Tech firms urge reform in public sector procurement focus

A coalition of technology and digital organisations has called for urgent reform in public sector procurement, citing an excessive focus on cost considerations.

The open letter, initiated by Paper, Nexer Digital, and other signatories, draws attention to the growing emphasis on price weightings in tenders, which can be as high as 50%. The coalition suggests this approach has unintentionally fostered a "race to the bottom" environment, awarding contracts foremost based on cost to the detriment of overall value. This, they argue, is negatively affecting the quality of public services.

Mark Goddard, Co-founder of Paper, explained, "We created this letter because we believe public sector procurement should be about delivering real value and improving services, not just finding the cheapest option. A system that prioritises expertise and long-term outcomes will ultimately serve the public better."

The letter outlines concerns regarding the current state of public sector procurement, which the authors believe should focus more on long-term value and high service quality rather than immediate cost savings. There are suggestions that reform could improve public services and make more effective use of taxpayer money.

The coalition of organisations expressed concerns about high staff turnover, reduced wages, and limited investment in skills and development as outcomes of the current procurement practices. They also pointed to the impact of regulations like IR35, which has reportedly led to risk-averse contract classifications that disproportionately hinder SME participation.

The erosion of the Digital Marketplace was also highlighted, with the letter asserting that it has shifted procurement practices away from user need-driven contracts towards those prioritising rapid personnel procurement over measurable service enhancement.

The letter commented on the absence of presentations and face-to-face meetings in the procurement process, arguing this has eroded trust and transparency. Furthermore, it raised alarms over accountability, citing insufficient checks to ensure contracted services meet stipulated expectations.

Among the recommendations is a call for more stable and planned procurement processes. This would include creating a transparent procurement pipeline that enables suppliers, especially SMEs, to better prepare for upcoming opportunities.

The coalition advocates for a collaborative government approach, urging engagement with SMEs and industry experts to reform procurement strategies. This is deemed crucial not just for fairness but also for the delivery of enhanced public services.

Shaun Gomm, Commercial Director at Nexer Digital, highlighted the importance of greater fairness and opportunity for SMEs, saying, "SMEs have a huge role to play in delivering high-quality public services, but the current system makes it difficult for them to compete. By making procurement more transparent and fair, we can unlock expertise, drive innovation, and ultimately improve outcomes for the users of these services."

The signatories encourage additional organisations to join the movement, acknowledging that the letter remains open for further endorsements. They continue to advocate for a procurement system that supports long-term service quality and value over short-term cost-cutting measures.