FE faces ‘double edged sword’ as Procurement Act hikes risk of litigation

Experts warn of subcontracting trouble

Experts warn of subcontracting trouble

10 Nov 2023, 11:00

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Private providers and colleges could be further driven away from subcontracting by the government’s new Procurement Act as it risks more litigation, experts have warned.

The act, which got royal assent last month and will come into force from next October, will also “create additional bureaucracy” across the board in further education, lawyers and sector leaders have told FE Week.

It covers procurement across all industries, but FE bigwigs say it could have far-reaching consequences for the sector. The Department for Education has itself been on a mission to significantly reduce the amount of subcontracting in FE, in a crackdown prompted by concerns about poor oversight and fraud.

The Procurement Act means that anyone tendering across the public sector, and failing to win a tender, will receive a breakdown of the individual scores awarded to the winning bid and their own, which they can then compare.

Chris Murray, legal director at Eversheds Sutherland, said the risk is some colleges do not know they are implicated in the Procurement Act.

“A lot of them do, but there are quite complicated definitions as to which contracting authorities are implicated here for the purposes of procurement law,” he added. For instance, independent training providers are subject to these rules too if they are competing for public money.

“One of the government’s key objectives with the change in rules is to ensure greater transparency in public procurement,” he said.

Currently, when any public organisation finishes its procurement process, it must send letters to each losing bidder with some detail on why it has lost a procurement procedure. But this change will mean they receive “assessment summaries” for their own bid and the winning bid. That will include the individual scores for each criteria, and feedback on each score.

“They will just give you both assessments and you can look at it you can say: ‘Wait a minute, I’ve been given a one out of 10 for question one and the winner has been given an eight out of 10 for the same question, and yet the feedback is quite similar’,” Murray said.

That means an “increased likelihood of [legal] challenge”, he said. However, he stressed any challenges will need to be made within 30 days of the receipt of the “assessment summaries”.

There are also concerns around an “administrative burden” for contracting authorities and ITPs. More notices around procurement will be legal requirements – such as “pipeline notices” which will give all bidders extra time to prepare for tenders, and abandonment notices, which show when a contracting organisation has decided to cancel its procurement procedure.

That will add, Murray said, to the already high amount of paperwork needs around procurement.

But there is more positivity around the Act’s new “debarment list” – a Cabinet Office list of firms that are disqualified from procurement, such as those who have committed corporate manslaughter or fraud.

Businesses which are bankrupt or have been flagged for their “poor performance” on other contracts will also be on the list. Those, however, will be “discretionary” disqualification grounds, meaning the procuring body will need to decide if they should be allowed to tender.

It will include any example when a minister has determined any supplier is “an excluded or excludable supplier”, or if an investigation has taken place into them, according to the Procurement Act itself. Businesses will need to apply to the cabinet office to be struck off the list.

That will mean procuring organisations such as colleges will not need to approach individual subcontractors to check if they are allowed to procure for work.

Simon Ashworth, director of policy at the Association of Employment and Learning Providers, welcomed the move to “improve procurement rules” including the requirement to include a “provider’s track record”.

But, he said the act could be a “double edged sword” for providers.

“There is a real concern that new procedures will create additional bureaucracy that may end up discouraging subcontracting opportunities due to the risk of new litigation. AELP is calling for a minimum value exemption threshold to be introduced into procurement rounds below which additional bureaucracies wouldn’t apply.”

Julian Gravatt, deputy chief executive of the AoC said the reforms “may provide some benefits in terms of transparency but there are risk and costs at a time when college capacity is already really stretched”.

A spokesperson for the Cabinet Office said the new act “slashes red tape and introduces one single set of simple, flexible rules, removing more than 350 complicated and bureaucratic rules as a result of Britain leaving the EU, opening up competition for new suppliers, especially SMEs”.

“It will also create a more open and transparent system, stimulating competition and ensuring procurement teams have the flexibility to design a tendering process to their needs.”

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