Opinion

Businesses are fighting shy of public sector tenders

5 min read

10 February 2014

The separation between public service procurement and the private sector is at an all-time high, says David Cliff.

Regularly, I approach businesses with a view to looking at their growth and development to find they have already fallen foul of the system.

A recent meeting highlighted how many businesses are fighting shy of public sector tenders. The probity and meticulousness of the procurement process, designed to protect public money, turns into a mind-numbing use of time and resources. Organisations ultimately feel they must conform to process, rather than demonstrating true innovation.

The separation between public service procurement and the private sector is at an all-time high. Many organisations attempt to “tool up” for the task using bid-writing specialists, to little avail.

Nonetheless, many companies simply wouldn’t bother exerting the time and effort, accepting that these appear to go to favoured, the connected or those who can simply manage the bureaucracy with sufficient in-house resources and meticulousness.

Ironically, local authorities keen to attract jobs and wealth will not even place a contract with a company they have offered accommodation, start up grants and other facilities to.

They talk up local business, whilst being too risk-averse to engage in the economic exchanges that truly facilitate growth, lest the public purse is in any way compromised.

We don’t want wasted public money, but it’s a daily occurrence. One needs only look at various government departments’ penchant for computer systems to see billions squandered in procurement processes designed to eliminate risk.

Public procurement departments serious about stimulating the local economy must encompass a number of things; primarily, risk. They must accept that companies are in different stages of evolution; simply placing contracts with safe bets will only support larger companies with the economic might to partake in the game, strangling at birth smaller entities seeking to become significant players in, and ultimately stimulating the local economy.

Second, so-called “buy local” initiatives have, by and large, failed. Ask the business community, it is difficult to find people who have won work via these policies. Third, those involved in procurement need to develop elements of specialism rather than simply focus upon procurement as a generic art. A radical suggestion, but perhaps private sector experience should be an essential requirement when recruiting for public procurement jobs.

Both sectors are key to any evolving growing economy. Both must embrace risk and celebrate diversity in the provision available.

I see very innovative products and services that will be unlikely to see the light of day in the public sector as the company involved has simply chosen to stick with B2B as a primary marketing focus. How can the public get a good deal on that basis?

Running a small business involved in the care of people, I find it very difficult to think I may be entering public service procurement up against the might of organisations such as Group 4. However integral, sincere, community focused and ethical my business is, however I reinvest in the local community and have a sense of stakeholdership in an interdependent economy, it’s clear who is most positioned to invest enough to win that fight.

Some businesses play the game, some leave the field. Sadly, those that leave the field often take with them innovation, economy and vision, because to them business never was a game. As a result we all lose.

The sociologist Max Weber talked about bureaucracy expanding to provide a form of universal fairness. In its current form it’s the logic of having the beans counted and shared equally, without any knowledge that caviar was available for all.

David Cliff is managing director of Gedanken and vice-chairman of the Institute of Directors’ County Durham and Sunderland Committee.