LGA submission to the Transforming Public Procurement Green Paper consultation, 8 March 2021

The Local Government Association (LGA) is the national voice of local government. We work with councils to support, promote and improve local government.

We are a politically-led, cross party organisation which works on behalf of councils to ensure local government has a strong, credible voice with national government.  We aim to influence and set the political agenda on the issues that matter to councils so they are able to deliver local solutions to national problems. The LGA covers every part of England and Wales, supporting local government as the most efficient and accountable part of the public sector.

The LGA welcomes the opportunity to comment on the Transforming Public Procurement Green Paper (the Green Paper).

The LGA supports in principle the ambition to transform public procurement.  However much of what is being proposed within the Green Paper is more around the legal process for procurement without sufficient discussion on how the Government believes we will meet the stated objectives  “to speed up and simplify our procurement processes, place value for money at their heart, and unleash opportunities for small businesses, charities and social enterprises to innovate in public service delivery”.

There seems to be little understanding as to how councils, as democratically elected and self-governing bodies, undertake procurement to meet the needs of their communities.  Some of the proposals in the Green Paper are unlikely to add much value in practice and (in particular those proposals that involve an element of central ‘reporting’ and the proposal to remove the Light Touch Regime) will cause extra administrative burdens for councils and their suppliers.

The Green Paper discusses various methods of training, capacity building and guidance to be produced in the future with no details on how this need will be met across the whole public sector.

We have worked with councils through our National Advisory Group for Local Government Procurement, their wider regional networks and with other relevant bodies in formatting this response.

We are keen to continue to work with Cabinet Office and MHCLG to consider the granular details of the proposals in the Green Paper through our wide networks.

We outline our detailed responses to the questions below.

Question 1. Do you agree with the proposed legal principles of public procurement?

• It would be difficult in general terms to disagree with the legal principles of public procurement outlined in the Green Paper, however we do have some concerns which are set out below
  • Public good - procurement should support the delivery of strategic national priorities including economic, social, ethical, environmental and public safety.  We believe that council led procurement should support the delivery of strategic community priorities in the first instance which are themselves subject to local democratic decision making.  Any other central Government priorities should be considered in addition to these priorities.  Of course, the priorities set out in the paper (economic, social, ethical, environmental and public safety) are also priority policies for most councils (but with a community focus).
  • The public good principle should more overtly refer to social value in view of PPN 06/20 and the text contained in Section 31 which states “The role of procurement is to translate the desired outcomes into the right contracts and select the supplier or suppliers that will deliver these in the way that offers best social value for money”
  • We would also like to see a commitment to written consultation in the event of central Government priorities changing at a future date.
• There are no specific consultation questions in relation to the other aspects of the NPPS but we are pleased to have been part of more informal consultation during the development of the NPPS.  For completeness we set out below our issues relating to the themes that the Government has chosen to include in the NPPS.
• Pipelines.  Although we have been advised that the purpose of this policy is twofold, the first supporting a range of suppliers in bidding for public sector business and therefore contributing to diverse supply chains including VCSE and SME’s. The second is part of the overall drive to ensure transparency throughout the procurement cycle. Our understanding is that contracts over £2 million will need to be included in the pipeline and believe this does not fit with the objective of helping VCSE and SMEs who would not, in general, bid for such high value contracts.
  • We believe the publication of pipelines will benefit mainly larger organisations
  • We would like to work together on a policy that would encourage larger, tier 1 organisations (particularly in sectors with long supply chains like construction) to publish pipelines of work in order to better support SME and VCSEs.
  • We would not support any requirement for councils to report pipelines to Government
  • One particular issue about publication of pipelines for a longer period is the way in which councils are funded on a short term basis.  It is difficult to say with any confidence what contracts will be let in 3-5 years’ time when Government funding for the sector is only on an annual basis. 
• Benchmarking.  Councils have been benchmarking themselves against our National Procurement Strategy recommendations since 2015.  They have been able to compare their own responses with anonymised results from other councils in their regions, other councils nationally and by council type.  Many regional groups have also chosen to share their full results in order to work together to improve as a region.
• We plan, if resources are available, to run a new version of the benchmarking exercise in 2021/22
• We achieved around a 60 per cent response to the exercises in 2015 and 2018 and we believe this is because of the opportunity for councils to be honest due to our pledge not to publish individual council names or to create ‘league tables’ or to ‘intervene’ but rather to ‘support where requested’.  We asked those ‘innovator’ councils to share their stories at a number of events, through case studies and through specific matching of those requesting support in line with our sector-led improvement approach.
• We would welcome the opportunity to work together with the wider public sector to develop the granular detail and provide practical examples of good practice in councils to support improvement across the public sector. 

Question 2. Do you agree there should be a new unit to oversee public procurement with new powers to review and, if necessary, intervene to improve the commercial capability of contracting authorities?

• We agree in principle about the need to continually improve contracting authorities’ capability in relation to procurement, But we do not support Government control or intervention powers in relation to capability.  These are matters that should be decided on by the contracting authorities themselves. 
• Instead we propose our sector-led approach to improvement which was implemented in 2011, providing an alternative to the former, centrally-led, national performance framework. SLI takes the view that the responsibility and regulation of improvement in local government should stay with councils and is underpinned by the following key principles:
  • councils are responsible for their own performance and improvement
  • councils are primarily accountable to local communities
  • councils have a collective responsibility for the performance of the sector as a whole
  • the role of the LGA is to maintain an overview of performance of the sector and to provide tools and support.
• The support offer itself is based on what we have learnt works for improvement – strong political and managerial leadership, challenge from one’s peers, the ability to benchmark performance against others through the use of comparable data and the sharing and spreading of good practice.
• The short-term priority for any commercial and procurement capability will be for the training and embedding of the new regulatory framework, for both procurers and suppliers
• We see merit in sharing of good practice with the wider public sector and welcome the opportunity to continue to develop policies and guidance together. 

Question 3. Where should the members of the proposed panel be drawn from and what sanctions do you think they should have access to in order to ensure the panel is effective?

• We would oppose a central government-led panel with these powers even if the panel included local government representatives as this goes against the principle of sector-led improvement set out in the response to question two. 
• The Green Paper presents no evidence to suggest that there is a need for such a panel with the wide ranging powers set out in the paper.
• If central Government were to set up a panel to oversee the commercial capability of their own departments we would be happy to work with them to share good practice from the local government sector.

Question 4. Do you agree with consolidating the current regulations into a single, uniform framework?

• We agree in principle as long as the flexibilities are carried through into the single uniform framework. 
• The procurement of healthcare services is not being considered as part of this Green Paper because the Department of Health and Social Care is continuing to consider next steps in relation to the NHSE proposals on procurement in the Long Term Plan.  We responded to the consultation on these proposals expressing our concern that we strongly call for the whole of the public sector to operate within the same legal framework wherever possible. Local government is subject to the Public Contracts Regulations so this proposal represents greater regulatory burden on local government.  We would be concerned if this difference created a barrier to existing or new joint commissioning arrangements, or if commissioning was inappropriately channeled through the NHS.
• As you are aware the Local Government Act 1988 s17 restricts councils’ ability to take into account certain non-commercial considerations (such as the geographical location of suppliers) when undertaking their procurements.  This restriction does come with some exceptions, for example in the case of service contracts procurements, councils can take into account such non-commercial considerations when taking steps to comply with their social value duty. This means that the options put forward for below threshold procurements in the recently issued PPN 11/20 are at present unable to be fully utilised by councils and demonstrates why all legislation should be considered within the procurement reforms.
• Government has proposed that the Local Government Transparency Code is not considered as part of this reform.  Much of what has been proposed will mean that the requirements of the Transparency Code will be redundant and we believe that amendments will be essential to the Code in parallel with these changes.  We have previously written to the Cabinet Office and MHCLG setting out the overlaps and contradictions between the Public Contracts Regulations and the Transparency Code and ask that as part of its response to this consultation exercise government commits to resolving these issues
• In line with the intention to simplify the framework the SBEE Act Part 3 could be repealed and incorporated in the new regulations.   
• We have some concerns that allowing deviation of one part of the public sector from the rules will in time override the ambition for simplicity in approach.
• We have outlined below some issues that will arise in the event of removal of the higher threshold for what is now known as services under the Light Touch Regime.

Question 5. Are there any sector-specific features of the UCR, CCR or DSPCR that you believe should be retained?

• Although councils will be less familiar with the UCR and DSPCR we would be keen to see the flexibilities outlined in s19 of the CCR to be retained.

Question 6. Do you agree with the proposed changes to the procurement procedures?

• We agree in principle with the changes to procurement procedures, reducing the number of procedures (from seven to three) and simplifying them whilst adding in flexibility is a positive move.
• However, it should be noted that with increased flexibility there will inevitably be more inconsistency of process which might be confusing to suppliers that contract across the public sector having to adapt their tender submissions for the provision of similar goods and services with different contracting authorities, who may each have adopted their own, bespoke, flexible practices.  We are concerned that if the new regulations are not precise enough – for example about record keeping and debriefing – we will again end up with the courts filling the gaps, resulting in uncertainty and bureaucracy
• There is concern around the thresholds for the Light Touch Regime (LTR) and the timescales. This expenditure – the majority of local government procurement spend and about 8% of all public procurement spend– is just not adequately addressed in the Green Paper.
• Whilst we could support the move to remove LTR (which would be superseded by the flexible procedure) we believe that (i) the inclusion of personal care or aspects of it in the proposed new healthcare procurement legislation merits serious consideration; (ii) to the extent that social care is covered by the new regulations contemplated by this green paper there must be specific provision for service user choice; and (iii) that the higher threshold of £663,000 should remain for any education, health or care contracts that remain in scope, in order to reduce administrative burden.
• We have provided Cabinet Office with a set of vignettes setting out scenarios where the proposed new flexible regime would not appear to meet the needs of councils or align with their statutory duties under the Care Act and would be happy to continue to work with Cabinet Office on how the proposed procurement reforms can be implemented whilst removing additional burdens and issues they may present.
• We are concerned that the Green Paper does not provide any particular narrative on pre-commercial procurement procedures (PCP) that are currently available. PCP enables public procurers to compare alternative potential solution approaches and filter out the best possible solutions that the market can deliver to address the public need. 
• We are concerned that public-public procurement including the Hamburg and Teckal exemptions is not addressed, we seek assurances that non-commercial joint working will be addressed, and if possible expanded, and that the Teckal exemptions will remain.

Question 7. Do you agree with the proposal to include crisis as a new ground on which limited tendering can be used?

• We agree in principle with the proposal to include crisis as a new ground on which limited tendering can be used but think that the objective needs to be clearer – presumably to support the longer-term use of limited tendering in a long-running emergency. We seek confirmation that the new ground of ‘crisis’ will not narrow the current ability to use extreme urgency – a local authority dealing with an immediate crisis in its area cannot afford to wait for confirmation from MCO before it procures goods and services to deal with a local issue in a crisis situation.
• We would seek further clarity on the process of how an isolated, regional issue is categorised as a crisis and central confirmation that something is a crisis will be done at pace, objectively and consistently.
• Rather than trying to build a new definition of when something is a crisis we would suggest the definition of ‘emergency’ in the Civil Contingencies Act could be used.

Question 8. Are there areas where our proposed reforms could go further to foster more effective innovation in procurement?

• The flexibility afforded in the proposed new procedures feels adequate at this stage with the proviso that the timings and threshold issues raised in Question 6 are adequately resolved and dealt with.

Question 9. Are there specific issues you have faced when interacting with contracting authorities that have not been raised here and which inhibit the potential for innovative solutions or ideas?

• It was felt that the rigidity of some of the previous processes will have been resolved to negate any further problems.

Question 10. How can government more effectively utilise and share data (where appropriate) to foster more effective innovation in procurement?

• We would need to seek clarity on what data the proposals refer to and whether the government is looking at innovation within the procurement process or innovation in delivering services.  In principle we do not have an issue with sharing data if it’s to drive efficiency and consistency of approach and outcome, but we remain unconvinced that sharing price and/or spend data leads to cheaper prices or increases innovation.
• We would also be wary of increasing the burden on councils with more reporting requirements which could be an unintended consequence of increased data collection and sharing.

Question 11. What further measures relating to pre-procurement processes should the Government consider enabling public procurement to be used as a tool to drive innovation in the UK?

• We believe that, certainly within the local government sector the existing pre-procurement processes and procedures, if applied adequately, already allow public procurement to flourish.
• We therefore do not feel the need for additional legislation in this area but if pre-procurement processes are being under-utilised then more training and awareness of their benefits is required.

Question 12. In light of the new competitive flexible procedure, do you agree that the Light Touch Regime for social, health, education and other services should be removed?

• Removal of the LTR is not a problem in itself given the flexible procedure will cover what was traditionally procured this way.  However we refer to our response to question six above, where we propose (i) the inclusion of personal care or aspects of it in the proposed new healthcare procurement legislation; (ii) to the extent that social care is covered by the new regulations contemplated by this green paper there must be specific provision for service user choice; and (iii) that the higher threshold of £663,000 should be retained for any education, health or care contracts that remain in scope, in order to reduce administrative burden.

Question 13. Do you agree that the award of a contract should be based on the “most advantageous tender” rather than “most economically advantageous tender”?

• In practice this is what most councils are currently doing but we welcome the change to wording as it removes the perception or misunderstanding that evaluation should be based purely on ‘economic’ or ‘price’ considerations.

Question 14. Do you agree with retaining the basic requirement that award criteria must be linked to the subject matter of the contract but amending it to allow specific exceptions set by the Government?

• The Green Paper does not provide enough detail about what specific exceptions might be in order for us to fully understand and identify any conflicts with local impacts and requirements.  We support the ability to evaluate broader criteria such as a supplier’s overall approach to net-zero, rather than this being limited to its approach to a particular contract.
• We suggest removing the requirement to be linked to subject matter of the contract to enable contracting authorities to more clearly evaluate on other criteria like social value, or the living wage that may not necessarily be formally linked to the subject of the contract (although could be linked by way of an overarching council policy).
• There is a risk that Government could set exceptions in the future that goes against councils’ own objectives.  Our response to Q1 sets out our proposal that councils’ own objectives should form the priority.

Question 15. Do you agree with the proposal for removing the requirement for evaluation to be made solely from the point of view of the contracting authority, but only within a clear framework?

• To the extent that this proposal would allow councils to take into account impacts on other councils or communities it is welcome, but this should be an additional freedom for contracting authorities and not an obligation on them.
• More clarity would be needed regarding the purpose and objective of the proposal and how this would assist a contracting authority and any proposed guidance on how criteria are to be objectively considered will need to be explicitly clear.
• The proposal could allow for councils to have access to more information when making the decision to work with a particular supplier but will mean additional reporting and consultation burdens for councils.

Question 16. Do you agree that, subject to self-cleaning fraud against the UK’s financial interests and non-disclosure of beneficial ownership should fall within the mandatory exclusion grounds?

• We agree that this area needs to be strengthened but we believe there will need to be clear direction on the conditions of exclusion regarding beneficiary ownership to ensure grounds for exclusion are fairly applied.
• Strengthening this area would also need to look at how it would prevent the scenario where companies close and reopen under new names or with a new director.
• This proposal may limit how usable an open procedure would be as there would often be a requirement to add additional selection criteria.

Question 17. Are there any other behaviours that should be added as exclusion grounds, for example tax evasion as a discretionary exclusion?

• We agree with the behaviours proposed to be included under grounds for exclusion. However, in addition to what is being proposed we would want to see the inclusion of the following behaviours to the exclusion grounds:
  • Tax evasion
  • Data protection
  • Adherence to the Modern Slavery Act
  • The Equality Act
  • Broadening of PCR 57 (8) (c) to cover grave professional misconduct whether or not it renders the integrity of the operator and/or business questionable - this ground should cover all forms of professional misconduct, such as malpractice in social care

Question 18. Do you agree that suppliers should be excluded where the person/entity convicted is a beneficial owner, by amending regulation 57(2)?

• Yes but there needs to clarity to determine when the grounds for exclusion may apply. This exclusion presents an opportunity to instill transparency, ensuring that contracting authorities fully understand any potential conflicts.

Question 19. Do you agree that non-payment of taxes in regulation 57(3) should be combined into the mandatory exclusions at regulation 57(1) and the discretionary exclusions at regulation 57(8)?

• Yes and we see this as an opportunity to ensure both mandatory and discretionary grounds are brought up to date and made fit for purpose from a public interest perspective.

Question 20. Do you agree that further consideration should be given to including DPAs as a ground for discretionary exclusion?

• We agree that further consideration should be given but it is important for there to be clarity to determine the circumstances.

Question 21. Do you agree with the proposal for a centrally managed debarment list?

• As with other parts of the Green Paper there is little detail to allow us to understand how this will work in practice.  This proposal will require clear management, protection, and transparency.
  • There is a risk of misrepresentation of a contractor in scenarios such as a poorly written KPI that is breached. This does not necessarily reflect poor performance on behalf of the contractor. Also, an exclusion ground that might be proportionate and relevant to one procurement may not be for another.
• Understanding of the principles of a list would need to be clear and the practicality of maintaining a list thought about in detail.

Question 22. Do you agree with the proposal to make past performance easier to consider?

• We have no issue with this proposal in principle but a requirement to publish/report on performance under the contract KPIs will be an additional burden to contracting authorities.
• There is uncertainty around if the proposal is just for some ‘types’ of contract (eg construction), or if it is in relation to just those suppliers deemed ‘strategic’ by Government?  If all suppliers on contracts, even those over the threshold this will be a significant burden for councils.
• We have concerns around how this consideration would be objectively applied whilst minimising the risk of discriminatory challenges. It would also be better for the contracting authority to be left to govern how this is measured.

Question 23. Do you agree with the proposal to carry out a simplified selection stage through the supplier registration system?

• We are not convinced that this proposal offers much benefit, and we are concerned that the proposed system will add complexity. Previous implementations such as Contracts Finder have resulted in duplicated effort for contracting authorities and the system owners have (perhaps due to lack of resources) been unable to make timely changes in response to feedback. If this approach is to be implemented it is essential that the design is more careful, that standard APIs are offered (including for bulk transactions) and that sufficient resources are dedicated for ongoing maintenance and improvement.
• Experience suggests that systems that are focused on industry sectors – such as Constructionline – and that carry out actual validation are more effective than broad-but-shallow approaches like the European Single Procurement Document (ESPD). The current proposal seems to be closer to the ESPD. We think serious consideration should be given to a more sector-by-sector approach.
• It is important that if any system is to align with national priorities, we would want to be involved in the development of this. Also, the system needs to consider possible contradictions between the priorities and requirements of different contracting authorities.
• This approach would assist suppliers in the time requirements but there is a chance that SMEs in particular will not understand the new process or why they should sign up to it when they are also completing tender documents for the contacting authority.
  • It would be useful to see the data that shows how many public sector contracts over the threshold are awarded to SME’s and VCSE’s as a proportion of all contracts over the threshold. We understand this Green Paper to be focused on the Public Contract Regulations which looks at over threshold rules when much of the contracting activity takes place with these suppliers under the threshold.
• The system would need to be kept up to date and it would be reliant on suppliers to do this.

Question 24. Do you agree that the limits on information that can be requested to verify supplier self- assessments in regulation 60, should be removed?

• No, we believe that having the limits on information that can be requested provides assurance to the contracting authority in the decision to exclude and/or disqualify a bidder. And that by removing these limits, transparency becomes critical in disclosing relevant criteria, and sets out at what point the contracting authority can exclude and/or disqualify a bidder.

Question 25. Do you agree with the proposed new DPS+?

• Our feedback from councils was mixed about the introduction of a DPS+.  It is perhaps an over simplified view that it will be time saving within councils due to the sheer volume of contracts being let by councils we believe the administrative burden of opening and reletting will be increased and the reporting burden has not been thought through.   
• We think that in particular smaller councils shy away from setting up DPS’s due to the resource burden, although some larger councils have also made this point. 
• We note that in practice there are some providers who either fail to be admitted onto the DPS because they did not reach the required standard, or those who apply and are admitted but then never bid for the call-offs giving false market representation.  It would be helpful to consider whether an additional rule in relation to such providers preventing them from bidding in future DPSs for a short period would restore the administrative balance.
• It would be helpful to understand the reasoning for the rule around no direct awards being allowed under a DPS.  We can see benefits in allowing direct awards against a catalogue for example.
• We believe there could be benefits of using another procedure instead of the new competitive flexible procedure as this new procedure will not suit the way that some existing DPSs are used.  The requirements for just one procedure to be used is particularly restrictive.
• It is critical that for repetitive, price-only procurements – such as school transport – the ability for sub-national contracting authorities to specify shorter timescales for tender returns is retained.
• In terms of the requirement for contract awards to be published every time a contract is let under a DPS (point 147).  For DPS at present a quarterly contract notice is published rather than every contract.  We believe that the opportunity for ‘bulk’ or ‘quarterly’ upload of contract award notices will be beneficial without compromising transparency principles.

Question 26. Do you agree with the proposals for the Open and Closed Frameworks?

• Councils have been adding value by collaborating on the procurement of common goods, works and services through framework contracts let by our Professional Buying Organisations like ESPO and YPO for more than forty years.  We are not convinced that the introduction of an ‘open’ framework will add much value, particularly given the proposals for DPS.
• We would like to see further consideration of the ability to extend a closed framework to six or eight years rather than the requirement to re-open to competition after three years.  This would be particularly useful for some of the construction frameworks and would provide the opportunity for additional investment in partnership working. 
• Para 155 discusses transparency.  Councils are required, under existing regulations, to publish details of call-off contracts, but with PCR regulation 108(3) offering an opt out – it is unclear from the paper whether this opt out will be removed?  Again there is the issue discussed above about the sheer number of framework call-off arrangements making reporting to a central platform burdensome. 
• As we move towards the implementation of the new rules we would like to see an opportunity to reserve the right to make an existing framework into a new style multi-year contract when the new rules come in.

Question 27. Do you agree that transparency should be embedded throughout the commercial lifecycle from planning through procurement, contract award, performance and completion?

• Whilst not disagreeing with the requirement for transparency in the procurement cycle we have some concerns about the proposals set out in the Green Paper and how they might work in a practical way.
• We are particularly concerned about the additional administrative burden on councils who deliver more than 800 different services to their communities.
• The requirement to declare what information will be disclosed in the tender documentation presents some problems.  We believe that there will need to be a common minimum standard to mitigate the potentially endless negotiation with bidders on this point.
• On publication of a timetable by which data will be released it is unclear in the DPS situation whether this would need to be the initial DPS or for each procurement?  We suggest the latter is impractical
• We are confused about the requirement to publish basic disclosure information set out in para 166.  Would contracting authorities be required to publish every evaluation report at the start of standstill?  We do not believe that the Green Paper goes far enough in explaining the reasons why this will result in a ‘simplified’ process?  We are very concerned that this proposal will result in:
  • a very significant redaction burden
  • much more protracted debate with bidders during standstill
  • the proliferation of ‘ambulance chasing’ by lawyers, as has happened in personal injury cases
  • the impossibility of re-running procurements where a minor flaw in the process has been found, because so much information will have  been released about the content of the bids.
• If our interpretation of para 166 is correct, that councils will be required to publish everything, this will create a hugely onerous burden on councils.  To illustrate this, we estimate that a reasonably sized council letting passenger transport contracts under a DPS in 2020 this would mean the publication of some 3000 records.
• We note that the government has cited the administrative burden of redactions in its own defence in Good Law Project Ltd & Ors, R. (On Application of) v Secretary of State for Health And Social Care but now seeks to place this burden on other contracting authorities.
• Any requirement for introducing a mandatory standstill period for DPS call offs will make them unsuitable for some services (for example Passenger Transport services). 

Question 28. Do you agree that contracting authorities should be required to implement the Open Contracting Data Standard?

• We see some merit in the ambition for a single contracting data standard for the whole of the public sector (notwithstanding the proposals in relation to the NHS Long Term Plan).  A single standard could help contracting authorities to manage categories and markets.
• Consideration on how to resource the move to a single standard is obviously required.
• More thought and explanation is needed on the proposed UK notices.  Several of those cited at para 173 do not appear to be part of the OCDS and their purpose is unclear.  We would be happy to work with Government on this going forward. 
• The publication of budgetary information and project plans does not fit with the short-term nature of local government budgets – which is driven by annual Government financial settlements.
• We are particularly concerned about the administrative burden of publishing contract amendment notices for high-volume, low value contracts such as passenger transport – there are many hundreds of such changes in a large local authority each year. It is essential that there be some collar below which such amendments need not be published.

Question 29. Do you agree that a central digital platform should be established for commercial data, including supplier registration information?

• The list of what might be included in a central digital platform is ambitious and we are concerned that councils will be required to ‘report’ centrally through this digital platform. 
• Any new platform should be configured in such a way as to be able to collate existing published data without creating an additional burden on time and resources.  Any platform must be sufficiently resourced to ensure proper user-centric design and, critically, to evolve in response to user feedback.
• We do not think that the Green Paper brings together enough of a business case for this digital platform to be worth the investment of public funds.  
• We are puzzled by the proposal to retain Contracts Finder as a separate portal.  We would hope that this would not mean double entry of notices.
• Para 176 talks about ‘decentralised elements of the system’ - we would like more clarity on what the centralised elements of the system are?
• Para 180 proposes a ‘central register of suppliers’.  We would like confirmation that suppliers will not need to register here before they can tender?  This could be particularly burdensome for SME’s and providers in the VCSE sector who may only wish to deliver services to their local council (for example a tree surgeon).
• The proposal to include performance information in a central digital platform is over burdensome.  There is no indication as to what Government might define as ‘key performance information’.

Question 30. Do you believe that the proposed Court reforms will deliver the required objective of a faster, cheaper and therefore more accessible review system? If you can identify any further changes to Court rules/processes which you believe would have a positive impact in this area, please set them out here.

• In the main, and in principle, we welcome the proposed court reforms, which seek to make the review system quicker, cheaper and more accessible. We note these reforms are ambitious (requiring new Civil Procedural Rules and Practice Directions for reviewing and hearing procurement challenges to be agreed with TCC, MOJ and CPRC). Some of the proposals, for example claimants and lawyers making greater use of the TCC’s District Registries, will require a culture change and further consideration is needed as to how this will be brought about in practice?  If the TCC fails to effect the culture change, the objectives would be at risk. Government should ensure adequate support for the TCC to deliver.
• It is open to debate whether the reforms go far enough to achieve the objectives they set out to achieve.
• We can foresee a greater number of challenges by aggrieved bidders if the reforms are implemented. This would accelerate the existing trend of increasing number of (sometimes spurious) challenges and will put an increased burden on councils in terms of defending such claims and will risk delay to the procurement timetable.
• We are concerned that not implementing a tribunal system immediately is a missed opportunity. This works for both the public sector and SME’s who find the current system far too costly and cumbersome.
• Note: Our response to the proposals on disclosure are subject to the response to Chapter 6 on greater transparency throughout the procurement process.

Question 31. Do you believe that a process of independent contracting authority review would be a useful addition to the review system?

• This part of the proposal provides for contracting authorities to consider undertaking a time limited ‘formal internal review of a complaint before it is lodged with the court’.
• We consider this proposal is fine in principle; many authorities do already as a matter of course seek their own legal/procurement advice on the merits of an issue raised by an aggrieved bidder and take steps as necessary. It is already open to contracting authorities to do this.
• The advantages of having a review by contracting authority staff who are independent of the procurement process in question are noted. Such staff can be expected to look at matters more objectively than the project team directly involved. The possibility of such a review is likely to encourage best practice and information sharing during the procurement process itself.
• It was noted that having such an independent internal review process would likely present a practical challenge for smaller district authorities in particular – they may not have the resources or expertise to undertake a review.
• As such a review is optional under the proposal, it is unclear who should decide if the review is in fact commissioned? At what level in the authority should that decision sit?
• We agree such a review could favour the early resolution of issues and accordingly reduce pressure on courts. We query whether it is the intention that no claim should be brought through a court process while the authority is undertaking its independent internal review?

Question 32. Do you believe that we should investigate the possibility of using an existing tribunal to deal with low value claims and issues relating to ongoing competitions?

• A tribunal for a subset of procurement claims (low value and where the procurement is ongoing) in addition to streamlining the court process would appear to offer the potential to reduce costs per case for both the challenger and defendant authority however we are concerned that this will be at the risk of increasing the number of threatened and actual cases that authorities will need to manage, particularly earlier on in the procurement process.  This could lead to a risk of delay to procurement timetables and will require additional resources to manage.
• We can see value in having a dedicated tribunal however it would seem sensible to harness the procurement law expertise from within the Technology and Construction Court (part of the High Court).
• It does not appear to make a great deal of difference whether a new tribunal is established, or an existing tribunal is used. The key issue will be that of harnessing existing expertise in the court system and assessing the effect on number of claims. 
• Any tribunal would need to be sufficiently well resourced to deliver on the stated objectives of faster and cheaper decisions.
• Some clarification would be welcome on the meaning of a ‘low value claim’.  Is it by reference to the estimated value of the contract in procurement?  If yes, is there merit in aligning it with some of the thresholds that currently apply to procurements?
• Or is it by reference to the value to the disgruntled bidder of having the claim resolved in its favour? Or is it by reference to something else again? This is pertinent to the number of claims that might be expected in this new tribunal system.
• Additionally, a de minimis value for ‘low value claims’ would seem necessary, to guard against the risk of frivolous/vexatious claims. 
• Should the reform of the court system for procurement cases be successful, the tribunal system could be unnecessary.

Question 33. Do you agree with the proposal that pre-contractual remedies should have stated primacy over post-contractual damages?

• We recognise the reasons for proposing to give stated primacy to pre-contractual claims - it should keep open for bidders the possibility of securing the contract. In theory this sounds acceptable but there are a number of practical consequences that might cause difficulties. It would at a minimum require faster decisions following a claim and streamlined processes, since it is likely to place greater focus on pre-contractual remedies.
• We are concerned that aggrieved bidders would be incentivised to bring more speculative cases at an earlier point under the reformed system. Additionally, the proposal could encourage a series of smaller claims in respect of the same procurement exercise; this would be as disruptive as one larger claim in terms of introducing delay and the cost of resolving the issues/defending the claims through the court process.
• It is unclear how the courts will be resourced to manage this greater volume of cases and still make faster decisions?
• Overall, we might anticipate a far higher volume of claims leading to significant costs for councils, delays to procurement and burdens on courts which would limit or even reverse the intended benefit of the proposed reforms.

Question 34. Do you agree that the test to list automatic suspensions should be reviewed? Please provide further views on how this could be amended to achieve the desired objectives.

• It is noted in the Green Paper that many automatic suspensions are lifted under the current American Cyanamid test and that this potentially reflects the difficulty for challengers to show that damages would not be an adequate substitute for a profit-making contract.
• In principle we welcome the proposal to review the current test, replacing it with one that is procurement specific and that would involve balancing a number of factors (public interest, urgency, upholding the regulations, impact on the winning bidder, right for claimant to be able to participate in the contract, alterative available remedies). We note however there is no indication of the relative importance of the different factors and it is assumed that any such new test will be applied by judges on a case-by-case basis depending on the facts.
• Depending on how the new test is applied, we are concerned that fewer automatic suspensions may be lifted, preventing the authority from proceeding with its procurement. We recognise, as stated in the Green Paper, that the risk of this is mitigated if there can be a fast decision on the claim itself (meaning courts won’t have to actually apply the new test as more procurements will remain suspended while case is heard). So once again much will depend on the ability of the courts to make fast decisions in respect of ongoing procurements.

Question 35. Do you agree with the proposal to cap the level of damages available to aggrieved bidders?

• Generally we welcome the proposal to cap the level of damages as an improvement – it would close the door to large and speculative damages claims because challengers would not (generally, but see below) be compensated for lost profit. This would deliver on the objective of making proper use of public funds and be more proportionate. However, we consider the cap would be better set at legal fees plus 1x bid costs rather than 1.5x bid costs.
• We note from the Green Paper that in some circumstances, additional damages could still be awarded in line with the principle of lost profits where there has been no opportunity for a pre-contractual remedy. Whilst the Green Paper gives examples, it would be helpful to have these circumstances identified exhaustively. 

Question 36. How should bid costs be fairly assessed for the purposes of calculating damages?

• For the purposes of calculating damages, bid costs would need to be fully evidenced and reasonable by reference to strict criteria, so that it is clear what can and cannot be included in a bidder’s claim to recover its bid costs. The costs should be directly related to the procurement in hand and not include an element for overheads. Consideration could be given to creating a benchmark so there are caps to the different elements that make up bid costs; these should not be disproportionate to everyone else’s bid costs and may need to be considered on a sector by sector basis.
• An alternative is to produce a full list of allowable costs which would introduce transparency and equal treatment.

Question 37. Do you agree that removal of automatic suspension is appropriate in crisis and extremely urgent circumstances to encourage the use of informal competition?

• We understand this proposal to mean that where contracts are let following a degree of (informal) competition in crisis or extreme urgency situations, those contracts should be free from the risk of automatic suspension preventing contract award if an unsuccessful bidder were to raise a challenge, provided the proper process for such contracts has been followed (the Green Paper gives an example of publishing the new mandatory notice when a decision is made to use the new limited tendering procedure).  We agree it is appropriate in these circumstances to remove the risk of automatic suspension and therefore delay for such critical procurements.

Question 38. Do you agree that debrief letters need no longer be mandated in the context of the proposed transparency requirements in the new regime?

• The removal of the requirement to set out the relative advantages of the winning bid is hugely welcome but the replacement of a formal letter with the much more burdensome process set out in Chapter 6 will be costly and time-consuming. Bidders, especially SME’s, find some form of feedback essential in order to help them with future bids.  Removal of the letters may lead to a lack of ‘finality’ for bidders who will still approach councils for feedback.

Question 39. Do you agree that:

• Businesses in public sector supply chains should have direct access to contracting authorities to escalate payment delays?
  • The first port of call for businesses with issues or concerns around payment should always be with the organisation they are in contract with.  It is our experience that councils are always willing to support SMEs and subcontractors with issues around prompt payment and there doesn’t appear to be a need for legislation for a process to do this. We would propose that use of mechanisms such as the prompt payment code, the office of the small business commissioner and the Public Procurement Review Service be more rigorously enforced.
  • We assume the proposal is that contracting authorities’ ‘support’ for subcontractors will generally be in the form of dialogue with the contractor rather than actually stepping in and paying the subcontractor directly?
  • We think that opening access through legislation to businesses within the supply chain could create a significant resource impact on contracting authorities.
  • We would welcome the introduction of faster payment terms for SMEs. This could potentially be covered under the legislation if there is recognition of the wider objective to help support SMEs and the local economy.
• There should be a specific right for public bodies to look at the payment performance of any supplier in a public sector contract supply chain?
  • We agree that contracting authorities should monitor this routinely through contract management and where issues are identified, work with suppliers to improve payment performance.
  • We agree with the proposal to legislate specific rights for contracting authorities to investigate payment performance. 
  • The new regulations could also go further and legislate for increased reporting on private sector companies, for example, as a minimum it should cover reporting requirements in relation to public sector contracts they hold.
  • A mirrored 30-day payment clause for every tier in the supply chain in law might help drive the right behaviour. 
  • It might also enable public sector bodies to deal with monitoring by exception to support appropriate use of contract management resource.
• Private and public sector payment reporting requirements should be aligned and published in one place?
  • It is good practice to report on payment practices and the requirement to pay in 30 days in currently reported on through the Transparency Code.
  • Contracting authorities should monitor this information through supplier relationship management and contract management but not be required to by law.
  • There is little evidence on the benefits of this as well as being unsure of the practicalities for how this would be achieved.
  • Reporting requirements on private sector businesses should be aligned to the same frequency and standards as public sector for at least any public sector contracts they hold.

Question 40. Do you agree with the proposed changes to amending contracts?

• We welcome the proposal to detail what does not constitute a substantial amendment. 
• It would be extremely helpful to have guidance with real life examples of scenarios where amendments are deemed substantial and where they are not.
• It would also be useful to see the value of the amendment standardised across the subsections e.g. of Regulation 72.
• We would like to see more freedom to amend contracts where a substantially different delivery mechanism is identified in mid-contract. There are substantial economic, environmental and social costs of contracting authorities being locked into poor contracts that they cannot exit because the costs of doing so are prohibitive. Contracting Authorities do not have perfect foresight, contracts cannot anticipate every eventuality, and society, economics and technology change rapidly. Covid has revealed that in many cases contracts could be performed very differently – for example substituting digital for face-to-face services.
• Subject to some carefully drafted criteria (particularly about not increasing the contractor’s profit margin or fundamentally altering the balance of risk) the ability to renegotiate contracts to reflect a greener solution, new tech, a new delivery mode or simply a significantly reduced budget should be permitted. We would be very happy to work with government on drafting of such criteria.

Question 41. Do you agree that contract amendment notices (other than certain exemptions) must be published?

• In principle we disagree with the proposed requirement to report centrally on contracts, however it would be helpful to have clarity on definitions of amendments, variations, and modifications. We also see there is some merit in developing guidance on when a contract amendment should be published and when it would be helpful to do so.
• The modification notice needs reviewing as it’s “clunky” and not very user friendly.  If the purpose is to try to improve transparency, the format of reporting modifications should be streamlined and simplified.
• Publishing all modifications could be very burdensome in other areas e.g. social care contracts where numerous minimal modifications are made to contracts. It would be helpful for a value to be stated where if the variation is over a certain financial limit these should be published.
• We understand that with increased flexibility comes the need for increased transparency. However where do we draw the line between business as usual operational work and a change which should be subject to an amendment notice being published. An example of where this would be raised is property related contracts that are varied throughout delivery. Currently modification/amendment notices are not published as these changes are minor and operational in nature.
• There is feeling that the proposed increased transparency is creating more work without understanding the additional benefit or what issue is to be solved by the increase in transparency.

Q42. Do you agree that contract extensions which are entered into because an incumbent supplier has challenged a new contract award, should be subject to a cap on profits?

• Yes, we agree, this is not an issue widely experienced, but this type of supplier behaviour must be tackled and we see it as important enough to be considered.

The LGA would like to make the following additional comments.

Selection versus award

With reference to paragraphs 131 and 132, we believe that contracting authorities should have more flexibility to use what are traditionally selection questions at award stage, moving away from the unhelpful formulation in Lianakis. The definition of “most advantageous tender” could legitimately include, for example, an element of the financial stability of the contractor; or of its prior experience in delivering the works or services in question. The current directive, where once a tenderer passes some arbitrary cut-off it is considered every bit as good as a more-solvent or more-experienced tenderer, simply makes no sense.

Primacy of pre-contractual remedies

With reference to questions 33 and 34, we are concerned about whether the proposed approach takes sufficient account of the risk to services and service users of the delay arising from a procurement being re-run or of the automatic suspension not being lifted. It is critical that any new test takes account of the risk to public services of a delay in award of contract, including financial and organisational stability of any incumbent contractor and willingness and ability of that contractor or of the in-house team to continue delivering the service in a safe and business-like manner.

Tina Holland

Programme Manager, Procurement and Commissioning

Mobile: 07766 252 856

Email: [email protected]