The Institute for Government has called on ministers to “rewire” the processes underpinning the nation’s £400bn annual procurement spending to aid the delivery of prime minister Keir Starmer’s missions.
The think tank's new report says further improvements to the way government money is spent can make a significant difference to meeting the government’s priorities, and that “substantial, and in some cases quick, progress” is possible.
According to The Role of Procurement in Delivering Mission-Led Government, numerous barriers exist to improving the way that public money is spent to deliver effective results – not least risk-aversion to innovative practices on the part of civil servants.
Report authors Ben Paxton and Nick Davies also warn that a “lack of coherence” between Starmer’s five missions and the “milestones” in last year’s Plan for Change has confused how procurement budgets are spent.
Nevertheless, they suggest that putting procurement spending at the heart of the government’s cross-cutting mission approach and focusing it on outcomes has the potential to yield dividends.
Paxton and Davies make a number of recommendations focused on effective shaping of markets, stronger political leadership, better organisational and procurement practice, proactive co-ordination, and improvements to civil service capacity and capability.
They include requiring mission boards to identify and publicly announce key ways that procurement can support their respective missions, supported by “well-defined problem statements that identify the key challenges each mission aims to address, and the government’s desired outcomes”.
Paxton and Davies note that this will require the relevant ministers to first develop clear theories of change for how they expect the mission milestones to be achieved.
The authors argue that historically government has been too focused on inputs and outputs in its contracting – rather than on outcomes, and that procurement with an emphasis on mission-related outcomes will be key.
Relatedly, Paxton and Davies urge central government departments to review their existing contracts for goods, works and services that are most directly relevant to the five missions to identify where existing key performance indicators are “poorly aligned” with mission objectives or with an outcomes-led approach.
Several recommendations seek to drive innovation in procurement. They include a call for the Cabinet Office to update the Sourcing Playbook to require central government departments and their associated arm’s-length bodies to publish commercial pipelines covering at least three financial years.
Paxton and Davies say this would give future suppliers more time to consider solutions that could be provided to government. In a similar vein – but over a shorter timescale – the authors suggest that government departments could make better use of preliminary market engagement to encourage innovation.
They said interviewees had reported that PME often took the form of webinars, which raised the profile of upcoming procurement processes but were “less effective at encouraging innovation”. Paxton and Davies said government should undertake more in-depth conversations with individual suppliers to better understand their offer, emerging technologies and ways things can be done differently.
‘Ministers need to back civil servants’
A major theme in the IfG report is risk-aversion to innovative practices on the part of civil servants, with a “bias for the status quo” often prompting government to stick with existing approaches that “guarantee poor performance”, rather than taking a chance on change.
Paxton and Davies said it was vital for ministers to continue making the case for a test-and-learn approach, and “show willingness to publicly and privately defend procurement of innovation after failures”.
“While it will take time for civil service culture to change, ministerial leadership is a prerequisite for counteracting risk aversion at individual, team and organisational levels,” they said.
Shortage of senior commercial experts
Elsewhere, Paxton and Davies stressed that despite improvements in central government commercial capability, interviewees still reported two specific commercial-capability gaps that could limit the contribution of procurement to mission-led government.
The first is a shortage of senior strategic commercial experts. The second is a tendency for contract management to be left in the hands of junior officials without commercial expertise, which risks reducing accountability for performance.
The report calls on the Government Commercial Function to develop a long-term strategy to boost the number of senior commercial specialists within government departments and their ALBs. It also says the GCF should “establish an expectation” that all those managing contracts are commercial specialists.
Paxton, who is a senior researcher specialising in public spending and procurement at the IfG, said the government had to make the most of its £400bn annual budget for buying goods, works and services.
“Using the power of procurement to shape markets, drive innovation and secure better value for taxpayers' money will be crucial to delivering on the government’s missions,” he said.
“This will require cultural and practical changes in how government does procurement, and ministers empowering the public sector to explore new approaches to the big challenges it is facing.”
The IfG report can be read here.