Emergency contracts will no longer be handed out without competition in a shake-up of the state’s £300 billion expenditure which aims to avoid a repeat of Covid “VIP lane” controversies.
Companies that have ripped off the taxpayer or broken the law will be barred from further government contracts as ministers use post-Brexit freedoms to blacklist rogue suppliers.
Firms implicated in the Grenfell fire disaster are likely to be among the first to be banned as ministers give themselves more discretion to disqualify those that have run over budget or engaged in unethical practices.
Steve Barclay, the Cabinet Office minister, will publish proposals today to use government contracting to “promote strong values” and make it easier for small businesses to win government contracts by allowing officials to make decisions on the potential for local job creation as well as cost.
Almost a third of total government expenditure — about £290 billion a year — goes on buying goods and services each year. While Britain was in the EU, such contracts were governed by EU procurement law, designed to ensure open and fair competition across the continent. However, this rigid bidding process has been criticised as overly bureaucratic and ministers believe that simpler and more flexible rules will make it easier for small companies to bid for government work.
A procurement bill which is expected to be introduced in the middle of next year will also allow government buyers to take into account “social value” considerations such as job creation or the transition to net zero.
Ministers hope this will allow councils to buy more from local businesses.
Barclay argues that greater transparency will ensure that taxpayers still get value for money and is pledging real-time updates of planned procurement processes and contract awards through a single website.
“Leaving the EU gives us the perfect chance to make our own rules for how the government’s purchasing power can be used to promote strong values. We’re increasing transparency and ensuring that procurement remains fair and open. These simpler and more flexible rules will also make it easier for small businesses to win work.
Ministers want to avoid a repeat of scandals over emergency Covid contracts, which saw the government spend £18 billion on 8,600 agreements last year. Companies referred to a “VIP lane” by ministers, MPs and senior officials were ten times as likely to win government PPE contracts as those referred through normal channels.
A National Audit Office investigation found no evidence that ministers were directly involved in awarding contracts but criticised a lack of documentation which made it impossible to know why some companies landed lucrative supply deals.
Most such contracts were handed out without competition, as this is seen as the only alternative to a full procurement process under current emergency rules.
Under the new rules, if an emergency is declared government departments will be able to run quicker, less formal competitions that cannot be halted by losing bidders. Ministers hope this will result in better value and remove suspicions of cronyism.
Lord Frost, the Brexit minister, said: “These reforms are just one of the many areas where we are taking advantage of our exit from the EU’s rules.”