Contracts: So just how level is the Government's playing field?

When the Department for Work and Pensions awarded voluntary organisations only two of the first 16 contracts to help people on incapacity benefits get back to work, Acevo chief executive Stephen Bubb said the sector had been "stuffed".

Stephen Bubb and Janet Roberts
Stephen Bubb and Janet Roberts

But procurement specialist Janet Roberts said charities should look closer to home for the reasons they are not winning more contracts. Third Sector asked both of them to set out their arguments and say what they think should happen next.

 

Janet Roberts says...

 

From our perspective, working with organisations large and small, it is clear that private sector organisations foresaw the demands of public procurement two years ago. Having understood the requirements, they structured their organisations so that they would be in a position to win tenders. At senior management and governance levels, the majority of third sector organisations have not yet understood the requirements. As a result, they are losing out to better prepared competition. Organisations can never be tender-ready, but adequate preparation at management and governance levels in particular remains the key to winning tenders.

Acevo is well-intentioned, but Tendering for Care questions the value of holding an independent inquiry into a procurement procedure. The difficulties in reaching a meaningful conclusion are legion. First, even using the Freedom of Information Act to obtain all of the relevant tender documents is nigh on impossible. Second, an inquiry also requires the full details of the scoring matrix, together with the guidance used by appraisal officers. The Department for Work and Pensions is unlikely to reveal this information.

If there are concerns about the process, then well-established statutory and legal remedies are available. These could and should be employed if an organisation believes that there has been a failure to comply with the statutory requirements during the implementation of the tendering process, and has evidence to that effect.

If any tendering organisation has concerns about the process, it must take action within 10 days of the date of the letter informing it that it has been unsuccessful. This action can lead to a High Court injunction to stop the award of the contract, followed by a judicial review of the tendering process. The sort of inquiry proposed by Bubb would have no status in law, but the courts would have access to any tender documentation thought necessary to support the case being made.

Acevo appears to infer that issues related to the tendering process resulted in voluntary organisations losing one or more of the contracts to other organisations and that there is evidence of a failure of compliance with the statutory requirements. In such circumstances there is an option to take action in the County Court for damages for business lost through that failure. The courts have strict deadlines for this. In this case, action must be taken within three months of the failure in the process. If organisations have this evidence, why not take action in the courts?

The claim of bias is serious. If there is evidence that the DWP has shown bias in favour of either third sector organisations or private sector organisations, then action should be taken. One option is to make a complaint to the European Commission in Brussels. If the commission agrees that there has been bias, then it will follow a procedure that could lead to action being taken against the Government in the European Court of Justice.

The point is that all public purchasing must be competitive and the competition must be fair to all in the private, public and voluntary sectors. If this is not the case, and there is evidence showing that, then legal action should be taken.

A number of third sector organisations have perceived the necessities of successful tendering, taken the requisite action and are now winning contracts. They are not all large organisations. Indeed, there is a clear window of opportunity for organisations whose turnovers range from £500,000 to £5m to succeed in the current environment.

- Janet Robers is director of Tendering for Care, which provides procurement and tendering training to voluntary organisations.

 

Stephen Bubb says...

 

A passionate interest in procurement processes is not perhaps a characteristic of most chief executives. And you probably wouldn't want to share a train journey with someone whose passion was tendering. Yet commissioning and procurement are going to be bigger features in the lives of third sector executives, so we'd better get on top of them.

The recent debate about Department for Work and Pensions contracts caused concern. It led Acevo to establish an independent inquiry chaired by Dame Mavis McDonald, the former permanent secretary at the Office of the Deputy Prime Minister, and supported by Roy Ayliffe, director of professional practice at the Chartered Institute of Purchasing and Supply, and Michael Shaw, former chief executive of the disability charity John Grooms. Their report will be published soon.

The Government supported the inquiry even though some people criticised it as sour grapes or suggested that if we thought the process had been biased we should have used the legal channels to challenge the decisions. The DWP's first response was a knee-jerk "it was all done fairly in accordance with proper process". Janet Roberts offers us advice on how to challenge unfair awards and on the legal process. This spectacularly misses the point.

It reminds me of the debates in the 80s on public sector recruitment. People were rightly worried about the very low proportion of black staff in the workforce. Officials defended this by arguing that their decisions were fair and they appointed only on merit. But what they missed was the fact that the recruitment process had internal barriers that effectively prevented black people from applying for jobs.

A similar principle applies in this case. We already have enough evidence to suggest that there are institutional barriers in many of the commissioning and procurement processes adopted by government. We know that many good third sector organisations with huge experience in employment did not apply for the recent tenders because of these perceived barriers. We know that partnerships were discouraged. We know that many disability charities with specialist approaches to employment and training were left out in the cold.

An example of this was the recent decision by the Olympic Delivery Authority to tender for transport arrangements. It said that no organisation with a turnover of less than £5m could apply. This automatically excludes the vast majority of community transport organisations in London.

It is, however, also true that we in the third sector must gear up to compete. We must hone our tendering skills. We must consider what training and development are needed by senior staff in order to compete effectively. Acevo is establishing a commissioning and procurement advisory service. We will soon be offering a contracts legal helpline. We will be providing training and consultancy advice.

We also strongly support the Government's plan to train up its top 2,000 procurement experts to make them aware of the particular nature of the third sector. We support the Office of the Third Sector in its work on how social clauses should be used in procurement. Acevo will also use the lessons learned from the inquiry report to ensure that government widely reviews its commissioning processes. We are already in discussion with the Ministry of Justice to ensure there are effective commissioning arrangements for offender management services. It is not Acevo's way to be a supine supporter of the status quo. Just as we led the fight for full cost recovery and long-term contracting, we must now fight for commissioning and procurement processes that enable us to compete fairly.

This is a two-pronged approach, helping to gear up the sector's capacity to compete and campaigning for more effective commissioning. We believe passionately that third sector organisations can deliver client-focused services that make a difference. But if barriers do stand in our way, we must force them aside. I am proud that Acevo is getting stuck in and arguing for better commissioning by government. Let's hope the sector will row in strongly behind our work.

- Stephen Bubb is chief executive of Acevo, the membership organisation for voluntary sector chief executives.

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