Commissioning for VCS
Commissioning is the entire process of consulting, identifying, planning, procurement, delivery and review of contracted services. On the face of it, the commissioning process is one where an authority that advertises the contract is inviting other organisations to do the work for them. It sounds simple enough, but there are many regulations and guidelines throughout the process.
Commissioning and procurement (buying) of commissioned contracts is governed by the Procurement Contracts Regulation (2006). This regulation stems from the EU Directive on the Co-ordination of Procurement Procedures 2004.
Although commissioning has been around for many years, it is new to the majority of VCS organisations who are choosing to explore this in response to the increasingly challenging economimic climate and as a means to delivering local services. Very often, central government and local authorities act as public contracting authorities and commission tenders to other providers, including private businesses and non-profit organisations. These commissioned tenders can be very demanding and complicated, worth millions of pounds or small and focused, worth several thousands of pounds.
A public contracting authority can be
- Central government
- Local authority
- Primary care trust
- Other public bodies governed by public law such as
- Fire authorities
- Prison services
- A group of procuring bodies, such as a local authority with its respective local primary care trust (Hounslow Council working with NHS Hounslow as a joint commissioning team for services in London Borough of Hounslow).
Types of Tenders
There are three types of public tenders, as commissioned by public contracting authorities.
Public Works – can include utilities and infrastructure. Ordinarily, these are huge tenders and private companies will bid for these.
Public Supply – can include supply of resources to a public body, such as IT equipment, frozen foods and so on.
Public Service – can include delivery of health care services, crime prevention initiatives and other government / local authority driven agendas.
For VCS organisations, you would largely be interested in Public Service tenders. There could be some occasions where VCS may be interested in Public Supply tenders, e.g. a community farming project could bid to supply their produce to a public authority. It is unlikely VCS organisations would want to bid for Public works tenders.
Financial thresholds are part of the tendering process and determine whether tenders are fully subject to current commissioning and procurement contracts regulations. Public service tenders are split into
Part A tenders, with an estimated contract value (net of VAT) equal to or in excess of approximately £140,000 threshold.
Part B tenders, with an estimated contract value (net of VAT) less than £140,000 threshold.
Public Works and Public Supply tenders have their own financial thresholds and are not looked at in much detail here as they do not concern VCS.
All commissioned public tenders with an estimated contract value (net VAT) equal to or in excess of their financial thresholds must be advertised on the EU’s Official Journal of the European Union (OJEU).
In short, Part A tenders are subject to full regulations and must be advertised on OJEU. Part B tenders are not subject to full regulations and are do not need to be advertised on OJEU, although OJEU needs to be officially notified of any Part B tenders. Part B tenders are usually for local service delivery and local VCS groups and organisations principally can deliver these.
Five Principles
All tenders are subject to the five principles, which stem from the EC Treaty, as detailed below. The five principles are also involved in Part B tender regulation.
Equal Treatment – the contracting authority has to apply its criteria for decision makings strictly and equally to all bidders. If it makes any exceptions in the bidding process, it would have to extend that exception to all bidders.
Non-discrimination – these are minimum levels of equal treatment and protection for everyone resident and working in Europe. They are in place irrespective of
- Racial / ethnic origin
- Religion and belief
- Disability
- Sexual Orientation
- Age
Mutual Recognition – This principle has little bearing on public service tenders. It is a system that recognises that a national standard in one country, e.g. 2 pin plug sockets, is valid across all EU member countries. This ensures no product / service can be banned for trading in other member states. Some exceptions are present, e.g. electrical equipment for use in explosive atmospheres.
Proportionality – this is well established in EU law and is considered to be a “rule of common sense”. The principle of Proportionality requires that any measures chosen, such as means specified for expected output delivery, should be both necessary and appropriate in achieving the overall aims / objectives of a tender. Contracting authorities may not impose conditions which are excessive and disproportionate for the organisations that wish to tender. Conditions should be achievable, deliverable, cost effective and timely.
An example can be an output of delivering yoga to 200 people. It may be proportional for a contracting authority to specify delivering this across a month (more realistic / achievable) and disproportional to specify delivering this across a week (less realistic / achievable).
Transparency – generally speaking, it is a means of holding officials accountable and limiting corruption. Having meetings, minutes of meetings, consultations, budgets, financial statements and so on for anyone to review helps develop a culture of transparency. The result is less opportunity for personnel in contracting authorities to abuse the system for their own interests. It should be noted that the entire commissioning cycle should be transparent, including that of the successful bidder in the tender process. Again, this would help to minimise corruption with organisations that are delivering services on behalf of a contracting authoritiy, as they will serve as an extension of the contracting authoritiy’s desired output delivery. This will help in identifying short-comings in the process, from the contracting authority down to the organisation with the contract.
Processes of Tendering
There are four processes for tendering. Each contracting authority uses different processes depending on the tender size, type, and location of delivery and they each have their pros and cons.
Open – any organisation can submit a tender response to an advert and those who meet criteria will be assessed.
Restricted – any organisation can express interest in a tender and are generally screened through a pre-qualification questionnaire. Only qualified organisations will be assessed.
Competitive Dialogue – Like Restricted, but allows for a dialogue phase from potential service providers with the commissioners on aspects of the contract.
Negotiated – under limited circumstances, the contracting authority may negotiate directly with potential service providers that have expressed interest and met the assessment criteria
Hounslow Council and NHS Hounslow largely use the Restricted method in the tendering process for public service delivery.
Click here for a diagram of a standard commissioning cycle.
For a more comprehensive introduction to commissioning, click here for the ACEVO factsheet.
