By Tash Shifrin
July 2, 2009
Essex County Council’s selection of a preferred bidder for a major outsourcing deal may not be legal or ‘sensible’ amid uncertainty over the scope of the contract, a leading specialist has said.
In November, Essex announced it was looking for a private firm with ‘the potential to provide any or all of the council’s services’ in a deal that could be worth up to £5.4bn.
But in April, the council suggested the scope of the contract could be sharply reduced. ‘It’s more than likely going to be a small area, like IT or [back-office] processes,’ a spokeswoman said.
Essex selected computer giant IBM as preferred bidder at its June Cabinet meeting but agenda papers on the nature of the contract were withheld from publication and it was discussed in closed session.
Minutes of the meeting said IBM would ‘work exclusively to finalise a mutually acceptable contractual position’ to deliver elements of a council-wide transformation programme. But it did not set out what these might include.
A spokeswoman was unable to confirm the size or scope of the contract, saying the information had been withheld due to ‘commercial confidentiality’.
Edinburgh University public-private partnership expert Mark Hellowell questioned whether the decision was ‘actually legal’ under European Union procurement rules if the scope of the contract had not been defined.
‘By the time of preferred bidder [selection] you ought to be clear what the basic specification of the product or service is,’ he said. ‘If not... then you’re excluding the rest of the market.’ He argued that there were problems with deciding on substantive elements of a contract after narrowing potential partners down to a single bidder, because the private firm would then be in a ‘monopoly’ position.
‘Is it sensible? You don’t really want to be in a position
of agreeing to service specifications and a particular price without having any competitive element there,’ he said. ‘In terms of [European Union] procurement directives, that’s probably not acceptable.’ The 2005 directive stated that where the preferred bidder stage happens, it should be very much dotting the “i”s and crossing the “t”s.
He added that drawing up a deal between an authority and a single bidder ‘is going to be quite often bad from a value for money and competitive view’.
IBM will also work on developing business cases, IT systems ‘and the acceleration of procurement savings’ under ‘an interim arrangement’, the minutes said.
Essex is to have a ‘detailed discussion’ about the contract in October. The council was unavailable for further comment.
July 2, 2009
Essex County Council’s selection of a preferred bidder for a major outsourcing deal may not be legal or ‘sensible’ amid uncertainty over the scope of the contract, a leading specialist has said.
In November, Essex announced it was looking for a private firm with ‘the potential to provide any or all of the council’s services’ in a deal that could be worth up to £5.4bn.
But in April, the council suggested the scope of the contract could be sharply reduced. ‘It’s more than likely going to be a small area, like IT or [back-office] processes,’ a spokeswoman said.
Essex selected computer giant IBM as preferred bidder at its June Cabinet meeting but agenda papers on the nature of the contract were withheld from publication and it was discussed in closed session.
Minutes of the meeting said IBM would ‘work exclusively to finalise a mutually acceptable contractual position’ to deliver elements of a council-wide transformation programme. But it did not set out what these might include.
A spokeswoman was unable to confirm the size or scope of the contract, saying the information had been withheld due to ‘commercial confidentiality’.
Edinburgh University public-private partnership expert Mark Hellowell questioned whether the decision was ‘actually legal’ under European Union procurement rules if the scope of the contract had not been defined.
‘By the time of preferred bidder [selection] you ought to be clear what the basic specification of the product or service is,’ he said. ‘If not... then you’re excluding the rest of the market.’ He argued that there were problems with deciding on substantive elements of a contract after narrowing potential partners down to a single bidder, because the private firm would then be in a ‘monopoly’ position.
‘Is it sensible? You don’t really want to be in a position
of agreeing to service specifications and a particular price without having any competitive element there,’ he said. ‘In terms of [European Union] procurement directives, that’s probably not acceptable.’ The 2005 directive stated that where the preferred bidder stage happens, it should be very much dotting the “i”s and crossing the “t”s.
He added that drawing up a deal between an authority and a single bidder ‘is going to be quite often bad from a value for money and competitive view’.
IBM will also work on developing business cases, IT systems ‘and the acceleration of procurement savings’ under ‘an interim arrangement’, the minutes said.
Essex is to have a ‘detailed discussion’ about the contract in October. The council was unavailable for further comment.
