No proof of ‘value for money’ for billions spent on public procurement
The government cannot demonstrate “value for money” for billions of taxpayer-funded public procurement, a group of MPs have warned.
Ministers spent £295bn procuring goods and services in 2021-22, a report by the Public Accounts Committee (PAC) found, but cannot show it is achieving competitive pricing.
The report warned “significant issues” with poor and incomplete data on contracts is preventing officials evaluating market trends to score better deals with public cash.
From 2018 to 2022, six per cent of large contracts did not have “basic information” on the process used, and of 235 large contracts from 2021 to 2023, a fifth received just one bid.
While around a third of over £100bn awarded during 2021-22 was not subject to competition, despite an estimated £7.7bn of savings being possible via increased competition, it found.
Dame Meg Hillier, PAC chairman, said the government’s approach was “disappointing” and stressed its purchasing was equal to “the cost of building multiple HS2 rail lines every year.”
She added: “Public procurement is deserving of the most thorough oversight to ensure value for taxpayers’ money.
“Departments are also not doing enough to ensure robust competition for their contracts, leaving untold billions in savings every year on the table.”
Titled ‘Competition in public procurement’, the report also found no evidence the government was consistently using “purchasing power” to create new business, jobs and skills; tackle climate change; reduce waste; or improve diversity.
There are also concerns the government is “not prepared to successfully implement” the Procurement Act, set to come into force in 2024, which aims to improve the process – with no clear investment plan; no timeline of key steps; or assurances of critical commercial skills.
Recommendations for the Cabinet Office include: better evaluating trends; improving data publication and transparency; outlining best practice including on framework procurement; improving access for SMEs; and offering further guidance on Procurement Act compliance.
Hillier added: “The Cabinet Office needs to act swiftly to dispel any continuing lack of transparency around publicly funded contracts, so that taxpayers are able to see clearly how their money is being spent and not find this hard to discover.”
A Cabinet Office spokesperson said: “Value for money is always the number one priority, and our specialist teams have saved the taxpayer £2.9bn in the last year.
“Our new Procurement Act will also help us to improve data quality and analysis when assessing bids, while our commitment to transparency means all contracts are published online for public scrutiny.
“The report is also misleading as the figure cited doesn’t account for the fact many of these contracts are extensions of existing ones which already went through open competition, or open procurements which had one bidder.”