Wales - buying its way to a strong economy

The recent announcement of a Wales Procurement Policy Statement by the Welsh Government in the run-up to the convening of the internationally prestigious Annual Procurement Week is sure to cause feathers to be ruffled among the public sector in Wales.

In a Written Statement, Welsh Government Minister for Finance Jane Hutt A.M., lays out a set of principles against which the Welsh Public Sector should carry out procurement, and an expectation that they will be compliant with Welsh Government procurement policies.

The Minister’s Statement follows her welcoming of the McClelland Report ((“Maximising the impact of the Welsh procurement Policy”), whose contents are sure to attract much discussion among international procurement regulators and practitioners who are about to converge on Bangor University for Procurement Week.

John McClelland CBE has clout - his previous report on Scottish procurement a few years has inspired radical legislative changes in the way that the Scottish Government approaches public procurement.  Now in his 2012 report for the Welsh Government, he applauds Wales’ procurement policies as very progressive, and urges the Welsh Government to go a step further and mandate a legal duty on all public bodies to implement Welsh Government procurement policies as a legal requirement. 

Although Minister Hutt does not go this far, the Minister leaves little doubt that she will go the extra mile if necessary, stating that: “There are no reasons or excuses why all organisations cannot adopt [the Welsh Government Policy Statement] and there must be no delay in so doing.” The Statement continued: “The public sector, including the Welsh Government itself, has a collective responsibility to ensure that we use public money wisely, for the benefit of the people of Wales and as duty to ensure the right skills and resources are in place.”

This is particular of significance given that the value of public contracts won by Welsh-based companies has increased from 37% to 51% over the last 5 years (where public sector procurement spend in Wales amounts to some £4.3bn per annum, equal to a third of overall Welsh public sector budget).

Some examples of the radical approach being adopted in Wales include a Welsh Government requirement that all public sector contracts be advertised once they hit the relatively low ceiling of £25,000.  This takes up a key recommendation from the Barriers to Procurement Opportunity Report (2009) co- authored by Professor Dermot Cahill, Chairman of the internationally renowned Institute for Competition & Procurement Studies at Bangor. According to Cahill, “By advertising, this single step will bring transparency to the range of public tender opportunities that are available to SME’s – a real case of ‘information is power’. In turn, transparency will drive change needed to reform procurement processes that are overly complicated and often poorly designed, and which does not satisfy either party in the tender process.”

The Barriers Report’s 15 other Key Recommendations have now been adopted formally as part of the Programme for Government in Wales and many are actively being implemented by Value Wales, the Welsh Government’s procurement division.

One of the surprising findings from McClelland’s report that there was serious variability in terms of the number of procurement staff-to-spend across different local authorities in Wales, and his consequent finding that the lower the  number of procurement staff per £10m of spend on goods and services, the more likely it was that contracts were won by non-Welsh based companies. Minister Hutt in response has announced a programme of ‘fitness checks’ will be carried out, particularly in Local Government, to ensure that all public organisations in Wales are properly addressing any deficiencies in procurement skills or capabilities.

What is happening in Wales is coming to wider attention. Particularly significant will be the presence in Bangor of the European Commission’s Head of the Public Procurement & Intellectual Property Unit, Anders Jessen, who has extensive Washington and Brussels experience in dealing with complex international global trading agreements. Also attending will be 30 other global procurement leaders and practitioners, including the Procurement Ombudsman of Canada, Frank Brunetta, the Deputy Head of the Federal Antimonopoly Service of the Russian Federation, Andrei Yunak, Sammy Rashed of Novartis, and Professor George Schooner of George Washington University.

This year’s Procurement Week 2013 explores themes such as the challenges facing BRIC countries as they modernise their procurement and engage with the WTO procurement regime; Innovation and the Changing Landscape of Procurement; Public Procurement Law and How to write good tenders.

Ian Price, Assistant Regional Director, CBI Wales and South West, commented:  “Public sector procurement is one of the key levers which can be used to stimulate the Welsh economy.  Procurement Week can raise awareness of how the current situation can be improved. We still receive a large number of concerns from our members regarding the process in Wales. The CBI values the opinions of Prof Dermot Cahill and his ICPS team. Prof Cahill produced one of the best pieces of work in recent years on public sector procurement in Wales in The Barriers to Procurement Opportunities Report.”

Ian Forrester Mowatt, Interim Director of the North Wales Procurement Partnership, a local government consortium, is supporting the Energy Island Programme in preparing and helping local businesses to be as competitive as possible in bidding for contracts.  Ian is producing a report on 'Regional Supply Chain Development' in which he provides recommendations on how best to engage with the supply chain, and in particular SMEs. He said: "Bangor University's Procurement Week provides a national and international context and illustrates leading practice in the field.  It is also essential to link theory with practice. The Bangor Institute for Competition & Procurement Studies has a proven track record in providing effective research that is then turned into effective activities and behaviours."

Procurement Week will culminate with the hosting of the Inaugural Welsh National Procurement Awards, to be presented to individuals, companies and organisations highlighting leadership, excellence and innovation in procurement and tendering.

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Publication date: 19 February 2013