Implement public procurement reforms ambitiously so covid scandals can’t be repeated

Accounting for a third of all public spending, procurement is absolutely critical to our economy and national prosperity. However, even during non-emergency situations, procurement is recognised by the OECD, European Commission, and the UN Office of Drugs and Crime as the biggest corruption and fraud risk area for governments.

Public contracts touch every part of our lives from roadworks to school meals to critical medicines - so when things go wrong, the impact on society can be devastating.

The Covid-19 pandemic exposed serious weaknesses and corruption risks in the UK’s procurement system. In fact, the pandemic offers a perfect case study of how not to execute procurement during an emergency. Not only was the government badly prepared in advance, but subsequent efforts to get vital equipment to healthcare staff were extremely poor.

The most egregious aspect is perhaps the ‘VIP Lane’, where elected officials fast-tracked the businesses of friends and associates for emergency contracts. Many contract awards went to newly-founded businesses run by people with absolutely no experience in procuring or providing healthcare equipment. Effective procurement systems are created to keep politicians out of contract decisions, rather than integrating them into the process.

The UK Government spent £12bn on PPE during the pandemic. £4bn of this was spent on equipment that failed to meet NHS standards, and 25 of the 50 companies in the government’s ‘VIP Lane’ supplied a billion pounds’ worth of PPE that was unfit for purpose. To this day, there are missing documents for key contracts, including the sources of referrals through the ‘VIP Lane’ and considerations of conflicts of interest. Much of the PPE has now had to be burned, or locked away in storage containers that are costing the taxpayer millions of pounds a year.

Whilst emergency procurement situations bring huge challenges, our research found that the UK’s response was uniquely weak in the context of the international community. Other countries were able to maintain high standards and provide frontline workers with the necessary equipment.

The Procurement Act 2023 went some way to resolve the fundamental problems in the UK, but we now have a once-in-a-generation opportunity to reform UK procurement meaningfully and ambitiously. This will be an essential part of regaining public trust and will help future governments buy better as we harness the AI revolution, rebuild our infrastructure, and achieve net zero.

We call on the government to:

  • We should use the powers of these laws to deliver mission driven, best value procurement with a social purpose. We should also use the new debarment and supplier performance assessment tools to hold companies to account when they fail to deliver. We should be:

    • Breaking down silos across the whole commercial lifecycle of planning, procuring and implementing government contracts.

    • Clearly referencing mission objectives in an updated National Procurement Policy Statement and giving all central departments a public policy statement explaining how their buying will feed into these policies.

    • Making the desired social value more explicit in invitation to tender documents and relevant notices, with contractors’ social value commitments more clear in contract award notices, and mission-related outcomes linked to key performance indicators.

  • Citizens, public procurers, businesses, journalists and civil society have a right to know exactly how public money is being invested. So we should create a free digital register of procurement notices for end-to-end transparency across the commercial cycle, and invest in data analysis tools:

    • Consider international best practices to build a user-friendly, digital whole-of-government e-procurement platform. This would involve rethinking the digital workflow behind planning, procuring and delivering UK contracts to reduce friction, duplication and paper-based reporting. We have seen huge impacts from this approach in other countries. The government could commission a feasibility and delivery study, including options of what digital public systems should be reused, what should be bought as software and infrastructure capabilities from the digital marketplace, and what can already be created using GOV.UK building blocks. 

    • Record and share detailed data on procurement and spending, including beneficial owners of organisations awarded public contracts. This would be essential if the government is to achieve its objective of halving the amount it spends on consultancies. It would also help measure engagement of small businesses, regional spending and economic inclusion, and our progress towards net zero.

  • From digital transformation to greater training and reducing our reliance on consultancies, there are various ways we could make our public sector stronger:

    • Focus on skills, capabilities and capacity for digital transformation in complex public sector environments. Put in place key behaviours to transform public sector culture through open, collaborative and constructive ways of working, honesty, inclusivity and integrity. Bring together capable, multi-functional teams across government to lead procurement, especially around net zero and emerging technologies areas like AI. 

    • Support the development of in-house civil service professionals empowered to engage the market and individual suppliers to understand what is possible, encourage innovation, and to develop resilient supply chains. If the government plans to reduce the huge sums spent on consultancies, it needs to rebuild its own commercial and collaborative capabilities, especially in contract management. It should also implement a strategy to shift consultancy expenditure into core-funded and sustainable positions within the civil service.

    • Strengthen the Procurement Act’s Learning and Development offer and add more resources and best practices to this end.

  • In 2023, Rachel Reeves promised a Labour Government would appoint a Covid Corruption Commissioner. Seeing accountability for pandemic profiteering in the UK contributes to Labour’s commitment to regain public trust and to safeguard taxpayers’ money. We would strongly recommend focusing on the following areas:

    • Investigate how the UK took such a poor set of procurement decisions during the pandemic, including the infamous ‘VIP Lane’.

    • Adopt the approach of the U.S. Federal Government, which established a Pandemic Response Accountability Committee to fast-track and coordinate investigating fraud, waste and abuse of the US Federal Government’s Covid spending. There are also good UK examples on how a Commissioner role (such as the Children’s or the Anti-Slavery Commissioner) can add value to the existing ecosystem of agencies and actors by asking difficult questions, chasing for a response, as well as spotting gaps in government processes.

    • Look at whether the rules for tackling conflicts of interest and profiteering, especially in relation to political donors, are robust enough in the new Procurement Act to prevent future conflicts of interest.

    • Bring forward legislation to introduce a duty of candour for public servants, including specific reference to public procurement contracts.

    • Use the debarment and supplier performance assessment tools in the Procurement Act to hold companies to account when they fail to deliver contracts or commit wrongdoing. Implementation should be kept under review to see if the rules are adequate or if they need to be improved.