The Price of Poor Procurement – full report

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Between 2016 and 2019, the British government has spent an estimated £842 billion on external suppliers of goods and services.

Reform examined the official investigations conducted between June 2016 and July 2019 into public procurement (i.e. the purchase of goods from the private or third sector) and outsourcing (i.e. the shift of service delivery from the public to private or third sector). These included inquiries by parliamentary committees, independent regulators, and nonministerial government departments. The additional costs to the taxpayer identified by these investigations is an estimated £14.3 billion.

However, political and public pressure has skewed the focus of investigations. For example, health saw a disproportionately high number of investigations compared to the additional costs identified in health contracts.

The £14.3 billion cost of poor procurement and outsourcing raises two key questions for policymakers and interested parties: how can this additional cost be minimised in future, and which projects require heightened independent scrutiny to achieve this? A third important question is: who holds government and providers to account when things go wrong?

The National Audit Office’s and Public Account Committee’s bark needs to be accompanied by a body with more bite: an independent regulator. By giving a single body the ability to oversee, monitor, act, and review how government spends its money externally, the multiple issues and competing stakeholders can work more closely and have a clearer understanding of the risks involved.

This paper presents a framework for government to establish an Office for Public Procurement (Ofpro). It is designed to stimulate debate, rather than offer a definitive approach. What is clear, however, is that a systemic approach to improving public procurement is essential, and would yield benefits for both the quality and value for money of public services across the public sector.

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