Tender writing and contract extensions

However, private companies want best value too, after all, in a private company, it is their profit margin that is being hit if they don’t seek best value and so the motivation is there to ensure that best price and value is obtained through a rigorous tender process.

The public sector have no such profit concerns but spending someone else’s money is always easier than your own, so strict guidelines and legislation is in place to ensure that the public sector seeks value for money and a host of other economic and social benefits from their procurement activities. We know as tender writers that even when the guidelines are followed some strange results occur but when they are not followed then chaos ensues.

Kent County Council hits the news this week for the large amount of money spent on purchasing outside of the tender process. £4.2 million over the last two year period, according to Kent Online. Its own code of practice dictates that it should not award contracts under £50k without going through a formal tender process, however, some of the contracts awarded were considerably larger and all without seeking best value or allowing other companies to have the chance to offer their best price and service. The explanation? Well, some of it was contract extensions for a variety of reasons, the rest put down to the belief that only one supplier was viable from the start.

It is unknown how widespread this practice is but it is unlikely that only one Local Authority can be found guilty of overriding their own rules for seeking good value for the taxpayer.
Contract extensions are now often written into contracts at the start, usually for one year or so. But how fair is this practice? Surely, without going back to the market, judgement on how well the incumbent is performing and how good value the service or product is arbitrary?

Local Authorities will argue that existing suppliers are performing well, that there is not enough time to re-tender and that no other supplier exists in the market place that can fulfil the contract as required. Whilst this is convenient for the contracting authority and the existing supplier, it is ultimately unfair on potential competitors and the tax payer. It reduces competition, potentially decreases value for money and worse, compounds the perception that the public sector acts in its own interests rather than that of the public. More needs to be done about allowing contract extensions to be awarded without some sort of public visibility – until that happens, neither the contracting authority nor the public will know if they really are getting best value – the foundation of good public procurement.