Non-compliance to EU procurement rules has recently cost the government £40 million
. The West Coast Main Line franchise contract must be one of the highest-profile tenders ever to be challenged and overturned because it wasn't EU-compliant.
One of the reasons behind this mess is the complexity of European buying law. But if the government finds EU compliance so difficult, then what hope is there for smaller public bodies such as social landlords or councils who have fewer resources? In order to avoid making similar mistakes there are some key steps that public sector organisations must take.
Identify and manage risk realistically. The time and effort put into a tender should be proportionate to the tender’s value and the level of risk. This is what the Department for Transport (DfT) failed to do. They didn’t put enough resource in place to manage the huge risks involved in the West Coast Main Line tender.
Case law is king. Two years ago most tenders were dealt with internally. Nowadays, a large proportion of contracts go to lawyers. Legal advice has become an essential part of the process, as has a good understanding of case law. Many EU procurement rules are open to interpretation until taken to court and challenged. Buyers must swot up on the latest case law.
Be realistic about the limits of your knowledge: Effective procurement embraces the skill sets of other professions such as law. Procurement professionals must recognise that they may need external advice to make tenders watertight. Ask yourself whether the correct staff are working on the right tenders. We recently concluded a tender for energy consultancy that included our own staff, alongside external legal expertise. This was a conscious decision to match appropriate personnel to the value and risk associated with the framework.
Training must keep up with pace of change: The procurement environment is evolving at a rapid rate. Regular training is essential. This investment is crucial or there will be financial implications.
Above all, think carefully about what risks you chose to mitigate and get the right resources and training lined up to deal with that risk. This is a calculation the government got wrong.
☛ Alan Heron is director of operations for CEL Group, which provides procurement and business services to public bodies.