Has the MOD broken the law with single tender procurement?

We wrote recently about the MOD contract for £12M of consulting awarded without any advertising or competition (helping re-negotiate other contracts, somewhat ironically). Since then, we’ve taken a close look at the procurement regulations (here) that govern the snappily titled ‘Use of the negotiated procedure without prior publication of a contract notice”. This is the procedure MOD told me they had used in this case.

It is the EU mechanism by which you can let a contract without having to advertise it, moving straight to negotiation with one or multiple suppliers. As you might expect, the rules around using this are pretty stringent, as it does in essence cut across the basic EU Treaty principles of fairness, transparency...

There are around 10 justifications for using this procedure. They include commodity market purchases; cases where you already spent money with that supplier and this new contract is a small add-on to the original; where issues of compatibility with existing goods mean competition is inappropriate; and where there is only one supplier in the market.

The reason MOD gave me in their Freedom of Information response was ‘urgency’. This is covered in section 14 a (iv), which allows it: when (but only if it is strictly necessary) for reasons of extreme urgency brought about by events unforeseeable by, and not attributable to, the contracting authority, the time limits specified in ....(other procedures) .... cannot be met.

You can tell from the wording that the EU is not keen on people using this ‘urgency’ justification.  'Strictly necessary' and ‘unforeseeable’ are understandable and straightforward restrictions. The ‘not attributable to’ condition is interesting; it is there to stop organisations creating in effect their ‘own’ unforeseen event or crisis and using that to justify this route.

So, how do we think the MOD case fits with his? Not very well would be my view, although I’m not a lawyer, as I regularly point out. It would not seem likely that ‘needing to save some money from our suppliers’ is an unforeseen event; MOD has known for at least 2 years that this squeeze was coming.  And arguably the whole 'urgency' is attributable to MOD itself anyway.

And as we said last week, a 12 month programme of negotiations doesn’t feel like something that needs such urgency that all normal competition can be just ignored.  This get-out clause in the regulations is designed to meet the ‘tsunami’ situation, when clearly you wouldn’t expect the Government to go through a long process before ordering some tents or earth-movers. It is not designed to cover situations where a senior official says, “I can’t be bothered to go through a tedious process and I want to give a contract to my mates / this firm I’ve worked with before / these nice people who took me to Wimbledon”.

Not that I suggest this is the case in MOD, but these regulations are there to protect value, to promote open markets, and to make public sector procurement less vulnerable to corruption. They are there for good reasons, even if we sometimes think they are a pain. MOD could have run a competition from an existing framework in weeks, not months. Why didn’t they? I don’t know.

Have they broken the law? I’ll leave that for you to judge.

But it looks like it to me though.

And we've found out more about this contract - we'll be back with that later this week.


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Voices (7)

  1. bitter and twisted:

    So The MOD have potentially wasted up to £12m?.

    Thats a relative success for a defence project, isnt it?

    …meanwhile, we are spending £3b on an aircraft carrier that cant be used.

  2. Barry Henniker:

    I think Peter’s analysis and conclusion are absolutely sound. That is what happens when you have a doctor run the biggest department in Whitehall. Were I the mischievious sort I would be inclined to get my MP to pose a queation in the House to the Conservative party chairman and Secretary of State for the Cabinet Office, Mr Francis Maude, as to how this expenditure squares with the draconian cost cutting affecting virtually everyone else.

  3. David Atkinson:

    Pongs. *holds nose*

  4. Toni:

    Sounds strange indeed but there has been a new directive looking at the procurement of defense contract in the last couple of years. maybe some grounds there? I hope to feature some of the info from this directive in future posts.
    Look for Directive 2009/81 EC, community rules apply to specific contracts in the fields of security and defence (military equipment and security equipment with a sensitive angle to it). Could there be anything there?

    Otherwise they should stick to the general directives and Directive 2004/18 EC, community rules apply to contracts awarded in the field of defence for non-sensitive and non-military equipment. Also depends what the British adaptation of these texts have been…

  5. Final Furlong:

    A few points on the subject of authorisation:
    1) how did it actually get through the Perm Sec of the MOD – were they away on holiday, AWOL, hunting down Bin Laden etc?;
    2) which Minister (if applicable) signed it off – I thought that all/any procurements related to consultancy had to be signed off by a Minister, either in the MOD or Cabinet Office;
    3) who, specifically within Treasury (and/or Cabinet Office), counter-signed and/or authorised the £12m single-tender action for consultancy…

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