DISCUSSION To improve public procurement – use the Trust Test

by Scarlett Brown _______1st December 2020
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Public procurement is too often solely made on price, and not enough on true value and to account for areas such as culture or character. This was the driving force behind the creation of the Trust Test – an idea that was formed in a Tomorrow’s Company project in 2013 – for procurement to more accurately assess organisations and promote trustworthiness in the process.

The problem – poor public procurement

There is broad concern about the quality and transparency of business relationships within the procurement process and supply chain, particularly with regards to public procurement in the UK.

This concern has been heightened by the recent National Audit Office reports on government procurement during the pandemic and the outsourcing to SERCO of contact tracing. There have also been  revelations about ‘chumocracy’. It is now established that in the COCID 19 emergency the government abandoned the usual disciplines of supplier selection, and positively favoured those companies which had some personal connection with senior ministers or advisers.

There was some public cynicism before. This will have been heightened. And yet the country and its taxpayers need to make effective use of the public sector. It just needs to be done in a more intelligent way.

The government’s outsourcing policy and practices clearly stands in need of reform. There are three aspects which in particular need attention:

The UK public sector spends over £250 billion on the procurement of goods and services from the private sector. This accounts for around one third of public sector spending.

Government is under constant pressure to get better value out of public sector contracts. Its means of doing so are primarily through pressure on costs. It is much more difficult to specify the quality of a service. Tomorrow’s Company is hearing from a number of providers that it is becoming counterproductive to compete on quality, as this is not properly valued in the procurement process.

So far, the contracting out of services has led to the evolution of large monopolies delivering public services, who largely, or in some cases wholly, rely on taxpayers’ money for their income. The state is then constrained in finding alternatives where a big private company fails.

John Tizard, a former senior executive at Capita, says that, with the exception of IT, most government procurement is driven by price:

“Given that the services most likely to be outsourced tend to be people-intensive where 80 per cent of costs are labour, downward pressure on terms and conditions is one-way outsourcing companies can achieve cost savings.”

The government aims to achieve value for money in its contracting activity. But how is value defined, and for which groups is value to be delivered?

Certainly, the taxpayers’ interests need to be considered, and here there is a clear need to examine more closely than in the past the credentials of those companies awarded contracts. There need to be better ways of assessing factors beyond their financial strength and technical competence, factors such as the quality and transparency of their governance and the extent to which they have embedded a culture of integrity and public service.

Value needs to be delivered also to the contractors; the terms of the contracts must be such that they enable them to earn reasonable profits and while doing so to pay the ‘living wage’ to their employees. Some companies do not tender for government contracts because they believe that margins will be unduly squeezed and that it would be difficult to achieve a normal level of profitability.

And the tools to make that possible are now in place, waiting to be taken up by the government and public sector.

The solution – The Trust Test

As result of a 2013 project entitled Tomorrow’s Business Forms, Tomorrow’s Company developed the idea of a Trust Test. The idea is that alongside the normal details of price and performance, an organisation would as part of the procurement process be screened for aspects of its culture and character. The idea of a standard set of requirements, which organisations can meet to demonstrate trustworthiness to other organizations, was then developed by a series of stakeholder workshops undertaken by the British Standards Institution. The now-published British Standard 95009 is intended for use as a framework to enable those in the procurement process to more accurately assess organisations tendering for and procuring contracts.

It specifies generic requirements to demonstrate an organisation’s:

  1. a)    suitability as an external provider of products and services to the public sector; and
  2. b)    ability to reliably deliver products and services that meet the requirements of the contracting authority. This British Standard is applicable to any organization, regardless of type, size or the nature of its activities and can be used by organizations:

1)      contracting out provision of products and services to external providers; and/or

2)      acting as external providers throughout the supply chain.

BS95009 – also known as The Trust Test has many advantages.

It is drafted in a way that makes it easier for smaller companies to demonstrate suitability without excessive repetition or bureaucracy

It takes a more holistic approach to assessment

It uses a defined set of criteria based on best practice around the assessment of the culture, governance and motivation of organisations.

In the wake to the procurement fiascos of the last few months it is now urgent to rebuild trust in public sector outsourcing.

It is time for the Trust Test.

To improve public procurement – use the Trust Test

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