Proposed EU procurement regulations will see a “significant increase” in the number of public sector mutuals created to run services, say law firm Winckworth Sherwood, who advised the UK government on the changes, as the new rules are designed to encourage the set up of mutuals or co-operatives to run services.

The changes will allow local authorities to award time-limited service contracts to mutual or social enterprises without first having to advertise them in official channels – only service contracts exceeding £750,000 will need to be advertised.

Winckworth Sherwood said “This new directive is enormously welcome and is designed to make it easier for groups of employees to form public sector mutuals or co-operatives to deliver services.”

The new rules will allow local authorities to break contracts into smaller lots to facilitate greater SME participation and they encourage preliminary talks between buyers and suppliers to shape better specifications and outcomes. They will also be allowed to take into account the skills and experience of individuals at the award stage, as well as social and environmental factors.

Changes to the directive were needed, as they made it difficult for local authorities to award contracts for local services to employee-owned mutuals as those mutuals could not compete effectively against the big service providers. The new directive is expected to be implemented some time next year, following a vote by MEPs this autumn.

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