Inside the New Kleptocracy

Corruption?

One story that caught my eye this week was about how the Business Development Director at Chartwells had been involved, through his chairmanship of an industry body, in the drafting of the guidance on what firms like his should provide by way of school meals for eligible families while schools are closed.

Essentially, it looks like Chartwells got to draw up the contract specification, with no real regard to the nutritional needs of children, in a way which allowed them to max out their profit.

The story caught my eye not least because I’d predicted two days earlier that something like this would emerge, and had attempted to let Labour’s Shadow Minister for Schools that he and his team should be asking questions about how what is effectively corruption in the procurement system had been allowed by government.

Naturally, my message was ignored.

It might be useful to summarize why the procurement process apparently adopted here, is corrupt, before moving on to wider implications.

There is a general principle that, except in specific circumstances (see below), firms bidding for a contract should do so on equal terms. This includes not having input into what is being put out to tender, because it is clear that this might be used as ad advantage in the process. This is called the ‘open procedure’: the public body decides what it needs to buy and asks firms to bid for supply.

Exceptions are allowed, the central ones of which are the Competitive Dialogue (CD) or Competitive Procedure with Negotiation (CPN). But as recently as June 2020, the government’s Commercial Function department, set out (para 3.1.2) when these might be used, and the limits on their ise

Cabinet Office policy on the choice of procurement procedure can be found here. In this respect, the Public Contracts Regulations 2015 (the “Regs”) lay down the circumstances in which CD or CPN may be used, namely:

Where needs cannot be met without adaptation of readily available solutions;

Where the works, services or supplies include design or innovative solutions;

Where the contract cannot be awarded without prior negotiation because of the nature of the requirement, the complexity of its legal and financial make-up or because of its risks;

Where the technical specifications cannot be established with sufficient precision with reference to particular standards; or

In the case of where only unacceptable/irregular tenders have been submitted in an open or restricted procedure.

Now, frankly, I find it hard to believe that deciding what might be in box of food, such that it meets nutritional requirements and is at least a bit varied and tasty, is a matter so complex ot technical that you need an advisory group (aka, a cartel) of firms who want to make money out the contract involved in drawing up the contract. It is not as though the civil service is devoid of this basic knowledge.

So we should perhaps call it what it is. By using what amounts to a CPN process for the procurement of these so-called ‘hampers, the government is breaking its own rules, and that might be called corruption. [1]

Systematizing corruption

But it doesn’t quite end there. Roll on six months from the Government Commercial Function issuing guidance on how not to be corrupt, the government is embarking on a change in the rules to allow the CD or CPN processes to become much more widely used than they are now, by shifting to looser WTO rules.

That is, contract manipulation that until now is explicit corruption will be made legal, as the cartel-type set-ups of the type we’ve just seen lead directly to hungry children and families treated like dirt become much more the norm.

This, I’m afraid, is what this carefully worded section of the December 2020 Green Paper on Public Procurement really means:

The Government proposes introducing a new competitive, flexible procedure with minimal detailed rules, only those needed to comply with the proposed principles of public procurement and the GPA [the WTO rules in force from Janauary 1st]. This procedure would be similar to the existing “Light Touch Regime” which can currently only be used to procure specific social, health and other services. This will give commercial teams maximum flexibility to design a procurement process that meets their needs and the needs of the market (para. 63, my emphasis)

Expect to see, assuming this becomes law, a much greater percentage of central government contracts awarded in non-open procedures (currently about 10%), and pressure exerted on local government and CCGs etc to do the same.

This, in turn, is just one part of the institutionalization of the New Kleptocracy, the structure of which I’ve outlined here.

Labour’s woeful response

So is Labour just going to let all this happen? Well, current evidence suggest that yes, it will.

My tweets to Wes Streeting (and Angela Rayner) being ignored is of course par for the course, but so now also is the party leadership’s current failure even to try to spot underlying themes in the government’s behaviour; again and again, we see what often feels like manufactured outrage about specific hurts inflicted, but no apparent analysis of how they all stem from this new Tory governing mode, now given momentum by a Brexit which is terrible for most of us, but manna in heaven to the elite, and those displaying sufficient fealty to it, who will benefit from quietly sanctioned State Aid cheating and the legalization of procurement corruption.

This Labour failure to date is rooted in the new managerialism instituted by Starmer, a key aspect of which is the closing off of all information sources other than those which report in on the narrow success of the competence project, so that what the Tory regime is actually up to goes unanalyzed, even unnoticed.

But that analysis of how Forensic Labour mislaid its forensics department, and what it could do about it, not least so that it looks better at opposition than Marcus Rashford, will be a follow up post to this.

Notes

[1-] As caveat I should add that I don’t know whether the guidance was drawn up before any formal tendering process, or after it had started, and technically this makes a difference. However, the general point that the process of a firm being on both sides (design and submission) of a tender process, without just cause, is likely to lead to poor outcomes, remains valid.

Secretary General, Habermasian Labour (UK). Indefatigably focused on the promotion of ethical discourse in the public sphere, except when there's cricket.