Skip to main content Skip to navigation
Some Clients think that Regulatory Controls form major barriers to Partnering and Best Value Procurement. The two most commonly quoted barriers are:
Local Authority Standing Orders (SOs)The vast majority of Contract Standing Orders do not inhibit partnering. Most of them seek to secure the most economically advantageous offer, in other words the best value offer for the client. If this is not the lowest price, some SOs add that officers should set out clear reasons why the lowest price is therefore not being recommended. Whilst this kind of wording may not positively support partnering it does encourage officers to make judgements on best value, and to engage Boards and elected members in a fuller discussion about partnering and best value proposals.
Some clients have also been led to believe that EU Regulations do not permit partnering; or that the EU process is too long winded and time consuming and therefore causes unnecessary delay. Experience from the most successful partnering demonstration projects indicates that neither of these assumptions have been proven in practice, and that large scale partnering schemes have been successfully procured using OJEC procedures. As in all procurement processes it comes down to planning, programming and preparation.
Partnering is also acceptable under EU Procurement Regulations. However, it is recommended that Clients covered by the regulations (basically public bodies, referred to in the Regulations as "contracting authorities") take legal advice before embarking on major procurement activities so as to allow sufficient time for the compliance with EU requirements where necessary.
Local authorities have always been within the scope of the Regulations. On 10 September 2004 the UK Government accepted that Registered Social Landlords are also "contracting authorities" for the purposes of the Regulations.
The EU Regulations and OJEC procedures are therefore compatible with best practice procurement and with partnering. The process consists of the publication of notices in the EU Journal, and fixed timescales are allowed for contractors to respond with initial submissions. The expected duration of the contract must be stated in the notice. Short listed contractors are then invited to present submissions within stipulated timescales. Following a predetermined evaluation process appointments are made on the basis of the criteria set out by the client in the original OJEC notice. The overall time to get through the process is often, in practice, only slightly longer than that taken to appoint a long term partner under Standing Orders.
For many clients, using the EU process offers a clear and auditable process and it is worth the effort because of the flexibility and savings it gives down the line when setting up long term partnering arrangements.
The current financial thresholds are £3,834,411 for public works contracts and £153,376 for public services contracts (including most reactive maintenance contracts) and public supplies contracts. These thresholds remain valid until 31 December 2005.
There are currently three basic EU tender procedures available:
Open Procedure. Under this procedure, a contracting authority invites interested bidders to submit a tender for the proposed contract in direct response to a notice in the Official Journal. The time limit for applications to the contracting authority should be a minimum of 52 days from the despatch of the notice for publication in the Official Journal.
Restricted Procedure. This is a two-stage process, with bidders invited to submit an initial expression of interest in response to the notice in the Official Journal. The closing date for receipt of applications must be a minimum of 37 days from despatch of the tender notice for publication. An assessment of those interested bidders will then be undertaken by the contracting authority, in order to compile a short-list of those to whom an invitation to tender is to be issued. The short-listed bidders must respond to the invitation to tender by submitting a formal tender, which will then be evaluated in accordance with pre-determined criteria. Responses to the invitation to tender must be returned to the contracting authority within a minimum of 40 days from despatch of the invitation to tender. If it is impracticable to observe the time limits specified above, an accelerated programme may be justifiable - however, the contracting authority must be able to prove the need for urgency.
Negotiated Procedure. This procedure is similar to the restricted procedure in that interested bidders are asked to express their interest, with the contracting authority selecting one or more companies from those who expressed an interest, for final negotiations. The time limit for the receipt of a request to negotiate is a minimum of 37 days from the despatch of the notice. This procedure is very flexible, and historically has been used in the UK for PFI and other complex procurement projects.
The contracting authority is required to award its public works, services or supplies contracts on the basis of either the tender which offers the lowest price or the tender which is the "most economically advantageous". The latter is consistent with selecting a partnering team who will generally not be selected solely on price. Various criteria may be considered in identifying the most economically advantageous tender including price, the time allowed for completion, running costs, profitability and technical merit. If the "most economically advantageous" criteria are to be used, the contracting authority must state these in the contract documents or in the contract notice.
When entering into an arrangement for a series of projects to be undertaken by contractors/ service providers or suppliers you must look at the total value of all of the projects when assessing the value of the contract. Under EU aggregation rules, clients are prohibited from "splitting" contracts with the intention of evading the Regulations.
Contracting authorities will also need to consider the requirements of the new Consolidated Directive, due to be implemented in the UK by January 2006. Amongst other provisions it limits the duration of framework agreements to a maximum of four years. Some strategic partnering agreements may be framework agreements within the definition in the Directive and advice will be required if this issue may arise.
The National Housing Federation Guide to the EU Procurement Rules gives practical guidance about when and how the EU procurement rules apply. The legal basis of the rules is given and why they apply to associations. Using the guide associations will be able to decide whether or not the rules have to be followed when contracting for work or purchasing goods or services. The options that can be followed where the rules apply are explained and what has to be done in each case.
Barriers to Change can be overcome by:
Obtaining from Members a waiver to Standing Orders to seek construction proposals on a Best Value basis, rather than lowest price.
Viewing regulatory controls as opportunities to ensure that procurement processes are well organised with adequate timescales to complete all the necessary procedures. This will enable clients time to select a best value team, instead of being under extreme pressure to get schemes (other than genuine emergency works) on site quickly resulting in false economies.