Use the power of procurement

I’m a campaigner against workers’ rights violations in the supply chains of major clothing and electronics brands. That essentially means I’ve spent 7 years trying to make public procurement – governmental purchasing of goods and services from private companies –a sexy topic. Why?

Procurement can be sexy  

Ultimately, money is power. If we’re going to more effectively regulate big corporations in a globalised world, then we need to set our crosshairs on the one thing they particularly care about: their wallets.  

And government consumption of products and services makes up a big wodge of those wallets. Public procurement makes up a fifth of all spending in the UK, and 16% of GDP across the European Union. Including legally-binding conditions in public contracts can therefore be a major tool in enforcing better standards of corporate behaviour.

Any push to use this method to promote social or environmental justice, however, must currently ensure that it is compliant with the convoluted requirements of European Procurement law, which is also the legal framework currently governing UK public procurement. Despite recent legal revisions, this framework is very restrictive towards public bodies wanting to use contract conditions to advance socially just outcomes; often for perfectly laudable reasons such as avoiding corruption.

For example, amongst other absurdities it would not technically be possible for a government to require in a procurement tender that any potential suppliers have a company-wide policy on not employing slave labour. Although, paradoxically a government could require in a contract that there was no slave labour in the specific supply chain they end up using.

Using our collective power

After Brexit, we’re no longer tied into this policy framework. This gives the government a huge opportunity to use its £242 billion of spending power as a force for regeneration, de-privatisation or environmental protection, alongside getting good value for money for the public sector.

Procurement is a powerful medium through which to push a progressive agenda in a wide range of sectors. Here are just a few:

1. The triumph of Brexit fed on the the desperation felt after 40 years of underinvestment in post-industrial towns. Why not require companies gaining large government contracts to invest and employ in those regions, or to share project ownership with and transfer technology to local infant industries?
2. Why not favour cooperatives, rapidly expanding the cooperative sector of the economy?
3. Why not require suppliers to invest in carbon reductions in parts of their supply chain over the course of large 4 year contracts, perhaps sharing costs where this contributes to national targets?
4. Why not favour public entities over private companies for supplying relevant products or services; the profits they retain effectively subsidising them, enabling them to invest or cut user costs?

Colin Cram recently argued against this position, calling on government to keep procurement legislation the same for efficiency’s sake. Any reformists would also have to face a potential for backlash from other countries if government procurement action is seen as protectionist. Furthermore there are other legal frameworks such as competition law and international trade law, which, even pre-TTIP, need to be considered when developing procurement policy. Some of these ideas may fail after legal analysis, but the aim here to start off a much needed debate.

Money is power, and 20% of GDP is a lot of concentrated power. Progressive governments would be unwise not to use procurement, one of their biggest potential available levers, to achieve the structural reform that our economy requires to meet our needs in the 21st Century.