Susie Smith, Consultant, Bevan Brittan LLP, Kings Orchard, 1 Queen Street, Bristol, BS2 0HQ www.bevanbrittan.com

A short presentation on procuring public private partnerships in practice

University of Nottingham – 4 March 2016

Preparation for 4 March: Please read and make sure that you understand the case study facts below before you attend the talk on 4 March. There is no need to prepare answers to the "key issues and problems" as those will be picked up in the talk. Case study facts We act on behalf of two neighbouring local authorities, Barford Council and Lanchester Council. Recent reductions in central government funding mean that both councils must cut their expenditure by 15% over the next two years.

Both councils have looked at a range of cost cutting measures across all of their services. They have concluded that the use of more IT based solutions for a wide range of administrative services could result in significant cost reductions.

Council tax and debt collection services

In 2012, Barford Council ran an EU compliant public procurement process for the supply and operation of a new IT system to administer Barford Council’s council tax and debt collection service. The contract also covered the provision of a new telephone call centre to deal with all council tax and debt collection queries. The council awarded a 5 year contract (with an option to extend for a further 2 years) to a company called “IT4U”. The value of the contract is £1.2 million per year. The council is very pleased with the product and services which IT4U has provided.

Lanchester Council does not have an up-to-date IT system for council tax and debt collection. It has its own IT systems which were developed in-house by the council’s IT staff over a number of years. All council tax and debt collection queries and administration are handled by Lanchester Council staff. The current cost to Lanchester Council of delivering the council tax and debt collection service is £1.4 million per year.

The shared service PPP project

The two councils have decided to combine their requirements and create a “shared service” for council tax and debt collection. They think that private sector providers will be attracted by a long term, high value contract for the shared service. The proposed contract will cover:

• supply and operation of a council tax and debt collection IT system • provision and operation of a call centre for council tax and debt collection; and • provision of related support services

They also believe that providers may be interested in providing a wider range of products and services.

Both councils want ensure that the services provided by a private sector provider are high quality and there are ongoing opportunities to share in cost savings and profits. A public private partnership (“PPP”) is more likely to deliver these outcomes than a traditional outsourcing contract. The two councils have agreed to jointly procure a private sector partner for this shared service PPP project.

Susie Smith, Consultant, Bevan Brittan LLP, Kings Orchard, 1 Queen Street, Bristol, BS2 0HQ www.bevanbrittan.com

Key issues and problems Non-competitive routes

• Use of a current contract - can the Barford Council contract with IT4U be extended to cover Lanchester Council’s requirements?

• Can any other existing arrangements be used - such as a framework agreement? • Direct award of the contract, without competition, to a not-for-profit organisation

set up by employees of both councils Competitive route

• “Soft” market testing/discussions with the market - is this permissible?

• Which EU procedure is appropriate? • Competitive negotiated procedure • Competitive dialogue procedure • Innovation partnerships procedure

• Balancing certainty and flexibility in advertising

• The negotiation/competitive dialogue phase

• Maintaining equal treatment • Confidentiality • Transparency - evaluation

• What can be discussed or changed after bids are received?

• With all bidders • With the successful bidder

• Economic recession issues

• Abnormally low tenders • Changes in proposals • Changes to the bidder consortium

Susie Smith, Consultant, Bevan Brittan LLP, Kings Orchard, 1 Queen Street, Bristol, BS2 0HQ www.bevanbrittan.com

Typical process for PPP procurement using competitive dialogue

Extract from 4Ps publication: A Map of the PFI Process Using Competitive Dialogue