Cost of streamlined government procurement portal balloons by eight times

Money saving platform was expected to cost £1.5m to run. Now costs more than £12m

A new government procurement platform intended to encourage more small businesses to bid for contracts, driving competition, has seen its costs balloon from an intended £1.5 million to £12 million as multinational consultancies won contracts to build and manage it.

The supplier registration platform was introduced under the Procurement Act 2023 by the-then Minister of State for Brexit Opportunities and Government Efficiency, Jacob Rees-Mogg. The aim was that bidders would only have to provide their details once “to qualify for any public sector procurement”.

This was to enable more small and medium-sized businesses to bid for contracts because they would not have to provide different details demanded by different procurement contracts. In addition to saving money by driving competition, Rees-Mogg claimed that it would improve transparency.

His department also calculated that the running costs of the platform should be about £1.5 million per year between its establishment in 2024/25 and 2030/31.

However, despite the drive to bring-in more small businesses, the initial contract to build the platform went to the multinational consultancy EY, formally Ernst & Young, in a £17 million, two-year deal.

An additional contract to UK-based Goaco Group – with offices in Ebbsfleet, Dunoon, Sheffield and Dubai – for £8 million for two years is intended to provide “support and maintenance” for the Central Digital Platform.

The contracts were uncovered by Lindsay Clark at The Register. “Even if you discount the transformation program, likely to address business change and training, the £4 million annual costs for maintenance are more than double that expected,” he wrote.

Introducing the legislation behind the Procurement Act 2023, Rees-Mogg said that the aim was to streamline processes to make it easier and less costly for businesses to bid for government contracts. In addition to the new platform, the Act was intended to remove “social value” considerations from public sector contracts. These could include non-financial metrics such as carbon emissions, jobs and the impact on local communities. Under the new government, these considerations have been reinstated.

Pre-Brexit, most government procurement was governed by EU rules and major contracts were dominated by a handful of major vendors. The Procurement Act 2023 was intended to take advantage of the looser regulatory environment post-Brexit. EU rules, for example, did not allow public sector procurement managers to mark down suppliers that had proven a disappointment in the past.

Yet very little has changed as a consequence of the reduced regulation.

It’s not the first time that government has sought to attract more small firms to bid for public sector contracts. Twenty years ago, the government’s Small Business Service and the Office of Government Commerce announced a portal intended to enable all businesses to “easily view and bid for contracts, as well as opening up a new pool of suppliers to government”.

That never materialised, at least not in the manner originally envisaged. In 2012, fees for accessing the site which advertised contracts of up to £100,000 were removed but that was a partial step, far removed from the original vision.