Regulaton & Policy
Professor Sue Arrowsmith and a Bracing View of Sustainable Procurement

Last Thursday we took the  impressively on-time train service from East Midlands Trains up to Leicester for a one-day seminar on Socially Sustainable Public Procurement organised by the Leicester University Law School. There were around 30 delegates, a mix of academics, procurement lawyers and procurement practitioners, that group coming largely from local government and universities.

We did a quick summary of the event here on our Spend Matters UK/Europe website. But today let’s look in more detail at the keynote session from Professor Sue Arrowsmith of Nottingham University , the most highly regarded academic lawyer on public sector matters in Europe, we would say.

Her topic was sustainable public procurement, both the current landscape and the implications of Brexit. Historically, the attitude to ”sustainability” as a priority in public procurement has been a pendulum. The 1970s saw it getting popular in local government in the UK; for example, sanctions against South Africa. But it was largely ignored in EU law.

In the 1980s, under PM Thatcher, we in the UK saw more focus on value, and indeed central government clamped down on local authorities using procurement in this way. But it was still ignored by EU law. By the 1990s, it was still unpopular in the UK, and now the EU Commission started considering it – but agreed with the UK and continued to focus more on priorities such as value, transparency and openness.

But the 2000s saw a change. That was under “New Labour” in the UK, who wanted procurement to address all sorts of wider issues. Having been involved personally at this time, it got to the point of overload, but Peter Mandleson for Labour and then Francis Maude for the coalition government in 2010 got it back to a manageable state. But now the Commission was getting interested in the agenda too, and specialists in environmental, labour and social policy issues got involved.

Arrowsmith argued that we really need to look at specific cases to assess the sustainability issues.  What are the costs, what are the benefits? There are real costs to contracting authorities and the supply side; our sustainability demands may deter participation or increase prices. We might see less competition, more complexity for buyers, and higher prices. There is a fundamental question here; is public procurement the right way to achieve the desired benefits? There are other routes (legislation, taxation, persuasion …)

We should also realise that greater discretion opens up the possibilities for corruption – the opportunity to set sustainability requirements to favour some suppliers, or abuse of power in decision making e.g. in the potentially subjective assessment of the ability to deliver social benefits. (this is a big personal worry; anyone who reads Private Eye will understand that local government in the UK has its fair share of bad apples, for instance).

But Arrowsmith accepts there are concrete benefits from effective sustainability focus, such as creation of jobs for disadvantaged groups. There is also the benefit via government bodies “setting an example and changing public attitudes”, and of course removing unfair competition. Firms who don’t comply with basic rights should not be able to undercut decent businesses and win public contracts.

There can also be tensions between different policies e.g. promoting SMEs (smaller firms) versus social and environmental benefits. So we could see costs to SMEs without resulting benefits, particularly if the  policies are in reality simply “tick-box” in nature. .

So how do you design effective sustainability policies? Procurement is a soft target in effect for politicians. It looks good, plays well with voters but the costs are invisible – we just don’t know the cost of these policies.  If you said “we’re giving a grant of £5 million” to support a policy then people would ask questions, but the equivalent cost in procurement spend is hidden. So we do need to think about whether other policy tools are more effective in achieving policy goals. And few organisations really evaluate the costs and benefits – the limited amount of academic research in different countries has come up with little tangible evidence of success.

So, a bracing view from the professor; we will be back with part 2 when we will look at her thoughts on how to make sustainable procurement more effective, and also what she thinks Brexit will mean to this agenda and indeed public procurement more generally.

Voices (3)

  1. Phoenix says:

    Of course the cost to suppliers of providing apprenticeships or other employment and community investment policies come as extra. And it matters that taxpayers should have some visibility of these costs.

    But since you are lumping these together with other ‘sustainability goals’ I want to make it clear that requiring suppliers to public service to meet mandatory ethical and sustainability standards should not be viewed as some avoidable cost. Imagine the scandal if a local council were to be found illegally dumping toxic waste. Or if an NHS Trust were deliberately exposing its workers to toxic chemicals without proper protection. Or if a central Government department were illegally denying social benefits that workers were entitled to by law. When their contractors do this in their name it’s exactly the same.

    All of this compliance costs money, yes, but it shouldn’t be viewed as avoidable cost – it’s the cost necessary to meet anti-pollution legislation, health and safety standards or local labour legislation. As you say, we must not allow those suppliers that flaunt these laws to undercut legitimate businesses to win public contracts. That’s not a premium cost for sustainability or ethics – it’s the true cost of the goods and services we buy. Let’s not mix these up!

    1. Dan says:

      Is this classed as ethical/sustainable procurement as its generally defined or are they legal minimum standards to be dealt with through risk management processes? Should we even be drawing a distinction?

  2. Sanjay says:

    I think issue of cost is indeed very important. However as I understand sustainable procurement is all about minimizing negative externalities of procurement on environment, society and human health.These extremities are not without cost. The fact that sustainable procurement tries to take these costs, it is good for tax payers.

    Secondly, perception that embedding sustainability leads to additional cost to taxpayers has often been found misplaced. For example, cost of recycle paper in many countries are less than that of virgin papers.