Congratulations, you’re now an academy, but has anyone told you that you’re also a ‘contracting authority’?!
This strange phrase refers to an organisation funded from the public purse, such as central government, local government and the NHS. And because academies receive virtually all their funding from the Education Funding Agency (‘EFA’) it applies to you too. This is very important, because as a contracting authority you need to think about the dreaded Public Contracts Regulations every time you place a significant order for goods, services or building works. In broad terms, these apply whenever the following thresholds are breached:
- for goods and most services - £172,514;
- for social and other specific services (including catering) - £625,050; and
- for building works - £4,322,012.
At first sight this seems OK; the thresholds are comparatively high. The problem comes, however, if the ‘aggregation’ principle applies. Aggregation means that when valuing some contracts it’s not just your immediate spend that needs to be checked - you have to tot up the value of all similar items purchased over strictly defined time-periods.
In the very worst case you may need to calculate the aggregate spend over four years!
Academies contracting with the local authority
You might think one easy solution is to continue buying everything from the local authority. Unfortunately that doesn’t work. Whilst you can continue a contract in existence before conversion, the Regulations apply as soon as the contract terminates or comes up for renewal. So staying with the Local Authority may be fine as an interim measure but it’s very unlikely to provide the foundation for a sustainable long-term procurement strategy.
It’s not just about complying with the law. Governors have strict legal duties under UK and European law, the terms of the Funding Agreement with EFA and the constantly changing requirements of the Academies Financial Handbook. However, it’s not just about compliance.
A well-thought out procurement strategy can help deliver very significant benefits for your academy, including the following:
- immediate cost savings that can be re-invested in delivering top-notch educational outcomes;
- more effective long-term relationships with key suppliers that provide much greater value for money;
- shorter supply chains and quicker delivery of goods and services;
- opportunities to pursue social value outcomes; and
- a powerful incentive for other schools and academies to consider joining you.
A well-thought out procurement strategy will also tick the box when it comes to Ofsted inspection. Conversely a failure to observe the law may, in the most catastrophic of circumstances, result in the issue of a Financial Notice to Improve and other punitive measures.