UK public sector procurement spend increased by 7% year-on-year in 2021 to reach £173bn, according to a report.
The report, from data company Tussell, said while Covid had a reduced impact, it still accounted for more than 10% of the total value of public sector contracts awarded in 2021.
Tussell said to date the public sector had awarded nearly 5,000 contracts in response to the pandemic at a cost of £43bn, with £15bn of those contracts awarded in 2021.
“The majority of the value has gone towards the Test and Trace programme, which accounts for nearly half of all Covid-19 procurement,” said the report.
In March 2021 the Public Accounts Committee said Test and Trace was “overly reliant on expensive contractors”. It said in February 2021 Test and Trace was employing around 2,500 contractors with an estimated average daily rate of around £1,100. The highest daily rate was £6,624.
Tussell said Wates was the biggest construction supplier in 2021, receiving a spend of £469m, while BAE Systems remained the largest manufacturing supplier, with £784m of spend. Capita was the biggest IT supplier (£620m) and Suez Recycling and Recovery the most significant waste and recycling supplier (£319m). Serco dominated the supply of professional, scientific and technical services with £1.2bn of spend, while The Hospital Company was the biggest supplier of health and social work services (£1bn).
“The most notable new entry is Great Western Railways, going straight to first position in the transportation and storage sector, due to the award of a rail franchise agreement from the Department for Transport,” said the report. Spend with GWR was £1.3bn.
The report said more than 2,500 new frameworks were introduced in 2021, bringing the total to 9,697, compared to 2,239 in 2018. The most used framework in 2021 was G-Cloud 12, with 1,243 call-offs worth £743m.
A total of 16,000 services contracts, worth £19bn in total and mostly in IT and communications and business and financial services, are due to expire in 2022.
“For the time being at least, the era of ‘big government’ looks set to continue, driven by the government’s three big priorities of post-Covid recovery, levelling up and the transition to net zero,” said the report.
Tussell said 2,200 public bodies awarded 66,000 contracts in 2021 to 26,000 suppliers, of which 17,000 were SMEs.
Regarding the government’s previously stated ambition to spend £1 in three with SMEs, the report said in 2020-21 £45bn (26%) of total spend went to small firms. “Assuming that SMEs earned at least another £15bn indirectly as subcontractors, then the public sector would have achieved or even exceeded its 33% target,” said Tussell.
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