This is the second in our series of ebriefings on the Government's Green Paper: Transforming public procurement. The first one on public procurement principles can be found here.

This one looks at the Chapter 1 proposal to set up an 'oversight' body. The Government is proposing that this body will have powers “to review and, if necessary, intervene to improve the commercial capability of contracting authorities", as well as the power to issue improvement notices and ultimately to restrict spending.  

Whilst these proposals may be appropriate for central government contracting authorities, they are of concern for contracting authorities that are not part of the central government.

If the central government body (i.e. the regulator) is to have the ability to intervene in the procurement processes of contracting authorities, this should be limited to situations where the contracting authority is in substantial or persistent breach of the new public procurement rules. The right to intervene should not be based on subjective tests such as a failure to act commercially or a failure to take account of the public good.

In relation to the proposed power to issue improvement notices, the obvious question here is what powers the body will have to enforce those notices and what sanctions will apply for non-compliance. The term 'improvement notice' has echoes of the health and safety regime, where a failure to comply with an enforcement notice is both a criminal offence and can lead to regulatory action. These types of sanctions are completely inappropriate remedies for breaches of the public procurement rules, so the term 'improvement notice' is an unhelpful one.

The real sting in the tail of these proposals is the suggestion that the Government body should be able to impose spending controls. For local authorities, a significant proportion of their spending will be in order to discharge statutory duties. If the central government procurement body restricts this spending, then the authority could be in breach of statutory duty and potentially subject to claims from individuals and ombudsman investigation. What is needed is support to help contracting authorities spend money better, not a power to prevent the authority spending the money at all.

In the case of registered providers of social housing, many of these contracting authorities will be charities and some of them registered charities. If these kinds of organisations are to continue to be contracting authorities, then it is inappropriate for a central government body to have the power to restrict expenditure by them in furtherance of their charitable purposes. Fairly recently, the government took steps to ensure that registered providers of social housing were not considered to be part of the public sector for the purposes of public borrowing. The introduction of a power to restrict the expenditure of registered providers may well be the kind of central government control that may lead to the Office for National Statistics (ONS) reconsidering whether they are part of the public sector again. If registered providers are to be subject to specific regulation of their procurements, it would be better for these regulatory powers to be given to the Regulator of Social Housing than to create a new central government regulator.  

We will be making these comments in our response to the consultation paper, which is to be submitted by 10 March 2021. In the meantime please look out for further ebriefings on the Green Paper.

Please note: Given the number of procurement ebriefings we are issuing at the moment, these will just be made available on our website. They will not be emailed out to our newsroom subscribers until a 'bumper' Green Paper version is sent towards the end of the consultation period.

For more information

For further information in relation to any of the above, please contact your relevant ACS contact or Andrew Millross.