Managing incumbent contractors in procurement
Landlords often struggle to deal with incumbent contractors when running public procurement exercises. Here are some tips on how to manage your incumbents without jeopardising the re-procurement or the new contract.
Check the terms of existing contracts:
Make sure that you understand when your current contract will expire, if and how it can be terminated, so you can structure your reprocurement timetable to be in contract by the time your current contract comes to an end. If there is going to be a gap between the expiry of the current contract and the start of the new one, check whether you are able to extend the current contract, and ensure that any contract extension is properly documented.
Terminating existing contracts:
Ensure that you follow any termination provisions to the letter and serve any termination notices correctly on the contractor. A failure to terminate a contract properly may prompt a damages claim from your contractor for repudiatory breach (ie.. that you are acting in a way that suggests you no longer wish to be bound by the contract terms). Check if there any consequences to early termination of the contract, such as a requirement to compensate the contractor for their anticipated lost profit?
Applying in-house knowledge:
Can clients apply their knowledge about an incumbent bidder's performance when assessing their bid at pre-qualification or tender stage? The Public Contracts Regulations 2015 are silent on this point, but academic opinion suggests that clients should be able to use any knowledge at their disposal, provided that it is applied in a fair and proportionate way. So if you've experienced performance issues not reflected in their selection questionnaire or tender response, this discrepancy can be raised with the incumbent in the clarification process.
Get necessary information:
Incumbent contractors often hold key information about the contract, such as updated stock conditions lists, performance data and lists of outstanding works, as well as employee information relevant in the event of a TUPE transfer. Check you can retrieve this from contractors, so it is available to bidders in good time for the reprocurement exercise.
Assessing incumbent bidders:
Where an incumbent contract bids in the reprocurement of the same contract, there is a concern that the incumbent will have an unfair advantage, which might conflict with legal obligations to treat bidders fairly and without discrimination. A pre-qualification stage focusing on bidders' past performance on other contracts may be seen as an "easy win" for the incumbent, who will have more detailed knowledge than other bidders. Level the playing field by asking bidders about past experience on a number of contracts, and ask a range of questions (e.g. examining bidders' health and safety records, relevant qualifications and accreditations, and participation in social value initiatives), which will allow everyone to demonstrate their competence. Tender assessments can ask bidders how they would improve poor performance and achieve innovations and efficiencies in the new contract, encouraging incumbents to rethink their current service delivery model.
Managing poor performance:
If an incumbent isn't reappointed, clients need to manage the contract attentively to ensure there are no slips in service delivery. The parties should be clear about the incumbent's contractual and legal obligations to provide information to the client or the new contractor during the transition stage, and any TUPE transfer that might apply.