By Joanna Frost
7th Jun 2019
New guidance has been published on outsourcing decisions and contracting for central government bodies, that although is not aimed at bodies outside of central government, still provides useful information for any public sector body considering outsourcing a service.
The guidance pertaining to Early Market Engagement is of particular interest. Services most commonly outsourced are those pertaining to facilities management such as cleaning and catering within the education sector. Whilst the CPC frameworks provide a much simpler route to market for these services, It is still beneficial for you to contact the framework suppliers prior to sending a mini competition to let them know that you are considering going out to market and get their feedback on interest and your tender timescales.
This will help you plan your process and prepare the suppliers for the opportunity. Although the CPC mini competition templates generally come with a template specification for you to adapt to reflect your particular requirements early market engagement could be used to gain information from the suppliers about what is available from the market that could help inform your specification further.
We recommend starting market engagement at least 6 months before you wish your outsourced service contract such as cleaning or catering to commence to get the most out of your contracts such as cleaning or catering.
All early market engagement must observe the principles of public procurement and be handled in such a way that no supplier gains a preferential advantage. This means not setting the specification to suit a particular bidder and making sure any information shared is also available during the tender procedure.
Should you be considering whether to outsource a service for the first time or are considering bringing a service back in house, there is also some useful guidance on the ‘make or buy’ decision process. It includes emphasis on addressing resolvable internal issues prior to outsourcing for efficiency gains. Unless you have made the supplier aware that you are outsourcing or transitioning services which have fallen into specific problems, consideration should be given to the maxim "don't outsource a problem." However, where the problem is well defined and all risks appropriately managed it should be considered whether the innovation and expertise of the private sector can be utilised. It is generally for this reason that education establishments consider outsourcing facilities services such as cleaning or catering where a supplier may be better placed to recruit and retain the staff required to deliver the service and implement quality improvements using their specific market knowledge.
A clear understanding of any TUPE considerations or asset transfer considerations are also key to any outsourcing decisions. Ensure you have sought appropriate legal advice on any issues. It is particularly important to consider any staff who would be subject to a TUPE transfer that have a Local Authority Pension Scheme entitlement. Facilities management contracts with a high proportion of staff with LGPS entitlement can reduce the list of suppliers who may be interested in tendering for the contract and therefore needs careful preparation. We would recommend reading our blog article a Guide for Procurement Managers on Local Authority Pension Transfers or seek the expertise of our sister company Tenet Education Services who have assisted many education institutions in outsourcing contracts.