New deal for public sector

20 January 2009

20 January 2009

The European Commission is encouraging buyers to stimulate their economies with faster tendering. Jake Kanter looks at the risks and likely uptake

In 1933 US president Franklin Roosevelt unveiled his New Deal, a major programme of public works designed to haul America out of the Great Depression. And more than 75 years later, plans set out by Gordon Brown have led commentators to draw comparisons with the aims of FDR's project.

At the start of the year the Prime Minister announced a capital investment programme totalling £40 billion, which will include increased spending on schools, hospitals and transport. Procurement will inevitably play a large part in this and the European Commission (EC) is encouraging buyers to speed up the tendering process by using the existing 'accelerated procedure', which can be justified on the grounds of urgency.

In this case urgency is prompted by the current economic situation, and the EC says: "Such presumption of urgency should apply throughout 2009 and 2010 for all major public projects". It adds that faster purchasing can "foster the economies" of member states.

Time limits set out by public procurement directive 2004/18/EC allow buyers to reduce the time it takes to secure deals from 87 to 30 days.

But how easy will the measures be to implement, and will public sector buyers embrace them?

Roger West, procurement director for NHS Supply Chain, says buyers must have robust reasons for using the accelerated strategy, which are in line with their stakeholders' objectives. Inappropriate or poorly executed use of the procedure could prompt legal challenges.

David Gollancz, partner at law firm Field Fisher Waterhouse, said giving suppliers a shorter time frame to submit bids could be seen as favouring the incumbent party, so buyers could face challenges if a contract is renewed with an existing vendor.

The OGC, which will publish a policy note on the EC guidance shortly, urges purchasers to consider a bidder's ability to respond to and meet a reduced timescale.

It adds if buyers apply the procedure they should make it clear how the procurement will boost the economy in their OJEU notice.

Ian Stewart, senior procurement manager at Cambridgeshire County Council, warns that there could also be extra costs involved. "With any 'rushed procurement' the risks increase for both the purchaser and the supplier and this is often reflected in higher tender price submissions."

He hopes the proposals do not provoke a "knee jerk reaction" in the public sector, resulting in mismanaged projects and cost overruns.

Jeremy Swain, senior associate at law firm Denton Wilde Sapte, went further to say completing a full and thorough procurement process in 30 days is "commercially unrealistic".

"The procurement process needs time to produce the relevant business cases, options appraisals, pre-qualification and tender documents, evaluation models and to undertake the relevant assessments."

However, other buyers viewed this as opportunity. Swindon Borough Council has already made headway using the procedure. Lawrence Bunn, head of corporate procurement, says it has around six projects prepared on this basis.

To avoid legal challenges, he says it is important to link the aims of the purchase to the impact it will have on the local economy and overall objectives of the council. After consulting lawyers and the OGC his team is prepared to deliver schools and highways maintenance programmes more quickly.

Bunn says other buyers should ignore the "fear factor", embrace the opportunity to be more flexible with time frames and "drive up the profile of procurement".

Solomon Nyamande, head of procurement at Thurrock Borough Council, agrees: "If the onus is on buyers to stimulate the economy, then this is fantastic for the profession. We have been given a chance, we must do our best."

SMjan2009

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