26 July 2018 | Herpreet Kaur Grewal
The government must be more assertive in forming the market for procurement, according to a report by a group of MPs.
The Public Accounts Committee report finds that the procurement process incentivised focus on tendering and winning bids - not on ensuring the right supplier.
The report states that the collapse of Carillion in January sharpened the focus on the relationship between government and its strategic suppliers - companies that receive over £100 million in annual revenue from government contracts.
The committee states that "there is no excuse for small and medium supplier businesses not being paid on time" and it recommends "that the government considers a project bank account approach and reviews the impact on small business. It expects the government's proposals for supporting SMEs to include measures to address the following:
Delays in payment
Preferred supplier discounts
Increasing the use of project bank accounts;
Reducing the barriers to the direct bidding to government;
Supporting consortia bidding
The report adds: "We recommend that the government consult with SMEs on the most appropriate way to incorporate these measures into contracts."
Committee chair, Meg Hillier MP, said: "The Public Accounts Committee has long highlighted weaknesses in government contracting and the lessons it must learn if it is to outsource effectively for the benefit of service users and taxpayers."
Hillier added: "Vast sums are invested across vital public services, with far-reaching impacts on the lives of citizens. It is critical that their money is spent wisely and with their best interests at heart.
"This report, which follows our publication of the government's Carillion risk assessments and new evidence taken from government and strategic suppliers, makes important recommendations in this direction.
"In particular, we have identified a need for government to be more assertive in shaping the markets in which it operates, with a renewed focus on driving value for taxpayers' money."