Complaints to government about public procurement soar by 45% in 2010/11

The number of complaints made to the Office of Government Commerce about public sector procurement rose by 55% in the last year, research by McGrigors has revealed.

According to the law firm, there were 73 such complaints over the 12 months to 30 June 2011. This compares to 47 the previous year and just 14 in 2007/08.

McGrigors said the proportion of complaints subsequently investigated by the government had also risen sharply. Some 89% were investigated in 2010/11, compared to only 45% the year before.

Fourteen of the contracts investigated following a complaint are now being amended. There were no such cases in the previous two years.

The law firm said that competition among bidders for government contracts had intensified as the amount of work in both the public and private sector had decreased. It also predicted that disputes would be fuelled as spending cuts kick in.

Stuart Cairns, Director at McGrigors, said: “The recession has meant that public sector contracts are at a premium. There are fewer contracts to go round, so disputes over how contracts are awarded have become more frequent and bitterly fought.

“There is a lot at stake. For many bidders the risk of failing to secure a public sector contract can mean the difference between survival and going out of business.”

He added that increased competition was squeezing margins on the few contracts that were still available, meaning that developers needed to win even more contracts to compensate. “The inevitable outcome of a smaller pie is more arguments over fewer pieces.”

Cairns said: “The government is coming under intense pressure from bidders to investigate complaints thoroughly. Bidders are increasingly aware of their rights under procurement law and as such, are much more likely to take the government to court if they feel the bidding process was flawed.  With public finances stretched, the last thing the government wants is to end up in costly court battles.”

He added that the perception was that courts had ruled in favour of private sector bidders in a number of recent cases. “This may have emboldened other potential claimants to bring legal action against the government.”

Philip Hoult