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Let's Adopt Public Service Ethos-Based Public Procurement And Contracting

15/05/2017 12:00

The General Election discussion on the role of businesses in the delivery of public services should be welcomed by those committed to public service.

Labour has announced that it would want to cap the pay of senior executives of companies that contract with the Government - and one assumes the wider public sector. It would wish to see a ration between the highest pay and the median wage within contracting companies. A Labour Government would work with the boards, shareholders and workforces of these companies to make this happen.

For this policy to work it would need to address remuneration issues beyond basic income and take into account factors such as bonuses, expenses, perks, executive and managerial incentive schemes and share options.

There is related but separate policy debate about the efficacy of public service outsourcing and this needs to be come to fore too. In reality there will always be some contracting of public services and certainly for construction and the supply of goods. This means that government and widely the public sector should up its game in terms of procurement and contract management.

I have written previously about the need to focus public sector contracts on organisations that can demonstrate a commitment to and the practice of a public service ethos, which includes many aspects of business and public contracting. Today the needs for this approach is greater than ever.

Transparency and accountability are a starting point because without these it would be very difficult to hold service providers to account and know if the actuality matches rhetoric and/or commitments made in tenders. Such commitments are easy to make and easy for public sector procurement officials to tick off but this is not the same as living a public service ethos.

A government and the wider public sector can introduce a number of measures to improve the quality and accountability of public service providers. As an immediate action I would propose that all organisations bidding for public service contracts and significant contracts for the provision of goods to the public sector should require bidders to demonstrate:

  • clear transparency on ownership and the location of the controlling companies where there is complex business ownership
  • transparency of financial performance and internal company payments where these could be material to a public sector contract
  • a commitment to pay fair and appropriate taxation in line with national fiscal policy; and clear transparency of tax policy and payments
  • high quality employment practices including fair pay (no zero based contracts) and the payment of at least the Living Wage; good continuous professional development (CPD) policy and practice, and effective talent management
  • trade union recognition and rights
  • staff involvement in decision making beyond the requirements of the current regulatory requirements
  • reasonable ratios between the highest and lowest pay of all staff including senior directors and chief executives (a government may wish to set this ratio)
  • sustainable environmental policies and practices
  • sound corporate social responsibility policies and practices
  • exemplary governance inside the provider and any controlling companies
  • commitment to 'profit share', 'profit capping', cap the rate of return to investors, etc
  • commitment to 'joint venture' and exemplary 'partnership' based contracting and contractual relations with independent 'non-executives' and stakeholder involvement
  • adoption of business models that match the requirements and expectations of the public sector and the public include social value goals
  • ethical procurement, and supply chain policies and practices that reflect the above; and similar practices across the provider including any non-public sector business

I would call on all the political parties to adopt a set of policies based on a commitment to move to a public service ethos based public contracting. They should also commit to paying for these conditions and move away from lowest price 'bargain basement shopping' procurement; and to monitoring and enforcing these conditions through a contract and throughout the life of the contract.

This should be welcomed by progressive providers in the business, social, and voluntary and community sectors. And it would give the public greater confidence and accountability; and better public services.

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