27/10/2015
This Update contains brief details of recent key developments relevant to those involved in procurement work.
If you have been forwarded this update by a colleague and would like to receive it direct please email Claire Booth.
All links are correct at the date of publication.
In this update:
- CCS Policy Procurement Notes
- Guidance on the Public Contracts Regulations 2015
- Other policy and guidance
- Consultations
- Cases - UK
- Cases - FOI
- News
Crown Commercial Service Procurement Policy Notes (PPNs)
PPN 11/15: Acceptance of unstructured electronic
invoices by central government authorities
Introduces a new requirement for central government departments and
their arm’s length bodies to accept unstructured e-invoices. It
applies to invoices submitted by suppliers on or after 30 June
2015. (22 June 2015)
PPN 12/15: Availability of procurement procedures
(decision tree)
This PPN contains a new Decision Tree and guidance on the choice of
procurement procedure resulting from the Public Contracts
Regulations 2015. It also sets out the general policy expectations
on procurement that continue to apply. The Decision Tree shows a
clear preference for the open procedure as the normal route for
in-scope organisations with other procedures shown as exceptions
(30 July 2015)
PPN 13/15: Increasing the transparency of contract
information
Provides guidance on how to implement the transparency principles
published in March 2015. It aims to increase the type and
accessibility of contract and procurement data to the public. It
applies to all central government departments including their
executive agencies and NDPBs. It applies to contracts advertised on
or after 1 September 2015. (3 August 2015)
PPN 14/15: Supporting apprenticeships and skills
through public procurement
This PPN requires departments, their executive agencies and
non-departmental public bodies to consider the opportunity for
apprenticeships and skills development in their contracting
requirements. These changes apply to contracts with a full life
value of £10m or more with duration of 12 months and above.
Businesses bidding for relevant contracts will need to propose the
number of apprenticeships they expect to create in fulfilling the
contract. This projection will be reviewed as part of the tender
evaluation process and written into the ensuing contract. The
contracting authority will take action if the supplier does not
meet its commitment. (27 August 2015)
PPN 15/15: Statistics on utilities procurement
contracts awarded in 2013 and 2014
This document explains the requirement for annual statistical
returns on utilities procurement contracts awarded in 2013 and
2014. This exercise is for utility sector entities only and not for
public bodies purchasing utility products or services (gas,
electricity, etc). (4 September 2015)
Guidance on the Public Contracts Regulations 2015
Cabinet Office: Public Contracts Regulations 2015 –
Guidance on 'public/public' contracts
Guidance on Reg.12 of the 2015 Regulations, which sets out new
provisions that codify, clarify and develop the case law on whether
contracts between public bodies should be subject to the public
procurement rules or not. The new rules also cover the
circumstances where either vertical or horizontal arrangements fall
outside the rules. (26 August 2015)
Cabinet Office: Public Procurement Regulations –
Guidance on electronic procurement and electronic
communication
This guidance explains the new rules on the use of electronic
communications between authorities and suppliers, including
electronic auctions (e-auctions) and electronic catalogues. These
rules include timing and scope of e-communication requirements,
accessibility, security, and exceptions to the mandatory use of
e-communication. For the first time, some e-communication stages
will be mandatory. (17 September 2015)
Other policy and guidance
CCS: Short form terms and conditions for goods and
services
The Crown Commercial Service has published updated terms and
conditions for general goods and services contracts with a value
below the procurement thresholds set out in the Public Contracts
Regulations 2006. They are designed for small and medium size
businesses to provide ‘light touch’ contract terms for low value
procurements. (31 July 2015)
DWP: Model terms and conditions for services
contracts
These model terms and conditions are applied to all services
contracts where the anticipated contract value is over £10,000. (21
September 2015)
HM Treasury: PPP policy note – Early termination of
contracts
Some public sector contracting authorities (the "Authority") are
considering options for reducing the costs of existing PFI (or
PPP2) contracts, consistent with Treasury’s Operational PPP
Efficiency Programme and wider objectives for managing public
services within constrained budgets. As part of this, the Authority
may be considering the potential for the termination of a PFI
arrangement by exercising the voluntary termination provisions
within the existing contractual terms. Infrastructure UK expects
the incidence of voluntary terminations of PFI arrangements to be
low, due to affordability challenges and the requirement to be able
to demonstrate value for money for the public sector as a
whole.
This note sets out the budgeting, accounting and fiscal
implications of a voluntary termination of a PFI contract by an
Authority, as well as the review and approval process that should
be followed. The note supports and expands on the addendum to DAO
(Gen) 02/143, which sets out the policy specifically related to the
early termination of PFI or PPP contracts, through no fault of the
supplier. (22 June 2015)
NAO: Open book accounting and supply-chain
assurance
The National Audit Office is calling for Government to negotiate
greater access to, and make better use of, information about how
much outsourced public services are actually costing suppliers and
therefore how much profit they are making. An NAO survey found that
such information, known as open-book accounting data, is currently
available in only 31% of contracts and that, even then, it is not
always received. Based on public and private sector case studies,
the report identifies five approaches to collecting and using
information on suppliers. It recommends that every major contract
has a strategy for the collection and use of information and that
every government department has a policy on when it will use
open-book accounting. (1 July 2015)
Chartered Institute of Internal Auditors:
Outsourcing and the role of internal audit
This report outlines a number of approaches in the private and
public sectors to managing the risks associated with supplier
relationships, including the practices of internal audit functions.
It highlights the importance of internal audit in providing
assurance on the proper management of the risks associated with
outsourcing. Failure to foresee and manage outsourcing risks can
result in service failures, delays in the implementation of new
projects, significant additional costs and reputational damage,
undermining the cost savings and other benefits that outsourcing is
intended to deliver. The report includes several case studies and
makes a number of recommendations. (30 September 2015)
DBIS: Small Business Commissioner – Government
response
Sets out the Government's response to the consultation on proposals
to create a Small Business Commissioner to act as a disincentive to
unfavourable payment practices, and build the confidence and
capabilities of small businesses to help them to assert themselves
in contractual disputes and negotiate more effectively. The
proposals will be implemented through the Enterprise Bill – see the
factsheet. (17 September 2015)
Electoral Reform Society: The cost of one-party
councils – Lack of electoral accountability and public procurement
corruption
This report looks at the savings in contracting between
single-party councils (or those with a significant number of
uncontested seats) and more politically competitive councils in a
pool of 132,000 public procurement contracts between 2009 and 2013.
It also calculates their procurement process against a ‘corruption
risk index’, looking at ‘red flags’ such as where only a single bid
was submitted or there was a reduced length of time between
advertising the bid and the submission deadline. It estimates that
could be wasting almost £3bn a year through a lack of scrutiny of
their procurement processes and argues that one-party councils are
around 50% more at risk of corruption than competitive councils. (5
October 2015)
Welsh Government: Wales Procurement Policy
Statement
This policy has been developed to support implementation of the
recommendations of the McClelland report. It sets out 10 principles
for procurement practices and the specific actions required of
every public sector organisation in Wales and how they will be
achieved. (12 June 2015)
Crown Commercial Service agreements
The CCS has published a list of the CCS agreements currently
available through which government and public sector organisations
can procure common goods and services. It includes details of when
each agreement is due.
Consultations
Cabinet Office: UK transposition of new EU
Procurement Directive – Concessions Contracts Regulations
2016
Sought views on draft regulations that implement the Concessions
Directive 2014/23 in the UK from 18 April 2016. The Government
consulted on whether the draft Regulations transpose the Directive
effectively and in the best way. The consultation closed on 18
September 2015. (21 August 2015)
Cabinet Office: UK transposition of new EU
Procurement Directive – Utilities Contracts Regulations
2016
The Cabinet Office has also consulted on draft Utilities Contracts
Regulations 2016 that implement the Utilities Directive 2014/25.
This consultation also closed on 18 September 2015. (21 August
2015)
UK - key cases
Edenred (UK Group) Ltd v HM Treasury [2015] UKSC
45
This case concerned an arrangement between the Commissioners of
Revenue and Customs (CRC and National Savings and Investments
(NS&I), both non-ministerial government departments, for the
administration of the Government’s new scheme for support of
working parents, known as Tax Free Childcare. Under the arrangement
NS&I was made responsible for the administration of the scheme
and received payment from CRC to cover the costs of administering
the scheme. The details were set out in a Memorandum of
Understanding, which is the usual form for inter-departmental
arrangements. NS&I had an existing outsourcing with a private
company, Atos. NS&I proposed to include additional work arising
from the Tax Free Childcare scheme within the existing outsourcing
contract with Atos.
This decision was challenged by Edenred as a breach of the Public
Contracts Regulations and Treaty principles, Edenred argued that:
i) there was an obligation to tender the arrangement proposed with
NS&I as it was a public contract; and, alternatively ii) the
arrangements amounted to a material change to the existing
outsourcing contract between National Savings and Investments and
Atos which should trigger the requirement for a new tendering
procedure.
The main judgment of the Supreme Court was given by Lord Hodge,
with whom their other Lordships agreed. The Supreme Court confirmed
the High Court's finding that the arrangement between CRC and
NS&I did not constitute a contract for the purpose of applying
the EU rules. The Supreme Court concluded that there was no
modification to the existing outsourcing arrangements with Atos
triggering a new tendering procedure. The contract notice referred
to the services being extended to other organisations up to a
certain amount, the further services in this case fell within those
stated term and so there was no material change. The Supreme Court
also commented that even if there had there been a considerable
change in the scope of services no new tender would be required.
This was because the extension was made under a clear, precise and
unequivocal review clause. (1 July 2015)
Woods Building Services v Milton Keynes Council [2015]
EWHC 2011 (TCC)
This case concerns the evaluation process used by Milton Keynes
Council when setting up a four year, single supplier, framework
agreement for asbestos removal and reinstatement. The estimated
value of the framework agreement was £8million. W was an incumbent
provider. W was unsuccessful in the tender for the award by
the Council of the new framework agreement. The tender was
evaluated using a 60%:40% quality:price ratio. W had submitted the
lowest priced tender but when the quality:price ratio evaluation
was applied it was not the most economically advantageous tender as
it did not score sufficiently highly on quality aspects. The
Council awarded the framework agreement to EAS. W applied to quash
that decision, arguing that the tender evaluation process was
unfair. W argued that the evidence demonstrated a lack of
transparency and a failure to treat the tenderers equally and that
there were manifest errors in the scores awarded.
The High Court undertook an extensive analysis of the evaluation
approach used. The court upheld W's claim and concluded that the
tender evaluation process was fundamentally flawed and unlawful. In
an unusual move, the Court decided that it would determine the
lawful scores that should have been awarded. It undertook a
re-scoring process. The court increased the scoring for W's tender
by 6 marks, whilst reducing the marks awarded to EAS. It is
important to note that the Court felt able to do this because of
manifest errors in the scoring. This meant that W had
submitted the most economically advantageous tender and should have
been awarded the framework agreement.
In a separate judgment on remedies the High Court, with the
parties' agreement, set aside the Council's original decision and
ordered that the Council's records should be amended by reference
to the scores as adjusted by the Court. The Court also formally
declared that W's tender was the most economically advantageous
tender provided to the Council. That still left two live
issues: First, W said that the Court should order the Council
to award the contract to them. Second, W said that, in the
alternative, they were entitled to an order for damages, to be
assessed if they could not be agreed. The Court declined to order
the Council to award the contract to W. The Court confirmed that W
was entitled to damages at a level to be assessed. (14 July
2015)
In two cases the High Court granted applications to lift the automatic suspension of a tendering process. In both cases the judge was satisfied that damages would be an adequate remedy:
- Openview Security Solutions Ltd v Merton LBC [2015] EWHC 2694 (TCC) (28 September 2015)
- Advanced Business Software and Solutions Ltd v The Pirbright Institute [2014] EWHC 4651 (TCC) (17 December 2014)
UK – Freedom of information
Ballan v Information Commissioner [2015] UKFTT
2015_0021 (GRC)
This was an appeal against a decision of the Information
Commissioner (IC) relating to a freedom of information application
concerning a tender process. In 2012 North East Lincolnshire
Council conducted a tender process for a provider to deliver a
‘Leisure Management system’. The contract was awarded to tenderer A
after the original front-runner ceased to be in contention. B was
an employee of a company which was a bidder. B made an FOI request
to the Council for the winning tender documentation or the tender
which was initially first choice which was then found to be
non-compliant. In that request B stated that that they were not
really interested in pricing which she acknowledged may be
commercially sensitive, but in the overall responses which might
assist them in understanding where they had gone wrong in their
tender. The Council refused to provide the information, on the
basis that it was exempt under s.43(2) FOIA 2000 as disclosure of
the information would, or would be likely to, prejudice their and
the relevant bidders’ commercial interests. The IC's decision
upheld the Council's decision. B then appealed.
The General Regulatory Chamber dismissed B's appeal. It held that
the information was exempt. The GRC found that the cumulative
weight of factors favouring non-disclosure very strongly outweighed
the cumulative weight of those favouring disclosure. The decision
contains a useful analysis of the weighting and balancing of public
interest considerations in the context of the disclosure of
information relating to a tender process. (28 July 2015)
News
The Telegraph: Police forces wasting millions by
paying 10x more for items
The Telegraph reports that chaotic ordering of basic equipment such
as shirts and batons has led to millions of pounds of taxpayers'
money being wasted. (6 September 2015)
Monitor: Commissioners in Devon did not breach
regulations in transforming community services
An
investigation by Monitor has found that Northern, Eastern and
Western Devon (NEW Devon) CCG's commissioning of community services
did not breached NHS commissioning regulations. However, the CCG
will be doing further work in the next phase of its process as a
result of the investigation. Monitor opened its investigation after
receiving a complaint from Northern Devon Healthcare NHS Trust,
which currently holds the contract for community services. The
Trust claimed that the CCG had undertaken an inadequate and unfair
process in awarding a contract for these services. Monitor’s
findings include that:
- the CCG’s process was proportionate and enabled it to select a provider from the available options by reference to its commissioning objectives;
- the CCG’s process did not breach transparency requirements;
- there had not been discriminatory or unequal treatment of potential providers;
- the CCG’s process was not affected by conflicts of interest.
(26 August 2015)
Crown Commercial Service: Schools and academies
newsletter – July issue
Latest edition of the quarterly newsletter for schools and
academies to help them meet the regulations surrounding how public
money is spent and achieve best value when buying commonly required
goods and services. (8 July 2015)
The Crown Commercial Services legal services framework agreement allows customers throughout the public sector to place orders with Bevan Brittan LLP under standard terms and conditions of the agreement. We are appointed to Lot 7: General Litigation and Legal Support Services and Lot 8: Major or Complex Projects.
