Part 2: Nobody spends their own money like this

You are having an extension built. You have found a builder with a poor reputation - late on his last three jobs, a couple of disputes, some work that had to be done twice - but his price is the lowest and he is saying the right things, so you are going to appoint him anyway.

To manage the risk, you have adopted an international standard for collaborative working, put in monthly steering meetings and agreed an innovative payment mechanism linked to milestones. You have also hired an English graduate from a global consultancy to review his bricklaying every Friday afternoon.

You would not do this, and neither would anyone else, because it is your money and your house. You would simply go and find a better builder.

I am clearly being facetious, but how the UK’s interpretation of the law, and the subsequent definition of procurement policy, got into this position is mind-blowing. It certainly is not “fair”.

‍Fair to whom?

Somewhere along the way, “fair” stopped meaning fair and started meaning defensible against challenge.

Fair to the supplier preparing to promise something it cannot build? Fair to the taxpayer, who will discover that two years later? Fair to the user who eventually has to take the thing out of the box and make it work?

When people say, “It wouldn’t be fair”, what they generally mean is that a losing bidder might send a shitty email. They may even threaten litigation. The possibility of that email then outweighs almost every other consideration. The process becomes focused on avoiding challenge rather than making the best decision, and those two things are definitely not the same.

This would be easier to defend if we were protecting a genuinely open and evenly contested market. We are not:

In 2024-25, the MOD’s ten largest suppliers received more than 39% of its procurement expenditure. SMEs received just 4% of direct MOD expenditure with UK industry, while 71% of the value of new SME contracts was awarded competitively. The result is a highly concentrated core surrounded by a fiercely competed perimeter.

That perimeter is where competition is often applied most aggressively. The contracts are much smaller, switching suppliers is easier, and the participating businesses have the least capacity to absorb months of bid writing. ‍Because the process must remain “fair”, the same incumbents receiving major direct awards are also welcome to compete at the bottom. The practical effect is that we impose the greatest competitive burden on the businesses least able to absorb it.

‍I am not arguing that incumbents should be excluded simply for being large. Some large suppliers are excellent, and some small suppliers are terrible. The underlying problem is that the ritual/cult of competition is being confused with a functioning market.

‍But that is the process…

The stated priority is value for money, which is reasonable enough.

To demonstrate value for money, a requirement is sent to competition. A competition needs award criteria, and there is rarely enough time or specialist knowledge to design those criteria properly for a difficult engineering problem. They are therefore copied from the previous procurement, adjusted slightly and issued to bidders.

The bidders respond in writing. Their submissions are read in a room, scored against the published criteria and added together. The winner of that exercise is usually the company that wrote the best bid. That company may also be the one most likely to deliver something useful: a problem is that the process is not especially interested in finding out, and the surprises are deferred.

“We can only mark what is in front of us.”

That isn’t really true because it overlooks the fact more could have been done.

The Cabinet Office’s own guidance allows competitions to include physical inspection and demonstration. Authorities can visit a site, inspect facilities, run a pilot or ask suppliers to demonstrate what they can do. The requirement is that the evidence is assessed against criteria published in advance.

The problem is that a site visit takes time and requires people who can tell a good factory from a bad one. It also creates visible judgement, which means the weakest suppliers are often waiting for a civil servant to make the slightest mistake so they can claim the process was unfair. FWIW: If that is your strategy, try being better instead. Then reflect on how much harder you are making it to get the right things to end users.

So instead, we assess engineering by reading about it...

Imagine selecting a cricket team this way. Nobody is permitted to watch anyone bat. Each player submits a written description of their technique in Arial 11, with a ten-page limit, and the submissions are scored against a matrix. The winner has excellent prose. They may also be able to hit a ball or have a great forward defensive technique. You will find out in approximately eighteen months.

We call the process objective because every supplier was subjected to the same test. A bad test applied equally is still a bad test.

But it is fair. Keep smiling and saying fair. That will solve it. Remember: fair.

The wrong problem is being managed

We are investing in improved delivery models, partnership structures, payment mechanisms, assurance processes, frameworks, architecture boards and review points. Many of these things are useful and some are non-negotiable but they cannot rescue a fundamentally poor choice of supplier.

The Department should therefore become obsessive about supplier selection. The first question should be simple: who is most likely to deliver the required outcome? Everything else should help answer that question. Currently, the system asks a different one: which decision can we defend most easily if somebody complains?

And none of this is about taking more risk. It is about taking different risks. The current system just shifts the risk off to the right - away from the procurement decisions and onto delivery (off this year and into the next decade).

Start with what must be true

The Department should begin with a small number of outcomes that are difficult to argue against. It should then push policy, process and the law as hard as necessary to make those outcomes possible. Currently, too much of the activity around procurement reform is window dressing and the announced budget increases risk being used to create breathing room for weak programmes, absorb foreign-exchange exposure and fund overruns caused by (you guessed it) poor supplier selection.

For the market to escape the doom loop, four things must be true.

1. Excellence must lead to opportunity

At present, a supplier can recover a programme, outperform expectations and still be treated almost identically to a company that failed. In my experience, good performance is praised, but it doesn’t mean you will be rewarded, and that is a terrible signal to the market. Strong suppliers should know that delivery improves their prospects of further work.

Responding that a new policy already allows for this is not good enough. Policy is meaningless unless it is implemented, enforced and reflected in decisions at desk level.

2. Failure must have consequences

Poor performance currently creates more governance, more meetings and often gets the supplier more money. It does not reliably reduce a supplier’s chances of winning the next contract. Failure should affect future opportunity, margin and reputation. That does not mean punishing every delay, but repeated incompetence should become a serious commercial problem.

It will not always be easy to prove neatly on a spreadsheet, but experienced people usually know which suppliers are failing. Capture the evidence, lawyer up and deal with it head-on. Occasionally, some heads will need banging together.

3. Decisions need owners

Major decisions are often attributed to teams, boards, programmes or processes. Those things cannot be held accountable, but people can.

A named person should be responsible for recommending the supplier, explaining the evidence and staffing the decision for approval. Accountability cannot disappear into collective language the moment it starts going wrong. The decision should later be reviewed against delivery. Not to find someone to blame, but to improve judgement and expose patterns in how procurements are run.

If you cannot answer the question, “Who chose this supplier, and can I speak to them?”, you are already in a very bad place.

4. The UK must receive a clear benefit

A compliant procurement process does not help anyone cross a river, reduce the likelihood of being hacked or win a firefight. The outcome must be capability, economic value, sovereign control or some deliberate combination of the three.

That benefit should be defined before the procurement begins and tested after delivery. Where is the intellectual property held? Where are the engineers? Can the capability be modified, supported and scaled in the UK without asking permission from a foreign parent company?

I am trying not to sound protectionist, because shutting out foreign companies is not the answer, but UK businesses face severe market asymmetries. A US-headquartered contractor can compete for the overwhelming majority of UK opportunities. A UK-headquartered business without the necessary US security arrangements cannot do the same in America, and the barriers to entry are becoming higher.

The UK takes a different approach. We ask domestic companies to compete openly at home while accepting that many overseas markets are effectively closed to them. We then hesitate to back our strongest businesses because doing so might not look “fair”.

European countries are also far more deliberate about backing regional champions. France has supported Mistral. Germany has placed major contracts with STARK and Helsing. Large, multi-year awards give those companies credibility, traction and enough certainty to keep private capital interested, which the UK claims is of upmost importance.

That is not a free market - strategy and policy contradict action. Any proposed reform should be tested against these four conditions: Does it reward excellence? Does it penalise failure? Does it create visible accountability? Does it produce a meaningful benefit for the UK?

“It isn’t that easy, Rob”

No, it is not. Those who know me know how deeply I care about this, and how well I understand the difficulty of changing systems like these. I have tried before and failed to move some of the things I believed needed changing. But if the Department is serious about reforming procurement and breaking the doom loop, this work has to be treated as a priority.

The proposals should be challenged and peer-reviewed by people with genuine expertise, then translated into practical guidance that reaches desk level within weeks or months, not years. And guess what: the outcome will not feel fair.*

*Not if “fair” means allowing underperformers to keep winning.

And an important nod to culture

If someone took the time to examine my business and explain how it could perform better, I would want to understand what they had seen. I would drive to meet them with a pack of fresh whiteboard markers. Treating feedback and recommendations negatively is a serious cultural problem. It puts protection of the institution ahead of improving its outcomes.

Turning this around requires exceptional leadership and a genuine sense of crisis: clear priorities, rapid decisions, visible accountability and a willingness to engage constructively with outsiders.

Act. Go now.