By Colin Lever
HAVE you ever wondered why Jersey’s high street is bereft of low-cost shopping franchises? The answer lies with procurement.
According to AI, procurement is the “strategic process of finding, negotiating and acquiring goods and services”. In respect of Jersey, this amounts to £2.118 billion in 2024 according to Statistics Jersey.
While the government has no say in how private enterprises operate, its own procurement system is being called into question. A recent Public Accounts Committee report stated that almost half of the government procurement services were given to off-Island companies at a cost of just over £215 million.
The vast majority (98%) were for services charging below a £25,000 threshold. Above this figure, tendering comes into play. This means that there is little in respect of checks and balances for many procurement transactions. Many hire simply by word of mouth. For large contracts in excess of £100,000, tendering is compulsory. But as we have seen with the ferry contract saga, the process is not as robust as would have been expected. It has been identified by the Public Accounts Committee and by Jersey’s comptroller auditor general that poor planning and lack of attention to risk have played a significant part in the process.
When it comes to procurement, the government, along with other businesses locally, use the ARIBA system. It is an online database that matches buyers with suppliers. However, it does require a degree of skill and training to operate, negating local small to medium enterprises from the outset as they do not have the resources to navigate the system.
Once prospective candidates have been identified, they are assessed against a set of criteria:
- Quality assessment (40%) expertise and experience.
- Financial assessment (50%) pricing.
- Social value assessment (10%) social, environmental and/or economic.
To help local companies to compete, extra points are awarded for being on-Island. The problem for SME’s is that larger firms often outcompete them in every aspect.
The furore over the tenancy for the Lido at Havre des Pas is an example of how government procurement favours big business over local SMEs. We are told that First Point Property Holdings are the most viable. Maybe they are, but has the assessing team followed due diligence as per the present government procurement process and have they fed back their reasons to the “losing” local group and to the Jersey public?
On the face of it, the assessments would appear objective. In truth, they are not.
PAC pointed out that local job creation and revenue from taxes were not factored into the economic section. They also identified that, in some cases, the social value contribution varied between 5% and 10%.
These glitches highlight the vagaries of the process and how points allocated can be manipulated, leaving it open to influence by vested interests, lobbying or just plain complacency. The debacle of getting an IT system for the Health Department is a case in point.
The Island has seen 13 construction firms close in as many months. There has been no official investigation to try and find out if there is a common thread. In the absence of the facts, the finger has been pointed at the Planning Department. But could the government’s own procurement process be to blame? In the absence of the facts, rumours of restrictive practices within the construction industry abound.
The PAC pointed out that the government’s procurement system lacks transparency and clarity. It stated that there had been 142 breaches and that none had been reported publicly. Local SMEs complained that the government’s procurement system is overtly complex with insufficient feedback and lacking support.
Procurement is the gateway into the Island for off-Island companies. Some would argue that the government’s own department for sustainable development is, in all but name, a Trojan horse for offshore businesses to get access to the riches that circulate within the Island.
There are aspects of the present procurement process that help local SMEs, but to facilitate better community wealth building, a local bias needs to be more overt as long as it matches the criteria of quality, performance and price. This is not Trump-like protectionism but rather creating an economic environment that is conducive to the development of local businesses and with it better sustainability and security.
Progressive procurement is at the heart of community wealth building. As an anchor institution, government must set an example and encourage private enterprise on the Island to do likewise. Progressive procurement goes further than the Island’s present procurement process in that it seeks to give local business priority as long as it meets the necessary criteria.
By supporting local business, it will help them to flourish, to build wider networks within the Island community, create a healthy economic multiplier and reduce the Island’s dependence on off-Island business. Yes, it will have to beware of cronyism, but an open and transparent process should cover that.
Colin Lever is a retired teacher and education specialist, SEND consultant and commentator on educational and community issues. He also contributes musically to Repair Cafés and charity events and is currently writing and producing a comedy sitcom podcast.
