Policy design

The incorporation of sustainable corporate ownership into public procurement would require careful planning. The state would have to provide contracting authorities with a clear understanding of its expectations under a new policy, noting especially what is, and is not, expected and possible for contracting authorities to do under the current public procurement legal framework. This policy would also have to be reflected in adjustments to various contracting guidance documents, including the national procurement policy statement, to support these strategic changes. We can expect some of these changes to be relatively uncomplicated. They would effectively refocus the regime on criteria that reflect governance in sustainable corporate ownership, enabling and encouraging contracting authorities to include these criteria in their public procurement as part of their tender evaluation procedure and/or as a condition to tender (reserved procedure), as long as to do so can be considered to align with the overarching delivery of value for money. In doing so, the state would give contracting authorities the option to specify that private firms contracted to deliver public services demonstrate corporate governance reflecting elements of sustainable ownership and, under certain circumstances, give preference to those that do. In practice, it would be necessary to ask suppliers, when they submit a tender or pre-tender questionnaire, to include their constitutional documentation (in the case of a company, their articles of association) and any other relevant company documentation (for example, shareholder agreements) as evidence of any elements of sustainable ownership design which are incorporated there, including in relation to criteria of corporate purpose (beneficiary rights), decision-making power (control rights) and profit distribution (economic rights).

We can assume that aspects of this transitioning process are relatively low-cost. The state would change its tendering strategy, and while this might require some policy or even legal changes, further demands on resources would be limited, broadly speaking, to providing education and information regarding the new regime. Once a commitment to a new policy has been made, it would be relatively easy to implement in practice initially. The greater challenge would be to ensure the benefits of such a policy are fully realized in the medium term and long term.