2nd February 2021
Like constitutional law and practice, the law and practice of public procurement has recently been exciting.
And this is not a good thing, for also like constitutional law and practice, the law and practice of public procurement should be dull.
But unlike constitutional law and practice – the elements of which like the crown, parliament and the courts are at least well known – the elements of the law and practice of public procurement are not so well known.
Indeed, many commercial and public lawyers can go through their careers and never have to deal with a public procurement issue.
And many commercial companies – all potential government suppliers – will never engage with the public sector.
Public procurement is (usually) a minority interest.
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But.
Public procurement – that is, in general terms, the purchase by public bodies of goods and services and works (that is, major projects) from the private sector – has become rather politically controversial.
And with Brexit, this public prominence is likely to continue.
So it seemed worthwhile to set out to non-lawyers – and other lawyers with no direct connection with public procurement – to set out some basic points about public procurement, from the subjective perspective of someone who has had some experience in public procurement for twenty years.
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The starting point, at least in the United Kingdom, is that central government would in principle be able to lawfully buy anything from anyone at any price and on any terms – but for the law of public procurement.
This is because – and here comes some constitutional law mumbo-jumbo – the crown is regarded as a legal person with full capacity.
And just as you and I are able, as natural persons, to enter into contracts, so is the crown.
Of course, it is not Elizabeth Mountbatten-Windsor who is signing contracts for things from toilet rolls to nuclear submarines as part of some extraordinary Waitrose delivery.
But in principle, the crown is able to enter into any contractual obligations it so wishes.
The agreements are, in turn, usually entered into on the crown’s behalf by government departments – usually in the name of the relevant secretary of the state.
(Here it can get complicated, as many secretaries of state are regarded by the law as ‘corporations sole’ that can hold property and so on.)
And so this means that government departments are, in principle, are able to enter into any contractual obligations they so wish.
Apart from central government, there are many other public bodies with a mix of legal forms – from bodies established by royal charter to corporations set up by statute – and these bodies also can, in (very) general terms, enter into contracts as readily as any natural person.
(There used to be many cases where certain transactions were held to be ‘ultra vires’ the powers of local authorities, but legal changes have meant that this is less likely to be the case now.)
And this is the basis of the law of public procurement in the United Kingdom: that but for the law of public procurement, public bodies can in general lawfully enter into transactions freely.
In this way, the law and practice of public procurement should primarily be seen as like the ropes around Lemuel Gulliver or King Kong – preventing public bodies from doing what they otherwise would do.
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So what are the restraints of public procurement?
In theory, the restraints are of two kinds.
First, there are general principles – at least under the law of the European Union (which has now been adopted as domestic law) and the rules of the World Trade Organisation.
Tenders should be advertised and open to all-comers; selection criteria should be published; public bodies should not discriminate in favour of incumbents and domestic companies; tenderers should be treated equally; procurement exercises should be competitive; there should be transparency; and there should be remedies in the event of unfair treatment.
All very fine and commendable.
And some would say that these principles really should be enough, and that as long as a public body accords with these principles, the public body should be able to be able to procure as it wishes.
Just as, say, an employer can recruit who they wish, as long as they do not discriminate against people with certain characteristics.
But.
The law and practice of public procurement goes further than these general principles – at least for high value procurements.
Much, much further.
This is because, in addition to these general principles, there are detailed procedures prescribed for public authorities to follow.
The theory is that these detailed procedures give practical effect to the general principles, by setting out what can and cannot be done at each of the many stages which a public procurement exercise can be broken down into.
And so behold, for example, the 122 sections and 6 schedules over 133 pages of the Public Contracts Regulations 2015.
Behold also the 178 pages of the European Union directive to which those regulations give effect – with no less than 138 recitals.
So, in practice, public procurement exercises can be long and expensive and complicated and legalistic.
And this, in turn, means that many procurement exercises are dominated by the same few mega-providers with specialist bidding teams – you know which companies, with deliberately bland and meaningless names – that can afford the lost costs of an adverse ratio of losing tenders to winning them.
The laws of public procurement can be seen as a well-intentioned way of opening up the government public procurement market that in fact makes things uncompetitive and inaccessible.
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There are further problems.
Procurement exercises that start with specifications developed by officials can often mean that providers are expected to provide bespoke (and thereby expensive, unrealistic, risky and untried) products and services rather than commercially off-the-shelf products and services.
And suppliers can exploit their relative power at the final stages of a procurement exercise, or after the contract has been entered into, to remove or vary contractual protections for the public body.
Public bodies do not enforce the contractual rights that they do have.
There is also the the issue of the revolving doors between public bodies and purchasers, with many on both sides knowing each other far better than, say, the officials will know those in other parts of the public body.
And so on.
Many problems.
But.
And this is a big but.
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As one politician once said of a certain political system, it is the worst form of government, except for all the others.
And the same can be said of public procurement.
Anyone who has been involved in the world of public procurement is alert to the problems.
And most public procurement officials do the best they can with the tools that they have got.
The problem is that, if it was not for the law of public procurement, with all its faults, the practice of public procurement would be worse than it is.
If there were no detailed processes for high-value procurements, then there would be even more of a chumocracy, more corruption, more political rather than commercial decisions, more incumbent bias.
The striking thing about the law and practice of public procurement in the United Kingdom is not that there are abuses but that, relatively speaking, there are so few.
If the law of public procurement was stripped away, even just to general principles, there would be little in practice to prevent a free-for-all with public cash.
The challenge for those, like me, who are critical of the law and practice of public procurement is to work out a better (or less bad) way.
And that is hard.
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Yet sometimes public procurement exercises do need to be flexible.
The detailed processes sometimes need to be set aside.
The current political controversy over the procurement of vaccines seems to show the merits of the quick decision-making of the United Kingdom over the ponderous and inefficient approach of the European Commission.
If this is the case, then: hurrah!
But for every Bingham there will be many more Hardings.
For every single successful urgent and informal procurement there will be many more botched and extravagant ones.
And this is because there are huge amounts of cash at stake – and public bodies are reliable payers – and where there is such money, there will be corruption and waste.
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All large-scale procurement is not easy.
Large procurement exercises in the private sector can also be highly problematic – it is just that they are less likely to feature in the news.
This, in many ways, is not an especially ‘public sector’ problem.
And we should, generally, be glad that the law and practice of public procurement works as well as it does.
Yet, there are ways it could be better.
As this blog recently averred, there is actually no good reason why the terms of public contracts should be confidential – at least in respect of allocations of risk and sanctions for non-performance.
Public bodies should also be more ready to use the powers and sanctions they do have under agreements – as it is, it is rare for any public body to ‘go legal’ in a way that a private sector company would do in a similar way with a similar value contract.
There are grounds for legitimate concern that many high-value, elaborate, time-consuming and cumbersome procurement exercises seem perfectly tailored for the benefit of the tender departments of a certain type of mega-suppler.
In essence: far more transparency, and more realism about how current law and practices are abused.
(Leaving the European Union may also be an opportunity for the United Kingdom to revisit the complexity of our domestic procurement regime – though this opportunity will no doubt not be used well.)
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What should be exciting in politics is the democratic contest between priorities and policies.
And once a priority has been asserted and a policy adopted, the implementation of that priority and policy should not itself be a political issue.
This is why public procurement should be dull.
(Similarly, it is rarely a good thing when constitutional law, which sets the agreed parameters of political action, becomes the primary focus of sustained political attention, as this means things are not well in the polity.)
But an awareness of the law and practice of public procurement, and not only of its faults but the greater faults which it prevents, should be part of the stock of civic knowledge of every citizen.
Dull things can still be important things.
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The title of this post alludes, of course, to this.
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These recitals set out the shared understanding of the European Commission and AstraZeneca as at the time of the agreement (which was signed by both parties on 27 August 2020).
