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Commissioning and Procurement Case Study

How Buyers go to Market

Central Government Departments (Authority) Procurement of Occupational
Health Services.
This case study sets out the process by which the National Procurement for Physiotherapy and
Chiropractor Services was undertaken and sets out the considerations a buyer must look at when tendering
for a service.

Background
A large central government department had been contracting the exclusive provision of the national Physiotherapy and
Chiropractor services with one multi-national private sector organisation (economic operator). The services were
required to cover a 30,000 strong workforce spread across England and Wales. Management of the Contract had
transferred from one procurement team to another and the contract itself was due to expire imminently.

Procurement legislation
The types of services being procured in this exercise are classed as Part B Services* and as such are not subject to the full
EU Directives; however value for money and open and fair competition are still principles that require adherence.
Ideally when one contract expires, another subsequent contract is commenced, following a competitive tendering process.
A competition of this magnitude would generally take a minimum of 6 months to undertake but in this instance the
competitive tendering process was not commenced in sufficient prior time. The current contract was extended for a
further 6 months to ensure that commercial coverage remained in placed throughout the tendering process.
Herein lies risk for the Authority.There is the risk of challenge to the contract extension, as business is being awarded to an
organisation for a period longer than initially advertised, without other providers having the opportunity to bid for the
work.This can be very frustrating for would-be providers when you are looking to get a cut of that business!
Good reasons should exist for extending contracts, as contracting authorities are legally obliged to go to competition at
the earliest opportunity once they become aware of a requirement.
The Authorities basis for the decision to extend was that in this instance there could have been significant operational risk
in letting the contract lapse and the Authority were only extending for the anticipated duration of the competitive process.
Another perspective here may be that the competitive process should have commenced earlier, as no justification has
been demonstrated for the delay, leading to the conclusion that the extension is anti-competitive.
* Those services included in an Appendix, or "Part B" to the Directive 2004/18/EC and the Public Contracts Regulations 2006. In procuring these
services, which include health education and social care, purchasers are not required to comply with all of the regulatory requirements. (NCVO)

The marketplace
The supply market was relatively unknown to the procurement team who had taken on this procurement and it was
assumed that a few major economic operators dominated the supply market. With this in mind the Open Tender process
was utilised.This is often used when only a few supplier responses are anticipated.
In reality there was a vibrant marketplace for these types of services, with a large number of SME’s involved in the supply
chain process as sub contractors to the major economic operators.

A joint initiative to strengthen support services for the third sector

The ACEVO Commissioning Support Service

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The Procurement Process

In order to comply with directions from Central Government [that good practice procurement gives opportunities to
SME’s,] the requirement was placed into smaller geographic lots with a view to giving opportunities to any SME’s that may
be able to deliver services on that smaller allocation of work.
Again to ensure good practice, whilst not a mandatory requirement; the opportunity was posted in a contract notice in
the Official Journal of the European Union (OJEU).
The response to the advertisement was staggering; news of the contract opportunity had reached membership
organisations who in turn communicated this to member lists of small businesses across the county.
The Tendering procedure was an Open process. This means there is no opportunity to shortlist from basic capability or
capacity data so each and every tender required full and equal evaluation, of which there were well in excess of 100.This
incurred significant cost and further delays in concluding the new contract.
The current incumbent was re-appointed.

Lessons Learnt
• Whilst the procurement process was compliant, it was not driven by the market. The procurement team had not
understood that there were a large number of suppliers that would respond and so made the wrong choice of
procedure. It is sound supply market analysis that should drive the choice of procedure.
• A compliant process does not always make a good buy, even if the intention to be inclusive, open and transparent is
genuine.
• There were real market development and consortia opportunities available in the disaggregating of this contract, but
they were missed. Lots of groups spent a lot of unnecessary time and resource completing documents.

ACEVO Commissioning Support Helpline

Contact us for advice and support on procurement and commissioning issues:
E: commissioning.support@acevo.org.uk
T: 0207 280 4937
www.acevo.org.uk/commissioning

The ACEVO Commissioning Support Service