Procurement and Strategic Alliances. Mary Mundy Sean Caldwell 22 March 2013

Transcription

1 Procurement and Strategic Alliances Mary Mundy Sean Caldwell 22 March 2013

2 Overview Procurement Update Strategic Alliances and Procurement Analysis Market Testing

3 AJ (Claimant) v Calderdale Borough Council (Defendant) & Calderdale Primary Care Trust (Interested party) (2012) Tender for supported living services Previously, service users had been involved in evaluation of bids Council changed that practice because it thought there may be unequal treatment because service users may apply other criteria Claimant sought Judicial Review Council was wrong in its interpretation of Regulation 4

4 William Clinton (T/A Oriel Training Services) V (1) Department for Employment and Learning (2) Department of Finance and Personnel (2012) Training and apprenticeships programmes Oriel s challenge was based on undisclosed award criteria and clarifications First Court focussed on fact that the procurement rules allow discretion Court said the contracting authority should have clarified with Oriel "Any objective observer would have viewed a request to the Plaintiff to supply the "missing" information as fair, modest and reasonable in all of the circumstances." Appeal to the Court of Appeal Majority held that to request the additional information would have amounted to a new bid

5 PPNs 9/12 - Taking account of bidders past performance 10/12 - Public Services (Social Value) Act /13 - Public Sector Equality Duty 2/13 - Financial risk issues raised by suppliers 3/13 - Promoting tax compliance and procurement

6 Health and Social Care Act 2012 What are the changes in relation to procurement? change in procuring entities CCP absorbed by Monitor section 75 Regulations imposing powers and duties on Monitor: recent developments

7 NHS (Procurement, Patient Choice and Competition) (No 2) Regulations 2013 Made under s75 Health and Social Care Act 2012 In force 1 April 2013 Requires CCGs and NHSCB when procuring health care services to act with a view to: Securing the needs of people using the services. Improving the quality of services. Improving efficiency in the provision of the services. Must consider integration, completion and choice. Must consider value for money. Must publish contract information: value, dates, selection process. Monitor can find a contract ineffective, vary an ITT or put in place measures.

8 New Directive: More flexibility? New regime in relation to social, health and educational services "competitive procedure with negotiation Innovation Framework Agreements more work up front! Reasons for cancelling a process Best value CVs award criteria Social and sustainability considerations

9 Driving efficiencies through your procurement processes Early market engagement use PINs, consult with internal and external stakeholders Review current contracts termination provisions/extension rights Join forces to improve buying power Access to other available framework agreements Streamline/simplify the processes Gain sharing incentivise your suppliers to increase savings

10 Strategic Alliances Background Pressures/drivers Scope Shared Services Outsourcing Joint Ventures Procurement Analysis

11 Background Last 2 years: HR Reconfiguration QIPP efficiencies Government policy The Integration agenda

12 Pressures/Drivers Cost savings / security Economies of scale Reduced investment costs Lower running costs Improved service Free up time/focus Risk share Access to funding

13 Recent Activity Merseyside/Capita HR Calderstone s subsidiary IT Outsourcing (eg PACS/RIS; EPR/PAS; integrated functionality; cloud) Pooled outsourcing Interserve LABV in health Bolton s ambulances

14 Power to Deal Acute Trust v Limited power to establish company Income generation SoS power conferred to do anything necessary or expedient for the purposes of or in connection with its functions Can delegate to mixed board Must work with Transactions Manual FT Wide set-up powers Cannot delegate to mixed board Must adhere to Compliance Code, REID, Transactions Manual, Prudential Borrowing Code Comply with any Licence conditions New governance structure

15 TUPE Application Restructuring Fragmentation Pensions latest guidance on closed directions

16 Outsourcing A basic service contract model but likely to be complex NHS Contract PSP

17 Outsourcing Potential cost savings Adopt new technology/methodologies to deliver better services But preferable in long term partnering arrangements to provide stable investment position for provider

18 Outsourcing: typical services HR ICT (standard contract problems) Finance Property/Estates Procurement (e.g. CSU at scale services) FM (including catering, linen, reception, domestic) Healthcare services (pathology and radiology (with asset funding), intermediate care, organisational management)

19 Outsourcing: challenges Capacity Duration Transferring an untreated problem Ability to generate savings Framework benefits Contract management

20 Outsourcing: the balance For Transfer risk to provider Procure best in breed Private sector expertise Difficult messages and decisions Outcome based specifications can deliver improved services Access to new sources of funding Introduce new technology Against Fixed costs less flexible than in-house Failure of contractor could be critical Passing ability to make savings to private sector Paying for contractor to take risk Loss of local jobs? Requires strong contract management

21 Outsourcing: procurement implications Value over 113,057? Part A or Part B services? Early market engagement Would competitive dialogue be appropriate?

22 Shared Services NHS bodies may collaborate with other NHS bodies to provide services (back office/mid office/front office) Hosted/shared structure/operational subsidiary Governance issues (particularly where one party is an FT)

23 Contractual Structure PARTIES TO CO-OPERATION AGREEMENT TRUST NO.1 FOUNDATION TRUST NO. 2 TRUST NO.3 CO-OPERATION AGREEMENT SERVICE LEVEL AGREEMENTS TRUST NO.1 FOUNDATION TRUST NO.2 PRINCIPLES OF SERVICE DELIVERY TRUST NO.3

24 Corporate Structure PARTIES TO SHAREHOLDERS OR MEMBERS AGREEMENT FOUNDATION TRUST NO.1 FOUNDATION TRUST NO.2 FOUNDATION TRUST NO.3 JOINT VENTURE VEHICLE e.g. LTD Co or LLP CONTRACT FOR SERVICES FOUNDATION TRUST NO.1 FOUNDATION TRUST NO.2 FOUNDATION TRUST NO.3

25 Basis of shared service Purpose? Contractual arrangements

26 Share Services: the balance For Retain control Services kept in public sector Attractive to staff Critical mass Procurement? (see later) No additional funding needed Against Limited savings Unclear accountability Limited scope to bid for other work?

27 Shared services: Procurement implications Is there a public contract? What is the value? Does Teckal apply? Who is doing what?

28 Joint Ventures Collaboration between economically independent entities with the aim of achieving a common objective Subject to the law relating to the legal structure adopted Can be contractual or corporate

29 Contractual JV A Joint Venture Agreement (JVA) between the NHS Body and PSP to work together whilst remaining independent entities. No separate legal entity is created. PCT Contract Trust PSP Joint Venture Agreement

30 Contract Issues Scope and duration Services Obligations and commitments Termination triggers and consequences Staffing Finance support Income sharing Governance Prime contracting

31 Contractual JV: balance For Simple set up Not permanent Retention of direct interest in assets Degree of control Access to partner s capital/resource/brand Staff preferable? Tax transparent Each party retains own liability/risks Against No limited liability Difficult to develop brand No valuable asset created Complex Difficult to attract new partners or investment Ownership of new IP No profit sharing (avoid partnership)

32 Partnership Easy to fall into by default Joint and several liability No formal contract needed Not recommended

33 Corporate JV Company limited by shares/guarantee Limited Liability Partnerships Community Interest Company Other

34 1. JVCo set up to provide services to a third party Customer Trust PSP JV Agreement JVCo

35 2. An extension of 1, JVCo sub-contracting its service obligations down to the partners Customer JV Agreement Trust PSP JVCo Trust PSP

36 3. JVCo providing services to the Trust Trust JV Agreement Trust PSP JVCo PSP JVCo Self Provision?

37 Share Company v LLP Company Registered at CH Memorandum, Articles of Association and JV Agreement Members subscribe for shares All profits accrued to JVCo and distributed by dividend payments Capital appreciation Limited Liability Asset ownership LLP Registered at CH Members Agreement Tax transparent Capital appreciation Limited Liability Asset ownership

38 CICs and Social Enterprise Models Right to request CIC asset lock Positioning and culture Range of other legal vehicles

39 Corporate JVs: Balance For Separate identity Limited Liability Flexible capital structures Ownership transferable Can accommodate late joiners Easier business disposal Can borrow directly Profit sharing Established structures for clear governance Against Potential set up cost Public information Companies House formalities Tax JVCo required to have separate management (best interests rule)

40 Some Further JV and Other Structure Considerations Process for choosing partner Choice of vehicle Scope Financial Governance Operational and staff issues Duration and exit Disputes Breach

41 JVs: Procurement implications What does the other party get out of being party to the JV? Is there a public contract for works, services or supplies? Consider value Consider whether JV will then become a contracting authority itself (see regulation 3 (1)(w)) (next slide) Potential state aid implications

42 Regulation 3(1)(w) 3(1) The following is also a contracting authority: (w) A corporation established, or a group of individuals appointed to act together, for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character, and (i) Financed wholly or mainly by another contracting authority; (ii) Subject to management supervision by another contracting authority; or (iii) More than half of the board of directors or members or which, or, in the case of a group of individuals, more than half of those individuals, are appointed by another contracting authority

43 Integration: The current health structures in Greater Manchester

44 Integrated Provision: a networked example

45 Integration issues Governance and contracting Patient consent and information governance IT connectivity The 2013 Regulations

46 Any Questions?

47 Sean Caldwell Partner Tel: Mobile: Mary Mundy Solicitor Tel: Mobile:

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