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4th Jul 2017

A recent article by Eversheds Sutherlands provides interesting comment on a ruling by the Courts in the procurement case Bombardier Transportation UK Limited v Merseytravel. In this case the Judge ruled that the successful tenderer’s tender documents be disclosed to the claimant (Bombardier) as Bombardier were “entitled to investigate fully the comparative treatment of the tenders, either to confirm criticisims it has already made, or to found freestanding allegations”.

The important lessons to learn from this case are to ensure you have adequate justification of all scores awarded to each tenderer and more importantly that this justification is recorded in an appropriate audit trail of the evaluation process.

Have you been involved in evaluations where scores were awarded without accompanying notes to explain the reasons that particular score was chosen? Or where the scoring methodology itself has been poorly designed or was not fit for purpose making the evaluation difficult?

The Guidance section of FELP (The Further Education Library of Procurement) has a number of ‘how to’ guides on various procurement tasks including A Guide to Tender Evaluation. This guide sets out four key areas to best practice evaluations, the impact of procurement regulations, award criteria and evaluation methodology and examples of scoring models. It also has some useful tips on how to conduct the tender process and what to record in the audit trail.

You can also call on the support of CPC Regional Procurement Advisors for advice on developing appropriate scoring methodology and of course, if you use a CPC framework agreement to run your competition the award criteria and associated methodology will be detailed in the user guide for the framework.

Can I Award Contracts to a Company ‘Owned’ by us Without Worrying About the Procurement Regulations?

The Public Contracts Regulations (“the Regulations”) apply when a college or school etc. award a contract for goods or services that exceed £164k, but what happens if you are considering alternative delivery structures and shared services? For example, what would happen if you established a separate legal entity (e.g. subsidiary company) to provide services to all institutions within your group e.g. for services such as HR, Payroll, Estates Management etc. You might consider these types of contracts are actually ‘in-house’ arrangements and therefore you can award contracts to them to provide these services without competing them within the wider marketplace – well, that assumption may not be entirely correct.

The Regulations does indeed have an exemption for these types of contracts, provided that the following conditions are met:

  • The contracting authority (school or college) exercises over the legal entity concerned a control which is similar to that which it exercises over its own departments
  • More than 80% of the activities of the controlled legal entity are carried out in the performance of tasks entrusted to it by the controlling contracting authority (school or college) or by other legal entities controlled by that contracting authority (the essential activity test)
  • There is no direct private capital participation in the in-house company
Regulation 12(4) provides for "joint control" by confirming that the exemption also applies where two or more Contracting Authorities jointly control a legal entity, provided that the conditions regarding essential activities and private capital participation are met.

Should the circumstances in which you are operating the shared service not be able to meet these ‘tests’, you may well be in breach of the Regulations if you don’t advertise the contract opportunity and run a tender process in compliance with the Regulations before awarding the contract to your shared services company.

Therefore, if you are considering creating these types of alternative delivery structures, it is worth looking closely at the Public Contracts Regulations and subsequent case law to see what type of arrangements may fall in or out of scope. More information on the what is commonly known as the ‘Teckal’ exemptions and review of case law in this regard can be found on FELP. You can also contact your CPC Regional Procurement Advisor for further information.

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