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Thursday, August 8, 2013

"Bidders have a right to know that any procurement process is fair, transparent and run with integrity"

Business complaints over public sector procurement contracts soar by 167%
The coalition has always looked to the private sector to run hospitals, schools and other frontline services but new contracts are often at low margins as the government looks for cost-savings. This puts bidders under pressure to win more work to compensate for reduced profits.

All of this puts significant strain on business, says David Isaac, head of the advanced manufacturing and technology services sector at Pinsent Masons. "Bidding for public sector contracts requires substantial upfront investment with no guarantee of return. In that context, bidders have a right to know that any procurement process is fair, transparent and run with integrity."

According to an FoI request our firm sent to the government, business complaints over how public sector contracts are awarded soared by 167% in the last 12 months to 196 – up from 73 in the previous year.

One tactic that some businesses have deployed is to challenge the procurement process and litigate if their bid is unsuccessful. That is not to say all complaints are motivated by a commercial agenda: at times there may be cause to challenge the process. However, a significant increase in the number of complaints being made indicates that something else is going on.

Complaining to the Cabinet Office is one way to stop a rival gaining an advantage in the procurement process. For example, businesses will complain about the procurement strategy that a public sector body is following if they think that strategy favours their competitor. Another way to gain an advantage is to look to external expertise for advice on submitting a successful bid. We have witnessed an increasing number of private sector bidders looking to their lawyers for this type of advice.

But does complaining work? Complaints to the Cabinet Office can sometimes lead to the bidding rules for a government procurement contract being changed while bidding for the contract is still progressing. Making a complaint while the bidding process is still open can delay things long enough to give a business crucial extra time to prepare and submit its bid, although a court challenge would be needed to actually overturn a contract that has been signed.

Simon Colvin, a partner at Pinsent Masons who advises central government departments on national IT outsourcing projects, points out that contracting authorities are increasingly conscious of market pressures. "Time invested at the outset of a procurement is key to ensuring that processes are fair and transparent. This approach together with ongoing monitoring as the procurement progresses towards contract award should ensure that bidders complaints are minimised and, if they do arise, can be handled effectively."
While the pressure to protest is obvious, it is not in anyone's interest to protest in ignorance. Ignorance of facts may always be a justifiable excuse to protest, but ignorance of the legal requirements for procurement, which are often not intuitive to non-government contractors, is not. It is as imperative that the private sector know the rules of government contracting as the public sector. Knowledge of the rules of the road will not only temper expectations of the desperate business person, but minimize their costs by knowing when not to chase shadows or rainbows.

By the way, the ABA Model Procurement Code also recognizes the need for a fair, transparent procurement system run with integrity. In a comment to MPC § 3-201, it is declared "fair and open competition is a basic tenet of public procurement. such competition reduces the opportunity for favoritism and inspires public confidence that contracts are awarded equitably and economically".

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