Under most construction contracts, the contractor takes on the ground conditions risk. However, a recent case has demonstrated that the risk can fall on the employer.
This is happening in local government and central government, especially the National Health Service. Because “public service mutuals” actually constitute a wide variety of legal forms, the extent to which mutuality and employee leadership actually are the modus operandi of these organisations will inevitably vary.
One development that many in the cooperative movement should welcome is the requirement in England, on any organisation that has to comply with the EU procurement regime, to consider the economic, social and environmental well-being of the area that they serve and how improvements in the well-being should be built into the procurement process for services. This requirement to think about the place that they are responsible for holds the key to sustainability being embedded in contracted-for services: for some public bodies, especially Government departments, their responsibility for people and place is what they have failed to grasp in delivering real value for money. Yes, this is the true meaning of the Public Services (Social Value) Act 2012.
Cooperatives, social enterprises and the voluntary sector have often regarded the application of competition rules as something best to avoid when seeking contracts to deliver public services. Actually, it depends.
Under the current EU procurement rules, for some services such as care, health and sport (categorised as “Part B” services) it has been possible for contracts to be awarded without a competitive tender where there is thought to be a lack of “cross-border” market.
New EU rules coming in some time (we think) in 2014 pose new challenges and opportunities.
New challenges include the sweeping away of the Part B categorisation so that for many services currently under that heading they will have to be tendered competitively if the contract is of a value above 750,000 euro. But competition, if done well, really can be healthy and does not need to exclude the likes of cooperatives. The skill is in setting up competitions that really do allow the governance of a mutual to be part of the service solution.
There are also new opportunities because social characteristics in the requirements of a contracting authority will have greater explicit prominence. In addition there will be the scope to have tendering exercises for a very limited list of public services limited to competition between, effectively, social enterprises (although the definition does warrant examination!), which will exclude the private sector from such services.
What this means is that any person contemplating setting up a public service mutual must expect to participate in some sort of competitive tendering exercise, certainly from 2015 onwards. The only way that mutuals can flourish in public services is for the Cooperative movement (with others of like mind) to give its full backing and resources to creating fit-for-competition public service mutuals that can compete effectively with a corporate sector that is struggling to recover its own credibility. This would be a good news story to build over the next decade.
Mark Cook is a partner at Anthony Collins Solicitors. Mark has over 20 years’ experience of advising on relationships between the public, private and not for profit sectors. He is a leading expert in sustainable procurement and uses his specialist knowledge to position social value in the heart of public services.
For more information
Contact Mark Cook on email@example.com or 0121 212 7472.
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