I was very interested in the recent article on NHS procurement. As a small business owner I have had multiple dealing with state procurement systems in all their awful grandeur over the years. They may seem dull but in a wholesale reformation of them lies a method of unlocking a massively more efficient and productive state.

UK procurement rules were originally set up to align with EU Directives and with the laudable objective of providing a level platform for competitive tendering for major projects. However intention and execution rarely coincide with regard to British bureaucracy and, while European governments seem to be able to use procedures as they were designed, as they understand and work to the underlying principles, the UK and Scotland used the creation of an extra ‘process’ to:

1. Set up a bureaucracy of procurement independent of any real control. Like most bureaucracies this validates itself by indefinite and uncontrolled expansion into areas where it is remarkably ill suited (in Scotland the main procurement body is technically under the control of all 32 Scottish local authorities which means it is de facto under no control at all)
2. Validates its own success.
3. Instead of simplifying process creates a giddying layer of documentation, gold plating and multiple entering. This of course requires an ever expanding bureaucracy to administer.
4. Massively expands requirements on interested suppliers by requiring a morass of irrelevant certifications and documentation. This essentially excludes small and medium sized businesses and instead of expanding the potential number of suppliers slashes them.
5. Since procurement process is deliberately disconnected from the purpose for which it is intended, every project is simply compressed into one ‘standard’ form without any regard for its suitability. Since those who construct the forms have minimal understanding of what they are trying to do they often enshrine economic lunacy in their construction. Since the process is all and its validation is by endless repetition then innovation is completely discouraged.
6. The result of this is that those who do tender build in an ‘idiocy’ premium to cover themselves against the obvious incomprehension of the process. Both this and the relatively small number of suppliers who work their way through results not in price competitiveness but substantially enhanced pricing.

In an even more Kafkaesque development procurement bodies will often respond to such criticisms by inviting winners of tenders to help refine their procurement processes! Funnily enough those winner then tend to win repeat tenders!

What are the consequences of this insane system?

A small example. Tobermory on the island of Mull requires a new school. That school has 230 pupils. The estimated cost of replacement of the school (and remember how rarely any tender comes in even remotely close to its estimated figure is £43 million – some £187 000 per pupil! Curiously we are so inured in Scotland to these extraordinary figures that in the desperate need for the school, no one queries why this remarkable cost.

This is of course is but one example of the mess of procurement in Scotland. Our most famous example is the two Ferguson Marine ferries on the Clyde, budgeted at £97 million with only one so far delivered seven years late and with the second heading for eight at a total cost currently at £360 million and rising. Both boats were intended to use a revolutionary green propulsion system, the fuel for which no one seems to have thought to enquire could be procured locally. In reality it is being tankered up from the south of England! Assessments of the ferries indicate they will be quite as polluting in toto as our current generation. Both are now technically obsolete with regard to modern regulation.

The above might be excused perhaps as an example of blatant political interference in the procurement process and how it was done. It is harder to excuse its sequel.

CMAL, the operator of the fleet, is currently procuring a series of boats being built in Turkey. Coincidentally some similar Norwegian boats are being built at the same time. The boats are built for similar sea conditions. The Norwegian boats have higher car and passenger carrying numbers, are the most advanced green ferries yet built, took 15 months to commission and will cost between £26 and £31 million to build. The Scottish ferries took 33 months to commission are less environmentally friendly, smaller and will cost £52 million each. Well they will not actually as they are now predictably late and over budget.

These are just a few examples.

Should we as Liberals not have at the heart of our policies the massive efficiency wins which, not simply reform (for it is unreformable) but abolition and replacement with apposite best practise of UK and Scottish government procurement? Surely the simplest win of all in a time of every tightening budgets is make every penny count?

* Hugh Andrew is Managing Director of Birlinn Ltd, one of Scotland's largest publishers. He served as Convenor of the Scottish Policy Committee.