The Perils of Public Procurement

Policy Consortium member Mick Fletcher discusses some of the risks of creating a ‘pseudo-market’ in FE. This article first appeared as a blog on the NCFE website. 

Two big stories have surfaced in the FE press in recent weeks. One concerns the complex and convoluted process introduced by the ESFA to determine how public funding for those apprenticeships not covered by the levy will be allocated. Commentators and sector representatives have expressed increasing alarm fearing that colleges and other providers will be destabilised and the ultimate losers will be potential apprentices. Those not up to speed with the issue can find a good account by Nick Linford on the NCFE blog so the details are not repeated here.

The other story, which broke only recently, concerns Somerset Skills and Learning (SSL), the dominant provider of adult education in the county, which until now has offered hundreds of courses to thousands of students. After its extensive programme had been advertised, staff and students recruited and premises booked, it learned at the very last minute that its funding allocation had been cut by an astonishing 97%. I must declare an interest: I have paid fees up front to an organisation that is now threatened with bankruptcy and the need to sack hundreds of staff; it is not just my ability to learn Italian but also my hard-earned cash that is threatened.

Somerset Skills and Learning had only recently been graded Good by Ofsted so its quality was not in doubt. The apparent reason for the loss of funding is that Somerset County Council, seeking to shed itself of everything other than its inescapable statutory duties, had offloaded its adult education service into a community interest company in 2015. This meant that rather than have its grant renewed SSL was thrown into the chaotic and unpredictable procurement process run by the ESF for private providers. Like the process for non-levy apprenticeship funding this is also running dangerously late – hence the last-minute surprise.

These two cases are not the only evidence that the procurement process introduced by the ESFA is not fit for purpose. The struggling non-levy exercise is the second attempt this year to make progress on apprenticeship allocations. Earlier still there was an outcry when several well established providers failed to make it onto the register of approved organisations for apprenticeship funding, while at the same time untried outfits with no track record (and in some cases no staff and no premises) were accepted. Meanwhile many third sector providers are complaining that the procurement exercise for the Adult Education Budget risks marginalising many small organisations that have worked successfully with disadvantaged communities.

Forcing the provision of public services to be driven through bids and tenders is based on an ideological conviction that markets always produce the best outcomes; a conviction blindly adhered to in spite of growing evidence that it is not true. A bidding process centralises power in the hands of those who invite the tender and judge submissions. A procurement process that is obsessed with allowing new entrants to a market is necessarily blind to the track record of those who bid. This means that contracts will often go to those who employ the slickest bid writers rather than those who invest in high quality delivery. It unintentionally prioritises those who scent large profits to be made rather than those driven by an ideal of service; anyone who doubts this need simply look at the outcomes, not just in FE but areas such as the Work programme, the Probation Service or in prisons.

This is not to deny the benefits of competition in many services. It is however to say that the creation of a pseudo-market, where bureaucrats create convoluted processes to try to mimic real competition, carries major risks. Furthermore there is another way. It is possible to create and sustain institutions that have independent democratic oversight and a long term commitment to public service. It is possible to have staff who pursue quality because of their professional values rather than being manipulated by league tables. We know it is possible because it is what they have in other countries and indeed what we had until the market fetishists forced their ideology on areas of life where they don’t properly belong.

In a not unrelated area people are now looking at the crippling debts imposed on services by the Private Finance Initiative and asking, “How could we have been so foolish?” How much longer will it be before we feel the same about the ‘procurement’ of skills?

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