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Fewer competitive tenders raises concerns over corruption and value for taxpayers
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Government outsourcing has become markedly less competitive over the past three years, with close to one quarter of public sector contracts, ranging from security to welfare services, awarded to sole bidders in 2018.
The proportion of public sector contracts awarded without a competitive tender rose from 15 per cent in 2016 to 22 per cent in 2017 and then 23 per cent in 2018, according to research by the Financial Times and OpenOpps, a consultancy that advises on government outsourcing.
The increase in sole bidders highlights the government’s difficulties in fostering competition in the outsourcing of public services while also adding to concerns about poor value for taxpayers and potential cronyism.
Ian Makgill, director of OpenOpps, said the increase seemed to “have been driven by a focus on letting large, unwieldy contracts, which reduces the number of companies with the range of skills and the financial muscle to bid for them”.
Concerns have been heightened in the wake of the government’s awarding of a £14m contract to Seaborne Freight— without a competitive tender — to provide ferry services in the event of a no-deal Brexit.
The Department for Transport justified the decision on the grounds that it was an “emergency” but the deal has become mired in criticism after it emerged that Seaborne has no ships and some of its directors ran businesses that were liquidated, owing money to the UK tax authority.
Another procurement expert said that government bodies often argued “that there was no time to carry out a fully competitive tender process” although “this was rarely justified”.
Contracts awarded during 2018 without a competitive tender included a £4.2m agreement for the security company G4S to supply pre-deportation accommodation for families.
Interserve, the government contractor that is in rescue financing talks with its banks, won a £31m contract to provide the Metropolitan Police with services, including crime scene tents.
Martin Blaiklock, a public services finance expert, said the increase in sole bidders for government contracts was “concerning and inconsistent with the principle of achieving optimal value for money for the taxpayer”.
“Single bid contracts, furthermore, prevent potentially more efficient and innovative businesses entering the market, with longer term effects on the competitiveness of our economy,” he added.
Government departments are also extending contracts without a competitive tender as they struggle to cope with austerity-driven budget cuts and a deluge of work related to Brexit.
This includes Capita’s contract assessing welfare claimants, which was extended last year until 2021.
Under the law, contracts awarded by public bodies, including central and local government and valued above a certain amount, need to be published in the Official Journal of the EU to encourage bidders from across the bloc.
The research by the FT and OpenOpps was based on data published in the journal because the government’s own public procurement database, Contracts Finder, does not include the number of bids received.
There were 36,307 public sector contracts awarded in 2018, of which 8,377 went to sole bidders. The lowest value at which contracts were required to be reported last year to the Official Journal of the EU was £65,630.
A 2017 study by academics at Cambridge university found that contracts that received only one bid were on average almost 10 per cent more expensive than those with two or more offers. The same study found single bids to be a reliable indicator of corruption. |
