Government staff will need to be capable of assessing the health of competition in outsourcing markets when preparing and planning for projects if new guidance on handing out contracts is to be effective, the Competition and Markets Authority (CMA) has said.
Public procurement represents around 14% of the UK economy, covering a wide range of goods including services such as facilities management and catering.
The CMA has worked with the Cabinet Office on the development of the ‘Outsourcing Playbook’, which is designed to help improve government procurement and deliver better public services, as well as new ‘Market Management’ guidance that will sit alongside it.
They will also describe how contracts and commercial strategies can be designed to reduce barriers to entry to new suppliers, strengthen competition, and in turn promote healthier markets.
CMA chair Lord Tyrie said this was “all a step in the right direction” but in a letter to David Lidington CBE MP, he stressed that the value of this work will depend on its implementation across government.
“First, staff need to be trained in market analysis, and in how government’s procurement decisions affect the health of markets. For instance, staff need to be able to identify markets at risk of weak competition (such as those with few competitors, high entry barriers and high switching costs). A small number of large, long-term contracts in such a market may exacerbate this risk, and lead to worse outcomes down the line.
“Second, compliance with the Market Management policy should probably be monitored and enforced by the Cabinet Office. Assessing markets and acting to promote market health must not become an afterthought for busy commercial staff. They will, at times, face pressures to let contracts at speed. The Cabinet Office will have a big job to do.”
