‘Billions’ paid out in public contracts without knowing if it’s value for money
“Untold billions” in government procurement contracts have been paid out by officials without knowing whether it’s value for money or not, MPs have warned.
A report from the influential Commons Public Accounts Committee (PAC) says the Government is unable to demonstrate value for money across £259bn of public procurement due to “significant issues with the quality and completeness of data on contracts”.
Their report slammed the “poor quality” of published data on official contracts, saying the lack of information inhibited efforts to ensure value for money.
The National Audit Office found government is unable to evaluate competitive trends in markets. Of 235 large contracts recorded between January 2021 and January 2023, one in five contracts using open competition received only one bid.
Around a third of the total contract value of more than £100bn in deals awarded by major departments in 2021-22 were not subject to competition, despite estimates suggesting government might achieve savings of up to £7.7bn per year through increased competition.
The report is the latest to raise concerns at the way the UK Government handles bids for supplying goods and services to its organisations.
The awarding of personal protective equipment (PPE) and other Covid response contracts during the first part of the Covid emergency was criticised for being partisan and biased in favour of those with political access, when it emerged ministers used a “High Priority Lane” (known as the “VIP lane”) allowing referrals of potential suppliers from MPs, peers, ministers, and senior officials. A High Court judge later ruled the use of the High Priority Lane was unlawful.
Former Conservative peer Baroness Michelle Mone was among the beneficiaries of the VIP lane. PPE Medpro, a company she initially denied being linked to, before admitting she had been, won its first contract worth £81m only a month after being set up in 2020. Weeks later it won a second contract, worth £122m, for sterile surgical gowns.
This week, in a YouTube documentary funded by PPE Medpro, Baroness Mone and her husband Douglas Barrowman acknowledged they are under investigation by the National Crime Agency, which is looking into their involvement with the company. Both have denied wrongdoing.
Dame Meg Hillier, chair of the PAC, said: “The Government’s purchase of goods and services is equivalent to the cost of building multiple HS2 rail lines every year.
“It is therefore clear that public procurement is deserving of the most thorough oversight to ensure value for taxpayers’ money.
“The Cabinet Office needs to act swiftly to dispel any continuing lack of transparency around publicly funded contracts, so that taxpayers are able to see clearly how their money is being spent and not find this hard to discover.
“Departments are also not doing enough to ensure robust competition for their contracts, leaving untold billions in savings every year on the table.”
In 2021-22, the Government spent £259bn procuring goods and services, with around £100bn of contracts awarded without a competition process.
Dame Meg added: “Given the change-making impact that public procurement can have, the Government’s approach here is disappointing. Be it in tackling climate change, reducing waste, creating new businesses, jobs and skills, or improving supplier diversity, innovation and resilience, we found no evidence that Government is consistently using its purchasing power to shift the dial.”
MPs called on the Cabinet Office to explain how it will use data to improve government’s ability to get better value for money for the taxpayer.
A Cabinet Office spokesperson said: “Value for money is always the number-one priority, and our specialist teams have saved the taxpayer £2.9bn in the last year.
“Our new Procurement Act will also help us to improve data quality and analysis when assessing bids, while our commitment to transparency means all contracts are published online for public scrutiny.
“The report is also misleading as the figure cited doesn’t account for the fact many of these contracts are extensions of existing ones which already went through open competition, or open procurements which had one bidder.”
