Providers warned of ‘significant financial penalties’ through Euro procurement rule

Providers warned of 'significant financial penalties' through Euro procurement rule

Providers that fall foul of new European procurement rules affecting exam fees could face “significant financial penalties” if High Court action is brought against them, FE Week can reveal.

The European Union regulations, adopted in this country in February, mean providers must follow strict procurement rules, which cover exam fee contracts with awarding organisations.

They will apply to contracts worth £625,050 or more “over a reasonable period, generally calculated over four years”, according to a report looking at how the regulations will affect colleges by Crescent Purchasing Consortium (CPC) in June.

It added: “Under the new regulations, an awarding body can challenge if they feel an institution has not complied with the regulations [over new exam fees contracts].

“A formal challenge would be by means of proceedings in the High Court, where significant financial penalties can be applied.”

The Association of Colleges (AoC), Crown Commercial Service (CCS), and CPC has responded to the rule-change by starting work on the development of a new common framework for exam fees contracts, to which it is thought all general FE and sixth form colleges and independent learning providers would be able to sign up.

Sally Collier (pictured), CCS chief executive, said it could lead to “potential savings” of up to £30m for providers, representing around 15 per cent of the total £207m exam fees cost for 2013/14.

Julian Gravatt, assistant AoC chief executive, told FE Week: “The details of how it [the framework] would work still have to be agreed, but the idea would be that efficiency savings could be achieved if CCS oversees procurement for large scale contracts that could apply to all members of the framework.”

A CCS spokesperson said: “This new agreement will make the provision of qualifications much easier and less costly for both colleges and providers, as they will not have to go through a full OJEU tender process and complex contractual requirements for each qualification.”

Analysis by FE Week of 2013/14 accounts showed that 54 colleges spent at least £1m each on exam fees.

Furthermore, about 315 colleges spent £150,000 each or more — which would put them in range of the new regulations over four years.

A spokesperson for the Association of Employment and Learning Providers said: “It’s already a well-supplied and competitive market and like with any service, independent providers are used to shopping around.

“So if the proposed new common framework is competitive, there will do doubt be providers who will at least want to take a look at it.”

David Igoe, chief executive of the Sixth Form Colleges Association, said: “I suspect… sixth form colleges will be looking for better deals [over exam fees] and there may be opportunities for a national or regional arrangement.”

However, a spokesperson for the Federation of Awarding Bodies warned that “centralised purchasing” could “create additional administrative burden, reducing choice and raising costs for colleges and awarding bodies”.

A spokesperson for the Association of Employment and Learning Providers said: “If the proposed new common framework is competitive, there will do doubt be ILPs who will at least want to take a look at it.”

No-one from CPC was available to comment.