Public Procurement - Outsourcing Accountability?

The report found that the Department for Regional Development (DRD) failed to properly investigate allegations of favouring a particular firm when awarding contracts for road signs. One of the allegations was of undue ‘closeness’ between Roads Service Officials and the firm in question. This follows criticism of the NI Fire Service for purchasing equipment from a company ‘ran by’ a senior member of staff.

Some claim that in a small place like Northern Ireland ‘everyone knows everyone’ and it is not uncommon for those awarding and tendering for contracts to be acquainted socially and/or professionally. Indeed far from being a bad thing, since the publication of Robert Putnam’s Making Democracy Work (1993) a whole literature has emerged extolling the economic benefits of relationships or ‘social capital’. Networking is now considered a core part of business practice on the basis that it is not just what you know, but who you know. Rather than criticising those whose networks gives them an edge, we are all encouraged to compete for the relationships that oil commercial life.

While in the private sector such personal connections are considered part of the game, the same is not true of the public sector in which objectivity in procurement is expected. Of course subjectivity is difficult to eliminate completely. Assessments of any kind invariably draw on judgements that are open to a degree of debate. People can come to very different conclusion despite being asked to apply the same criteria. Even if the space for reasonable disagreement is marginal, slight changes in criteria or scorings can swing the outcome from one bid to another.

Given the potential for bias (conscious or unconscious), transparency and scrutiny are vital. It is therefore concerning that it took action from whistle-blowers to bring concerns to light in relation to the procurement practices of DRD and the Fire Service. Similarly it took legal proceedings to bring to light ‘technical flaws’ in the controversial award of the West Coast Mainline contract in Britain.

Is it a question of skills? The former head of the British civil service recently argued that higher pay (in excess of the Prime Minister’s annual wage of £142,500) is needed to attract civil servants with the required expertise in procurement - an audacious position in the current economic climate. Perhaps a focus on technicalities misses the bigger picture? Some contend that the more fundamental matter is an overreliance on privatisation, an issue too often cheapened by vested interests and ideological stereotypes. For example having elsewhere suggested that departmental hostility towards Virgin Rail underpinned the West Coast debacle, Richard Branson was happy to cite government incompetence when the idea of renationalisation was suggested, stating tritely that if government “can’t run the [procurement] process they are going to have even more difficulty running a railway”.

As the devil is often in the detail, the merits of different models of public and private provision are best considered on a case by case basis. But there is a valid wider concern that as service delivery is dispersed among various contractors and sub-contractors the matter of accountability becomes increasingly ambiguous. Theresa Villiers, the Transport Minister who oversaw the West Coast procurement exercise, was appointed Northern Ireland Secretary of State shortly before the errors were made public. It is unclear whether the transfer to Northern Ireland constitutes a reprimand for Ms Villiers, but the government publicly blamed - and suspended – three civil servants. This suggests at least that some element of the state will take responsibility for the procurement process.

But does accountability stop there? Who is accountable once a contract is awarded to a private organisation which in turn employs other contractors? The Department for Finance and Personnel recently introduced an initiative designed to ensure that sub-contractors in construction are paid directly by government, rather than having to wait for main contractors to process their payment. This suggests that there are circumstances in which government will intervene in commercial agreements between main and sub-contractors. In contrast, the Employment Minister in Britain recently stated that the contracts agreed by sub-contractors were “entirely down to them”.

The implication that in contracting out services the government can divest itself of responsibility for the consequences – or at least the negative consequences - is deeply troubling. Government should be held to account both for the process of awarding contracts and for the outcomes of those decisions. It should not be allowed to outsource its democratic responsibilities.