Regulaton & Policy
Scotland Wants Public Procurement to Identify “Good Employers” – A Flawed and Impractical Approach

I think we can confidently predict more corruption in public procurement in Scotland over the next couple of years. What makes us say that? It is the issue last week of a new set of guidance from the Scottish Government titled “Selection of Tenderers and Award of Contracts – Addressing Fair Work Practices, including the Living Wage, in Procurement”.

We wrote here about the views of Munir Podumljak, anti-corruption campaigner from Croatia, who explained at the recent public procurement conference in Prague that the principles of European procurement were all about opening up trade, and allowing the very best suppliers around the Continent to compete and win work internationally. That would drive innovation and business performance, supporting economic growth and employment. On the other hand, the more contracting authorities try to favour small firms, local firms and give preference to non-value for money factors, then the greater the chance of corruption. We will ask him his views on the latest initiative from the Scottish government – but whilst we wait for that, here are our thoughts.

We recognise the importance of procurement being open to small and local firms, and support the idea that innovation in particular needs to be encouraged. BUT … the more constraints, barriers and subjective judgements that we allow to impinge on procurement, the greater the chance of corruption, favouritism, and plain bad procurement decisions. With this new guidance, the Scottish government appears to have tipped over the edge.

For a start, this is virtually unintelligible and incomprehensible as a document. European legislation does not allow contracting authorities to impose a requirement for a “living wage” to be paid – but the guidance makes it very clear that it is sort of expected. In fact, it ties itself in knots in trying to stay within the legalisation whilst also trying to make it clear that buyers should take these points into account. So we get nonsense like this:

The question should ask bidders to describe the package of measures which demonstrate their positive approach to fair work practices in delivering the public contract. We regard a commitment to the Living Wage as one of the clearest ways in which a bidder can demonstrate this positive approach.

Payment of the Living Wage is not the only indicator however, and it should be emphasised that whilst failure to pay the Living Wage would be a strong negative indicator it does not mean that the employer’s approach automatically fails to meet fair work standards.

How am I supposed to implement that as an operational procurement manager running a tendering process? Then, there are all the other factors that are supposed to be taken into account when evaluating suppliers bids.

They should be able to demonstrate that they are good employers who have adopted policies which comply with relevant employment, equality and health and safety law, human rights standards and adhere to relevant collective agreements, and describe how they adopt fair work practices for all workers engaged on delivering the contract.

This includes, for example, fair and equal pay (for example, supported by equal pay audits), respecting employee rights, avoiding exploitative employment practices, supporting progressive workforce engagement by, for example, involving their employees in decision making and encouraging staff to join an appropriate Trade Union and play an active part in it.

So good employers “encourage their staff to join a trade union” – what absolute nonsense. The best firm for employees I ever worked for certainly didn’t do that.

Anyway, the impossibility of implementing this “properly” will mean that it encourages corruption and also favours the large firms who know how to play the game. You can imagine Capita or Cap Gemini already composing their standard response to this, full of all the right words. (Of course, no buyer will have the time to check whether the supplier is actually doing what they claim). It is yet another factor that will also deter small firms, unless of course they have an inside track, a friendly politician or executive who can subjectively decide that they are good employers, in return for a nice campaign donation or brown envelope.

The Scottish government has done some good work on procurement in recent years, but here it appears to have moved into making a political point that will do nothing to improve public procurement, or the value that the citizen receives from its government and its suppliers.

Voices (2)

  1. Les Mosco says:

    The Scottish Government introduction of a ‘good employer’ test is indeed flawed. I’ve worked in the private and public sector (and, coincidentally, many years ago I set up the then new Scottish government procurement department). I used to argue against using public procurement to pursue public policy initiatives, but I’ve come round to accepting that it is legitimate. Its ‘simply’ a matter of adding some additions to the specification of the underlying requirement. Done properly and with care, this can work and create added benefits from the use of taxpayers’ money, especially if the update EU regulations don’t mke it near-impossible, as they used to. The problem comes:(a) when the list of such initiatives grows so long that they can be mutually contradictorry (which of local, green, small, minority owned, living wage etc takes precedence?); (b) they run counter to best Value for Money; (c) they require more work to run competitions and manage the subsequent contracts, whilst procurement resources are being cut back; and (d) when the definition of ‘good’ is unclear and hence open to (mis)interpretation and subjective judgement, making fair assessment difficult, ripe for legal challenge, and open to undue biased political interference. For all the reasons set out in the lead article, this initiative trangresses point (d) at least.

    1. Peter Smith says:

      Thanks Les – I’d forgotten you set up the first Scottish Government procurement function during your illustrious career! I suspect we will come back to your excellent a – d list again – very useful. And I think I would argue this new guidance probably applies to points a and b as well as d.