Sunday, 6 May 2012

Local jobs for local people?

A report in the Daily Post on Saturday - Meeting over Anglesey Council contracts row said "A COUNCIL mired in a row after an English firm was awarded the grass cutting contract for its schools could now see its executive study every tender before they are given out...."

...The motion resolved that the executive should look at every aspect of the tendering process in the future and consider “legitimate” means to help local firms tender."

Now I'm sure most of us would want our local council to help local businesses be competitive, grow and be successful. And the Council can help in many forms - assistance in applying for grants, business advice,starter units for new businesses etc...

But what they can't do is give an advantage or be perceived to give an advantage to local businesses in the tender process for public contracts. The Council spokesperson is right, the Council has to comply with European treaties and conventions.

In particular Article 101 of Treaty on the Functioning of the European Union (TFEU):

1. The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which:

...(e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

The Public Contracts Regulations 2006 incorporates this European legislation into British law.

Of course if there was legitimate means of giving an advantage to local businesses, don't you think some other Council would not have done so already?

But there is not.....and imagine the reaction if say an English Council awarded a contract to a local company even though a Welsh company tender price was lower.

And I agree with Cllr Peter Rogers who said to the Daily Post - "We need to make Anglesey companies competitive so they can bid for these contracts and also go to other areas and bid for work.

“We can't do this by stopping competition. We can't have councillors meddling in every contract.”

Returning to the report in the Daily Post and the "row after an English firm was awarded the grass cutting contract", let me finish with something I hope is quite obvious which is Article 18 of TFEU:

Within the scope of application of the Treaties, and without prejudice to any special provisions contained therein, any discrimination on grounds of nationality shall be prohibited.


Anonymous said...

The main problem with this issue is the belief that clumping it all together into one contract will get a better price. This is false economy.

Look at the figures involved in the contract:

"The authority has come under fire after it was revealed that a £1.2 million six year contract to cut grass at 49 primary schools, five secondary schools and 12 other sites on Anglesey has been awarded to Leicester based Glendale Managed Services."

How many grass cutting businesses in Anglesey would be in a position to contemplate going for such a large contract?

I know - one approach would be to say that small local firms could/should work together to go for the contract. But that is much easier said than done.

A much better approach would be for the council to cut it up into bitesize contracts - carve the contract up geographically to clusters of 5-6 schools each. Then I'm sure small local firms would have been much more intereted in tendering, as they would feel that it's within their capability.

This wouldn't show any local or national favouratism, and I'm quite sure that local businesses would be able to offer a better price than companies from hundreds of miles away, thus saving money for the council. Win-win.

Quite simple, really. Or am I missing something?

Iwan Rhys

Rhys Williams said...

Iwan - Quite simple maybe, but you are missing the fact that under The Public Contracts Regulations 2006 Part 8 Section 19 - A contracting authority shall not enter into separate contracts nor exercise a choice under a valuation method with the intention of avoiding the application of these Regulations to those contracts.

Maybe you are thinking about packaging numerous contracts i.e IT, security, cleaners, maintenance etc into one big contract.