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Single sourcing

With billions spent on new contracts for PPE, the pandemic has put government procurement practice under intense scrutiny. To what extent does the Government deserve criticism and are there any ways we can improve this in future? Dr Luke Butler, of the School of Law, says the University of Nottingham AHRC funded project ‘An Urgent Review of Single Source Procurement During the Pandemic: Recommendations for Best Practice and Reform’ addresses just some of the issues.

What is single source procurement?

Public procurement is about buying from the private sector to deliver vital public services. Open global competition is the received norm or rule in which public bodies advertise contract opportunities, all or most suppliers can bid through a tendering process, and criteria for making awards are clear. This generally results in the best prices and value for money. But what if there is only one supplier able to perform? What if an emergency means that it is not possible to conduct lengthy open competitions because of a need to fulfil an urgent requirement?

Whilst the media has reported that the Government has “suspended normal tendering processes”, UK law, in fact, expressly authorises non-competitive awards in circumstances of urgency. Public bodies do not have to advertise contracts before award and can negotiate directly with a single supplier. They must nevertheless publish contract information after award so that the reasons are clear to other suppliers and the wider public.

What is the scale of single sourcing and why has it been problematic?

During the pandemic, the Government faced a global competition to source PPE. Single sourcing was a means of meeting demand quickly. The National Audit Office Investigation into government procurement during the Covid-19 pandemic has reported that £10.5 billion out of a total of £17.3 billion of new contracts awarded have been single source. However, ultimately, the less open a process, the greater risks to transparency, higher prices, reduced performance and even corruption. The NAO found a lack of transparency and accountability on issues such as keeping records and reports of the process followed.

This was echoed by the Public Accounts Committee report Covid-19: Government procurement and supply of Personal Protective Equipment which criticised use of a “high priority lane” to quickly process certain offers deemed more credible (e.g. on politician’s recommendations).

Further, a recent legal challenge by the Good Law Project against the Department of Health and Social Care ([2021 EWHC 346 (Admin)) determined that the Department acted unlawfully by failing to comply with its own transparency policy and principles in delaying publication of contract information.

"The University is working with the OCP to identify the problems in accessing and publishing single source contract data and draw on international experience to improve transparency."
Dr Luke Butler

How does our research help to address these problems?

The media has reported cronyism and waste of taxpayers’ money. However, there has been less focus on constructive ways of addressing single source shortcomings. What would the critics have done differently and what are some of the possibilities? Our AHRC funded research sets out to tackle some of the questions which have been posed in light of recent events.

Better public contract data and access to it

The Open Contracting Partnership Lessons from the Covid-19 pandemic: findings and recommendations for better emergency procurement has found that transparency of procurement data is a major problem for many countries (not just the UK). The University is working with the OCP to identify the problems in accessing and publishing single source contract data and draw on international experience to improve transparency.

This aligns with the Cabinet Office’s Green Paper on Transforming Public Procurement which is proposed to radically reform how public procurement is regulated following Brexit. This reinforces a strong commitment to use of Open Contract Data standards. It is hoped that improvements to collecting and accessing data will go some way to addressing transparency concerns.

Single source procurement processes that are responsive to unique emergency circumstances

Similarly, concerns about the lack of any clear strategy for making single source awards during the pandemic have not gone unaddressed. It is worth emphasising that the pandemic saw unprecedented changes in buyer-supplier dynamics. Normally, public bodies receive few tenders to process. In the pandemic, the Government received thousands of offers from suppliers globally. This presented considerable challenges for coordinating the assessment of suppliers e.g. whether they had sufficient finances and competence to perform etc and supplies e.g. whether they met high specifications for medical grade equipment.

The Government has already committed to adopting certain recommendations following the Boardman Review. Under the AHRC grant, the University is working with DHSC to further refine procurement policies developed during the pandemic, build on departmental learning, advocate best practice, and ensure further accountability.

Improvements to how single sourcing is legally regulated, in particular, in emergencies

Finally, following Brexit, the UK plans to substantially reform regulation of public procurement. Professor Sue Arrowsmith QC (Hons), a co-investigator under the AHRC grant, has been instrumental in developing proposals on single sourcing under the Green Paper as a member of the Procurement Transformation Advisory Panel. Just some proposals include: making it mandatory to publish a notice when a decision is made to directly award a contract to improve transparency; new grounds for conducting procurement in a crisis with Ministerial powers to authorise such awards; and efforts to encourage more competition in urgent circumstances with a requirement to record the reasoning where competition is not used.

The UK could lead the way globally in improving value for money and transparency in single sourcing. Even before the pandemic, the UK took the unprecedented step of adopting Single Source Contracts Regulations overseen by a regulator, the Single Source Regulations Office. The regulatory framework introduces pricing controls and reporting requirements on defence contracts to ensure value for money and a fair return for industry. This was a targeted response to longstanding concerns about excessive pricing and low transparency in a sector in which 50% or more of the value and number of contracts are single source.

Ultimately, the pandemic has identified failures in public procurement which must be acknowledged. However, it is important to also concentrate on the opportunities it presents to learn from good and bad practices and for wider reform such that the public can be confident of value for money, transparency and accountability in public spend.

The project was funded by the Arts and Humanities Research Council (AHRC) as part of UKRI’s Covid-19 funding.

Luke Butler

Dr Luke Butler is an Associate Professor in Law, Faculty of Social Sciences.

Institute for Policy and Engagement

This blog appears as part of the series from the Institute for Policy and Engagement on the university’s ongoing research contribution to the Covid-19 effort.

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