Top tips for procurement season
October is generally a busy time for social landlord procurement
teams. Here's a checklist of key issues to consider when reprocuring contracts.
Do you need to advertise? – It is not every contract that needs a formal advertisement via the Public Contracts Regulations 2015. It's worth checking to see whether any of the exemptions in the Regulations apply. On the flipside, many development contracts linked to land deals do not get advertised, because of an assumption that these are exempted. Recent UK case law has clarified the position around advertising development contracts, so it is wise to seek advice before undertaking your procurement.
Low-value contracts – The 2015 Regulations introduced new requirements for UK contracting authorities when advertising contracts below the EU financial thresholds. The new rules apply to all central government contracts above £10,000 and all local authority, housing association and ALMO contracts above £25,000. Social landlords should also consider their internal standing orders and governance requirements for advertising low-value contracts.
Preliminary market consultation – Social landlords should consider the benefits of engaging with the marketplace prior to running a formal advertisement. Consultation is useful for identifying potential market interest and can help define the scope of the proposed contract and any social value requirements. Any consultation should be run transparently and so as not to give an unfair advantage or disadvantage to potential bidders.
Leaseholder consultation – Where externally provided works or services are intended to be recharged to leaseholders via a variable service charge, landlords may also have to consult with leaseholders on the proposed contract pursuant to the Landlord and Tenant Act 1985. Consultations should normally be undertaken before a contract is advertised. Landlords should ensure that their leaseholder and procurement teams are working under agreed joint timetables.
Third party frameworks – Third party framework agreements are a fast and efficient way for social landlords to procure contracts, especially when there is insufficient time to run a separate procurement exercise. Social landlords are still responsible for their own compliance with procurement law and should undertake due diligence on any frameworks to be used. Landlords should satisfy themselves that they can access the framework and that it covers the works, services or supplies being procured. The contract terms and prices set out in the framework should be able to be accepted with minimal negotiation. Many third party frameworks require users to pay joining and access fees, so this should be factored into procurement budgets.
Existing contracts – When looking to reprocure a contract, social landlords should check the terms of any existing contracts, especially around the contract term, rights of termination, and TUPE or pensions risk following termination. Advertising a programme before the existing contract has expired or been validly terminated, can create a risk of challenge for repudiatory breach of contract, so social landlords should check this before starting a reprocurement.
Tender documents – The 2015 Regulations require all procurement documents to be made available to bidders when the Contract Notice is published. This includes all tender documents, conditions of contracts, specifications and pricing documents. Crown Commercial Service guidance suggests that for complex procurements, some documents will not have to be made available until they are created later in the timetable. For most Open and Restricted Procedures, however, documents should be ready at the start of the procurement.
Precedent documents – Every social landlord has them – that old tender document or services contract drafted years ago, that's recycled in a hurry for a new procurement exercise. Social landlords should ensure that all precedent documents are checked and updated regularly, to take account of legislative changes and best practice guidance. Similarly, old forms of contract should be checked to ensure they fit the scope and requirements of the new contract. Bespoke forms of contract negotiated for particular deals may not be appropriate for new exercises, so these should be used with caution.
Electronic procurement – 2018 sees the roll-out of some key deadlines about electronic procurement. Social landlords are expected to be running fully electronic procurements (i.e. via e-portals) by 18 October 2018. By this deadline, we should also have access to e-Certis, an online toolkit established by the EU Commission, which will specify the types of certificates and documentary evidence that can be asked for in procurement exercises. Social landlords who aren't already using e-procurement should make this a key priority in the forthcoming year.
Beware of extensions – Extending a contract by mutual consent is a basic principle of contract law, but can cause complications in terms of procurement compliance. The 2015 Regulations set out a list of permissible grounds for extending an existing contract. Contract extensions that don't fit into one of these grounds should be re-advertised in accordance with the Regulations and failure to do this may create a risk of legal challenge. Extensions may also trigger leaseholder consultation requirements and TUPE and pensions liability issues, so this should also be checked.
Data Protection Act update – As of 25 May 2018, the General Data Protection Regulation (GDPR) will be in force (see our article covering the changes on page 4). Contracting authorities will be under increased obligations around sharing personal data with contractors and sub-contractors, and ensuring that those organisations provide sufficient guarantees that they will meet the new standards in the GDPR. This will include checking that contractors and sub-contractors have appropriate technical measures in place, as well as appropriate policies and procedures, to ensure the security of personal data and compliance generally. The terms of any contract must also be clear about the purposes for which personal data is to be used. Contractors should only be acting on the explicit instructions of the employer, including in relation to sharing with further sub-contractors. Contracting authorities will need to update their tender and contract documents to reflect these new requirements.