This update contains brief details of recent key policy, legislation and case law developments relevant to those involved in procurement work, that have been published in the past three months.
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:
Cabinet Office: Procurement Policy Note – Public procurement and the Public Sector Equality Duty (PPN 01/13)
This PPN reminds public bodies of their legal obligations under the Equality Act 2010 and the related Public Sector Equality Duty (PSED) when conducting their public procurement activities. This is not a comprehensive guide to the PSED, but a summary of how the duty can be taken into account when conducting public procurement. (28 January 2013)
Cabinet Office: Procurement Policy Note – Supplier financial risk issues (Information Note 02/13)
This PPN gives advice on carrying out an assessment of potential providers' financial or economic standing as part of a procurement exercise. It highlights four key issues arising out of feedback through the “mystery shopper” services, namely; requirement of accounts; turnover thresholds; insurance; and the use of credit rating reports. It stresses that all financial and economic assessments should be undertaken in a manner that is proportionate, flexible and not overly-risk averse while ensuring taxpayer value and safety is protected and the relevant EU procurement law is complied with. Financial standing should only be considered as part of the overall selection criteria; it may not, on its own, reflect potential providers’ ability to deliver. (13 February 2013)
Cabinet Office: Procurement Policy Note 04/13 – Measures to promote tax compliance
This Action Note sets out the scope and background of the Government’s new policy, announced in the March 2013 Budget, on the use of the procurement process to promote tax compliance and advises on how to take account of it in procurement documentation. The new policy will apply to Central Government Departments’ contracts over £5m that are advertised on or after 1 April 2013 (including their Executive Agencies and Non Departmental Public Bodies). Suppliers bidding for government contracts will be required to self-certify their tax compliance. Other contracting authorities (e.g. in local government, the NHS and the wider public sector) may choose to apply the measures set out in this PPN. . A further Procurement Policy Notice will be issued in April 2013 giving guidance on how Departments should assess suppliers’ responses. (28 March 2013)
This follows a very short consultation on the draft guidance: Cabinet Office: Procurement Policy Information Note 03/13 – Promoting tax compliance and procurement.
Cabinet Office: Meeting the challenge of change: A capabilities plan for the Civil Service
The Cabinet Office has published a Capabilities Plan that sets out how it intends to address its skills deficiencies in four key areas that are vital to delivering better public services in the 21st century: leading and managing change; commercial skills and behaviours; programme and project management; and digital skills. It establishes a new, more corporate approach to building on its current capabilities, embedding this approach for the first time in a new, more rigorous Competency Framework and performance management system. The Plan sets out how civil servants will be expected to develop better commercial skills in the three phases of pre-procurement, procurement, and post-contract, to allow for meaningful, planned and competitive engagement with the whole market and to negotiate with suppliers for the best value for money. It also states that the Government Procurement Service will be enhanced to provide an end-to-end purchasing service for departments by the end of 2013, and there will be a new unit within the Cabinet Office, the Complex Transactions Team, comprised of commercial specialists to assist departments in buying and managing the commercial delivery of complex ICT services. Commercial or Procurement Directors in departments will have a strengthened reporting line established to the Chief Procurement Officer in the Cabinet Office by May 2013, and the Cabinet Office will establish a central database of commercial specialists, starting with procurement professionals by summer 2013, and extend this to other related professions across government. (18 April 2013)
HM Treasury: Procurement Routemap – A guide to improving delivery capability
The Government has published a guidance note and application toolkit to help public and private sector infrastructure providers improve their ability to deliver complex infrastructure projects and programmes. It sets out a coherent approach to assessing and building an effective delivery environment, combining best practice tools and case study examples such as Crossrail. The Government will develop this toolkit over time to enable infrastructure providers to assess and improve their capability to delivery successful project outcomes. The launch of the toolkit forms part of the Government’s Cost Review programme, led by Infrastructure UK, which aims to improve delivery and make efficiency savings of at least 15 per cent by 2015. The closing date for comments is 22 April 2013. (28 January 2013)
Equality & Human Rights Commission: Buying better outcomes – Mainstreaming equality considerations in procurement: A guide for public authorities in England
This guide explains how public authorities may approach the task of ensuring that they comply with the public sector equality duty (PSED) obligations at different stages of the procurement cycle and takes them through equality issues that they may need to consider at each stage. (25 March 2013)
National Audit Office: Improving government procurement
Since 2010, the Government has made a number of changes to the governance structures around procurement, and has developed a procurement reform strategy, led by the Cabinet Office and to be implemented in collaboration with government departments. The fundamental aim was to improve the management of total procurement spending across central government by delivering a centralised procurement service through a newly-created body, the Government Procurement Service (GPS). This report provides an overview of the procurement reform strategy, reviewing the governance and accountability arrangements in place, and examining progress in its implementation. It finds that the current government procurement strategy is the most coherent approach to reform yet and has resulted in savings. However, while progress has been made, there have been problems in implementing the reforms including the lack of enforcement of the mandate to use a centralised approach. Either the Cabinet Office will need to create more effective levers, or it will have to win ‘hearts and minds’, and demonstrate that it has the capability and capacity to deliver a high-quality central procurement function. The NAO makes a number of recommendations for the Cabinet Office, the GPS and for departments. (27 February 2013)
National Audit Office: Sustainable procurement in government
This briefing gives an update on the Government's sustainable procurement commitments and its progress against those commitments. Part 1 explains what sustainable procurement is and the Government's commitments in this area; Part 2 reviews progress and sets out the challenges faced by departments in achieving the Government's sustainable procurement objectives. (27 February 2013)
National Audit Office: Police procurement
This report examines how procurement is currently undertaken by the 43 police forces in England and Wales and looks at whether the Home Office (HO) is effective in discharging its procurement responsibilities to the police service, including how the HO assures the taxpayer that police procurement is value for money. The HO oversees the police service, and central government provides most of its funding, but individual forces have traditionally bought many goods and services independently. With central government funding being reduced by some £2bn in real terms over the spending review period, however, the HO has taken a role in providing leadership and support to help forces improve their procurement and make savings. Many forces are now working with others to improve their buying power and make administrative savings, but most collaborations involve few forces and nearly half of all forces still have independent procurement teams. The Home Office’s efforts have been hampered by the lack of timely, accurate and detailed data, which makes it difficult for it to target its interventions. Forces also reported mixed views about the support the HO provides. It has set up frameworks for body armour and vehicles which forces are legally compelled to use, and forces are on the whole positive about these, but it has been slow to build on this despite support from two-thirds of forces for further mandatory frameworks. The NAO concludes that the HO, police forces and Police & Crime Commissioners will need to work together more effectively to identify and deliver further savings, particularly given the need to minimise the impact that cost reductions have on frontline policing. (26 March 2013).
National Audit Office: The Efficiency and Reform Group
This report scrutinises the work of the Cabinet Office’s Efficiency and Reform Group (ERG) and finds that it has helped departments make significant savings. Overall, the NAO has confidence in the £5.5bn savings in 2011-12 attributed to the influence of ERG; however, there has not been enough focus so far on the sustainability of savings. Among the contributions made by ERG towards reducing the cost of staff in departments are changes to the Civil Service Compensation Scheme, restrictions on employing consultants and temporary staff and the monitoring of the recruitment of permanent staff, central control over procurement of common goods and services and review of major ICT and other projects. ERG is now making good progress in developing strategies in some of its areas of saving activity and it is also beginning to coordinate these strategies with departments. Among the remaining weaknesses identified by the NAO are that ERG’s strategies include large savings ambitions but the plan for meeting the £20bn savings aspiration is still in its early stages. ERG, together with departments, also needs a more sophisticated understanding of risks to services at a time of major restructuring. (17 April 2013)
European Commission: e-procurement – Golden book of good practice
This study, carried out by PwC, analyses in depth around 30 electronic platforms used for public procurement in the EU. The report presents good practices in the area of e-procurement but also practices that should be avoided. These practices are aimed at helping to improve e-procurement systems. Good and bad practices take into account, amongst other criteria, the needs of SMEs and cross-border suppliers when using an e-procurement platform. (9 April 2013)
European Commission: Review of the functioning of the CPV codes/system
This report presents the findings of a review that evaluated the functioning of the current Common Procurement Vocabulary (CPV) classification system and examined scenarios for future improvements. It found that the current CPV is an efficient and effective instrument but there are possibilities for improving it. (19 December 2012)
NHS (Procurement, Patient Choice and Competition) (No.2) Regulations 2013 (SI 2013/500)
These regulations, which apply alongside the Public Contracts regulations 2006, came into force on 1 April 2013. They are made under s.75 of the Health and Social Care Act 2012. They impose requirements on the NHS Commissioning Board and clinical commissioning groups to ensure good practice when procuring health care services for the purposes of the NHS, to protect patients’ rights to make choices and to prevent anti-competitive behaviour. The regulations provide scope for complaints to, and enforcement by Monitor, an independent health regulator, as an alternative to challenging decisions in the courts. The original regulations (SI 2013/257) have been rewritten after concerns were raised that they would open up many more services to competition from private companies and could disrupt services for patients. (11 March 2013)
Bevan Brittan’s Alert: Regulating the commissioning of health services – revised regulations now laid looks at what the new regulations mean for commissioners, and highlights some of the areas which still lack clarity and where further guidance may be needed.
See also NHS (Procurement, Patient Choice and Competition) Regulations 2013: Department of Health response to legal opinions which sets out the DH’s response to legal opinions published by 38 Degrees on the application of the NHS (Procurement, Patient Choice and Competition) Regulations 2013 (SI 2013/257) and the NHS (Procurement, Patient Choice and Competition) (No.2) Regulations 2013) (SI 2013/500). The Department does not agree with many of the conclusions drawn from the legal analysis about the likely effect of the provisions of the regulations.
MoJ: Reform of Judicial Review – The Government response
In December 2012, MoJ launched a consultation on proposals to reform judicial review procedures. MoJ stated that the aim of the proposals was to tackle delays and reduce the burden of judicial review by filtering out weak, frivolous and unmeritorious cases at an early stage, while ensuring that arguable claims can proceed to a conclusion without delay. This response sets out how the Government will now proceed with the reforms, in light of comments received. The changes include:
The changes complement separate proposals being considered which would also see the fee for a judicial review application increase from £60 to £235. Court Rules will now be put in place to implement the changes, which are expected to take effect this summer. (23 April 2013)
AJ v Calderdale Council & Calderdale PCT  EWHC 3552 (Admin Ct) (22 October 2012) – User participation on evaluation panel not unlawful
This case related to a proposed tender process for the procurement of supported living services. These services are “Part B “ services and so are subject only to limited provisions of the Public Contracts Regulations 2006. Regulation 4, which requires contracting authorities to treat all bidders and potential bidders in an equal, non-discriminatory and transparent manner, applies to the procurement of these services.
In previous procurements for these services the service users or family carers were included on the evaluation panels to select tenderers. The Council decided that this practice would no longer be followed and that users’ views would be factored into the new tender process by way of consultation. The court concluded that the Council had based this decision on the erroneous belief that users’ membership of the evaluation panel was unlawful under EU procurement law. The court quashed the decision to exclude users from the panel on the basis that an error of law had occurred.
The claimant pleaded four other grounds – failure to have regard to government policy relating to user and carer choice, failure to meet the legitimate expectations of the claimant and her family to be involved in the choice of provider, failure to discharge the Public Sector Equality Duty (PSED) and unlawful fetter on discretion. As the judge quashed the decision he did not find it necessary to consider the claims relating to government policy guidance or the PSED. He did, however, comment on the claim relating to legitimate expectation and concluded that this would not arise because there was no specific undertaking given to continue with the previous policy and the claimant and her carers had not established any detrimental reliance.
Irish Waste Services Ltd v Northern Ireland Water Ltd  NIQB 41 (NI QBD) (25 March 2013) – The extent of disclosure of evaluation criteria and sub-criteria, application of Lianakis principle in the utilities context and permitted use of a two stage tender evaluation process
In this case the Northern Ireland High Court considered the issues of disclosure of award criteria and weightings, use of inappropriate award criteria and the permissibility of a two stage evaluation process in a contract for sludge management services that was awarded under the Utilities Contracts Regulations 2006. The judge confirmed the principle that if a contracting authority wished to rely on criteria or sub-criteria in evaluating tenders, then it must inform potential tenders of those criteria and sub-criteria by including them in the contract notice or tender documents. The judge held that, although the tender documents did not specifically use the word “criteria”, no tenderer considering the documents could be in any serious doubt as to what was being evaluated and the methodology applied. He found that the Invitation to Tender was clear and that a detailed breakdown in the quality submission allowed bidders to identify the responses which would generate greater marks in the overall assessment. The judge also rejected an argument that the tender criteria used in this case were in breach of the principle established in Lianakis v Dimos Alexandroupolis (C-532/06) that only criteria aimed at identifying the tender that was most economically advantageous were permitted award criteria. He accepted Northern Ireland Water’s (NIW) submission that the Lianakis decision was not applicable to utilities procurement.
The claimants also argued that the applicable Regulations did not permit a two stage tender evaluation process of the type used by NIW. At the first stage of the tender evaluation, NIW evaluated the quality aspects of the tender in order to establish whether the specified quality threshold had been met. Only those tenders meeting the quality threshold were considered at the second tender evaluation stage when the tender price was evaluated. IWS’s tender did not meet the quality threshold and so was not taken forward to stage 2. The judge rejected arguments that eliminating a tender due to failure to meet quality criteria without also considering price was in breach of the Directive or Regulations. He accepted that it was within the discretion of NIW to decide to eliminate bids which do not comply with threshold quality standards.
Montpellier Estates Ltd v Leeds City Council  EWHC 166 (QBD) (6 February 2013) – Use of public sector comparators and the contracting authority’s discretion to cancel a tender process and adopt an in-house solution
This case related to the proposed award of a contract for the development of a music venue arena in Leeds. The Public Contract Regulations 2006 (the Regulations) applied and the Council used the competitive dialogue procedure. During the tender process, conducted during 2007/08, the Council developed a public sector comparator against which to assess whether the tenderers’ solutions would deliver value for money and to serve as a fall back option. In November 2008 the Council decided to terminate the procurement process without award of the contract. This decision to terminate the process was made over a year into the competitive dialogue process, following receipt and assessment of interim submissions but before submission of final bids.
Montpellier Estates Ltd (MEL) made two claims against the council. The first claim alleged that the Council had deceived MEL by making fraudulent misrepresentations upon which MEL relied in entering into and remaining in the procurement process. The judge rejected all allegations of fraud and dishonesty.
The second claim was for damages relating to breach of the Regulations and breach of implied contractual obligations relating to the tender process. There were three complaints in relation to breaches of the Regulations, all of which were rejected. MEL claimed that the Council was in breach of its duty of transparency in setting up and using its own public sector comparator. The judge rejected this claim and held that the public sector comparator was not a rival bid in the process, that the Council was entitled to develop the comparator to assess value for money and as a fall back option. The judge also held that there was no breach of good faith and that the council acted lawfully in abandoning the tender exercise. The second complaint, that a “competition” between the public sector comparator and the private developers was inherently unequal and lacking transparency, was also unsuccessful. The judge rejected, on the grounds of lack of evidence, the third complaint that there was a lack of transparency and fair treatment in the scoring of bids. The judge also held that the implied contract claim added nothing to the claim under the Regulations.
Roche Diagnostics Ltd v Mid Yorkshire Hospitals Trust  EWHC 933 (TCC) (19 April 2013) – Disclosure of documents in procurement cases
This case related to two applications by Roche Diagnostics Ltd (“Roche”) for both specific disclosure and pre-action disclosure of documents.
In 2012 the Mid Yorkshire Hospitals Trust (“the Trust) ran a tender process for a 10 year managed service contract (MSC) for the provision of laboratory services at three main centres: Wakefield, Dewsbury and Pontefract. The tender process was subject to the Public Contracts Regulations 2006 (“the Regulations”). In November 2012 Roche was notified that it was unsuccessful and that the successful bidder was Abbott Diagnostics Ltd (“Abbott”). Following that notification Roche asked for further information relating to the evaluation process. Over a period of a couple of weeks the Trust sent Roche a series of spreadsheets explaining how the evaluation had been carried out, a number of which contained (different) errors and seemed suggest that the Trust had adopted different approaches to the evaluation of fixed costs to the approach stated in the Invitation to Tender. These spreadsheets were secondary documents created after the evaluation process. None of the primary documents demonstrating how the evaluation process had actually been conducted were disclosed. Roche applied for an order for specific disclosure of documents.
The judge, Mr Justice Coulson, outlined five broad principles which should apply to applications for early specific disclosure in procurement cases, in summary:
In this case the judge granted specific disclosure into a confidentiality ring of most, but not all, of the documents requested.
The judge also considered an application for pre-action disclosure on a linked matter which was not yet the subject of litigation. This related to the award by the Trust to Abbott of an interim contract relating to services and, perhaps, works at the Dewsbury laboratory following termination of the contract with the previous service provider. The judge considered the issue in the round, including the possibility that some of the services and/or works at Dewsbury might fall within the scope of the MSC contracts. He concluded that the Trust ought to provide the basic documentation relating to the interim contract and he ordered pre-action disclosure of some, but not all, of the documents requested.
DCLG: Best councils to do business with contest
Announces a new competition to identify and celebrate councils taking a supportive approach to engaging small and medium-sized enterprises in procurements. DCLG would like these examples of excellent practice to gain the recognition they deserve, so that other councils can learn from them and that small suppliers can come forward with more confidence in bidding for local government business. The competition winners will be invited to a reception at No.10 Downing Street to share and celebrate their success. The closing date for nominations was 22 February 2013. (25 January 2013)
DfT: Rail franchising future programme
Announces how the Great Western, Essex Thameside and Thameslink, Southern and Great Northern franchise competitions will be handled following the findings of the Brown Review into rail franchising. DfT will now commence negotiations with the current operators, First Great Western, First Capital Connect and c2c, to negotiate new short-term franchises while longer-term options can be explored. In parallel with these negotiations, directly operated railways will also be undertaking the minimum necessary preparations to take over services in case terms cannot be agreed. A further announcement about the franchising programme will be made in the spring, setting out the timetable for future franchise competitions and a statement on franchising policy. (31 January 2013)
DfT: Fresh start for rail franchising
The Transport Secretary has set out a package of plans designed to drive improvements to rail services, deliver on major infrastructure projects, and put passengers at the heart of a revitalised rail franchising system, including:
The new franchising programme will provide a more sustainable schedule for rail franchising by delivering no more than 3 - 4 competitions per year, and staggering the two principal Intercity franchises, West Coast and East Coast, so they will not be let at the same point in the economic cycle. In order to stagger the franchise start dates the Government will use a mixture of extensions to existing franchises and direct award contracts to ensure the realignment of the programme. During this process, DfT will look to negotiate further passenger benefits, which will ensure the best deal for taxpayers. To start this process, the Government has served notice on First Capital Connect and Southeastern to call contractual 6-month extensions. (26 March 2013)
See also DfT’s Franchise competition high level process map – a flowchart that gives a high level overview of the lifecycle of a typical rail franchise competition, and the accompanying narrative that describes the objective and the DfT’s activities during each of the sequential stages of a franchise competition. (24 April 2013)
DfT has also published a Supplement to the Brown review of the rail franchising programme setting out previously redacted paragraphs 8.13 to 8.20 of the Brown Review along with a corrected Appendix E.
Cabinet Office: New single registration system will make it easier for suppliers to bid for government business
Announces that the Government Procurement Service has awarded a new contract to NQC Ltd to develop a Single Supplier Registration platform that will mean that suppliers only have to register once to have access to a range of contracts. The GPS Single Supplier Registration solution will replace the existing SID4health system and provide an efficient and appropriate integration across the whole procurement landscape. It will first be available for the health sector at the end of April, followed by phased implementation across other sectors to integrate the registration across different solutions. (15 March 2013)
Our Procurement Telephone Advice Service allows local authority and public sector clients telephone access to specialist legal support on all procurement related issues. This service was initially made available to some of the firm’s existing clients and is now being more widely launched to all public bodies.
The Procurement Telephone Advice Service aims to provide you with an easy and accessible single point of contact for practical and essential procurement advice. You may make use of this service between 9am – 6pm Monday to Friday (excluding bank holidays) in a way which best suit your needs as and when you require our support, whether it is to address a procurement query or to clarify a point of law.
We have two service packages:
For more information or to sign up to one of our service packages, please do not hesitate to email Nina Beasley.
The Government Procurement 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.