Know the risk of getting outside help with procurement

Schools are busy, under-resourced places that often turn to outside agencies for help. But beware: there is a trade-off between getting the job done and the potential risks of doing so

Budget constraints and the scale of academy conversions has led to different buying responsibilities landing in the trays of teachers and school business managers.

A recent survey of 200 schools and academies by ESPO and the National Association of School Business Managers (NASBM) found buyers struggling to take effective procurement decisions because of time constraints. The result is that many pay outside consultants to get the job done.

External support is available through public and private sector routes. Public sector buying organisations (PSBOs), owned by either central or local government bodies, deliver procurement and supply chain services. They are not-for-profit, returning any operating surplus to the public purse.

Procurement consultancies are generally private sector organisations, providing public and private bodies with buying advice and support, and charge fees or percentage commission on their work.

Suppliers who feel wronged are more likely to pursue legal action

But what are the costs – and risks – of schools getting outside help?

NASBM members in the survey typically paid external advisers about £3,000, either up front or as a percentage of savings achieved; often it was appreciably more. But just as schools’ consultancy cost knowledge varies considerably, so could awareness of potential legal exposure.

Don’t forget – your school is a public body, spending public money, and bound by public procurement law. A consultant is an intermediary assisting the process.

Under public procurement regulations, a school (or an academy trust acting as a central purchaser) is the contracting body. If an external consultancy organises a procurement, even though it is acting in the school’s name, the school retains liability. Using a third party thus raises a number of potential risks:

– The consultancy providing the procurement “service” could deliver it badly – and the school would need to mitigate risk and know it was able to recover damages from the consultancy for underperformance.

– At the invitation to tender stage, the consultant will include product or service specifications and terms and conditions, but these could be inappropriate, or even illegal. They could bind the school to specifications/service levels/costs not in its best interests.

– As the “contracting body”, making an agreement with the successful bidder (supplier), the school is bound by those specifications or terms and conditions. Hence, before it decides to go to market, the school must satisfy itself that the procurement specification and the terms and conditions, are correct, fair, and promotes its interests.

– Should a supplier challenge over an inappropriate procurement process, the contracting body (the school) is liable to respond to the challenge (even if the consultant “physically” does so). If the challenge is deemed valid, the school is liable for abandoning the procurement. But if the school decides to continue the flawed procurement process, it is potentially liable to pay damages to the “aggrieved” supplier. Where the supplier’s challenge is incorrect, the school is still likely to incur legal costs.

– There is potential risk after the successful bidder delivers goods or services. If the supplier’s contract is poorly performed – with late or substandard goods or services – the school is bound by its supply contract terms and conditions drawn up by the external consultant for redress. If the consultant drew up inappropriate or ineffective ones, the school may be left without a remedy.

It is said that some private sector suppliers are more amenable to bidding for consultant-led tenders, because they perceive a lower likelihood of being pursued for remedies if problems arise. But when things go wrong, schools can be left to pick up the pieces.

There are few specific examples in the public domain of procurement consultants being taken through the court system, but it is known that suppliers who feel wronged are more likely to pursue legal action in today’s litigious environment.

All is not doom and gloom, however. Schools purchasing through a PSBO supply framework are protected from procurement challenge risks. With a supply chain of approved suppliers, the PSBO will support the school’s buyer by proactively creating fair terms and conditions, managing the supply chain and monitoring supplier performance.

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