De La Rue's passports and the political allocation of contracts

De La Rue is complaining bitterly that someone else - that is, not them - is getting the contract to print the new post-Brexit passports. There're a number of things that can be said about this:

The passport manufacturer De La Rue is set to announce it will challenge the government over its decision to manufacture new blue British passports in France.

The company will formally launch an appeal against the decision to award the £490m contract to the French-Dutch firm Gemalto on the grounds that it believes it had the best offer on quality and security, though not on price, according to the Financial Times.


The Home Office has previously said changing the contractor would save UK taxpayers £120m but the decision has been met with a storm of criticism from Brexit-backing MPs, as well as Labour and trade unions.


De La Rue’s chief executive, Martin Sutherland, has previously expressed outrage at the decision to award the contract to the rival firm, telling the BBC that Theresa May should “come to my factory and explain to my dedicated workforce why they think this is a sensible decision to offshore the manufacture of a British icon”.

One thing to say is, well matey, if we're to say that something British must be printed in Britain then where does that leave your global contracts to provide both passports and money for other countries then? You'd be happy to lose all of those contracts to their national champions would you? 

But enough of the snark. What this really shows us is how bad politics is at allocating contracts. It's just a bad way of deciding economic matters. Sure, we don't know how this is going to turn out, don't know if the government will cave to the shouting here. But look at what the political demand is.

The taxpayer should be gouged for an extra £120 million because politics. Politics being the only argument actually there to justify that extra gouging. That is, having failed at every other argument, like cost, efficiency and so on, politics is being appealed to.

Now think on the implications of that for every politically awarded contract. It's not an efficient manner of producing goods and services for the consumer, is it? The very point of using politics to assign being to award to the politically favoured, those who would lose out under any consideration of price or efficiency.

Obviously, there are some things that simply have to use the political process but that very definition of it, that it is subject to other than cost effectiveness arguments, means that we should only use it where we must.