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OFT joins forces with OGC and Defra on review of procurement in waste management

91/05    23 May 2005

The OFT, the Office of Government Commerce (OGC) and Defra are looking at the effects of public procurement on competition and capacity in the municipal waste management sector.

The study will focus on improving strategic procurement in the municipal waste management sector, which includes the collection, recovery and disposal of household waste, civic amenities waste and street cleaning services. The OFT will consider how public sector procurers can make the most of competition when procuring waste management services.

The OFT, OGC and Defra aim to conclude the study by March 2006.

The waste management study follows OFT preliminary research into public sector procurement published in 2004 and is the second study undertaken in the wake of the OGC's 2003 report 'Increasing competition and improving long-term capacity planning in the government market place' (known as the Kelly report). (See notes 1 and 2).

The first of the studies by the OGC looked at the construction industry. In collaboration with the OGC, the OFT will publish guidelines for public sector procurers on how to make the most of competition when procuring construction services. The guidelines will also feature a section on how to avoid being the victim of bid-rigging or price-fixing cartels. The guidelines, which the OGC's Smarter Construction Division will promote, should be ready for publication in autumn 2005.

In addition the OFT will be supporting the OGC and the DTI's Small Business Service in their work on assessing the impact on small businesses of the use of supplier accreditation lists by public sector procurers. (See note 3).

NOTES

1.  The OFT published 'Assessing the impact of public sector procurement on competition' in September 2004. The preliminary research, which was carried out by independent consultants, indicated that public procurement can enhance competition as well as restrict or distort it. The report also identified a number of sectors where it was more likely competition could be affected by procurement practices, one of which was 'sewage and refuse disposal, sanitation and similar activities' (which includes waste management). See the OFT statement

2. Following the Chancellor of the Exchequer's pre-budget report in November 2002, which asked OGC to look at what steps could be taken to increase competition and improve long term planning in markets where government has purchasing power, an OGC team headed by Sir Christopher Kelly published a report entitled 'Increasing competition and improving long-term capacity in the government market place' in October 2003. The report highlighted areas that needed addressing in order to improve competition and capacity planning. The Kelly action plan was published in December 2003.

3.  A 'supplier accreditation list' is a list of pre-qualified suppliers, which is compiled by a third party assessment provider. The Federation of Small Businesses and others have complained that such practices can make it more difficult for small firms to enter the public marketplace.

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