Procurement rules a major obstacle to innovation by public bodies: LGL report

The procurement rules are proving a major obstacle for many public bodies in their efforts to innovate when delivering services, research by Local Government Lawyer and law firm Bevan Brittan has found.

Some 44% of the more than 100 procurement lawyers and other professionals who took part in the survey said the rules were a “serious obstacle” to implementing different models for service delivery, such as outsourcing, joint ventures, local asset-backed vehicles and the like.

The survey also revealed significant growth in the number of legal challenges brought against contracting authorities’ procurement processes.

More than half of respondents (52%) reported that their organisations had seen the number of challenges increase over the past three years. Just 2% reported a decline in legal challenges.

However, the research shows that contracting authorities feel they have a very strong record in defending those challenges that are made.

When respondents were asked what they considered to be the greatest area of legal risk in procurement, the most frequent reply by some margin was evaluation.

Other problem areas are a lack of understanding and knowledge of the rules, a reduction in resources, the complexity of the legislation and fast-moving case law. 

The survey also asked respondents about a number of key elements of Government policy, particularly around engaging with suppliers pre-procurement, improving SMEs' access to contract opportunities and developing staff mutuals.

Key findings from the survey in these areas include:

• One in five respondents (19%) said their organisations ‘rarely’ or ‘never’ engage with suppliers pre-procurement to discuss how their requirements may be met;
• Almost half of the respondents (48%) had not reviewed their tender procedures in light of the Government’s policy on improving access for SMEs; and
• One in ten (11%) organisations are giving active consideration to the setting up of a staff mutual. Just 2% have already set one up, and a further 2% said the process was underway.

Liz Cooper, partner in the Commercial Department at Bevan Brittan, said: "The results very much support our day-to-day experience of queries we receive from procuring authorities; particularly in relation to tender evaluation which is the area that most respondents cited as the key area of legal risk for them. 

"There is a widespread feeling that procurement is becoming more, not less, complex and that those tasked with delivering successful procurement outcomes have potentially conflicting objectives of procuring efficiently and procuring innovatively as well as creating wider opportunities for SMEs to compete; all in a changing environment with reduced resources."

Cooper added: "With new EU procurement rules on the horizon, there will be an even greater need for contracting authorities to develop procurement skills to be able to deliver access to contract opportunities and to do so efficiently and effectively."

Philip Hoult, Editor of Local Government Lawyer, said: “These results underline just how the procurement rules and associated threats of legal action from aggrieved bidders present a real challenge to local authorities and other public bodies at a time when they are seeking to innovate and get the most out of increasingly scarce resources.

"Furthermore, the rules are also acting as a significant hurdle for key elements of government policy, such as an expanded role for mutuals in the delivery of public services.” 

Download a pdf of Local Government Lawyer and Bevan Brittan’s Procurement Law: Special Report 2012.

As well as in-depth analysis of the survey results, the report also contains a series of articles from Bevan Brittan’s procurement law specialists on topics such as mutuals and social enterprises, SME access to contracting authorities, implementation of the Public Services (Social Value) Act 2012, and successfully defending legal challenges.