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LGA LAW PAGE: COMMERCIAL SWAY

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A slight tweak to Part II of the Local Government Act 1988 has significant implications for best value, according t...
A slight tweak to Part II of the Local Government Act 1988 has significant implications for best value, according to Nicholas Dobson, partner, head of government law at Pinsent & Curtis.

Part II of the Local Government Act 1988 which brought the world non-commercial matters is to be ammended.

In the 1980s when Ken Livingstone was 'red' rather than 'cuddly', there was a stand-off across the River Thames between the Greater London Council and Margaret Thatcher at No 10.

At the time many authorities were perceived to be using procurement muscle to achieve what the government considered were extraneous social objectives. As the secretary of state for the environment put it on the second reading of the then 1988

Local Government Bill: 'Political discrimination in the award of contracts is an offensive and growing practice; increasing numbers of councils subjugate the interests of their ratepayers and businessmen to futile political gesturing'. So despite controversy and opposition Part II was enacted.

Section 17 of the 1988 Act requires local and certain other public authorities to conduct tender and contract processes without reference to specified non-commercial matters.

These matters include 'the terms and conditions of employment by contractors of their workers or the composition of the arrangements for the promotion, transfer or training of or the other opportunities afforded to, their workforces' (s17(5)(a)) and 'the conduct of contractors or workers in industrial disputes between them or any involvement of the business activities of contractors in industrial disputes between other persons' (s17(5)(d)).

These matters could often raise genuine commercial considerations on tender processes. In addition s17(5)(a) could prevent agreements between authorities and prospective contractors for the transfer of employees as if TUPE applied. And this would impede the general presumption of TUPE applying in the January cabinet office publication Staff transfers in the public sector - statement of practice.

In the consultation paper on draft guidance, Best value and procurement handling of workforce matters in contracting, issued on 11 April the government proposes s17(5)(a) and (d) 'cease to be defined as non-commercial matters for the purposes of Part II of the Local Government Act 1988, to the extent that they are relevant to the achievement of best value, and in circumstances where they are relevant for the purposes of a TUPE transfer'.

But there is no intention to 'relax the restriction on those matters that can be said to be truly non-commercial. Workforce matters not directly relevant to the delivery of the service in question should not be taken into account. Also the other non-commercial matters specified at s17 of the 1988 Act, which do not relate to workforce matters, will continue to be excluded from the contractual process.'

The removal of these two small, significant parts of Part II proposed by the draft guidance should ease some of the pains of procurement and facilitate best value.

Comments were sought by the end of May; in the light of these the government intends to issue the requisite statutory order and finalised guidance 'as soon as possible thereafter'. And so in a puff of legislative smoke, matters that one moment were non-commercial and beyond the pale should reappear before your eyes as respectable and helpful commercial considerations.

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