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Maude to expand Mystery Shopper service, increase use of open procedure in procurement

Nine out of ten cases investigated in the last three months by the Government’s Mystery Shopper service resulted in a Whitehall department, local authority or public body changing a live procurement process or pledging to re-examine procedures in the future, the Cabinet Office Minister has revealed.

The release of the latest figures comes a week after the Government said it would be extending the service by investigating complaints about unfair practices in the supply chain of government contracts.

The move was part of a package of measures unveiled in speeches this week and last by Francis Maude and aimed at boosting SMEs’ share of government contracts.

At the Procurex conference in Birmingham today the Minister told delegates that he also wanted to increase the use of Open Procedure, which he claimed was “faster, more effective and gave SMEs a much better chance of competing”.

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Maude highlighted how just 29% of procurements currently use the Open Procedure in the UK, while – according to the EU opportunities portal – the figure rises to 93% across the rest of the EU.

“In the past one of the things that has held back the greater use of open procurement was the public sector’s refusal to talk to the market first,” the Minister said.

“It’s been a case of fools rush in – with public bodies starting the formal process blind to what the market could offer – and suppliers similarly unprepped on what they were looking for.”

The Minister said that in future major procurements should only take place after the government has spoken informally to potential suppliers. “So we can make swift off-the-shelf purchases where appropriate or quickly choose the right supplier for the job,” he said.

Maude also stressed the presumption in Whitehall against using the “clunky and protracted” competitive dialogue process, “which in our view slows things up unnecessarily”.

The Minister meanwhile told the conference that he was “delighted” that Communities Secretary Eric Pickles had asked the Local Government Association to work with the DCLG to develop a scheme to streamline the PQQ process for contracts above £100,000.

The LGA is taking steps to remind local authorities “that they should be doing all they can to reduce the burdens on small business, including putting projects in the pipeline on Contract Finder”, Maude said.

The Cabinet Office Minister also told delegates that:

  • Central Government’s overall procurement spend was forecast to reduce to £43bn, 8% down from last year and 14% from the £51bn that was being spent when the coalition government came into office;
  • One of the Government’s biggest suppliers, Capgemini, had agreed changes to its IT contract with HM Revenue & Customs that would deliver £200m in savings by 2017;
  • Some of the savings were being reinvested in the procurement profession. “This will be crucial for Whitehall Departments now using Lean sourcing principles to ensure all but the most complex procurement projects are completed within 120 days”;
  • More than a third of the 6,132 contracts posted to date on the Government’s Contracts Finder website had gone to SMEs;
  • Ministers were committed to getting subcontractors paid within the same contractual terms that the Government pays prime suppliers, in part by extending the use of Project Bank Accounts.

On the Government’s focus on procurement, Maude said: “The era of cosy gold-plated contracts held by a small oligopoly of suppliers is over and we are no longer tolerating poor supplier performance.”

He added that the Government expected the wider public sector to follow its lead in levelling the playing field for smaller companies. Ministers’ ‘aspiration’ is for 25% of central Government spend to be delivered both directly and within supply chains through SMEs by the end of this Parliament.

Maude’s speech at Procurex comes on the back of Government measures announced last week aimed at supporting SMEs.

“One crucial element is breaking up contracts – across the public sector they don’t have to be so big and complex that smaller companies can’t get a look in,” the Minister told delegates.

This is to include a new approach to Government IT contracts, which in future will be made more flexible, starting in two areas – application software and infrastructure IT.

The Cabinet Office said the Government would introduce set breakpoints in IT contracts so there was less money locked into large lengthy contracts. Whitehall will also look to disaggregate future contracts.

Other changes include:

  • A pilot of new approaches that would make it easier for SMEs to form consortia to win Government business;
  • The appointment of an SME ‘champion’ in each Whitehall department to drive change;
  • Asking SME suppliers to rate departments on how ‘SME friendly’ they are;
  • The introduction of transparent feedback mechanisms so that public bodies can rate the performance of companies delivering procurement contracts. “This will help high performing companies win a greater market share of procurement projects”.

Philip Hoult

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