Supplier ‘blacklists’ are not the answer but neither are underperforming providers: an alternative and more robust approach…
The Home Affairs Select Committee has proposed that the Government and presumably the wider public sector should establish a ‘blacklist’ of private sector contractors that have failed in a public sector contract.
Aside from the unfortunate term ‘blacklist’, this proposition certainly appears attractive and raises the question why such a scheme has not already been set up.
The proposal arises as a result of the appalling failure of G4S to meet its obligations to LOCOG. It also follows a series of monumental failures (or perceived failures) by public service contractors over the last decade or so.
Leaving aside questions about the legal powers that Government has to introduce such a list (which in effect would exclude companies and others from bidding in open public procurement projects – and there may also be other questions that legal colleagues would be more able to address), there are other considerations that might make this apparently good idea rather less than desirable. Indeed, it may not address the core problem that the Select Committee has identified as being a real weakness in far too much public procurement.
I list below seven issues/questions that will need to be satisfied in order to make such a ‘blacklist’ either practical or helpful. These are in no particular order, and nor do I claim they are exhaustive.
- How will the responsible official define ‘failure’ and be legally safe?
- How will the responsible official differentiate between client failure – eg poor specification, wrong choice of provider, poor performance management of the provider – and inadequate contract terms?
- Will this only be based on a provider’s public service record when many suppliers work with the private sector too?
- Will such a list be confined to business sector providers or will it be extended to third and social sector providers – and indeed public sector providers?
- Will membership of the ‘blacklisted’ club be ‘time bound’ – and if so, what will a provider have to do to prove that it should be allowed to come off it and to bid for future contract opportunities?
- Will and should ‘failure’ be extended to include poor employment standards, inadequate governance, unacceptable tax and/or remuneration strategies, procurement and supply chain practice, strategies and so on? After all, these are all legitimate issues for procurers to take into account.
- Will there be an appeals process if a bidder feels aggrieved at being placed on the list?
I wonder if it would not be better to consider ensuring that all significant (if not indeed all possible) public sector procurement procedures included the duty to:
- Take into account bidders’ previous track records – particularly, but not exclusively, in contracted public services – and ideally to seek the views of the bidders themselves, their clients, service users, staff and unions, as well as any external inspector (CQC, Ofsted, etc). There must be more intelligence-sharing across thre public sector.
- Take into account bidders’ wider ethical standards, governance, employment practices, tax and remuneration policies, etc.
- Encourage new entrants and innovation, and not adopt approaches of compliance (‘x’ years of trading accounts, for example) that exclude these.
- Require all bidders to demonstrate their added social value – building on the Social Value Act and its duties.
- Have the necessary commercial skills and capacity to procure, contract and client manage effectively if outsourcing
The public sector, when considering bids and indeed before starting a procurement process, should be encouraged to speak to others who have attempted similar approaches, and as part of the due diligence process should seek evidence from bidders’ previous and existing clients and wider stakeholders. This is merely common sense and already good procurement practice.
I sympathise with the basic premise of Select Committee members that ‘something has to be done’ to improve the quality of outsourced and contracted public services, as it does to in-house public services – would Mid Staffs NHS Foundation Trust have been eligible for inclusion on the list?
I also accept that there is a need to restore public confidence. However, a ‘blacklist’ is not the answer. Action is most certainly required, and poor performance is most certainly never acceptable – from any supplier and from any sector, be it private, public, voluntary or community. But what the Select Committee has suggested, as presented, is not the answer.