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Time to take tendering seriously

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Procurement iStock 000002542569XSmall 146x219Having first targeted reductions in their spend on law firms, local authorities have inexorably moved on to external counsel. John Binks examines the process and provides some tips for chambers.

The tendering by local authorities for the services of counsel is now common place. Competitions are however becoming more serious as authorities seek best value by allocating high volumes of work to relatively fewer chambers. Chambers not geared up to compete are finding themselves locked out of comparatively lucrative sources of work on a long term basis.

What has changed?

On both a local and national level purchasers of publicly funded services have for years been attracted to the idea of competition by tender, but have struggled to get the process right. Chambers have historically spent time and effort engaging in such processes, ‘winning’ and discovering that in reality the victory is rather hollow. Everyone else seemed to ‘win’ as well, and there was consequently no tangible difference in the volume of work coming in.

These outcomes stemmed from badly designed processes which failed to identify in reality who the best bidders were – so everyone got a contract. Chambers that have previously engaged in LSC tenders for high cost case work will doubtless recognise this scenario well. Recently however local authority competitions have been run on a far smarter basis, purchasers have identified that transparent effective scoring systems are crucial. Those running competitions are accordingly now in a position to allocate high volume work to far smaller numbers of chambers, confident that their decisions are robust and can stand up to challenge if needs be .

The Process

This is not a treatise on procurement law, but in summary relevant EU law differentiates between Part A and Part B services. Part B services are those which would in general only be supplied by those operating within the borders of the purchasing state. Domestic legal services are generally regarded Part B. Whilst the tendering process for Part A services is very clearly defined, it is less so in the case of Part B. Consequently public bodies purchasing legal services may not always follow exactly the same process, but they should apply the same general principles. We should accordingly expect that the process will be commenced by a published ‘notice’. The notice will normally invite those interested to register to complete a pre-qualification questionnaire ( PQQ), followed by the submission of a tender, which may in some cases may in turn be followed by a final interview/ presentation stage.

The Notice

It is self-evidently vital that you do not miss a notice of a tender you want to be involved in. Tenders for part A services have to be commenced by notice in a specific format published in the EU’s Official Journal. The requirements in part B cases are less specific. Local authorities will doubtless place them on their own websites, there are commercial sites that pool all local authority tender notices, unitedkingdom-tenders.co.uk is useful, and there are doubtless many others. The notice will outline the services being purchased, and probably the estimated sum total of the value of the lots. It may give details of the projected final number of chambers that will be granted contracts. Crucially it will give the date by which an expression of interest to take part should be lodged.

The PQQ

Purchasers do not have to go through the PQQ stage, they may go straight to tender, but henceforth most if not all local authorities will. The notice will explain how to register for a PQQ. The notice may also give an indication of how seriously completion of the PQQ should be taken. Whilst PQQs have previously been used (if at all) by local authorities to establish a minimum requirement for those passing to the tender stage, PQQs are now being used to set a far higher bar. The notice for a tender in train in the Midlands ( for work circa £18m over a period of four years ) indicated that no more than five bidders would get final contracts and that only 5-20 potential bidders would be allowed past the PQQ stage. In such circumstances a serious bidder would do well to invest time and effort into ensuring that the PQQ is completed as fully as possible. The PQQ should certainly not be treated as a formality.

The Invitation to Tender (ITT)

The degree of information required in the tender document will vary dependent upon how the PQQ was structured. In the Midlands example given above elements of the quality aspect of the bid and the capacity of chambers to deliver the services was scored at the PQQ stage. In such circumstances the tender itself may well just come down to price, dealt with in more detail below.

Guidance

Throughout the process the purchaser will be publishing guidance in various forms.

The purchaser will publish Information for Applicants (IFA) The IFA may have been published at the beginning of the process or may only come with the ITT. If the IFA doesn’t come before the ITT there will be separate guidance with the PQQ.

Almost inevitably there will be information missed from published guidance .Throughout the process potential bidders will therefore be contacting the purchaser direct with additional questions about the process. The purchaser should not answer such questions direct to a single bidder alone but should publish all questions and responses as FAQs to all parties in the process at any one stage.

Bidders must ensure that they are completely familiar with all guidance throughout the process and should ensure they keep up to date with published responses to FAQs. FAQs can significantly alter the rules of the process, including closing date. All guidance should be followed to the letter. In cases of uncertainty do not hesitate to request guidance from the purchaser.

Some Tips for Success in Completing PQQ and Tenders

Never Assume Knowledge

In any process there will be chambers that have a track record of excellent service and personal relationships with the purchaser going back over a number of years. There may be a temptation, when called upon to describe and evidence quality of service, to assume that the purchaser knows all about you. Never fall into that trap. Increasingly the conduct of tendering processes will be outsourced. The people scoring the PQQ/tenders may know nothing of your chambers, and possibly even little about the provision of legal services. Even if those marking bids do know you allowance of credit for issues not evidenced in the application would potentially make the outcome challengeable by unsuccessful bidders. Most purchasers are live to this risk. In an open competition purchasers cannot assist individual bidders to the inevitable detriment of others involved in the process.

Manage the process

Have someone in chambers whose key focus during the process is to make sure the bid is submitted on time and to the best standard you can get. That person needs to have the authority to be able to collate and marshal all the detail required. They need to understand the process and the rules. It is unlikely that a single member of chambers will have the time or opportunity to give the process the focus it will need, and a committee of members is likely to be a recipe for disaster. You need an appropriately experienced senior member of your chambers management team, or you need to bring someone in for the duration of the process. Members who want to be included in the bid must co-operate by providing all information as and when required. If a group of counsel are bidding for a lot, the purchaser is likely to score their evidence and experience of ability as a single factor.

Prepare

For chambers who wish to be involved in local authority work in particular tenders are here to stay. Larger chambers should plan to be involved in multiple tenders. Individual counsel should maintain CVs based on a common chambers format so that demonstration of the capacity of chambers as a whole to work in particular areas by production of a properly evidenced track record is a relatively straightforward matter. Policies on disaster recovery, health and safety and diversity should be kept up to date, with proof that they are in actual operation. You will need them.

Understand your Unit Costs

The most common description of the award criteria in any tender will be described in along the lines of "the most economically advantageous tender in terms of the criteria stated in the specifications". All things being equal it comes down to price. You need an understanding of the prices at which you can bid and what that means by way of associated profit. To be blunt, if barristers have nothing else to do anything may be better than nothing, but in most cases there are choices of work, without an understanding of unit cost it is difficult ( if not impossible) to understand the financial implications of such choices. It is certainly impossible to get a proper understanding of unit costs without an effective system of time recording. It is possible to make estimates, but as margins narrow estimates will not suffice. In order to understand unit cost you need to time record and accumulate data, and the best time to start is now. This data will enable you to pitch bids on a proper commercial basis, and to understand the outcomes at the point at which you devise the bid – not six months down the line when you discover you are committed to providing services at a loss.

Put Yourself in the Position of the Purchaser

It is common for purchasers to ask what value added services you can offer over and above the provision of actual advocacy. Basically they want something for nothing, and as local authority cuts bite they will have lots of nothing to go round. Offers of free training is a start, but litigation of any nature is a problem, and the purchaser wants to buy a solution. In general the more you are able to assume responsibility for providing the solution on the purchasers' behalf the more attractive your bid will be. Bear in mind however that no purchaser will be comfortable in handing over responsibility for case management unless you are offering proper quality controls. You need to put together a bid that gives the purchaser 100% confidence that you will deliver the services you say you will deliver as and when required and with complete consistency. The quality control and case management services the administrative element of your chambers can offer may for some authorities be as important as the delivery of the end legal services themselves.

Double Check Everything

Probably the most common single error in tenders for LSC Contracts was an omission to sign the application. In any tender the purchaser will retain to themselves the discretion to allow bidders to correct errors. These discretions are however normally used extremely sparingly, if at all. Allowing one party to correct or add to a bid almost inevitably prejudices other parties whose bids were stronger on first submission. Exercise of such discretion lays the purchaser open to challenge and consequent delay in implementation. The purchaser is buying a solution, not satellite litigation. Never approach a bid on an assumption that more information can be added at a later date. Assume errors or omissions will be fatal, and check it accordingly before submission.

In a recent exercise a large local authority in the north of England awarded virtually all its work to just two chambers. For those willing to invest time and effort in winning such contracts the rewards are clear.

John Binks is a member of the Bar Consultancy Network. He can be contacted on 07584 096681 or by This email address is being protected from spambots. You need JavaScript enabled to view it.