Looking in one direction, walking in another: does Government actually want to exclude SMEs from Public Procurement?

Entertaining as ever, Douglas Carswell MP takes to the Telegraph blog to make his point about what he sees as muddled economic (and indeed procurement) thinking in the Government’s recent action to centralise its presently diverse procurement function.

Carswell’s real arguments hide behind a lampooning of the civil service objection to his characterisation of the new body as a “Quango”. It is, we are told, an “Agency”.

Not really sure whether that kind of dancing on the heads of pins gets us anywhere but, of course, his real objective is a bigger issue.

What he says, in essence, is that increased centralisation naturally and inevitably will result in harm being done to the SME engine of the UK economy. Economies of scale require scale to be realised and scale inevitably tends towards larger and fewer suppliers. Suppliers thereby maximise their control of price and two things (amongst others) occur: (1) buyers pay more; and (2) smaller suppliers are forced out of the market.

The Government position is, not surprisingly, that increased centralisation facilitates the use of public procurement as a tool to implement desirable “horizontal” policies such as, in this instance, promoting the interests of SME’s in participating in public procurement.

With the evidence mounting over time that states do not tend to perform procurement functions very well it is a brave person who would back a state sponsored public procurement strategy against “natural” free market forces.

So what is the solution? Accept a degree of inefficiency in public procurement as part of the price which must be paid to incubate local economic social and environmental objectives alongside the procurement process? Or is it to improve how we “do” public procurement in terms of broader and deper understanding of what procurement is and, thereby, how it can be bent to the right ends within the applicable regulatory framework rather than allowing the “process” of public procurement to be the master?

Mr Carswell MP’s blog is here:


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