Business and Trade Committee
Oral evidence: Industrial Strategy, HC 727
Tuesday 13 May 2025
Ordered by the House of Commons to be published on Tuesday 13 May 2025.
Members present: Liam Byrne (Chair); Antonia Bance; John Cooper; Sarah Edwards; Sonia Kumar; Gregor Poynton; Mr Joshua Reynolds; Matt Western; Rosie Wrighting.
Questions 668 - 718
Witnesses
I: Andrew Forzani, Government Chief Commercial Officer, Cabinet Office; Andrew New, Chief Executive Officer, NHS Supply Chain.
Witnesses: Andrew Forzani and Andrew New.
Q668 Chair: Welcome to today’s session of the Business and Trade Committee and the final panels in our industrial strategy inquiry before we wrap up our conclusions and publish them ahead of the comprehensive spending review. Andrew and Andrew, thank you very much indeed for joining us today to rattle through some questions about the way in which we use procurement to drive industrial strategy.
Perhaps we could start off with Andrew New. Broadly speaking, what do you think is the value of public procurement this year?
Andrew New: I will start by talking about my role in terms of NHS Supply Chain activity. Within healthcare more broadly, we have a responsibility for buying the goods that are consumed across health. We have a responsibility for everything from large diagnostic equipment to implantables and consumables in care across England.
Q669 Chair: What is the rough value of that this year?
Andrew New: The rough value that we are procuring is approximately £6.5 billion. That is out of the core content in the NHS in England of around £9 billion on products, which is a subset of around £35 billion on all goods and services, including medicines and things that sit outside our scope.
Q670 Chair: There is £35 billion in spending altogether, and you cover about a third of it. Andrew Forzani, what is your perspective on this?
Andrew Forzani: I can probably give you a better perspective of the whole public sector. Last year’s public sector procurement spend was about £380 billion, of which about just under £80 billion went through central Government.
Q671 Chair: What is your analysis of how many jobs in our country that £380 billion supports?
Andrew Forzani: I have no idea, apologies.
Q672 Chair: Do you have a sense of what fraction of economic growth in our country today is being driven by that procurement spend?
Andrew Forzani: We are aware of the percentage of that spend that goes to suppliers that are registered and homed in the UK. We have that data. We have the information on the level, size and type of businesses where that spend goes.
Some sectors might have that information, in terms of how directly it corresponds to economic growth, but, in my role as the person responsible for the Government commercial function, that is not information that I am familiar with.
Q673 Chair: What fraction of that budget is going to UK-domiciled firms?
Andrew Forzani: From a central Government perspective, about 90% of public procurement spend goes to suppliers—I will be clear on the definition—that win the contracts and are registered in the UK. They might have a foreign parent, but the contracting authority is a registered UK supplier. That is who has bid for the contract.
It is very high. If you want to look below—there are supply chains below that—we do not have that granularity of information across all sectors. Andrew might have it for health; I think he probably does.
Q674 Chair: The Government have listed eight strategic sectors in the industrial policy. What fraction of public procurement spend goes into those eight sectors?
Andrew Forzani: You might be able to answer for life sciences, Andrew. I will start with defence. I will not be able to give you a full answer, but I have worked in defence recently. Defence procurement spend last year was about £31 billion or £32 billion. That would be one of the sectors.
Andrew New: From the work that we have recently done with the Department of Health and Social Care and NHS England to establish the overall spend across the health family, it is around £55 billion a year.
Q675 Chair: We have about £86 billion there—we are at about a quarter, we think, of public spending that you can pin down to two of the eight sectors in industrial policy. What about the other six sectors? How much of public procurement goes into those other six sectors?
Andrew Forzani: That is not a way that we have cut the spend so far. We have knowledge of the spend, as I said, by nationality, by type and then by the broad sector. We have figures on local government, health and central Government, but we do not collect the data on those eight sectors, I am afraid.
Q676 Chair: Just in terms of the future, how many years in advance can you forecast the level of Government procurement?
Andrew Forzani: If we focus in on central Government, which is my remit, most of the Departments are still setting their budgets on an annual basis. We understand that one of the key things around economic growth is to give a long-term demand signal to industry and suppliers. We are very much encouraging Government Departments to make long-term planning and spending commitments.
We have a new digital system, which is called Find a Tender. If you are looking to bid into the public sector, we have a new system that joins it all up, so any supplier just has to register once. It went live in February this year. We encourage and ask all public sector bodies to put their future pipelines and opportunities on there.
Those opportunities will be at different levels of certainty. For some of them, the budget will be there and the project has kicked off. They will put on a requirement to say, “We know we’re going to build these schools in this period. If you want information, this is where you can go.” Some of them are more speculative. They will say, “We think there’s going to be some development in this area. It roughly looks like this, but we want to make the market aware.” We are asking public sector contracting authorities to put that information on much earlier, even if it is not 100% certain, to give a better demand signal to industry and to the market.
Q677 Chair: How many projects are on that pipeline today?
Andrew Forzani: I checked today. This morning there were 17,456 pre-procurement notices on Find a Tender across the whole of the public sector. Those are early indication procurement planning notices, just to give you a scale.
Q678 Chair: What is the value of those?
Andrew Forzani: Some of them would not have values against them, so I cannot answer that.
Q679 Chair: What value do you know is in that pipeline?
Andrew Forzani: Individual Government Departments will publish a pipeline every six months. I can certainly write back to the Committee with the figures per Government Department on what is in their pipelines.
Q680 Chair: Yes, that would be brilliant. It would also be useful to know, if you can answer today, how far in advance that pipeline stretches.
Andrew Forzani: Probably the furthest it goes is about four or five years; there is not much looking that far out yet. Most of them are probably in the next six to 18 months, but there are projects that are three to five years out.
Q681 Chair: You say “not much”—give us a figure.
Andrew Forzani: Probably 80% is in the next 12 months. This is where central Government, in particular, need to get better at forward planning for the market.
Q682 Chair: We have done a lot of work on some quite problematic suppliers to Government. Can you assure us today that Fujitsu has not won any new Government contracts over the last 12 months?
Andrew Forzani: Fujitsu is still working with Government Departments where we are relying on the continuation of some of the legacy IT systems that it provides. The reality is that some Government Departments are still running very old IT systems where the options are either to continue with Fujitsu or to stop those services. Departments are in different stages of re-procuring some of those legacy systems. In the last 12 months, there have been extension contracts with some Departments.
Q683 Chair: What is the value of those contract extensions with Fujitsu specifically?
Andrew Forzani: I can provide that to the Committee.
Chair: We look forward to that.
Q684 Mr Reynolds: Just to confirm, Andrew, 90% of public procurement goes to UK companies. We do not know the one or two scales down from that; we do not know about their suppliers. Is that correct?
Andrew Forzani: We do not know across the whole system. If you take into account central Government, local government, health and education, there are thousands and thousands of contracting authorities placing contracts that make up that £380 billion. For some areas, and some Departments, we have supply chain information.
Mr Reynolds: But across the board we do not.
Andrew Forzani: No.
Q685 Mr Reynolds: If we talk to a big business such as a car manufacturer, it will know who its suppliers and sub-suppliers are. If you talk to a grocery retailer, they have to be able to tell the Government at any second where the tomato that makes up a bit of that ready meal came from—right the way back to who grew that tomato. We are talking about economic growth, so developing and growing our economy. How can we talk about that if the Government and the civil service have no idea how many UK-based companies are in our supply chain and where we are today with that?
Andrew Forzani: You cannot compare most of our organisations with those that you have just listed. They are not organisations that are funded or set up to have that level of supply chain management. There are exceptions to that. Andrew, my colleague who runs NHS Supply Chain, does have that information because that is his job and that is the service he runs.
There are lots of major Government programmes that have that information. Some of the submarine defence contracts go right down to a really low level. It is not that we do not have it at all; we have it in patches. We have it in areas where we have major programmes and where there is that specialism. But no, we do not have it across £390 billion of public procurement spend.
Q686 Mr Reynolds: How do we know who is, at the end of the day, supplying our goods? How do we know that we do not have goods coming in through public procurement that are supplied from countries that should not be supplying the UK?
Andrew Forzani: We have some level of assurance. I am accountable only for central Government procurement. We often ask for assurance from our suppliers. Certainly our big suppliers—our key strategic suppliers—will be very much aware of this. As an example, when we had the illegal invasion of Ukraine and we had a policy of sanctions, straightaway we looked for assurance through our supply chains across Government on any kind of Russian content. Russian steel was an issue then.
There will be particular circumstances where we will go out and seek assurance on particular issues. We will generally get that from a central Government perspective, but the system is huge. There will be lots of areas where we cannot give that assurance.
Q687 Sonia Kumar: What concerns me is that sometimes a certain supplier has a monopoly on supplying the NHS, for instance—I know this as a former NHS manager. They will supply all the healthcare products and there is no competitive review in any way. If there are SMEs that want to get in, they cannot because they just do not have the ability to scale up as quickly as you are saying.
You were saying that there is a platform for firms to bid through, but there is only a certain amount of time that they can put one in, and it is not years in advance. This will be putting a lot of smaller companies at a disadvantage. How do you break down those barriers? I will go to Andrew New to talk about the NHS.
Andrew New: The contracting approach across the NHS is very much one where there are longer-term cycles of creating framework agreements with multiple suppliers and then having further competitions to select individual products for use across the NHS. In some cases, there may be only one supplier that can get the accreditation to achieve a position on the framework, in which case that initial competition sets the price for the rest of the contract. One of the benefits of the Procurement Act that came into power a month or so ago is that, rather than being a fixed framework agreement that must last for a period of time with no refreshes in between, we now have new rights to refresh them more often, bring new suppliers in and give them a longer-term view of demand.
The NHS is slightly different from other parts of Government because a lot of the things that we do are not project based. Of the £9.1 billion on medical devices and things, implantables are pretty consistently utilised every year. There is some change in the technology and some renewable technology, but we can predict that £2.5 billion-worth of stents and things will be consumed through major surgery. Approximately £1.8 billion of consumables, whether they are bandages, sutures or other things, will be consumed in operating a hospital, and there will be around £600 million of food and hotel service-type activity.
The peaks and troughs really come through investments in new diagnostic equipment, upgrading new hospitals and those kinds of things. When we look at our pipeline, we can be very consistent on what the demand will look like year on year both at the NHS Supply Chain level, which is around 68% or 69% of products flowing into the NHS, and at the NHS level as a whole.
We manage the growth in between. If NHS Supply Chain moves to 75%, we know that the NHS directly ordering things from suppliers will drop on the counter. We give a pretty good view of the demand into the future to those suppliers from which we regularly buy products.
Q688 Matt Western: Just to move along, we were in Belfast last week and we visited the Harland and Wolff shipyard, which you may know, Andrew, was taken over by Navantia. We also learned that Navantia is in actual fact owned by the Spanish Government.
In the referendum on leaving the EU, it was claimed that leaving would liberate us from certain regulations about procurement and that we would be able to drive more localised procurement to the UK, despite the fact that the French, Spanish and other countries’ Governments were actively enabling their base of suppliers to supply for public procurement. How can the UK Government use their supply base better within current UK and international rules?
Andrew Forzani: You might be aware that the procurement regulations changed quite significantly in February of this year. We have a new Procurement Act. That was trying to do a number of things. It was trying to create a simpler and more flexible procurement system. It has been accompanied by a national procurement policy statement, which is the framework of the Government’s priorities. All public sector contracting authorities have to take regard of those priorities when they run their procurements. At the heart of that is running their procurements and working with the market to generate economic growth and to take regard of SMEs.
There is a new obligation in the procurement regulations from this year. Contracting authorities have to consider what the barriers will be to SMEs taking part in these procurements. They have to consider whether they can mitigate and overcome those barriers. That is a new measure in the regulations. We are pushing that message very strongly across the commercial and procurement community.
Government Departments, for the first time, are being asked to set ambitious three-year direct-spend SME targets. This is about the percentage of their spend that is being directly contracted with SMEs. We are expecting the first round of those in the next few weeks.
Q689 Chair: What are you planning to get to? How much of this £385 billion is going to be targeted at SMEs?
Andrew Forzani: The Government have not set a target. We know what the baseline is. At the moment, across central Government, the baseline is about 11%.
Chair: Gosh, that is very small.
Andrew Forzani: There are two figures that get collected. The first is the direct spend. That is where a Department has a contract directly with an SME to deliver. We also measure the number of SMEs in the supply chain in some Departments. That runs much higher. Across central Government, that is running at about 30%. These are direct-spend SME targets that are being set.
Q690 Matt Western: Andrew New, what is your view?
Andrew New: At the moment, around 37% of our spend goes through SMEs. They have a key role in the health supply chain in operating the NHS on a day-to-day basis and in bringing innovative new products to the marketplace.
NHS Supply Chain is helpful to SMEs in providing some of the infrastructure that they cannot afford to generate themselves, in the physical receipt and distribution of goods, and in the ability to deliver to all hospitals nationally. We still have work to do—that work has been under way for some time with NHS England, NICE, MHRA and the Department of Health—to scale new innovative products faster and more consistently across health, and therefore use the innovation spend in health to grow UK businesses and then have an export market associated with them.
There are plenty of opportunities to continue to do more. The process has simplified significantly already. We are now ready for the next wave and the next step of making that easier for SMEs to operate. I had negative feedback from a supplier last week, who I have invited to come and talk about their experience and the challenges that they have had. Navigating a complex system is complicated. We need to do more signposting to support them through that process.
Q691 Sonia Kumar: In terms of tackling some of the barriers, it sounds like the process is a little bit simpler. In particular, SMEs find it very difficult to apply for Government contracts because of all the bureaucracy. What other avenues are you pursuing to try to break down these barriers?
Andrew New: We have great engagement through both the trade associations and with SME expert panels. A number of SMEs give us regular feedback on how we could become more accessible to SMEs.
One of the challenges that we have given to our teams around our category approach, as we design the right size and shape of the supply chain, is to make sure we do not end up with an over-aggregation of needs across the NHS. It would be very easy to say, “This year we need to spend £2 billion on diagnostic equipment.” But on that basis, clearly no SME is going to win that contract. By separating some of those demands into smaller, more specific and sometimes niche product areas, we create opportunities at the right scale for SMEs to be successful in competing for them.
There is constant redesign of what matters to the NHS in the selection criteria that we use through our procurements. The right answer this year will not necessarily be the right answer next year. We need to continue to iterate our processes and get feedback from our suppliers.
Q692 Sonia Kumar: How long is the process taking from an SME wanting to bid for a contract to them getting one? When I worked in the NHS as a manager, it took over a year for me to list any new contracts. There were monopoly suppliers, and getting a new contract in or trying to look at any other cost-saving SMEs was ridiculously difficult. How long is this process now taking?
Andrew New: It depends on the stage of the process. Creating a new set of framework agreements will probably still take around 15 months to ensure that due diligence has been done across all products. Once a supplier is approved to supply through that framework, further competition is normally conducted in six to eight weeks. Such as they are available to buy from, buying from them is relatively simple.
We try to avoid any direct-award activity because we cannot demonstrate competition and value for money. That would be a faster process, but clearly it comes with a compromise. This year we have implemented a new dynamic purchasing system, which enables truly innovative products that are not available anywhere else to have access in around three to five weeks. At the point at which NICE, MHRA or NHS England signal, “This is a product that we wish to be able to buy,” we can complete that competition much faster to make it available for the clinical workforce.
Andrew Forzani: I will give some more examples of some practical measures that we are taking across the whole system. With the new Procurement Act, we have also given Government Departments the ability to reserve procurements for SMEs only, if they wish to.
Q693 Chair: I just want to check something, though, Andrew. Have Ministers given you a target for what fraction of public spending needs to go to SMEs or not?
Andrew Forzani: No. Broadly, all the measures that we are talking about today are designed to provide an increase. When the individual Departments come back with their targets, there will absolutely be a dialogue in terms of whether they are ambitious enough and how they compare with the current baseline, but there is no single Government target at the moment.
There is some good stuff here. Government Departments are now allowed to reserve procurements for SMEs only, if they wish to, up to a certain value. This is for lower-value procurements. It is up to £139,000 for goods and services and £5.5 million for construction.
Q694 Sonia Kumar: Are these all British-backed? Is this only for British-backed SMEs or can anybody go for this?
Andrew Forzani: This is for SMEs. In terms of nationality, the way the public procurement regulations operate is we give equal access to suppliers from those countries where we have reciprocal trade agreements. As part of the WTO, the GPA is a broad procurement agreement that many countries sign up to. This is a set of reciprocal procurement arrangements, which gives UK-based suppliers access to all the markets on the other side. That is the basis of our procurement system.
There are some exemptions—for example, around national security. The Government can make the decision to procure in the UK only on national security grounds, if they wish to.
Q695 Antonia Bance: Following on from that point, one of the industries that this Committee has a pronounced interest in is UK steel. I am interested, Mr Forzani, in your comments on what action can be taken through public procurement to support UK-produced steel. In particular, what further use can we make of the national security exemption to support UK-produced steel? Could we use the procurement policy note system to make people who are procuring steel explain why they have not chosen British steel or a British company, if they had the opportunity to do so?
Andrew Forzani: We have been working really closely with DBT around steel procurement policy for a number of years. A number of procurement policy notes have been issued around the procurement of steel over the last few years. If you look at the actual figures on the public sector procurement of steel—the last figures we have are from 2023—about 88% of all steel that was procured for the public sector that could be delivered by the UK, as in the grade was available in the UK, was purchased from the UK.
Q696 Chair: That lights up the problem nicely, does it not? We have seen and we have been on warships that cost £1 billion a piece, which are being built with Swedish steel, not British steel, because the grades are not available in the UK. I am just concerned that what looks like a nice statistic in headline terms does not tell the full picture.
Andrew Forzani: We are currently consulting and working on a possible new procurement policy note and a catalogue. We are working with DBT and the steel industry to have a very clear catalogue of the grades and types of steel that are available and currently produced in the UK. That will be made available to all public procurement buyers. There is consultation and discussion going on at the moment around, as you say, a comply‑or‑explain process for declaring UK steel content and describing why steel might not be procured from the UK, if it is able to be. There is absolutely consultation and discussion going on about looking to strengthen some of that policy.
Q697 Antonia Bance: Do you have any comments on the national security exemption and the further use of that to support the UK steel industry?
Andrew Forzani: No, there is nothing that I can say on that from my position.
Q698 Rosie Wrighting: Just on Sonia’s point, Mr Forzani, you spoke earlier about complex multi-tiered supply chains. Are we doing anything about the SMEs that might not be directly involved in public procurement? Are we trying to bring them on to direct contracts?
Andrew Forzani: Do you mean those that are currently in the supply chain?
Rosie Wrighting: Yes.
Andrew Forzani: The main thing that we are doing is trying to ensure that they are paid on time and that the prime contractors that sit at the top are not flowing down unfair contract terms—that they are not unduly flowing down unreasonable policies, indemnities or liabilities. We are ensuring that those top-tier suppliers are paying through the supply chain on time. We are asking the big suppliers to declare and report their payment performance. If they are not paying the supply chain within 30 days—I think it needs to be 90% within 30 days—we have the ability to stop them getting future procurements. That whole regime has been operating for the last two or three years.
Q699 Rosie Wrighting: Is there anything about moving the SMEs that are working under the umbrella of the larger suppliers on to direct contracts so that they do not have to go through them as well?
Andrew Forzani: That is the whole strategy behind the direct-spend targets. The Government are absolutely asking, encouraging and wanting Government Departments to increase that spend. They want more of the spend to go direct to SMEs, which is why we are setting ambitious targets for them.
Q700 Chair: You are not setting targets for how much Government spend should go into the eight sectors prioritised by the industrial strategy, as far as you know.
Andrew Forzani: We are not at the moment, no.
Q701 Mr Reynolds: How do we ensure that Government Departments work in a co-ordinated manner to harness our buying power?
Andrew Forzani: I am responsible for the 6,000 people who run all the procurements across all the Government Departments. We work very closely, in terms of Government policy, on how we manage the top suppliers. We try to come together across the big categories of spend in terms of what the strategies are and how you approach the market. You might have heard of an organisation called the Crown Commercial Service, or CCS. It lets framework contracts for the whole of the public sector. That is where a lot of the public sector and Government spend come together in a co-ordinated way.
On the one hand, there is a lot of working together in the system, but each Department is an individual contracting authority and is able to go and buy themselves, if they want to.
Q702 Mr Reynolds: If you are looking at something really basic such as office paper, how many different contracts for buying paper do we have across central Government? Is there one contract that supplies everything? Does each Department have its own? Does each sub-department have its own?
Andrew Forzani: I do not know the exact number, but there are large contracts to cover those types of services—those basic spend categories. The Crown Commercial Service operates frameworks that the Departments will call off against. I am sure the vast majority of the Departments are using the same contracts for a lot of those things. Things such as laptops will be very similar as well. There is a lot of buying together for what we might call the more straightforward or basic spend categories.
Q703 Mr Reynolds: What scope is there for greater value for money and economies of scale in our basic spend categories?
Andrew Forzani: Yes, there is a lot of scope. There is a tension between standardisation and the efficiencies that it can deliver and people liking to have their own choice and saying, “I need this feature. This is important to me.” Those are the kinds of debates and challenges that we have.
The Government launched a new Commercial Digital Centre of Excellence in DSIT a few months ago. They are trying to have a single Government laptop as an ambition. They are trying to agree some specifications on things like that, and hosting and trying to have many more Government-wide deals. That is the direction of travel.
Q704 Chair: You will have thought about this, because procurement people think about it all the time: what is your estimate of the efficiency that could be gained through better co-ordinated bulk buying across Government?
Andrew Forzani: If you look just at Government Departments, the spend, as I said, was just under £80 billion last year. In terms of the efficiencies and savings that the Government commercial function made across all of its procurements, it was about 4.5% last year—the way that we went to market and procured last year generated 4.5% in savings. That is with a very low amount of the type of aggregated buying that we just talked about. You could significantly increase that if we took the decision to take a much more centralised and standardised approach.
Q705 Chair: What is “significantly increase”?
Andrew Forzani: I would not want to give you a figure.
Q706 Chair: What would your gut feel be?
Andrew Forzani: I would not be able to give you a figure.
Q707 Chair: You have just said “significantly increase”. Is that double? In our book, that is double.
Andrew Forzani: I have told you what the baseline is. There is a great opportunity there.
Q708 Matt Western: Just briefly, what systems do we use across Government for procurement and finance? Do you use SAP-based systems? Is it similar to that? Is it standardised?
Andrew Forzani: There is a whole shared services system across Government. There are different clusters of what are called ERP systems, as you might be aware. SAP and Oracle are the core systems for procurement, HR and finance across Government Departments.
On top of that, we have five or six different procurement systems that sit on those, with which we do the tendering and ordering. That is where the spend information is held. We have come a long way. If we were sitting here five to six years ago, I would not have known a lot of the figures that I have been giving to you. We did not consolidate them. We have a better picture, but it is still imperfect. We need to get us on to the same spend system. We need to get on to the same procurement system going forward.
Q709 Chair: That is interesting. We are very interested in the way that procurement can drive industrial strategy. Some of the evidence that we have found about Government co-ordination has surprised us. For example, there is a defence industrial strategy board that does not have the Secretary of State for Business and Trade on it. When you look across Government, what would your advice to Ministers and Parliament be about how we strengthen the governance of procurement so we are really using every pound of taxpayers’ money to drive the industrial strategy as hard as we can?
Andrew Forzani: The commercial and procurement work, and the people who are responsible for it, are too far removed from the industrial strategy and the industrial policy work. We have done some work trying to support the work of the industrial strategy and the eight sector boards. It is closer in some areas than others, but it is not close enough. In terms of some of the opportunities and themes that we have just been talking about, such as better standardisation and the ability to harness the way that we procure, it is still not joined up closely enough with policy.
Chair: We could put you on the Industrial Strategy Council, for example.
Andrew Forzani: Yes.
Q710 Sarah Edwards: I am interested in asking about demand signals; you might want to build on this. We have heard about the Find a Tender scheme, pre-procurement notices and the reserved procurement space for SMEs. One of the things that I am interested in asking about is the difference between the national Government responsibility and what happens when that comes down into regions.
I am going to give two examples. I will give you one example from the NHS. One of the suppliers in my patch, Wearwell, made PPE. During the covid crisis, they were directly procuring to hospitals in the west midlands. That was stopped at national level and has not since resumed. Secondly, if I look at local authorities, one of my businesses, PI-KEM, told me in a roundtable that they had to have a different portal for every different tender across lots of different areas.
I have heard from you that some of these things are being streamlined, but some are not. Could you perhaps expand on how you see those regional elements of the state and their purchasing power? Are you looking at that or are you keeping everything at a national level? Perhaps we could start with Mr New on the NHS side and then we can move to a broader picture, if that is okay.
Andrew New: PPE is a complex topic. Clearly, we had to ensure that we had pandemic resilience for all healthcare and therefore there was a need to co-ordinate that more centrally. The Department of Health took a lead on specifying the products and the availability of the products that were required.
At the end of the pandemic, we had an excess of PPE. That is well documented. Therefore, that has been consumed before any new PPE is bought. We are in the process of awarding new contracts for PPE going forward. We will take that national supply into the resilience centre and provide it to the NHS, as it works and cycles through the requirements. PPE is quite a unique set of requirements because of the way we operate it.
Q711 Sarah Edwards: Are regional hospitals now going to go back to procuring it or will that stay at a national level?
Andrew New: There is still a conversation in the policy space as to how strong the direction will be to say, “You should buy that from the centre.” We do not want to have a stockpile that is required for pandemic resilience that ends up going out of date and being disposed of because local hospitals have bought fresh PPE and have not consumed the central supply.
We need to look at the Government-wide impact and the economic impact of those sets of decisions rather than just the local perspective of, “We can buy things potentially cheaper in some cases on a short-term basis than if we were to utilise the central supply.” That is a policy piece of work, on which we are working with the Department of Health and Social Care. NHS Supply Chain operates that supply chain as an integrated part of how we support all care on a regular basis.
Local decision making is very important, particularly for more complex products that get closer to the patient, and because you need your clinicians to be able to select the right product for the patient at the right time. We would not look to drive that from the centre and say, “You must do it this way.” However, taking that example of paper, all the paper that is consumed in the NHS is bought through NHS Supply Chain; we buy it through CCS arrangements. We are leveraging the national position and supplying it locally in the right way.
For each of the 138 different categories that we buy, the solution has to be slightly different. It is far too nuanced to be able to say, “Just buy all these things nationally and maximise national buying power. Leave all of these things locally.” We need a sliding scale across all of it. Again, that changes every time we reset what the strategy for that category needs to look like and what the clinical needs are that we are looking to support.
Andrew Forzani: I will just answer on Find a Tender very quickly. Find a Tender went live on 24 February exactly because of the criticism that you just made. It is a one-stop shop. You register once and it connects you to any public sector procurement opportunity in the UK. It is done.
Q712 Sarah Edwards: Now SMEs can go in and bid for contracts and they do not have multiple accounts.
Andrew Forzani: That is the main reason why we upgraded it.
Sarah Edwards: That is excellent progress.
Chair: That is progress.
Q713 Rosie Wrighting: As we know, in the UK, we have amazing talent and creative innovation. How can we use public procurement to foster that?
Andrew Forzani: This goes back to the Procurement Act and the changes in the regulations that went live in February. A lot of the changes were to try to foster more innovation in public procurement.
What is the Procurement Act trying to do? It is trying to simplify and speed up the procurement process. It is much more flexible. That is probably the key thing. There are already examples, over the last two or three months, of public sector organisations going out to market and starting to procure in a very different way. We have some authorities doing digital demonstrators as a first phase of a procurement. Before, the public procurement regulations were probably quite prescribed. It was a straight road in terms of what you did. You asked for what you wanted and you saw what the market could offer. There is a lot more flexibility now to allow the market to do more innovation. The flexibility is a key change.
The other thing is around giving much longer notice. We were talking about this right at the start. The earlier you can tell the market, “These are our early ideas,” the much better chance there is that the market will come up with new ideas and engage in that.
These are the things that we are pushing across the procurement community in Government. We have set up an innovation hub in DSIT, which is looking to take the most interesting S&T and tech ideas from across the Department and take those to the market to develop new concepts and stuff. There is a lot going on in the space.
Q714 Chair: Very briefly, Andrew, the challenge that we have heard, in particular in defence and life sciences, is that our inability to structure long-term contracts for very innovative materials or supplies means, for example, that companies such as AstraZeneca or some defence companies are not investing what they could in this country. We are at the bottom of the G7 for business investment. We need to fix this.
We are quite interested in understanding how you put very long-term partnerships out to contract, over 10 to 15 years, that will allow public servants to buy cutting-edge innovation. Frankly, we are not going to fix the business investment problem unless we fix that.
Andrew Forzani: The old procurement regulations were a barrier. You will have heard some of these stories. Defence would go out for a development concept phase and they would get their ideas in, but then they would not be able to contract to scale it up to do the long-term work. They would have to start the procurement again. Quite often, frankly, that put companies off because they did not want to put their IPR on the line.
These new flexibilities that came in from February allow public sector buyers to stage their procurements in different phases. You can now have an initial development phase—a concept phase. You can then pause that and then scale it up to production. It allows you to design public sector procurements in a way that will allow you to go through all those stages of development up to production and a long-term commitment, if that is how you want to do it.
Q715 Chair: The rules are flexible, but at the top of this meeting you told us that only about 80% of the contracts in this pipeline go beyond 12 to 18 months. There is not a long-term demand signal for industry today.
Andrew Forzani: Sorry, that is not how long the opportunities might last; that is when the opportunities might come to market. That is the way I answered your question.
Chair: Let us follow this up in correspondence because that is a really key point.
Q716 Rosie Wrighting: Do you believe these new initiatives are going to change how we procure to get the most out of the increased defence spending?
Andrew Forzani: I know the Department is really serious about using these initiatives, but it will also come down to how we specify things and what the funding is. I do not believe the procurement regulations were the biggest barrier. They will not be the thing that solves it, but they were a problem. They are now much more flexible.
Q717 Chair: What was the biggest barrier?
Andrew Forzani: I have just come from defence. It was that we did not follow up with funding. We had far too many of these innovation programmes and projects. Most of them got to concept phase and had some great ideas, but most of them then could not find the budget to continue.
Q718 Chair: The lack of multi-year budgets was the real predicament.
Andrew Forzani: Yes.
Chair: That brings us up to time. Thank you so much. That has been incredibly helpful. Thank you for being really candid and clear with us. Thank you for what you are doing. It is hugely appreciated. That concludes this panel.