Government rules out banning lowest price criteria in 'light touch' public contracts

Will Green is news editor of Supply Management
3 February 2015

The government has ruled out banning the use of lowest price criteria in awarding contracts where “service quality is paramount”.

In its response to a consultation on the transposition of the EU procurement directive covering public contracts, the Cabinet Office (CO) said there was “not a sufficiently strong evidence base to justify gold-plating”.

In a report the CO said most respondents supported the government’s proposals around a “light touch regime” (LTR), which aims to implement the directive “in a minimalistic fashion”.

“A few respondents including trade unions and the voluntary sector wanted to ban lowest price award criteria in LTR contracts, arguing that MEAT [most economically advantageous tender] should be mandatory in service contracts where quality paramount, eg health, education and social care,” said the report.

“Taking account of the range of views and reflecting on the majority preference of stakeholders involved in the earlier feedback on the policy choice of MEAT versus lowest price, we conclude that there is not a sufficiently strong evidence base to justify gold-plating through banning use of the lowest price award criterion.”

However, the CO did say there was “sufficient opinion to warrant addressing the matter clearly in guidance, and stress the importance of MEAT criteria when awarding contracts where service quality is paramount”.

The report also said the Crown Commercial Service would explain combined lots in guidance and advice, and would consider the possibility of guidance on the approach to lotting and combined lots, following comments that the issue could be “highly complex”. Some respondents said the guidance should be binding “or offer a strong steer towards the use of lots”.

But the CO said: “Lotting decisions and justifications for those decisions must remain the responsibility of the authority undertaking the procurement.”

The CO said it would not be mandating the use of centralised purchasing bodies, though “it would be wrong for the government to rule out the possibility of doing so in future in the pursuit of better value for money for the taxpayer”.

Despite 10 per cent of respondents calling for public sector bodies to be obligated to use e-procurement from the date of transposition, the CO said “postponing mandatory adoption of e-procurement gives greater flexibility, allows authorities and suppliers the time to prepare for mandatory usage, and reduces the risk of breach of the new rules”.

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