The proposals concerning dynamic purchasing systems (DPS) and framework agreements are the most disappointing aspect of the procurement Green Paper, writes Andrew Millross.
This article, which is part of our series (see below) on the Government’s Green Paper: Transforming public procurement, looks at the Chapter 5 proposals headed 'Using the best commercial tools'.
Given the way in which DPS’ are used now, the proposal to remove the limit on using them just for 'commonly available purchases' will make no difference. We already have some concerns over the extent to which DPS’ are sometimes used inappropriately, e.g. to drive down prices for care provision.
A key limitation on the usefulness of current DPS’ is the need to invite and evaluate tenders from all suppliers on the DPS that are capable of meeting the contracting authority’s requirement. We responded to the proposals to say that it would be helpful for contracting authorities to be able to invite tenders from a smaller selection of DPS suppliers, with this selection being made through objective selection criteria.
Other than this, where they are used appropriately, DPS seem to be working well for simple repeat purchases so there is no need to change them.
At first sight, the proposal to allow eight-year frameworks looks positive. However, the proposal is that this framework would have to be retendered at some point after the initial three years. Suppliers, initially on the framework, would not be guaranteed to keep a place on the framework after the retender. This can be done now with two consecutive four-year frameworks on the same terms, so the proposals offer nothing new.
In our response, we said that if an eight-year framework is to be opened up to competition, this should result only in the inclusion of additional providers onto the framework rather than the removal of those who were successful when it was first tendered.
Buying club fees
In our response, we raised concerns over the potential conflict of interests where a buying club is financed from a levy (usually of a proportion of the price payable under each call-off contract) on contracts called off from that framework.
We recommended outlawing these charges to suppliers on the framework. This would mean that the costs of setting up and running a general framework would need to be met by the contracting authorities setting up and using the framework. We thought that this would be a fairer approach, encourage framework providers to minimise the costs of running frameworks and remove the conflict of interest inherent in the current arrangements.
New commercial tools
We commented that if the Government was serious about offering a much wider range of commercial tools for contracting authorities to engage with their suppliers in the most appropriate way commercially, the Government should consult contracting authorities about these. The consultation should ask what issues contracting authorities currently find difficult in relation to compliance with the Public Contracts Regulations 2015. This may give further information on the range of alternative procurement routes that may be needed and the scope that the new rules should allow for them.
We raised a specific concern over how 'package deals' could be provided for explicitly in the new procurement rules. This would be preferable to having to rely on the negotiated procedure without advertisement, using the developer’s ownership of the land as a 'technical reason' why it is not possible to contract with any other party.
We commented on the increasing focus on long-term relationships, as recommended by the Construction Playbook, and on how difficult it was to set up long-term strategic partnerships within the existing framework agreement rules.
We specifically invited the Government to overturn the Henry Bros case*. This case makes it difficult to justify two-stage tendering as being compliant with the public procurement rules - two-stage tendering is where a main contractor is appointed based on tendered profit and preliminaries percentages and the subcontract packages are then tendered jointly with the client.
What happens next
The consultation has now closed. We have included these comments in our response to the consultation paper, which we submitted on 10 March 2021. We are now awaiting with interest the Government’s detailed proposals following the consultation.
* Henry Bros (Magherafelt) v DoE Northern Ireland (No 2)  NIQB 105
See Andrew's earlier articles on the Green Paper: