Examination of Witnesses (Questions 180
- 186)
TUESDAY 16 JANUARY 2007
CBI
Q180 Mr Hoyle: I have noticed that
you have used this outcome based specification which ties in with
what you have said already. What procurements of goods and services
are going to happen? How do we work around that? I know you have
given us a hint about you can see working together on designs,
working together to ensure full life programmes and you have used
the defence. A quick example is the French. I understand when
they had a van contract for their post office, they made sure
the specifications were exactly to a French vehicle that nobody
else met. Do you think we ought to be using that?
Mr McCafferty: Not to the extent
that it then enforces higher cost procurement as a result and
I suspect that is probably the case in the case of the example
that you give. I do think that what we do need to do is review,
as I said, where we can provide proper outcome based specification,
not necessarily using it as a form of backdoor protectionism,
but as a way of allowing companies to not only manage their capacity,
but also to innovate into more productive space. One example where
that did not happen which I can give you was to do with the budget
a few years ago involving the indirect taxation of spirits where
it was felt that because of movement across borders we had to
have a new system for that. The procurement for that simply focused
on the very old-fashioned method of paper tax stamps across the
top of the bottle, and those of you who bought the spirits in
duty free will be familiar with that. There are now very different
and much more innovative ways of solving that, including embedding
computer chips in the glass at the time of manufacturing the bottle.
This has a number of advantages in terms of the industry in the
sense that it allows you to track the spirits much more effectively,
at the same time it is also a lot cheaper both for the product
and in terms of monitoring, but because the specification was
focused on tax stamps and not saying to the industry, please come
up with the most cost-effective way of tracking the transport
and trade in spirits, then, as I said, we probably came up with
a less than optimal solution.
Q181 Mr Hoyle: I will tempt you a
bit further if I can because if we go to France, you would not
see an ambulance or a police car being anything but French built.
Italy is the same, Germany is the same, yet you come to the UK
and everything goes. A good example of that is the Highways Agency
at the moment. I would have thought if you have a procurement
you might be better off dealing with, say, Land Rover and one
of the Discovery vehicles which they have used in some quantity,
yet what we have seen the Highways Agency do is have the Discovery,
British built; then we see the Toyota, non-British; Mitsubishi,
non-British; Nissan, non-British built; four-wheel drives all
operating. How does that make sense in procurement terms?
Mr McCafferty: The primary purpose
of government procurement is to provide the best value, least
cost option for the consumers of the service that the government
provides. What we need to ensure, therefore, is not somehow to
rig the specifications so that we exclude all competition, but
to ensure that the background climate permits British manufacturers
to compete fairly and openly for those contracts.
Q182 Mr Hoyle: You miss the point.
Surely, it is cheaper to operate one type of vehicle than five
different vehicles. It does not make any sense at all because
scale should make it cheaper. The fact that the maintenance across
the line, because you are only operating one vehicle, makes much
more sense. What I am trying to say is the fact only one of the
five vehicles is British built must surely be at the expense of
the British taxpayer.
Mr McCafferty: I am not sure,
I am not a motor mechanic.
Q183 Chairman: I think we will leave
Mr Hoyle's question as a rhetorical one. I was very interested
in your very helpful written evidence that you were critical of
the Government using purchasing power to support social and environmental
objectives, for example. Surely it has a right to do so, does
it not?
Mr McCafferty: I think the issue
is one of what are the correct specifications to make your own
product. I think whereas we would argue that the legislation,
the existing regulation, does provide the climate for health and
safety and for employment issues, as long as those competing for
a government contract are in accordance with the law I do not
see the need for other specifications.
Q184 Chairman: Consumers are free
to make decisions about how they buy stuff on ethical grounds.
The Government has policy on disability discrimination, on age
discrimination and all kinds of issues, it should not bring those
into public procurement?
Mr McCafferty: The difficulty
is embodying those regulations alongside what I have already stated
I think is the primary purpose of government procurement which
is to provide the highest value, lowest cost option for the service
or the product that is being delivered to the public and to the
extent that environmental or social obligations conflict with
that, I think they are confusing and unhelpful.
Q185 Chairman: I am following up
in a slightly lower key way the questions Mr Hoyle was asking.
We do get this feeling that other countries are rather better
at procuring their own manufacturers' products. Do you see any
evidence for that in the rest of the world, particularly in Europe?
Mr McCafferty: I think it is one
of those interesting folk myths. Certainly the Wood Report, commissioned
from Alan Wood, the head of Siemens, a couple of years ago looked
into this in significant detail and found it very difficult to
substantiate the view that there is widespread foreign rigging
of the rules, if you like, in order to promote domestic products.
Q186 Chairman: Perhaps you can invite
Mr Hoyle round for a tête-a"-tête on this
subject. We have done very well in limited time. We are very grateful
to you for the help that you have given us, except possibly Mr
Hoyle on one subject! Thank you very much for being such good
witnesses.
Mr McCafferty: Thank you for inviting
us.
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