progress made at the heart of government by the Crown Commercial Service, the report states.

Combating complexity is also key to removing barriers to entry for SMEs. 

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