Some thoughts on UK Government open contracting push

The British Government announced yesterday its plans to adopt a UK Open Government National Action Plan 2016-18 (NAP) which includes significant changes to procurement practice, aiming to make contracting "open by default."

I am fully supportive of some of the ideas being pushed by the Government, namely the use of the Open Contract Data Standard by the Crown Commercial Service or the interdisciplinary (and international) Anti-Corruption Innovation Hub. The fact that a national government is willing to push the boundaries in these matters and looking to make its work more accessible to citizens is an approach worth praising.

There is however a big fly in the ointment on yesterday's announcement: the idea of making procurement procedures transparent during the procedure itself. This approach is going to be tested with the High Speed 2 project (HS2).

Making procedures transparent (as they are happening) is bad for at least two reasons. First, it has implications for competition as fosters collusion between tenderers. Second, in politically charged projects like HS2, lobbying groups will have a field day with the information available.

As for my first reservation, it has been well established that providing more information about tendering helps collusive behaviour. In general, I am in favour of disclosing contract information after the procedure has ended since I believe the trade off between facilitating collusion on the one hand but improving market access, reducing rent seeking and increasing accountability on the other actually leaves us better off (most of the time). The problem with making information during the procedure public is that it does nothing for the competition upside and increases the risk of foul play during the procedure itself. In other words, at least with information being made public after the end of the procedure any negative effect on competition may only strike future procedures, it will not affect the one which has just concluded. Not so if we make information available during the procedure.

I first came across this issue of information being passed among economic operators during a procedure when doing my PhD on the use of competitive dialogue in Portugal and Spain. It was plainly obvious that confidentiality safeguards (which only hamstrung the contracting authority) were not foreclosing bidders from talking to one another. And once they start talking during a procedure, it is just a question of time until at least some actions are coordinated.

The second problem is probably less widespread and likely to arise always in a reduce set of circumstances. Having said that, the fact the pilot will be run on HS2 is actually good - if any project can go wrong due to pressure from lobbying, its HS2. Again, I am usually a cheerleader for more transparency and not less, but this is an area where the added transparency will simply embolden those who do not want certain projects to succeed.

Bottom line, I am all in for more transparency after public procurement procedures have finished, even if there is a price to be paid in markets where collusion is likely, but certainly not so while contracts are being tendered.*

*If the Government wants to improve "live procurement practice", perhaps it could look into the Swedish Competition Authority and its role intervening in changing procurement procedures while they are live if bidders lodge complaints.