9. Stage 2 of the Procurement Process - Plan
9.1 This chapter focuses on the planning stage of a procurement exercise. It is essential that a public body develops a comprehensive procurement plan (that is, an individual plan which lays out the direction of how a particular procurement exercise should be organised in order to align with procurement policy) and build in adequate time for the completion of the exercise. In particular, a public body should allow for an appropriate lead-in period prior to commencement of the contract.
Procurement procedures described in the Public Contracts (Scotland) Regulations 2015
9.2 For many care and support services contracts, a public body may use the procurement procedures, tools and techniques of its choosing. It will likely want to follow a procurement procedure, as a matter of best practice, that is proportionate to the value of the contract and to take account of some fundamental considerations (for example, the TFEU fundamental principles where relevant and fair work practices).
9.3 When doing so, a public body may choose to adapt or streamline one of the procurement procedures described in the Public Contracts (Scotland) Regulations 2015 (see paragraphs below). If it decides to do so, it is not obliged to follow the detailed procedural requirements set out in those Regulations. A public body should therefore not refer to the Regulations in the tender documentation issued to participants, as this may create an expectation that the detailed procedural requirements will be followed. In all cases, a public body should ensure that the procurement process is described accurately and clearly and then adhered to.
Developing a procurement plan
9.4 At the planning stage, a public body must decide how the service will be put in place and develop the service specification. A public body should develop a procurement plan which describes:
- the introduction and description of the purchase (considering the purpose, critical nature of it and any sensitivities etc.);
- whether it is advertising the requirement and awarding the contract or framework agreement by competition, extending an existing contract or making a direct award without competition;
- the reasons for that decision;
- the procurement process (for example, open procedure) that will be followed and relevant timescales;
- how it can be demonstrated that the procurement exercise will be fair, transparent and non-discriminatory, i.e. compliant with procurement legislation;
- the roles and responsibilities of staff involved in the procurement process;
- the applicable governance arrangements and approval process;
- how and when it will communicate its intentions to people who use the service and also their carers and proposals for their involvement in the procurement process;
- how it proposes to handle fair work practices;
- how the service specification will be developed with the involvement of people who use the services and also their carers and service providers in its development (including any opportunities to contribute to economic, social and environmental wellbeing and to reduce inequality);
- the type and duration of the proposed contract or framework agreement, available budget and estimated contract value;
- research of the supplier market to identify current suppliers providing the same or similar service and any spend analysis available;
- risks identified that may impact on the progress of the procurement;
- anticipated benefits and outcomes;
- what criteria will be used to select service providers and award the contract or framework agreement (including whether award criteria or performance indicators should include equality considerations);
- what transitional arrangements will apply if an existing service transfers to a different service provider;
- how the contract or framework agreement will be managed;
- how the relationship between the public body and service provider(s) will be managed;
- arrangements for reviewing the service;
- what action it proposes to take at the end of the contract term; and
- how the procurement exercise will be evaluated.
9.5 Examples of individual procurement plans can be found in the Procurement Journey.
Advertising the requirement and awarding a contract or framework agreement by competition
9.6 A public body should decide, on a case-by-case basis, whether or not to advertise the requirement and award a contract or framework agreement by competition. A number of factors will influence this decision, as explained below and illustrated in the flowchart at Annex 6.
- application of the procurement legislation, procurement policy and risk of legal challenge;
- application of local financial regulations and standing orders; and
- benefits and risks to people who use services and service delivery.
Identifying care and support services
Schedule 3 of The Public Contracts (Scotland) Regulations 2015 confirms those services that are health or social care and which includes care and support services.
Where a contract includes a mix of services, the categorisation of the contract into a care and support contract will likely depend on whether the majority of the cost of the contract is for those services. Where the cost is made up of more than 50% of those services, then the contract will be a care and support services contract and vice versa. For contracts valued between £50,000 and €750,000 (i.e. contracts below the EU-regulated contract threshold) where the cost of the services is evenly split (i.e. 50-50), the contract is deemed to be a care and support services contract.
Application of the procurement rules to a contract or framework agreement for care and support services
9.7 At the analysis stage, a public body should consider the procurement rules that apply at different threshold levels as described at chapter 8. That chapter makes clear that contracts or framework agreements with a value of £50,000 or more but less than €750,000, a public body should decide, on a case-by-case basis, whether or not to seek offers in relation to the proposed contract and in accordance with section 12 of the Act.
9.8 Such decisions may also take into account the following considerations:
- whether the public body can demonstrate that the contract is of no interest to service providers located in other Member States;
- whether the total sum to be paid under the contract is so low that service providers located in other Member States would not be interested in the contract; and
- whether the service is of such a specialised nature that no cross-border market of suitable service providers exists, for example where market research indicates that there is only one potential service provider.
See flowchart at Annex 6.
9.9 A public body should also consider if national or local policy requires them to advertise and compete a contract. Advertising and competition may not be required, for example, where:
- Advertising the contract at the current time would result in the loss of a linked service, for example, where the separate competitive tendering of a housing related support service would result in the withdrawal of the accommodation currently provided for people who use services and those units of accommodation could not be replaced.
- It is possible to extend an existing contract under the scope and terms of that contract.
Risk of legal challenge for breach of the procurement rules
9.10 A public body should assess the risk of legal challenge if it decides not to advertise the requirement and proceeds to award the contract or framework agreement without competition. A legal challenge may have serious implications for procurement activity and future service delivery. For example, for a 'light-touch' contract with a value of at least €750,000, if a court grants an ineffectiveness order together with damages, legal costs and/or compensation, this may divert monies from service provision and may cause significant disruption and uncertainty to people who use services. Also, standstill rules apply to care and support contracts of that value. The relevant legislation is part 3 of the Public Contracts (Scotland) Regulations 2015.
Application of legal remedies to contracts and framework agreements services covered under the 'light-touch' regime
9.11 The award of a contract or framework agreement for one of these services may be challenged on the basis that a public body has failed to ensure publication of the contract opportunity on the OJEU and follow a procedure sufficient to ensure observance of the TFEU fundamental principles. In relation to a contract or framework agreement worth at least €750,000 such a challenge would be pursued as a commercial action.
Community benefit requirements
9.12 The use of community benefit requirements provides a method of including economic, social and environmental matters in contracts that do not conventionally have these requirements as defined or measured outcomes. They provide a means by which new and innovative ideas concerning social issues can be inserted into contract specifications while ensuring value for money in their delivery.
9.13 Section 25 of the Act requires a public body to consider community benefit requirements for all contracts valued at £4 million or more. This value will be subject to review. Chapter 4 of the Guidance under the Procurement Reform (Scotland) Act 2014 provides statutory guidance on community benefits, which includes:
- defining the appropriate community benefit requirements through stakeholder engagement;
- what to say in the contract notice and contract award notice;
- circumstances where community benefit requirements would not be relevant or proportionate; and
- reporting of expected and achieved benefits.
9.14 A public body should consider community benefit requirements even if these contracts are not in excess of £4 million or where these are not covered by the Act.
Application of local financial regulations and standing orders
9.15 In deciding whether to advertise the requirement and award the contract or framework agreement by competition, a public body must ensure that it complies with local financial arrangements and standing orders.
9.16 These will typically refer to the requirements of the Public Contracts (Scotland) Regulations 2015 in respect of contracts worth at least €750,000. These should also establish local requirements for advertising contracts of different values. A public body should ensure that its local financial arrangements and standing orders comply with this guidance and legal requirements.
Benefits and risks to people who use services and service delivery
9.17 As described in chapter 6, a public body should analyse the benefits and risks to people who use services, and also to service delivery, of advertising the requirement and awarding the contract or framework agreement by competition. For existing services, this will require consideration, through consultation with people who use services and their carers, of the impact that any change in service provision or provider will have on:
- people who use services and their carers;
- continuity of care;
- the quality of the service and the outcomes delivered;
- the cost of the service;
- the market; and
- the workforce.
9.18 This analysis may suggest that, where a public body is satisfied with the quality of a service and that best value is being achieved, the existing service provider should continue to deliver the service. If a public body's contract with the existing service provider includes an extension option that is within scope, the contract may be extended for the specified period. In the absence of an extension option, any decision by a public body to renew (or 'roll forward') its contract with the existing service provider must be compliant with public procurement legislation. Legal advice should always be sought in respect of any procurement decisions.
9.19 Alternatively, the analysis may suggest that the requirement should not be advertised at the current time and that a staged approach should instead be adopted. If a public body decides to adopt a different timetable for advertising the requirement, it should describe this in relevant procurement documents and set out how it intends to move towards competition in the future.
Contract renewal or direct award without competition
9.20 Where a public body decides to renew an existing contract, or to award a new contract without competition, it should ensure that:
- its decision is based on sound and objective business reasons and that this is fully documented;
- its decision not to award the contract or framework agreement by competition is permissible (see threshold diagram at paragraph 8.6) and compliant with the public procurement Regulations and the TFEU fundamental principles;
- its decision is consistent with local financial regulations and standing orders and local policy and procedures for the procurement for care and support services;
- it is able to demonstrate that best value has been achieved; and
- the decision is subject to regular review. For example, a decision not to advertise and tender a contract because of its low value will need to be reviewed should the total sum to be paid under that contract increase.
The renewal of an existing contract is likely to involve negotiation between a public body and service provider about aspects of service delivery, the outcomes required and the costs.
9.21 The competitive procedures which a public body may choose to follow, broadly, where it has chosen to compete a care and support services contract are:
- open procedure;
- restricted procedure; and
- competitive procedure with negotiation;
For further information on the procedures, please refer to the Public Contracts (Scotland) Regulations 2015 and guidance in the Procurement Journey.
9.22 A public body may seek a long-term (for example, over a period of 10 or 20 years) strategic partner or partners to redesign and achieve major changes in the delivery of a service and/or the use of resources. For example, it may decide to work with a service provider or providers to determine what could be provided across a range of services within the available resource, rather than tendering for particular services. In this situation, the choice of strategic partner(s) should be on the basis of a transparent and competitive process in accordance with the public procurement rules.
Public Social Partnerships (PSPs)
9.23 PSPs are strategic partnering arrangements, based on a co-planning approach, through which the public sector can work with third sector organisations to share responsibility for designing services based around service user needs.
9.24 A PSP typically comprises three stages:
- third sector organisations work with public sector purchasers to design a service;
- a consortium of third sector organisations, which may also involve the public sector, conduct a short-term pilot, helping to refine service delivery parameters and maximise community benefit; and
- if the service is deemed successful, commissioners then need to consider the most appropriate approach to sustaining the PSP. This could involve a competitive tendering process but other methods of securing service delivery should also be considered.
9.25 The Scottish Government published guidance on developing and running Public-Social Partnerships in July 2011.
Developing the service specification
9.26 The service specification is critical when procuring a care and support service contract as it provides detailed information to potential service providers about the public body's requirements. It describes what type of service a public body wishes to purchase in order to meet individuals' needs and the standards and outcomes that the service is required to deliver. The service specification will subsequently form part of the contract between the public body and service provider(s). A public body should ensure that service specifications are sufficiently flexible to take account of redesign and innovation, particularly where the contract will be for a longer duration. Any changes which are subsequently made to the contract may otherwise constitute material changes and may require the contract to be re-tendered.
9.27 Wherever possible, service specifications should be outcome-based. This encourages a public body to focus on the results it wants the service provider to achieve, instead of prescribing in detail how the service should be delivered. It gives the service provider greater flexibility to develop services (in consultation with people who use services) which meet individuals' needs, propose innovative solutions and direct resources.
Service specifications for certain social care services, for example home care services, can be very prescriptive about the tasks to be carried out by the service provider within the specified time. A public body should consider the extent to which task and time-based specifications will result in a service which achieves the desired outcomes for people who use services. Where task and time based specifications are deemed appropriate, these should be written in such a way as to ensure that the time allowed for the specified tasks is sufficient to provide a good quality of service, achieve the desired outcomes for people who use services and give a service provider flexibility to respond to immediate and changing needs.
9.28 Service specifications should make specific reference to the National Care Standards (which apply to registrable services) and the national health and wellbeing outcomes and integration indicators. Service specifications should also state the public body's expectations in relation to the personalisation of services.
9.29 In addition, a public body should ensure that service specifications:
- support the priorities contained in its procurement strategy;
- are realistic in specifying requirements and outcomes which can be delivered within the available budget;
- are developed in consultation with people who use services and service providers;
- consider all aspects of the service and highlight, for example, whether premises will be required;
- identify delivery requirements, including eligibility criteria and access to other services;
- incorporate, insofar as relevant and proportionate, equality and human rights standards;
- identify responsibilities and risks and determine who has responsibility for those risks; and
- incorporate key performance indicators and describe the mechanism for measuring performance and managing the contract.
9.30 A public body should ensure that people who use services are involved in defining their needs and the outcomes they require and that their views inform the development of the service specification. It should also be proactive in involving service providers in the development of the service specification, whilst ensuring that they do not gain a competitive advantage in the subsequent procurement process. Under regulation 42 of The Public Contracts (Scotland) Regulations 2015 (prior involvement of candidates or tenderers) public bodies must take appropriate measures to ensure that competition is not distorted by a tenderer where that tenderer has been involved in the preparation of the procurement. Caution must therefore be exercised to ensure that service providers which are involved in the development of the service specification do not have an unfair advantage in any tendering process.
A public body should not assume that an existing service specification will reflect future requirements. Specifications which are already in use should be reviewed and updated to ensure that these are fit for purpose.
Also, a public body must ensure that there is no conflict of interest which could distort competition or prevent the equal treatment of bidders. This may include where individuals have a direct, or indirect, financial, economic or other personal interest which might be perceived to compromise their impartiality and independence of the procurement process.
Determining the conditions for participation
9.31 A public body must determine at the planning stage what criteria it will use to select potential service providers and what criteria it will use to evaluate tenders. The mandatory exclusion grounds must be applied and a public body may also choose to apply discretionary exclusion grounds, selection criteria and award criteria. Where it is appropriate and proportionate to apply other selection and award criteria, these can enable a public body to select service providers which are capable of delivering the service and to eliminate those which are not capable of delivering that service. These criteria can help clarify the conditions for participation and help a public body to consider the degree to which potential providers will meet the specification for service delivery and provide best value. A public body should:
- where it is appropriate to do so, use set selection and award criteria which are relevant and can be objectively measured and are non-discriminatory;
- consider the involvement of people who use services and their carers in developing any criteria, preparing questions for use in interviews with potential service providers, and the nature and level of support they will require;
- develop an evaluation template which clearly states the selection and award criteria and the scores and any weightings that will be applied;
- disclose the selection and award criteria, and an indication of the scores and any weightings that will be applied, to potential service providers in the contract notice or contract documents;
- establish a process for selecting potential service providers and evaluating tenders and agree the timescales and resources required for each stage of the process; and
- establish whether specialist input, for example from legal or finance teams, will be required and at what stage of the process.
Distinguishing between selection and award criteria
9.32 Where a public body chooses to apply selection and award criteria, it should ensure that there is a clear distinction between them. This applies whether assessment of a service provider's suitability to deliver the service and assessment of the service provider's proposals for delivering the service are assessed in two separate stages (as in the restricted procedure) or at the same time (as in the open procedure). Further information on selection and award is available in the Procurement Journey.
Selection criteria: evidencing capability and experience
9.33 Where used, selection criteria may, for example, include:
- track record (relevant experience and expertise);
- provider capability/capacity;
- policies and procedures;
- awareness of National Care Standards (where applicable);
- non-subjective references, including from other public bodies;
- skilled and competent workforce (including registration requirements and staff training/learning);
- business probity; and
- financial viability.
9.34 A public body should have regard to relevant information held by the regulatory bodies in relation to registration, inspection, complaints and enforcement activity in order to inform the assessment of a service provider's track record, quality of provision and/or capability.
9.35 A public body may ask potential service providers to submit recent inspection reports relating to similar services which they deliver within the same geographic area and similar services provided in other geographic areas. A public body should consider asking for copies of previous inspection reports and outcomes of other regulatory activities, for example enforcement notices and complaint information and action plans. A public body should also take into account improvement action taken by service providers in response to inspection reports.
9.36 A public body should also ask potential service providers to submit a statement which summarises the quality grades of all of their registered services within the service category and geographic area. Account should be taken of the quality grading of these services. Where a public body considers that prior experience of service delivery within a registration category is essential, consideration should be given to how to apply quality grades in decision making. Caution should be exercised in using quality grades as a threshold, as the relevance of individual reports to the service in question is likely to vary.
9.37 It is important to note that some potential service providers may not have experience of delivering registered services in Scotland and may therefore be unable to submit inspection reports or details of quality grades. To allow for this, a public body should invite service providers to submit reports from other regulators or other evidence of their track record in delivering similar services. Where the Public Contracts (Scotland) Regulations 2015 or TFEU fundamental principles apply, a public body must not limit eligibility to Scottish- or UK-established service providers.
9.38 A public body could analyse the financial position of potential service providers and determine the level of risk that it would represent to the public body, having regard to the contract requirement and value.
9.39 Care should be taken to ensure that any selection criteria relating to financial viability are proportionate to the contract in question, do not unreasonably exclude SMEs or third sector service providers and genuinely reflect ability to perform the contract.
European Single Procurement Document (ESPD)
9.40 Mandatory exclusion grounds must be applied to care and support services, and a public body can also choose to apply the discretionary exclusion grounds, selection criteria and award criteria. A public body can choose to use the ESPD in respect of exclusion grounds and selection criteria, and it is a matter of best practice to do so.
Award criteria: evaluation of a service provider's tender
9.41 While not required, award criteria can enable a public body to assess a service provider's bid to deliver the service in question. They must be relevant and proportionate to the particular requirement and should therefore be determined on a case-by-case basis. Award criteria may, for example, include:
- understanding service requirements and implementation proposals;
- achieving outcomes for people who use services;
- staffing structures and how these have been calculated to meet the needs of the people that use services group;
- proposals for service improvement/development;
- proposals for monitoring and evaluating service delivery outcomes and user satisfaction; and
- whole life costs.
9.42 A public body should award a contract or framework agreement on the basis of the tender which represents best price quality ratio. In doing so, a public body should determine how it intends to evaluate quality and cost or price and whether, for example, it intends to apply a minimum pass mark to an individual technical question. A public body should consider inviting people who use services to contribute questions which can be put to potential service providers at interview. Any questions must be relevant to the contract outputs and outcomes and the contract award criteria established for the procurement process. These must also be objective and agreed and disclosed to service providers in advance. These should be evaluated, scored and be objective.
9.43 A public body should also determine the appropriate best price quality ratio for the particular procurement. For example, it may be appropriate for a tender for equipment to be conducted on the basis of 30% quality, 70% cost if the equipment meets manufacturing quality standards. However, when procuring care and support services, greater emphasis should be placed on quality rather than cost or price. In this instance, it might be appropriate, for example, to use a ratio of 70% quality, 30% cost.
9.44 Where a public body applies award criteria, a public body must make this available to potential service providers in advance as part of the requirement to publish in the contract notice the conditions for participation. It cannot score with reference to other factors or change the award criteria without communicating this to the tenderers and this may require a fresh tendering period. A public body should ensure that it clearly specifies the information it requires to allow a valid comparison of unit costs and to ensure that, for example, there is clarity about whether bids include the cost of potential staff transfers under the TUPE Regulations.
Use of e-auctions as part of the tender evaluation process
9.45 E-auctions are compatible with procurement law, subject to certain pre-conditions. The e-auction stage of the evaluation process allows tenderers to submit new prices/values throughout each phase of the auction. When the e-auction closes, the contract must be awarded on the basis of the result of the auction - no further evaluation or clarification is allowed.
9.46 Legislation does not preclude the use of an e-auction as part of the tender evaluation process for care and support services. However, its use is not appropriate in the context of social care procurement. This is because of the risk that an e-auction's focus on reducing costs will impact on the quality of care that can be delivered for the amount bid. E-auctions should not, in any circumstances, be used as part of the tender evaluation process for the procurement for care and support services.
Social issues in public procurement
9.47 It is possible to incorporate social issues in public procurement as award criteria provided that doing so offers a value for money outcome, complies with legal requirements and is directly related to the subject matter of the contract. It is important that social issues are considered at the planning stage and built into the procurement process. The Scottish Government has published guidance on this in SPPN 8/2012 - Equalities: Duty to consider award criteria and conditions in relation to public procurement.
Taking account of resources which service providers are able to bring to bear in delivering the service
9.48 Where the availability of resources, for example a building, has a bearing on a service provider's ability to perform the contract, it may be assessed as part of the evaluation of the quality of the service being offered.
9.49 A public body can consider whether or not it will accept variant bids, i.e. whether it will allow service providers to propose an alternative solution to that set out in the service specification. Where a public body chooses to allow variant bids, it must disclose this.
9.50 Variant bids can be useful because these allow service providers to suggest innovative ways of meeting a public body's requirements and delivering the outcomes in the specification. However, a public body should set out clear parameters within which such variants may be made, that is, which areas may be varied. All variant bids should be evaluated using the same criteria as the standard bids and compared on a like-for-like basis.
9.51 A public body should also consider whether to allow potential service providers to set out options in relation to different TUPE scenarios within its tenders. If so, it should provide clear directions to tenderers to ensure that bids can be compared on a like-for-like basis.
9.52 A public body may choose to indicate the available budget for delivering the service in question, specify the outcomes desired and invite providers to submit proposals for achieving the outcomes within the resources available. Stating an indicative budget ensures that service providers' tenders for delivering the service are affordable. This may be appropriate if, for example, a procurement exercise fails and the public body moves to negotiation with service providers. In other circumstances, stating an indicative budget may make it difficult for a public body to assess that the service represents value for money.
Establishing a timetable for the procurement process
9.53 To ensure that suppliers and service providers have sufficient time to respond to any advertisements published in the OJEU and on PCS, a public body should take into account the complexity of the tender and the resource implications for service providers and should consider allowing additional time, where appropriate.
9.54 Where a public body advertises a contract or framework agreement for care and support services below €750,000 it should ensure that any timescales are compliant with legislation and where relevant, are realistic and take into account the complexity of the tender and the resource implications for service providers. This is particularly important if there is an expectation that service providers will submit consortia bids to allow discussions between service providers to take place.
9.55 In determining the start date of the contract, a public body should take into account any process and timescales for registering a care service where this involves a new service or change in the registration of a service. In all cases, a public body should seek to observe the timescales it has set for decision making.
Determining the type and duration of the contract
9.56 A public body's policies and procedures for the procurement for care and support services should identify an appropriate range of contracting mechanisms and provide a rationale for selecting different mechanisms, based on best value, the need for service continuity and desired outcomes for individuals. Individual procurement plans (see diagram at paragraph 2.25) should describe the type and duration of the proposed contract or framework agreement.
9.57 A public body should determine the most appropriate contractual mechanism on a case-by-case basis and ensure that suitable contracts are in place with all providers delivering care and support services.
9.58 Contracts will typically comprise a number of documents:
- the general terms and conditions which set out the obligations of the public body and service provider; and
- schedules, including the service specification, which set out the specific details of the services to be provided and the arrangements for their provision.
9.59 Contracts for care and support services have traditionally required specific activities to be undertaken at specific times, with payment contingent upon inputs (resources) and outputs (service levels). The success of a contract has been determined by the extent to which the service provider has delivered the prescribed service. Contracts should be outcome-based. Outcome-based contracting is designed to shift the focus from activities to results. The success of a contract is determined by the extent to which the service provider can demonstrate progress towards achieving the specified outcomes. An outcome-based contract should include:
- the outcomes to be achieved - these must be realistic and take account of external factors which might impede progress;
- clear performance expectations and measures;
- key milestones which indicate progress and dates for achieving these; and
- monitoring arrangements which ensure performance is being achieved.
9.60 In addition, all contracts should be:
- clear, concise and written in plain English;
- complete and unambiguous - contracts should set out the obligations of the parties in a way that does not allow for differing interpretations of what is required;
- comprehensive and consistent - there should be no contradiction of requirements or approach (a public body should ensure that all the documents which comprise the contract support the achievement of the required outcomes);
- flexible - contract conditions should be adjusted to take account of provider requirements for example, frequency of payment to smaller providers to maintain cash flow (but care must be exercised if conditions are amended after a competition as this would have the effect of distorting that competition);
- detail shared risk - contracts should seek to reduce both the impact and the likelihood of risk within acceptable levels and to define what each party must do to make this possible; and
- contain appropriate equalities and human rights clauses.
9.61 Contracts should also make appropriate provision for dealing with poor performance.
Unlike framework agreements there are no explicit limits in public procurement law on the duration of a contract, although excessively long contracts may be open to challenge on the grounds that they are designed to distort markets/competition. Contract duration should be determined on a case-by-case basis, taking into account the public body's requirements and the needs of the people who use the services; contracts should be subject to a review of service delivery at appropriate intervals.
A public body may decide to award contracts of longer duration, where necessary, to ensure continuity of service for people who use the services. It is possible to frame contracts in a way which would allow the service provider to continue to provide a service to a person who uses the service for an extended period. For example, it may be appropriate to specify that the service provider should (subject to satisfactory performance) provide continuous support for that individual for as long as support is required.
9.62 Decisions about contract duration should also include consideration of the importance of having a skilled, engaged and stable workforce in social care. Frequent re-tendering may have adverse implications for staff morale and conditions of service and can lead to the loss of highly motivated staff. Local authorities may, where appropriate, take a three-year (or longer) approach to funding, offering service providers the necessary stability to retain and train their staff and to plan for service development. It is, however, recognised that short-term funding may be appropriate in certain circumstances in order to encourage innovation in service delivery and respond to the changing needs of local communities.
9.63 It is also possible to provide that a contract will (subject to satisfactory performance) be extended by a certain period of years. Any option to extend the contract must be made clear at the outset in the contract notice. A public body should consider whether the circumstances make it appropriate to award a contract of longer duration (rather than providing an extension option), thereby offering itself and service providers greater certainty.
9.64 It might be appropriate to include price adjustment clauses in service contracts of longer duration, for example over two years. Price adjustments clauses determine the parameters for adjusting price (upwards or downwards) during the term of the contract. The inclusion by a public body of 'no-fault' termination, or break, clauses and successor body clauses in contracts of longer duration can provide flexibility in the event of a change in the public body's requirements.
Clauses relating to transitional arrangements
A public body should include clauses which specify the arrangements that will apply in the event that a service is transferred to a different service provider, including lead-in, exit and handover clauses. For example, consideration should be given to identifying the requirements on the incumbent service provider to transfer information such as care plans to the new provider.
9.65 A public body should also include a clause requiring the incumbent service provider to provide information about staff, conditions and costs to potential service providers during a procurement exercise. This allows a potential service provider to assess the staffing and financial implications of TUPE transfers prior to submitting its tender.
Determining the transitional arrangements that will apply
A public body should determine the transitional arrangements that will apply when a new service is established or if an existing service transfers to a different service provider. As part of the planning process, it should address:
- the timescale and arrangements for the service transfer;
- how it will communicate the outcome of the procurement exercise and the transitional arrangements to people who use the services and their carers, service providers and relevant staff within their own organisation (including assessment and care management staff);
- what information will be provided to people who use the services and their carers about SDS, including direct payments and arrangements for dealing with applications; and
- additional support arrangements for people who use the services and their carers during the transition period.
9.66 A service provider also has a legal obligation to notify people who use services about care service cancellation.
9.67 A public body may have legal obligations under the TUPE Regulations where it is outsourcing a service or bringing a service back in-house, in which case it should seek legal advice on the application of the Regulations to the particular circumstances. In all cases, public bodies should consider the potential impact of staff transfers under the TUPE Regulations:
- on continuity of support to people who use services and their carers;
- on the cost of delivering the service; and
- on the affected workforce.
It should also consider what action they will need to take to facilitate the exchange of information between service providers or the transfer of staff should the TUPE Regulations apply.
Other issues for consideration at the planning stage
9.68 At the planning stage, a public body should also consider:
- how the contract will be managed;
- how the relationship between the public body and service provider(s) will be managed;
- arrangements for reviewing the service; and
- how the procurement process will be evaluated.
Some of these issues are considered in detail in the following chapters.