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Is it time to put the brake on the procurement bandwagon?

August 20th 2019

With procurement in the spotlight, Helen Cunningham asks if it is time to take stock of what procurement should do, and what are realistic expectations.

Procurement is a hot topic. With the effective scrapping of the National Procurement Service, a plethora of procurement reviews, government pilots and Assembly Committee inquiries, procurement is trending.

There is an increasingly popular belief that procurement of local goods and services will stimulate local economic development by retaining money within the economy. Preston managed to raise its purchasing of local goods and services in Lancashire from 39% to 79% over five years. It is widely seen as a successful case of community wealth building.  The Bevan Foundation itself recently recommended harnessing the power of procurement to create a positive future for the valleys. So, you could say we are part of the procurement bandwagon. With procurement in the spotlight and calls for more local procurement though, perhaps we should also ask if it’s time to put a brake on and ask a few questions?

A delicate balancing act

Procurement professionals are charged with maintaining an increasingly difficult balancing act. They have to consider the ethical employment code, living wage supply chains, fair work, SME and social businesses access to contracts and apprenticeship opportunities. All this is underpinned by a need for stewardship of public money in an era of seriously reduced budgets. It’s a balancing act worth £6bn per year nationally, and £3.6bn in local government. With multiple and what sometimes feel like competing priorities, interpretations of “value” and “good” procurement are all too often in the eye of the non-procurement professional beholder.

It’s understandable that the Welsh Government is moving towards a more nuanced understanding of value for money that can bring these strands together and include wider benefits beyond cost savings alone.

 Are there limits to local?

There are beginning to be some concerns expressed about this new approach.  The first is ‘how local is local’. Nationally, over fifty per cent of procurement is from Wales-based suppliers, but the spread across Wales is uneven and “local” inevitably looks different for Cardiff compared to Cwmbach or Monmouth or Milford Haven.

Critics also suggest that local procurement is protectionist. Protectionism can give rise to artificial pricing, low quality, poor value for money and, in its worst excesses, corruption.

The reality is that there isn’t presently the evidence to support pursuit of local procurement as a way to generate local economic growth. That doesn’t mean it should be abandoned. Absence of evidence is not evidence of absence. But it does demand clarity on what procurement should do, what are realistic expectations of its transformative capacity, and how the available evidence can inform practice.

The increase in Preston’s local procurement occurred in the wider context of active support and development of cooperatives and a Living Wage Foundation Accredited Council. There is research to show that co-operative based business models tend to be more financially resilient than other forms of business ownership and therefore support for them could be a credible tool help strengthen local economies. We also have great examples of good practice in procurement from across Wales, from breaking down contracts to support smaller suppliers to targeted recruitment and training amongst others. The familiar challenge lies in the mainstreaming of this good practice and making it the norm.

Local shouldn’t be the end in itself, but part of a wider expectation of procurement that it is fair, delivers quality and value and where it can, adds resilience to local economies. Perhaps rather than purely local procurement we should be pursuing the broader understanding of ‘progressive procurement’, which may make the procurement balancing act easier and as well as benefiting everyone. It might even be a bandwagon everyone can get on board.

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