How private firms take unfair advantage over the public sector to get government contracts

Open and transparent: Grahame Morris, who called for a 'level playing field' for both private companies and public organisations when bidding for government contracts.
Open and transparent: Grahame Morris, who called for a ‘level playing field’ for both private companies and public organisations when bidding for government contracts.
Did you know that £1 in every £3 spent by the government goes to an independent or private-sector service provider?

If you also recall government ministers bemoaning the fact that £1 in every £4 spent by the government was borrowed, as they said very often during the first year or so of the Coalition, and you bear in mind the fact that all private companies must make a profit, you’ll come to a fairly damning conclusion.

Did you know, also, that private companies – while free to hide behind commercial confidentiality regarding the conditions under which billions of pounds of taxpayers’ money are awarded to them in government contracts – may use Freedom of Information requests to gain detailed information about public sector organisations and then use that knowledge to undercut or outbid those bodies when government contracts are tendered or put up for renewal?

FoI regulations give private providers an unfair competitive advantage when bidding for contracts, due to unequal disclosure requirements.

Both of these were made clear in Grahame Morris’s short speech in support of his 10-minute rule motion to bring in a Bill amending the Freedom of Information Act 2000 to apply to private healthcare companies, and for connected purposes.

He even pointed out that we are living in a society where freedom of information is routinely censored – stating that he attended a demonstration against NHS privatisation in Manchester at the start of the Conservative Party conference there, “but which was barely reported by our public sector broadcaster”.

He said the government should be chastened by recent events. “For example, the tagging scandal — involving Serco and G4S and uncovered by the Serious Fraud Office — showed that these companies had defrauded the taxpayer of more than £50 million.

“Perhaps we need a hard-hitting advertising campaign, with advertising hoardings on vans driven around the City of London, warning off corporate fraudsters from bidding for public contracts?

“The danger for our NHS is that we are inviting convicted fraudsters into our health system.”

He said HCA, the world’s biggest private healthcare company, recently won the contract to provide cancer treatment for NHS brain tumour patients, “stopping patients receiving world-class treatment at London’s University College Hospital”.

Mr Morris continued: “The Competition Commission has already caught HCA overcharging private patients in the United Kingdom. In the United States, HCA has had to pay fines and costs in excess of $2 billion for systematically defrauding federal healthcare programmes.

“The public are right to be concerned about these providers coming into the NHS. If that is to happen, it is essential that their operations and their contracts with the NHS should be open, transparent and subject to public scrutiny.”

Introducing his Freedom of Information (Private Healthcare Companies) Bill, he said its purpose was to strengthen FoI legislation and introduce vital safeguards, so members of the public can see how their money is being spent.

It seems he may even have read Vox Political‘s earlier article on his motion, as he said: “I hope that Members on both sides of the House will support fair competition, a level playing field and the duty of equal disclosure throughout the bidding process for NHS services.

“The public have a right to know the record of public and private providers before contracts are awarded. Those safeguards can work only if the Information Commissioner has the same rights to seek information and carry out investigations, and to make all providers of public services comply with freedom of information legislation.

“I understand that the Information Commissioner expressed concern to the Justice Select Committee that accountability would be undermined if FOI did not apply to private providers of public services.”

He said: “Freedom of information is one of the Labour Government’s greatest achievements, ensuring transparency and accountability in modern government and allowing the public access to information on what is being done in their name and how their money is being spent.

“In recent years, we have witnessed an acceleration in the number of public services being outsourced, and today roughly £1 in every £3 that the Government spend goes to independent or private sector providers.

“Owing to the Government’s policy of opening up public services to the private and voluntary sectors, billions of pounds of NHS contracts are now being made available to the private sector, following the implementation of the Health and Social Care Act 2012.

“Unfortunately, while more and more taxpayer money is being handed to the private sector, especially in the NHS, FOI responsibilities are not following the public pound.

“There is a big issue here about transparency, because the public should know what is happening in their name, as was brought home to me recently in a demonstration against NHS privatisation in Manchester that I attended, along with more than 50,000 other people, but which was barely reported on by our public sector broadcaster.

“Private health care companies should not be permitted to hide behind a cloak of commercial confidentiality. Billions of pounds of taxpayers’ money is being awarded to private sector companies under barely transparent contracts.

“Meanwhile, private companies are free to benefit by gaining detailed knowledge of public sector bodies through their use and submission of FOI requests. The same information is then used by the private sector to undercut or outbid the very same public sector bodies when contracts are tendered or put up for renewal.”

Although no objection was raised to the Bill going forward, it seems the Coalition has performed an about-face on the issue. Mr Morris said: “I understand that in opposition the Prime Minister was convinced about this matter, having previously promised to increase the range of publicly funded bodies subject to scrutiny using section 5 of the Freedom of Information Act.

“The coalition agreement also promised to extend the scope of the Act to provide greater transparency, but unfortunately it would appear that nothing is being done to address the democratic deficit caused by the outsourcing of public services.”

Sadly, it seems likely that this Bill won’t get very far, for reasons this blog has already mentioned – the Government usually opposes Private Member’s Bills in the later stages and, given their low priority in the schedule, there is often insufficient time for the debate to be completed.

But this may not matter, as the information already provided by Mr Morris makes fascinating reading that is damning for the government.

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7 Thoughts to “How private firms take unfair advantage over the public sector to get government contracts”

  1. […] Did you know that £1 in every £3 spent by the government goes to an independent or private-sector service provider? If you also recall government ministers bemoaning the fact that £1 in every £4 sp…  […]

  2. Thomas M

    This government knows that it is being booted out in 2015 with it’s Lib Dem friends so it wants to do as much damage to everything as it can before it gets evicted.

  3. Perhaps a better example of the government’s contempt for Freedom of Information is the DWP’s absolute refusal to comply with the Information Commissioners office that they comply with FoI requests and make public the names of companies using Workfare. They’ve been fighting tooth and nail to keep that secret for well over a year now.

    1. Or indeed my own FoI request about the number of people who have died after claiming ESA and being put into the work-related activity group or marked ‘fit for work’ and appealing against that (coming up on the six months mark now, and the matter is with the Information Commissioner).
      The article was based on Grahame Morris’s speech, and I wanted to publicise the information he mentioned in that – but I’m grateful to your for your addition.

  4. Paul Hanes

    Not to mention that the bid process for new contracts being awarded are not open to the public sector to put in a more efficient or competative bid. Third sector and private sector once winning the contracts then loobt the Governemnt for more money ststing the work costs more than they originaly intended. Workers in these sectors oten do the same jobs for substantially less pay and this is how the elite cut wages which protects and increases their wealth through deflation for all except their money often ofshore and protected form quantative easing.

  5. beastrabban

    Reblogged this on Beastrabban’s Weblog and commented:
    This piece reports the attempt by the MP, Grahame Morris, to introduce a bill forcing the private companies bidding for NHS services to be liable to the same level of accountability and transparency as the public sector hospitals and institutions these seek to supplant. At the moment these companies are using the Freedom of Information Act to undermine the NHS by undercutting them. Yet the same companies prevent anyone from scrutinising their record for care and quality under the pretext of ‘commercial confidentiality’. It is vitally necessary that these companies should provide the same information as the state-owned NHS institutions, as many of the companies competing for services, such as Serco and G4S have been caught committing fraud. HCA, the giant healthcare company that has one the government contract to provide treatment for those suffering from brain tumours, has had to pay$2 billion in fines, costs and damages in America for defrauding federal healthcare programmes. Morris’ bill is an excellent one, but it is a private members’ bill which, if past experience is any guide, will be filibustered out of time by the government when it comes to be debated.

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