Business opportunities Q & A’s
Do you have a question on public procurement? If you don’t find the answer below click here to ask us!
What is public procurement?
In order to open up the market for businesses across the EU or parts of it, the EU has legislated that organisations who spend public money must follow strict rules when advertising and awarding contracts for services, supplies and works (such as construction and civil engineering) to ensure that contracts are awarded on an open, competitive non discriminatory basis. This is known as public procurement.
What is a contracting authority?
Any body spending public funds, such as such as local authorities, the police, the Highways Agency and the NHS is a “contracting authority” for the purpose of the procurement rules.
Which rules need to be followed?
If certain financial thresholds for the contracts available are exceeded (set out below) the EU rules must be followed.
These thresholds apply to contacts for works costing over £4million and services and supplies over £160,000 must be awarded in line with specified procedures that include
- the Open Process, where all interested parties can submit tenders
- the Restricted Process where only those invited by the contracting authority can apply
- the Competitive Negotiated Process, where the contracting authority negotiates the terms of the contract with one or two suppliers of choice (this is only available in limited circumstances)
- the Competitive Dialogue Procedure, only used for particularly complex contracts
If the contract values are under these thresholds, there are no specific rules, although contracting authorities usually follow “equivalent” procedures.
What sort of contracts might be affected?
Any procurement process can be caught by the rules, for purchase of hospital beds and medical equipment, to livery for public transport, to street management such as refuges collection or building works in a redevelopment area and even installation of a café in a public art gallery.
Where can I find out about tender opportunities?
Opportunities over the EU thresholds (set out above) must be advertised on the Tenders Electronic Daily website – http://ted.europa.eu/ for all interested parties throughout the EU (and beyond) to see.
Although there is no compulsory single website for opportunities under these thresholds to be advertised, interested parties can subscribe to the Supply2gov website, which advertise these sort of contracts (a free service).
The local press and trade publications often advertise opportunities under the EU thresholds where the contract value is of a lesser value.
Is there a specific place to find out about London 2012 tender opportunities?
Most of the business opportunities for the 2012 Games will be managed by The Olympic Delivery Authority and The London 2012 Organising Committee.
Businesses can register on the CompeteFor website to access these upcoming 2012 procurement opportunities.
If I win a contract advertised on the ‘CompeteFor’ website to provide goods or services for the 2012 Olympics can I use “Olympics” or the Olympic ring symbol on my marketing material or my website?
Not unless the contract permits this. The words “Olympic”, the Olympic motto and Olympic rings symbol have special protection and any use without a licence from the London Organising Committee of the Olympic Games and Paralympic Games Limited is likely to result in legal action being taken against you. The 2012 logo is also a registered trade mark that you can not use in the course of trade without permission from The London Organising Committee. The only exceptions are if you include the name of the organising Committee (LOCOG) in a list of at least 9 other clients; you include factual details of the contract in a tender document you submit to another organisation; or you include it your company’s annual report.
But there is some good news! You can talk about your success in a social or other informal contexts (though not in the context of marketing).
If I believe a contract award to be unfair, can it be challenged?
If a contracting authority has acted unreasonably at any stage of the procurement process (including drawing up of a shortlist, or the selection criteria applied), their decision can be challenged under a process known as “judicial review”. A recent decision (referred to as “Alcatel”) set out limited circumstances and a tight time table in which unsuccessful parties can challenge an award decision. Injunctions may be applied for to prevent or stay the contract award, although applicants must persuade the Court that it meets the various limbs of the test, including demonstrating loss.
All members of the public may make a request for information of the contracting authority under the Freedom of Information Act 2000. See our fact sheet for further information.
What business structures/ practises need to be in place to make a tender more successful?
Sometimes the tender documents specify the contracting authorities preferred trading structure, and so a partnership or sole trader may need to consider whether incorporation of all or part of the business is appropriate. In any event, you should consider whether the business which will be trading should be a limited company (limited either by guarantee or more commonly by shares) or whether trading as a sole trader or partnership is more suitable in the circumstances. Our tax team would be able to advise you on which structure is the most suitable from a taxation perspective.
Can a charity tender for these contract opportunities?
As long as the following criteria are met a charity is likely to be able to tender for contracts, and the charity may prove an attractive option for public authorities who are themselves run for public benefit.
- The individual charity has the power in its governing document or otherwise to enter into such an arrangement
- The rules in relation to charities trading are met (either the trading must fulfil the purpose of the charity or it must be to raise funds in a manner that does not present a substantial risk to the charity)
- The independence of the charity from the public authority is not jeopardised
If entering into the contract would present a commercial risk to the charity can it still tender?
Where the opportunity presents a substantial risk to the resources of the charity, the charity may use a limited liability trading subsidiary to enter into and carry out the contract. The advantages of using a subsidiary are that the trading would not have to fit within the charity’s objectives and that any profits could be sent tax free to the charity under the Gift Aid scheme.
