The UK Government is to exclude companies from government procurements if they fail to pay their own suppliers within 60 days, the UK’s chief commercial officer told delegates at Innovation 2019 on Thursday.
Gareth Rhys Williams, head of the Crown Commercial Service, said in the procurement session: “We are going to use data to exclude vendors who are not paying promptly – 60 days. This should drive stability and liquidity in the supply-chain and that is good for the economy as a whole.”
The Crown Commercial Service issued an 11-page consultation on the topic in April 2018, Rhys Williams said at the event – which was organised by Global Government Forum and the Cabinet Office, and attracted over 600 delegates from 39 countries to discuss innovation in civil services worldwide.
In 2017 the government’s major suppliers signed up to a ‘Prompt Payment Code’, with 32 committing to pay 95% of invoices with 60 days, Rhys Williams explained. The government’s biggest suppliers also committed to aim towards 30 days being the norm.
The Conservative Government’s 2017 manifesto contained a section on ‘backing small businesses’, in which it said that it would “use our buying power to ensure that big contractors comply with the Prompt Payment Code both on government contracts and in their work with others. If they do not do so, they will lose the right to bid for government contracts.”
One of Rhys Williams’s presentation slides referred to the Prompt Payment Code being “tightened up”, based on a recently introduced payments database held by the Department for Business, Energy and Industrial Strategy (BEIS).
The slide also cited a target of driving up the government’s spend with SMEs to 33% of the total, noting: “Some departments progressing well, some not so much”. It added: “Focus moving to action rather than just measurement.”
Rhys Williams said that the government also plans to start publishing KPIs (key performance indicators) relating to procurement.
He said: “How do we get ourselves more disciplined so we can actually deliver what our policy colleagues want? How do we demonstrate value being delivered to the taxpayer? One way we’re doing this is by publishing KPIs, which we will start to do increasingly, starting with our larger contracts.”
Speaking more broadly on the topic of innovation in procurement, Rhys Williams said: “We spend £45bn [US$60bn] or so – some of that can be quite innovative, some of that cannot be. A lot of the innovation that we can do has to be driven by our customers, by departments”.
He also said that the past four years have seen a “huge upskilling” in government procurement. And he touched on the UK’s exit from the European Union, saying: “Most of the [EU] procurement regs are fantastic. There are some aspects of them [that are not], particularly as regards the remedies regime.
Following Brexit, he said: “We will be looking at changing those but we cannot do that yet – until we know what form of Brexit we will have and until that has been achieved.”
Another of his presentation slides said: “We are working to continue our membership of GPA [Agreement on Government Procurement] to ensure ongoing guaranteed access for UK companies to overseas procurement markets. EU rules will still apply for UK companies seeking to sell to EU governments.”
Fringes innovate; centres support
The ‘Innovation in Procurement’ session also featured contributions from Alex Benay, chief information officer of Canada; Nihat Arkan, CEO of thebigword; and Jane Barrett, founding partner of Cadence Innova.
Canada’s Benay discussed themes including risk aversion, saying: “As [civil servants] go through the ranks, we lose the appetite for risk – and we certainly don’t like talking about that four-letter word that starts with ‘F’: ‘Fail’.”
His comments reflected views set out last month’s interview with Global Government Forum, in which Benay said: “Our workforce knows how to innovate, but managers get in the way. As we go up the ranks, we become risk averse, and the ones that are able to manage risk get promoted.”
By the time people reach the top, he added, “they’re focused on risks, on audits, on managing budgets, on the crisis of the day.” Benay argued that “innovation happens on the fringes,” and the job of leaders is to spot it, support it, and to clear away the “white blood cells in the system” that will otherwise squash innovative ideas. Leaders must recognise their own ignorance, he added, and “let go. You have to start by accepting that you know nothing of the modern way of creating a business.”