Compulsory Competitive Tendering (Hansard, 19 July 1994)

§ Mr. Baldry

Compulsory competitive tendering is being extended to six professional support services, in a phased programme—legal services, professional construc-tion and property services, IT, finance personnel, and corporate and administrative services. Detailed proposals for each service are being developed in close and productive consultations with local authority associations, the Audit Commission, the Account Commission for Scotland, the Chartered Institute of Public Finance Accountancy and the professional bodies.

Detailed consultation proposals for construction and property services CCT were issued by my Department on 22 February 1994. The Government have now considered the responses received from local authorities, the construction and property professional bodies and other interested parties.

We have concluded that the percentage subject to CCT should be 65 per cent., as suggested in the consultation proposals. I carefully considered comments that the competition figure should be lower, but I feel confident that the proposed figure—subject also to a minimum in-house provision of £450,000 to safeguard the position of the smallest authorities—will enable authorities to gain the benefits of competition across a wide range of their construction and property work, while ensuring that authorities can maintain the necessary in-house profession-al expertise. The minimum figure of £450,000 will be reviewed periodically to ensure that it continues to meet its purpose.

I also considered the alternative suggestion that these services should be sub-divided into a set of client-side functions, which would be excluded from CCT, and a set of functions of a consultancy nature, all or nearly all of which would be subject to competition. I note, however, that individual local authorities have different views on the types of work which they prefer to retain in-house and those which they prefer to put out to competition. We have sought to ensure that the CCT arrangements for professional services allow individual authorities flexibil-ity in the way in which they approach competition, and I believe that the simple percentage approach provides greater flexibility and is preferable.

We propose that the defined activity will cover construction and property services in relation to local authorities' construction and maintenance programmes and projects, and the management of local authority property—other than housing, which is separately covered by housing management CCT. It therefore does not include authorities' professional work in support of other activities such as regulatory and enforcement functions.

The Government propose that authorities will be able to count the following categories of professional and construction work towards meeting their CCT require-ment: work being carried out in house following a voluntary competitive exercise; work carried out for the locally managed schools; work in support of other local authority activity which itself has been exposed to C'CT; and construction and property work already contracted out. For a transitional period, authorities will also be able to count construction and property work related to housing management, where this service will become subject to CCT at a later date for the authority in question; and similarly count project work which the authority has in progress at the time when CCT comes into effect and which it is not sensible to tender midway through the project.

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Where individual members of staff spend less than 50 per cent. of their time on construction and property work, their time will not be included in the authority's aggregate of defined activity.

In the consultation proposals, we suggested two-stage implementation—initially 35 per cent. rising to 65 per cent. six months later. Responses indicated that this was not felt to be particularly useful. We therefore propose to move to one-stage implementation, but starting at the later date of April 1996 for the London boroughs and English metropolitan districts. This additional six months before commencement will give authorities good time to prepare specifications and carry out tendering.

For shire counties and districts, I have already announced that CCT will come into effect following the local government review and the determination of each authority's new structure, and I have now decided to allow an additional six months in the implementation timetable for both professional construction and property and legal services in all shire areas. We want new authorities to take a fresh and radical look at the way in which they organise and provide themselves with support services, and the additional six months will ensure that they have a full opportunity to do so. Separate timetables will apply in Scotland and Wales.

CCT requires the authorities to operate free and fair competition. My Department is issuing guidance to local authorities and others on the conduct of tendering for professional services. This guidance emphasises that authorities should give full weight to quality in defining their requirements for professional services, and should consider quality of bids fully alongside price, in selecting the best tender proposals.

My officials will be writing to local authorities with the text of the order which the Government will table shortly, and which will provide, subject to resolution of both Houses of Parliament, for professional construction and property services to become a defined activity for CC'T purposes.

Some 215 responses were received on the consultation proposals. I have placed a list of responses in the Library.