As part of the “Big Society”, medics and lawyers have now been offended over competitive tendering. Competitive tendering is no longer the solution; it is very much the problem.
Yesterday, it was the lawyers’ turn. The Bar Standards Board (“BSB”) yesterday extended (10 May 2013) the first registration deadline for the Quality Assurance Scheme for Advocates in the face of a threatened mass boycott by barristers. The Solicitors Regulation Authority is expected to follow. In a statement yesterday, the BSB said the deadline will be extended from 10 January to 9 March 2014 ‘to ensure the criminal bar will have more time to consider the consequences of government changes to legal aid before registering’. The end of the first registration period will now be after the Ministry of Justice publishes its final response to its consultation on price-competitive tendering. The SRA board is expected to approve a similar extension later shortly.
A group of leading academics, including Prof. Richard Moorhead from University College London, indeed wrote yesterday,
“As academics engaged for many years in criminal justice research, we write to express our grave concern about the potentially devastating and irreversible consequences if the government’s plans to cut criminal legal aid and introduce a system of tendering based on price are introduced. Despite the claim by Chris Grayling, the minister of justice, that ‘access to justice should not be determined by your ability to pay’, this is precisely what these planned changes will achieve. This is not about ‘fat cat lawyers’ or the tiny minority of cases that attract very high fees. As we know from the experiences of people like Christopher Jefferies, anyone can find themself arrested for the most serious of crimes. No one is immune from the prospect of arrest and prosecution.”
Previously, it had been the medics’ turn. That did not deter Earl Howe in collaboration with people who clearly did not understand the legislation like Shirley Williams in competition with the medical Royal Colleges, Labour Peers and BMA. The Royal College of Physicians set out their oppositions to competitive tendering articulated their position last month:
Competitive tendering is often considered to promote competition, provide transparency and give all suppliers the opportunity to win business. It may be that price tags are driven down, but most reasonable professionals would actually ask, “At what cost?” Competitive tendering, rather, has a number of well known criticisms.
When making significant purchases, frank and open communication between potential supplier and customer is crucial. Competitive tendering is not conducive to open communication; in fact, it often discourages deep dialogue because in many cases all discussions between a bidder and the purchaser must be made available to all other bidders. Hence, Bidder A may avoid asking certain questions because the questions or answers may help other bidders by revealing Bidder A’s approaches, features, and the like. At the moment, there is a policy drive away from competition towards collaboration, innovation and ‘creating shared value’. Dr. Deming also writing in Out of the Crisis, “There is a bear-trap in the purchase of goods and services on the basis of price tag that people don’t talk about. To run the game of cost plus in industry a supplier offers a bid so low that he is almost sure to get the business. He gets it. The customer discovers that an engineering change is vital. The supplier is extremely obliging, but discovers that this change will double the cost of the items……the vendor comes out ahead.” This is called the cost-plus phenomenon.
Competitive tendering furthermore encourages the use of cheaper resources for delivering products and services. A supplier forced to play the competitive tendering game may come under pressure to keep costs down to ensure he gets a satisfactory profit margin. One way a supplier can lower costs is by using cheaper labour and/or materials. If the cheaper labour and materials are poor quality, the procurer will often end up with inferior, poor quality product or service. However, warranty and other claims may result –raising the price of the true, overall cost. Another area where suppliers may be tempted to lower costs is safety standards. This current administration is particularly keen on outsourcing, and sub-contractors may cut corners and creating safety risks. This is obviously on great concern where patient safety in the NHS has recently been criticised, after the Francis Inquiry over Mid Staffs NHS Foundation Trust. Furthermore, then government agencies, and indeed, private companies use competitive tendering it can take several years to choose a successful bidder, creating a very slow system. The result is the customer can wait incredibly long periods for product or service that may be required quickly. Finally, insufficient profit margin to allow for investment in research and development, new technology or equipment. Already, in the U.S., private “health maintenance organisations” spend as little as possible on national education and training of their workforce.
So the evidence is there. But, as the Queen’s Speech this week demonstrated on minimum alcohol pricing and cigarette packaging, this Government does not believe in evidence-based policy anyway. In the drive for efficiency, with a focus on price and cost in supply chains, the legal and medical professions have had policies imposed on them which totally ignores value. This is not only value in the product, but value in the people making the product. One only needs to refer to the (albeit extreme) example of a worker being retrieved from the rubble of that factory in Bangladesh to realise that working conditions are extremely important. This is all the more hideous since the policies behind the Legal Aid, Sentencing and Punishment of Offenders Act (2012) and the Health and Social Care Act (2012) were not in any of the party manifestos (sic) of the U.K. in 2010.
Competitive tendering is no longer the solution; it is very much the problem.
