NAO - framework agreements don't achieve competition!

Public Procurement Report

The latest National Audit Office (NAO) report provides detailed recommendations for UK Government departments’ to maximise the benefits of effective competition when they run public procurement processes.

​The UK Government procured 72% of its large contracts through framework agreements in 2021-22 compared to 43% in 2018-19.

Although competition is an underlying principle of public procurement, (and widely acknowledged to be a key enabler of value for money) the NAO found that many UK Government departments routinely extended contracts rather than retendering them. 

The central government department with responsibility for public procurement also failed to show how well competition was working, and could not demonstrate a structure to encourage and support the use of competition in its own public procurement processes.

By engaging all of the market, sharing information (in a way that does not favour particular suppliers) and asking the market for feedback, the NAO believe that UK Government departments can increase levels of competition in future procurements.

The NAO concluded there report with a recommendation that UK Government departments need to consider how their actions during individual procurements can affect the long-term participation of suppliers and consequently the competitiveness of the market.

They argue that in doing so, more smaller firms would stay involved in public procurement processes, while reducing UK Government department reliance on a few large suppliers. 

​Suppliers told the NAO that high bid costs, lack of confidence in evaluation and a lack of feedback had detered them from bidding on future Government contracts.

Contracts Finder 
​

​The NAO found that Central Government does not take advantage of the data it collects to understand more about competition and gain further benefits.

Of the 235 large contracts recorded on the public contracts database 'Find a Tender' between January 2021 and January 2023, 20% of contracts that used open competition only received one bid. The expected level of single bidders within UK government’s major markets was not assessed. 
​
There was also significant variation in how UK Government departments adhered to Cabinet Office processes for procurement. For example, in 2022, only 5 of 16 UK Government departments published a complete set of contract data. 

The NAO found that basic information on which procurement route was used was missing for 6% of contracts recorded on Contracts Finder, from 2018 to 2022 and most UK Government departments did not consistently publish all contracts within the required time. 

The Cabinet Office did not join up published contract information with insights from its commercial teams that provide procurement support to UK Government departments and look at markets and suppliers. 

The benefits of implementing such an approach may include increasing competition for public contracts, securing goods and services at the​ right price and quality, and supports confidence in the probity and transparency in the award of public contracts. ​

​NAO recommendations
​

​The NAO recommend that the Cabinet Office and its central commercial teams should:

1. Clearly define the information UK Government departments are required to publish, including how it should be structured.
2. Improve the quality of information Government departments submit on contracts.
3. Explore how it can use data collected on individual contracts to analyse competitive trends in markets to support its work.
4. Work with UK Government departments to understand the barriers to early market engagement and take steps to address them.​
5. Where frameworks are used, ensure it is for compatible requirements and results in competitive pressure.
6. Support improvements in the effectiveness of competition.

Who are the NAO? 
​

The NAO are the UK’s independent public spending watchdog. The NAO supports Parliament in holding government to account.

About the author

Naomi Clews

Naomi Clews is a management consultant and owner of procurement advisory firm Naomi Clews Consultancy Limited. Find out more here.