All in the past?

Procurement iStock 000002542569XSmall 146x219Nathan Holden sets out some of the key challenges arising from the recent Cabinet Office procurement policy note on taking into account of bidders' past performance.

Under Directive 2004/18/EC and under the Public Contracts Regulations (regulations 15(12), 16(12), 17(14) 18(15)) contracting authorities are entitled to assess whether a contractor meets a minimum standards of technical or professional ability.

One of the means at their disposal for doing this, in the context of a bidder’s technical ability, is a right to take into account a bidder’s skills, efficiency, experience and reliability.

It is in this context that the Cabinet Office has published (8 November 2012) Procurement Policy Note – Taking Account of Bidder’s Past Performance (Action Note 09/12). Its stated aim is to provide “...guidance for future procurements on how Departmental Bodies are to apply minimum standards for reliability based on past performance”.

The objective is sensible, what better way of judging a bidder’s ability to carry out a contract than past performance, albeit, as they say, it is no indicator of future performance. However, in practice, it is far harder than it sounds.

Who does the Note apply to?

The guidance in the Note initially applies to Government Departments, their Executive Agencies and Non-Departmental Public Bodies, for the purposes of this note I have referred to these entities as contracting authorities.

In what circumstances does it apply? Where one of the above procures goods and/or services in respect of:

  • information and communications technology; or
  • facilities management or business process outsourcing.

In either case, where the anticipated contract value is £20m or more (excluding VAT). The Note also applies to framework agreements for similar goods/services where a contract let under the framework will have value of £20m or more (excluding VAT). Other contracting authorities, such as local authorities, are invited to apply the principles set out in the Note on the basis that they reflect “best practice”.

When does it apply?

The Note applies to relevant procurements (see above) for which an OJEU notice has not yet been published as at 8 November 2012.

What must a qualifying contracting authority do to comply with the guidance?

They must:

  • tell bidders that their past performance is to be taken into account;
  • set minimum standards relating to past performance and set these out in the OJEU notice;
  • be consistent in all documentation relating to the selection stage and the issue of past performance;
  • verify information provided by bidders in relation to past performance, by considering other sources and any further evidence provided by bidders and apply the minimum standard;
  • Continually review (at appropriate stages in the process) whether a bidder continues to meet the minimum standards in relation to past performance;
  • In framework agreements, make sure the agreement provides/allows for an assessment at the relevant stage whether minimum standards in relation to past performance have been met.

To help implement these arrangements contracting authorities are required, in their capacity as customers, to provide certificates of performance to their suppliers on request – to keep a central record there is further obligation to send a copy of issued certificates to the Cabinet Office.

What evidence will a bidder be expected to provide of past performance?

A list comprising a statement of the principal goods sold and/or services provided by the bidder in the last 3 years – this may be limited to certain categories so as to lessen the obligation where bidders may have, for example, provided a broad range of services, together with certificates from those to whom services/goods were provided. Where a certificate indicates that a service, for example, was not satisfactorily provided, bidders would then be invited to explain why, in any new contract, the same will not recur.

The guidance then caters for consortia arrangements and the ability of a bidder to rely on another joint bidder’s past performance in respect of the part of the contract they would perform. However, the provisions that attempt to address the issue of the use of sub-contractors, especially when their appointment does not happen until after the contract has been concluded, seem impractical in giving the contracting authority a contractual power of veto if the sub-contractor fails to meet a minimum level of reliability based on past performance.

An issue the guidance alludes to as a potential problem area is set out in paragraph 33, namely how do you deal with circumstances where the sources of information available, for verifying a bidder’s past performance, come from sources other than the bidder? In the preceding paragraph, 32, the guidance quite rightly reaffirms the need to treat bidders equally, without discrimination and act in a transparent way. This means that if a contracting authority wants to verify information provided by one bidder in one set of circumstances then it must do the same thing in the context of another bidder in similar circumstances.

The same is true for verification; the same approach should be applied in similar circumstances. Putting to one side what is meant by “similar”, which is ambiguous and difficult enough on its own, a potentially more serious problem arises where information is missing or it is not possible to verify information having taken reasonable steps – the guidance in these circumstances suggests that the contracting authority “is still entitled to verify other information or information from other bidders where that can be done reasonably and proportionately” and then “Bidders in such cases are treated equally by reference to the same standards and the resulting difference in the steps taken to verify the information in the two cases would be justifiable given the difference in the information obtainable by reasonable and proportionate steps in each.”

It is difficult to see how the second sentence follows the first, because in order for the process to be meaningful bidders need to be treated equally. In this, and in many other respects, the certification process has severe limitations and would appear to provide plenty of scope for future disputes and possible legal challenges.

What are the implications for local authorities?

Although local authorities are currently under no obligation to comply at present, they may choose to do so out of choice. In those circumstances they would be wise to approach the exercise carefully until some of the vagaries of the verification process, for example, have been worked out in practice.

Nathan Holden is a partner and Head of Local Authorities at Freeth Cartwright. He can be contacted on 0845 077 9646 or by This email address is being protected from spambots. You need JavaScript enabled to view it..