The move towards two-way feedback in public procurement

Back in 2011, the Cabinet Office instituted a new service called Mystery Shopper. This service would discreetly investigate complaints received from aggrieved participants in public procurement processes tendered by central and local purchasing bodies. Putting aside the fact that the name Mystery Shopper means something very specific in market research, the truth is that we finally had in the EU an avenue whereby suppliers could vent their anger without going through the court system.*

Before the Mystery Shopper came about, the Scottish Government created the Single Point of Enquiry in 2008, with similar aims. In a similar fashion, in March 2016 the Welsh Government hast just instituted a Supplier Feedback System.

These three services create a two-way feedback system, allowing economic operators to criticise contracting authorities without risking their reputation and future business. The potential for influencing future practice via public reports is reasonable and the avoidance of disputes in court is welcome. I stand by my opinion that feedback in procurement should be a two way street. It would be good if other countries* followed a similar path with services like these. But lets not delude us that they move the needle significantly.

Limitations

Neither of those three services can adjudicate cases or deal with the crux of the matter. They clearly lack enforcement powers. Both the Mystery Shopper and the Supplier Feedback System are quite clear in their guidance that if there is a whiff of potential legal action, no investigation will be undertaken. Furthermore, as far as the Mystery Shopper service goes until now compliance from contracting authorities was not even mandatory. This lack of teeth is, unfortunately, is a shame.

I was told by a colleague a few years go that the "ombuds" word was not welcome in the British public sector. Looking at these three services I can understand how my colleague was right. The aforementioned services could easily be bona fides "ombuds" services with proper investigatory, adjudicatory and practice changing powers. In other words, they could be UK versions of the Office of the Procurement Ombudsman of Canada (here's an interview with Frank Brunetta, the former Ombudsman. Here's his final report.) Sadly, they're not.

On a conversation with someone in the know, I made that same suggestion: it would be great if these services evolved in the direction of a proper independent, impartial "ombuds" service similar to the Canadian one. I was told that it would not happen as an "ombuds" service would be very heavy. I begged to differ and we left it at that. 

If we look into the details, however, we can see at least the Mystery Shopper making baby steps into the "ombuds" direction. Section 40 of the Small Business Enterprise and Employment Act establishes an obligation for some contracting authorities (mostly in England) to comply with requests for assistance issued by the Mystery Shopper service. That is an excellent step in the right direction, but one that is still short of addressing what I see as the main shortcoming of the service: lack of enforcement powers.

Those services could also provide alternative dispute resolution mechanisms which are very popular offering of the Canadian Procurement Ombudsman, although public bodies are entitled to refuse taking part. That is one of the shortcomings of the Canadian system. Yes, in jurisdictions where going to court is perceived as expensive (England and Wales) or slow (Portugal, Spain until recent reforms) I am in favour of using alternative dispute resolution systems like the one from Canada.

In the UK we have around 50 court cases per year and the Mystery Shopper alone in 2015 handled 85 new cases, so there is probably a significant number of situations which demand some sort of respite/change in practice that never come to be in the first place. It is time we moved into a more robust system, but that remains a pipe dream.

What's next

I suspect the use of services like the Mystery Shopper, Single Point of Enquiry and Supplier Feedback Service will continue to grow in the near future. That creates the incentive for said services to increase in their scope and power - and the compliance obligation of Section 40 of the Small Business Enterprise and Employment Act is just an example. We are moving towards a fully fledged two-way feedback systems, but only that.

As for the pipe dream mentioned above, who knows if in a future review of the Remedies Directive Member States are forced to develop systems which may function as an alternative to the judicial courts.

* Yes, I know Sweden has the competition authority and Denmark the complaints boards.

Links I Liked [Public Procurement - UK edition]

1. Wales will have its own regulatory powers in public procurement. I do not know how this will pan out since the Public Contracts Regulations 2015 cover Welsh contracting authorities for the most part. Maybe their powers will be restricted to regulate the areas that are not already regulated by the PCR2015, ie contracts below-thresholds whose provisions do not apply to devolved contracting authorities. Either way I would expect the Welsh Government to push some of their policies, particularly SQuiD and community benefits.

2. Central Government wants to mandate apprenticeships in large construction contracts. Now that was quick. There was a rumour flying around for the last few years that Francis Maude was really not keen on social clauses in procurement. My opinion on this is clear: no one knows the costs involved by introducing social clauses (which raise complexity and imply transaction and opportunity costs). the impact on SMEs and that these are the gateway drug to offsets as they exist in defense. There are no free lunches, but at least the Central Government will apparently limit this obligation to contracts above £10M. For now.

3. What would a 'Brexit' mean for public procurement in the UK? Not much in the short run, particularly if the UK decided to join the GPA. A useful scapegoat would be lost however (oh those damn, pesky Directives, source of all evil..).

4. More mystery shopper results. This time for July/August 2015.

5. Data in Whitehall: which UK departments are the least and most open? It is so much easier to get on the high horse of claiming transparency than actually delivering it.

6. Edinburgh drops BT for CGI, claims to save £45M over 15 years. If it is true, another sign it pays to go to the market regularly for large projects.