Local Authority Procurement – An Uneven Playing Field for SMEs (part 1)

(We're delighted to feature a guest post from Jim Lynch of PLC Leisure Consulting  - more about him at the end of this piece).

I write as half of Ploszajski Lynch Consulting Ltd. - a two man, niche consulting business specialising in sports and leisure projects.   Our turnover is less than £200,000 per year with about 75% of this coming from public bodies.

We are currently railing against local authority and other public procurement processes which, through their total lack of proportionality and appropriateness, are killing small businesses such as ours.

Let’s start with a case study.  We recently pitched for work with what we'll call  “North Ruralshire” Council, a midlands unitary council next to a large county from which it had split.   The project was to complete a playing pitch assessment needed as part of the local planning process to protect playing fields from development.  We had completed an identical assignment for the neighbouring county and so received directly from North Ruralshire an invitation to bid for a similar study.

We were encouraged to find that one of this council’s corporate priorities was to support the development of the SME sector.    We were horrified to find that their procurement processes did the exact opposite and worked only to favour the big boys.

This became evident once we were sent a standard PQQ not from the leisure department but from central procurement.  This stated that to reach the proposal stage we were required not to demonstrate our professional expertise but to have in place a number of systems and procedures, the absence of which would preclude us from further consideration.  These included: -

  • An equity and diversity policy for vetting and recruitment
  • Child protection procedures and CRB checks
  • A robust and objective complaints procedure
  • Insurance to the tune of £5 million public liability, £10 million employers liability and £2m Professional Indemnity

These were all to be judged on a pass/fail basis by the procurement team.  Only after we’d cleared this hurdle would our expertise, experience and ability to do the job be looked at.

For a big consultancy this is off the shelf stuff – for a small business such as ours it is irrelevant and pointless.  So before the deadline we wrote to point out that: -

  • Our company comprises just the founder directors, has no need or aspiration to appoint any other staff and, hence, we have no equity and diversity recruitment procedures in place
  • As we do not work with children, we do not have child protection procedures nor hold CRBs.  The task they would be employing us to carry out would not bring us into contact with children but we’d be happy to get CRBs done on appointment if this would re-assure them
  • On the very rare occasions  that an issue with our work has arisen, we respond to any client concerns directly by meeting them to discuss the issue. We do not require a formal ‘complaints procedure’ to codify what is commonsense business practice and in our 12 years of trading we’ve never had a contract cancelled.

We also asked them to point out what in practical terms could possibly go awry in an assessment of playing fields that could justify us carrying insurance to that level of expense. (And we're talking here about a project for which our quote would have been less than £20K. )

To be fair to North Ruralshire they did respond (many councils simply ignore you) albeit with a selection of English straight from the legal clichés handbook.

They said that their “legal and procurement team advised that the requirements were proportionate and relevant to this specific consultancy commission” and that “Advice from the council’s insurance team supports the stipulation of the required indemnity limits.”  In other words “these are our stated procedures and if you don’t wish to tender on this basis that’s your look out.”

On the “head, wall, hurt, stop” basis we took no further action and did not make a proposal.  They eventually appointed one of the big consultancies at double the fees that we’d have charged.

So we lost out and the local ratepayers lost money – but what the hell, the systems had been served.

Part 2 tomorrow

(PLC is Tony Ploszajski ex Sport England and Cambridge athletics blue and Jim Lynch who comes from a leisure management background.  We’ve been going for some 12 years during which time we’ve developed an expertise in feasibility studies, funding applications, playing pitch strategies, market research and sports development plans).

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Voices (9)

  1. Nigel:

    Hi, I too am in the same position where I am losing work through this so called fair system. I am a small cleaning firm in Cambridge that has been established 22 years but for the last 12 years cleaned schools up to 8 in its peak and gradually I have lost them (now 3) due to this procurement system which includes a point scoring which only national companies who score 95/100 or more will be looked at. Although I do have the 5 and 10 million insurances at a cost of £3500 per annum and CRB checks that are now £55 each and £12.50 10 years ago I still lose out in the scoring as I don’t have 250 or more staff and turn over £10 million pounds per annum which is worth 5 points alone (so thats me out of the running before they see you) I have only been asked to be in the tender process because are work is good, we’re reliable and local as well as won the contract before.
    The last one I lost this summer was after 12 years and three tenders so couldn’t have been doing a lot wrong. I even wrote to my MP who brought it up at the House of Commons (Michael Gove) and still got the same answer that it’s a fairer system but to who not me not a small business who has offered a personal service and cares not a company topping up their turnover for share holders.
    The problem I have found mainly is the people making the decisions for the schools companies like Tenant and Litmus who advise the schools and ashore them it will be cheaper through them so they then acquire your price which leaves it open to all who bid. I recently went through a council contract tender company for a primary school who were paying £17000 per year and was told as long as I come in cheaper I stood a chance nothing about quality or could I do the job?
    The second main reason is who chooses the contract The Head, Manager, Bursar? I actually lost my local secondary school which was decided after the tender company put their word in and voted by a First Aider, Receptionist, Office worker, Site team member and College Manager all I can say is these schools deserve what they get and believe me they are disgusting (how I originally found them when I started) but they are saving or so they think money each year until they find out what is not included in the price that we did include.
    My advice stay small, don’t employ full timers, avoid employers tax and every other tax this government throws at small business. At least Thatcher encouraged small business to grow.

    1. Dan:

      “I don’t have 250 or more staff and turn over £10 million pounds per annum which is worth 5 points alone”

      I have to admit, those requirements are farcical. We’re not all that bad in local government.

      I worked with a high profile, national procurement consortium once (naming no names) who you would have thought would know their stuff. I tore their standard PQQ to shreds, because they were asking questions such as “which ones of our other frameworks are you a party to?” and “what other public sector frameworks are you a member of.”

      One problem is that many procurement people see the PQQ as a shortlisting exercise alone (which inevitably favours the handful of larger bidders with more experience and professional bid writing teams) rather than viewing them as a risk-assessment process.

  2. Tom Graham:

    It would have taken so little effort to work round this and if I were consulting on schools playing fields requirements I would certainly get myself CRB checked

  3. Dan:

    My favourite anecdote on this is from a few years ago. I had to exclude a company because they didn’t have an equal opportunities policy. When i excluded them, the manager of the company called me to query this – he asked me “What do I need an equal opportunities policy for?! I don’t employ any darkies!”

  4. Flog:

    I can understand the frustration, I’m a one person business and fully aware of why the questions are asked and required even. A number of years ago, I received and completed a 119 page PPQ from, lets call it Middle England City Council. Many of the questions were pass/fail with no opportunity to submit a N/A. I was excluded because I gave the honest answer to the equality question; I do not have Employer’s Liability insurance – I don’t employ anyone and am the only shareholder. They had no issue with the no EL but failed me on the equality issue.

    After trying to get information (this was setting up a major EU professional services framework) I submitted two FoI questions (there were 2 LA’s involved in managing the tender) asking for info on my firm’s submission. One said they couldn’t answer becasue someone was not there, the other sent me lots of info about carparking for meetings etc. but there was one very interesting page – summarising the pass/fail evaluations for 11 named applicants! So they released info I hadn’t asked for that showed, for me, a pass on EL cover and a fail on equality. More interestingly, 3 others were marked as Fail, one I reckon was a small organisation the other two, where major consultancies. Of the 4 that were marked as failed, two were ultimately named on the framework and it wasn’t me or the other small business.

    About 6 months of trying to get somewhere I gave up, I’d been through OGC etc. and submitted a complaint to Europe. I felt so disloyal, complaining about the actions of what I assumed to be fellow procurement professionals. I’d identified over 30 problems with their process.

    About 3 months later, I received communication from the EU to say that they’d started infraction proceeding against the UK – at this stage I was torn between ‘bl***t h**l’ and ‘Yes!!!’. About a year later I was told that the LA had revised some of its documentation and was I happy to accept this or did I want to have the matter taken further. I decided to let it go.

    I understand that during the research stage the LA were visited by numerous additors etc. and you know what, I reckon they deserved it.

    Micro and the very small SME’s don’t have the resources to take this guys on and maybe we should be using the EU route more often to make things more equal, transparent and proportional.

    Thankfully, I don’t bid for many such frameworks. It had a number of lots, the procurement one was v small in terms of the overall framework value . After a year, I submitted a follow up FoI question to the CAs named on the FA asking about usage on the procurement lot – it had been used once for a £55k requirement and what was perhaps more concerning was that over half of those that actually responded to the question didn’t know of its existence let alone thought or even used it!

  5. Dan:

    Stand back people, I’ve got this covered….

    Almost all public bodies, especially local authorities, recognise the importance of SMEs. Some of them even have a rough idea what they can actually do to promote this. Pretty much none of them have the time or resources to do more than scratch the surface. The need to find savings is the top priority.

    PQQs themselves are one of those things that no-one sees the value of. Until something goes wrong with the supplier, and it was revealed that no risk assessment was carried out in the name of expediency. It’s a pain in the derriere, but necessary. Would G4S have fumbled the Olympic security contract if they had been properly PQQ’d?

    The problem with PQQs in general is that they are standard documents that are used for procurements of all types and values, including OJEU tenders. As such they are legal documents and drawn up by lawyers who are, by nature, incredibly risk averse. Procurement staff don’t want to be constantly altering them and them getting them checked by legal every time they use one – this leads to a ‘one size fits nobody’ document. There’s also the legal requirement not to discriminate against certain firms – this would stop authorities making it easier for SMEs but not larger firms. Some authorities are doing away with PQQs for contracts under certain values (e.g. £50k) but this depends on the risk appetite of the organisation itself.

    Equal opportunities and diversity are an important duty for local authorities. Even in the bad old days of compulsory competitive tendering, Equal Opps was the only ‘non-commercial’ consideration that could be taken into account. It really is that important to them. Its not too difficult to write a policy and keep a copy in a drawer somewhere. Some LA’s are moving away from this though – we just ask you if you comply with your legal requirements (yes/no) and if you have been investigated by the E&HR Commission (yes/no).

    The insurance levels are pretty much standard across all authorities. If it was me, I would only have asked for £1m for professional indemnity, but that’s the only difference. This is not about the value of the work itself, but the impact if your advice is negligent – it could have a huge impact on the school and its students, the neighbourhood, the developers etc. Its more than just a playing field, its part of a community. As soon as the word ‘planning’ is mentioned, everyone and their kid brother gets involved.

    1. Rob:

      Valid points Dan. Having looked at the list which upset PLC Ltd in respect of their PQQ submission, to be honest, I’m not sure why they couldn’t complete these – it probably took more resource, time and money to write to the Council to lodge a complaint. At least the Council didn’t state a minimum turnover threshold, which would have effectively exluded them from this (and all other competitions).

      More forward-thinking PQQs now state “if you haven’t got this process [which is really important which is why we have included it in the PQQ…], outline the steps you will take to implement it”.

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