Part 4 Chapter 3 of the Localism Bill sets out the framework for a new Community Right to Challenge that will give communities the right to bid to take over local state-run services currently delivered by or on behalf of local authorities. This article considers a number of procurement issues that are raised by the Right to Challenge provisions.
Part 4 Chapter 3 of the Localism Bill sets out the framework for a new Community Right to Challenge that will give communities the right to bid to take over local state-run services currently delivered by or on behalf of local authorities.
This article considers a number of procurement issues that are raised by the Right to Challenge provisions.
The Right to Challenge is linked in with the Community Right to Buy which aims to assist “community” organisations to purchase assets of community value, and the Right to Provide under which public sector workers will be given the right to form employee owned cooperatives and bid to take over services they currently deliver.
The Right to Challenge is available only to a “relevant body”: this includes voluntary and community bodies, charities, parish councils and two or more staff of a relevant authority. It relates only to a “relevant service” defined as “a service provided by, or on behalf of, a relevant authority in the exercise of its functions”.
The provisions give a relevant body the right to submit an Expression of Interest (EoI) in providing a service currently provided by a “relevant authority” (a county council, district council or London borough, or other authority specified in regulations). The EoI is submitted to the relevant authority providing that service and that authority is then obliged to consider the EoI. The authority is required as part of its assessment to consider how the EoI and procurement exercise might promote or improve the social, economic or environmental well being of the authority’s area. The authority must also have regard to any guidance issued on the Right to Challenge by the Secretary of State.
The authority must then either accept, or accept with modification (subject to the agreement of the submitting body) or decline the EoI. Where the local authority declines the EoI it must give written reasons for its decision. Where the local authority accepts the EoI it must then carry out a procurement exercise relating to the provision of the service, in line with relevant legal requirements.
In February 2011 DCLG issued a consultation paper on the detailed workings of the Right to Challenge which will be set out in regulations, to come into effect in 2012.
Key features are:
The consultation paper points out that the Right to Challenge is not a right to deliver the service and that one outcome of a procurement exercise may be that the relevant body which originally exercised its Right to Challenge may not end up as the provider of the service. It is also careful to highlight the need for relevant authorities to comply with the Procurement Regulations where they apply and to use appropriate competitive processes where they do not.
The explanation of when the Procurement Regulations apply is rather over simplified and does not, for example, refer to requirements to advertise and comply with other positive Treaty obligations flowing from the EU cases. Future guidance would do well to provide information on these issues.
The provisions on acceptance of an EoI require the relevant authority to take account of the economic, social and environmental benefits of accepting an expression of interest. It also requires a relevant authority, in carrying out the procurement exercise, to “consider how it might promote or improve the social, economic and environmental well-being of the authority’s area by means of that exercise”. This raises the spectre of significant discussion around the issue of the extent to which social and environmental issues can legitimately be taken into account in a tender process. It also raises linked concerns about how far these provisions will be interpreted by the relevant authorities as legitimising the selection of tenderers and the acceptance of a tender using criteria linked to the location and local nature of a tendering organisation thus, potentially, resulting in discriminatory behaviour.
A further area for concern is the extent to which transparency, non-discrimination and equal treatment can be maintained where a procurement process has been prompted by an EoI received from one of the tendering organisations. Relevant authorities will need to act with care to ensure that there is no actual or perceived bias resulting from pre-procurement links with the body, or bodies, submitting an EoI.
Careful records will need to be kept so that relevant authorities are able to demonstrate that pre-tender discussions have not tainted the process. Checks will need to be made to ensure that the tendered specification is not inappropriately influenced by the proposals in the original EoI and that the procurement process is not skewed in favour of a particular provider. The dangers are even greater where the relevant authority accepts an EoI with modifications as in order to comply with the primary legislation the modifications will need to be agreed, and therefore presumably discussed, with the relevant body submitting the expression of interest.This article also appears in our local authority newsletter Authority View Spring 11.