In his second report on small firms, ‘Growing Your Business’, Lord Young, the PM’s adviser on enterprise, recommends the removal of pre-qualification questionnaires across the public sector for all contracts below the EU threshold of £173,934.
According to the report, Lord Young believes that the “abolition of PQQs together with the replacement of completion bonds by an insurance scheme would transform the opportunities for small firms and result in a stronger SME sector and at the same time save the taxpayer considerable expenditure”. In this he is building on the initiative of Francis Maude, who scrapped PQQs for central government early in 2011.
Although a well intentioned initiative to enable access to public contracts for SMEs, this is a badly flawed policy that will have exactly the opposite effect. It sounds beneficial to remove bureaucracy from the tender process, but what is actually being removed here is the ‘pre’ element. The qualification questionnaire would still remain, but instead it would be bundled with the full tender response.
This dramatically increases the workload for any company wishing to bid as a full proposal is now required, together with the qualification information. This may be acceptable to a larger company that is confident of winning a high proportion of its bids, but disastrous for any SME’s making a more speculative approach.
It’s undoubtedly true that many PQQs have gold-plated requirements and even more frustratingly each organisation require answers to essentially the same questions in a different format. What is actually required is a reform of the qualification process that efficiently assesses the capability of a supplier. This should be standardised across the public sector so that it only has to be completed once a year.
The final revisions to the EU procurement directives are due next month. The main changes, so far, are as follows:
1. Greater involvement of small companies (SME’s)
Selection criteria must be “appropriate” and “related and strictly proportionate” to the subject matter of the contract. If they are used minimum turnover requirement must be no more than three times the contract value and insurance requirements must also be proportionate.
Purchasers will be required to divide tenders into lots wherever possible or provide an explanation of why they haven’t.
2. Financial Thresholds
Purchasers claimed that the rules made tendering more expensive and time consuming and would have liked the thresholds increased to remove the requirement for smaller contracts. In reality the market is more open through increased visibility of opportunities. The lengthy tender process is frequently due to poor organisation.
3. Changes to contracts
Changes to the terms of a contract have always been allowed where they are not material. Materiality is now defined as changes affecting less than 5% of the value.
As it’s our core business, I’m delighted to see the moves towards e-procurement. Contract notices must be submitted online and tender documents must be available for download when the notice is published.
5. In-house suppliers
A purchaser using its own resources to fulfil a need, has always been allowed. The test for in-house provision is set out in three parts:
- Control must be as if the contractor were an internal department;
- 80% or more of the contractor’s turnover is for the authority; and
- There is no private ownership.
6. Part A and B Contracts
I’m pleased to say that the artificial distinction between Part A & B categories of services will be removed. Part B services which previously haven’t subject to most of the rules, cover requirements such as accountancy, legal services, health and social services. There are of course national restrictions related to qualifications, etc., but if for example a UK company can satisfy French rules, why shouldn’t it bid for a contract in France on the same terms as a French supplier?
New rules that will allow government departments to ban companies and individuals which take part in failed tax avoidance schemes from being awarded Government contracts have been unveiled by Chief Secretary to the Treasury, Danny Alexander and Minister for the Cabinet Office, Francis Maude today, Thursday 14th February.
Many large companies make massive profits from their participation in government contracts and I suspect that few tears will be spilt by taxpayers if any company is excluded from future contracts because it hasn’t being paying the ‘correct’ amount of tax on those profits. Whenever the government intervenes there are always concerns about yet more bureaucracy (especially for SMEs), the scope for subjective decision making beyond existing tax law, but it is also interesting to see how this fits as part of the wider ‘mood music’ from government and their relationship with larger companies.
The rules, which are proposed to come into effect on 1 April 2013, are outlined in draft guidance published for consultation by the Government. They will require potential suppliers to notify contracting departments of their recent tax compliance history, and specifically to tell the department if any tax return has recently been found to be incorrect as a result of:
- HMRC successfully challenging it, including under the new General Anti-Abuse Rule (GAAR); or
- a failed avoidance scheme which the supplier was involved in and which was, or should have been, notified under the Disclosure of Tax Avoidance Scheme (DOTAS) rules.
Suppliers will also be required to disclose if they have been convicted for tax related offences or have been subject to a penalty for civil fraud or evasion. Continue reading “Tax avoiders excluded from government contracts”
At midnight last night the Department of Transport released the following announcement:
Transport Secretary, Patrick McLoughlin, said “I have had to cancel the competition for the running of the West Coast franchise because of deeply regrettable and completely unacceptable mistakes made by my department in the way it managed the process.”
Bombardier Zefiro High Speed Train
Any of us who tender for public contracts are only too fully aware of the sometimes less than perfect award criteria and a decision making process that owes more to being able to write a creative tender, stuffed with ISO standards, Prince2, ITIL and other accreditations, rather than a process that identifys the most suitable supplier, but how can things go so wrong with such a high profile decision?
Continue reading “West Coast Rail Franchise – the latest procurement fiasco”
Earlier this summer the Department of Health published two documents aimed at improving procurement within the NHS. The first titled NHS Procurement:Raising Our Game is guidance setting out the immediate steps that the NHS needs to take in order to save £1.2 Billion of the current £18 Billion annual procurement spend under the Quality, Innovation, Productivity and Prevention (QIPP) programme. The second document NHS Procurement Standards sets out the standards against which Trusts should be measuring themselves in order to ensure that they improve procurement performance and ensure Value for Money (VfM).
Continue reading “Improving NHS Procurement”
Millstream, the company behind the Tenders Direct service, has secured a £4.8million deal to run Norway’s national procurement database, cementing the company’s expertise in connecting suppliers with public sector buyers.
Alex Salmond, First Minister of Scotland
Scotland’s First Minister Alex Salmond has praised the contract win, citing it as an excellent example of Scottish companies developing strong ties with Norway, a key export partner.
Continue reading “Millstream wins £5 million contract to provide national procurement website for Norway”
An investigation into the corruption of civil servants has concluded at Belfast Crown Court after all four defendants admitted their involvement. The case centred around payments to show favour for the tendering and continuation of CCTV contracts in Northern Ireland.
Their guilty pleas mark the conclusion of a joint investigation by the Serious Fraud Office and the Ministry of Defence Police, into bribery allegations, which began in 2002.
Continue reading “MoD civil servants plead guilty in CCTV contract corruption case”
Some public authorities use the negotiated or competitive dialogue procedures for awarding contracts, when in fact the regulations are actually quite strict on which procedure they should choose and authorities should be using the Open or Restricted procedure in most circumstances.
Continue reading “Inappropriate use of Negotiated and Competitive Dialogue Procedures”
The Audit Commission has today published the results of its annual survey of fraud against English councils and related bodies (Protecting the Public Purse 2011). The 2010/11 report shows that:
- fraud directed against public sector organisations costs taxpayers £21.2 billion/year
- fraud against councils costs more than £2 billion/year
- councils detected more than £185 million worth of fraud (<10% of the total), involving 121,000 cases
- the total value detected increased by 37 per cent compared against 2009/10, with the number of cases detected also rising
Continue reading “Procurement Fraud in English Councils”