1. The Changing Face of Public Procurement

2. The new DNA for public sector commercial activity
Procurement
Process
Contract and supplier management
High
Before going to market
Time spent on value added activity
Improving contract and supplier management capability through application of new standards
Developing requirements that shape markets and the supply base to Government
Simplifying process and reducing turnaround times & supplier bid costs
The key point of this slide is the recognition that public procurement needs to concentrate much more of its attention on market and supplier management, and ensuring the contract itself is properly managed, The approach taken to the procurement process needs to be simplified. The procurement directive reforms form a key part of the Crown Commercial Service’s approach to this goal.
Low
Before
Execution of sourcing strategy
Supplier relationship management and negotiation
Business need identification
Market analysis
Sourcing strategy
Supplier identification
Finalisation of contract
Contract management
Goal

3. Value for Money is YOUR responsibility, NOT the Regulations
The EU Procurement Regulations (I know it’s early in the morning, stick with me here)
Value for Money is YOUR responsibility, NOT the Regulations
Transparency - contract procedures must be transparent and contract opportunities should generally be publicised
Equal treatment and non-discrimination - potential suppliers must be treated equally
Proportionality - procurement procedures and decisions must be proportionate
Mutual recognition - giving equal validity to qualifications and standards from other Member States, where appropriate
Spot the obvious mistake. There is nothing in here about securing Value for Money, Efficiency, control of public spending etc. That bit is YOUR responsibility, NOT the treaty

4. Awaiting adoption – expected in Jan 2015
What
‘s changing?
Awaiting adoption – expected in Jan 2015
None of the following altered:
“Contracting Authorities”
Thresholds (apart from “Part B”)
£172,514 (Goods and Services)
£4,322,012 (Works)
Remedies Directive, i.e. potential legal and financial penalties remain in place as before

5. Local Authority trading companies (“Teckal”)
Exemptions! (1)
Local Authority trading companies (“Teckal”)
where the authority exerts on the ‘supplying authority’ a control similar to that which it exercises over its own departments and
where 80% of the activities of the ‘supplying authority’ are for the ‘buying authority’ or other bodies controlled by it and
where there is no direct private capital participation in the ‘supplying authority’
Teckal case concerned a group of local authorities in Italy (the Commune of Viano) procuring energy and fuel supplies together. Dates from Has been tested in UK law – RMP vs LB Brent; court found for RMP in 2009, overturned in 2011 by the Supreme Court

6. Inter-municipal Co-operation (“Hamburg”)
Exemptions! (2)
Inter-municipal Co-operation (“Hamburg”)
the participating authorities co-operate to perform public services they must provide, meeting common objectives and
the co-operation is for public interest reasons only and
the participating authorities perform less than 20% of the activities on the open market
Waste disposal case between authorities in Germany (2009). Covers shared services essentially but only applies to statutory services (in effect the open market consideration is unlikely to be met)

7. Reservation of certain contracts for mutuals and social enterprises
objective of a public service mission linked to the delivery of these services
reinvest profits to meet this objective (where profits are distributed this should be based on participatory considerations)
owned/managed on the basis of employee ownership/participatory principles or the active participation of employees, users or stakeholders not have been awarded a contract for the services concerned by the contracting authority concerned pursuant to this reservation within the past three years
The duration of the contract to be reserved must not exceed 3 years
Such ‘reserved’ contracts must be open to all relevant suppliers with rights under the directive and must be awarded using the procedures in the directive, including a call for competition in OJEU
Use once for a spin-out and then they’re on their own

8. Treaty principles must be applied
Light Touch Regime
These contracts will only be covered by the directive if their value exceeds Eu750,000
Mainly former “Part B” services, now referred to as “Annex XIV” (some cultural services included, mainly around events and festivals)
Still require “Call for Competition” and “Contract Award” but discretion over process outside of that – UK govt has promised lots of flexibility
Treaty principles must be applied
Will affect services not previously covered by the directive – care, legal, some bits of HR

9. Innovation Partnerships
New procedure allowing authorities to encourage suppliers to develop works, supplies or services not currently available on the market through long term partnerships
Awarded to one or more suppliers using the competitive procedure with negotiation
Procedure may be constructed in phases to match the research/innovation process – authority could reserve right to terminate process or reduce the number of partners
Authority must make clear the position on property rights and must not disclose suppliers’ confidential information without agreement
Not expected to apply to much LA spending – more like contracts for MOD etc bringing in national initiatives. Wait and see.

10. Shorter Timescales! Open: 35 days (30 electronic, 56 current)
Restricted: 60 days (40 electronic, 77 current)
Competitive Negotiated (CN) and Innovation Partnerships (IP): 60 days (40 electronic, no current equivalent)
Competitive Dialogue: 30 days to participate, no explicit time limits beyond that, no acceleration
Restricted, CN and IP can all be reduced by a further 5 days using a Prior Information Notice (PIN) as a “Call for Competition”
Restricted = ; Electronic =

11. Exclusion of poorly performing suppliers from re-tendering
A supplier may be excluded where
there are ‘significant or persistent’ deficiencies in performance of a contract or concession for an authority or utility body that led to early termination of the contract or other sanctions
If you have terminated a contract early or know of someone else that has (with justification) or imposed fines / penalties and there is supporting evidence, then you can exclude them from a tender at your discretion – must be relevant and comparable though.

12. Plus Other Useful Clarity
Market Consultation explicitly permitted
Need to be able to justify “Lotting” strategy
Environmental / Social labels can be must be linked to the subject matter of the contract (challengeable)
Encourages use of:
Life Cycle Costing
Including costs incurred or saved through the adoption of a specific supplier or solution (“Outcomes Based”)
Most Economically Advantageous Tender (MEAT)
Challenging “Abnormally Low Tenders”

13. The Small Business, Enterprise and Employment Bill
Para 37: Regulations about procurement
(1) The Minister for the Cabinet Office or the Secretary of State may by regulations impose on a contracting authority duties in respect of the exercise of its functions relating to procurement
(2) For the purposes of this section “the exercise of functions relating to procurement” includes the exercise of functions in preparation for entering into contracts and in the management of contracts …(& follows)
Para 38 Investigation of procurement functions
(1) In this section “a Minister” means the Minister for the Cabinet Office or the Secretary of State
(2) A Minister may investigate the exercise by a contracting authority of relevant functions relating to procurement.
Lord

14. Lord Young’s Proposed Reforms
Abolition of the PQQ for sub-threshold procurement
Mandating of a standard “Suitability Check” to replace the PQQ in above threshold procurement
Mandating 30 day payments terms for sub-contractors by your main or Tier 1 contractor
Advertising all contract opportunities above a certain value (mooted as £25K) on the national portal, Contracts Finder

15. Social Value Act Underused legislation to date
Consider economic, environmental and social benefits WITHIN your geographic area only as part of the tender evaluation
Only applies to Service contracts above threshold
Review is under-way to consider extending scope
Could form part of the powers referred to in the new UK Government procurement legislation
Can be used in any circumstance if relevant to the contract. Must be considered above threshold but not necessarily applied

16. Contact details
Eddie Gibson East of England LGA