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Major procurement changes 'will be burdensome and costly'

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Councils are being asked to prepare for three “major changes” which will affect the way they procure goods and services.

Local government minister Kris Hopkins wrote to council leaders on 10 October telling them they would not be able to use pre-qualification questionnaires for “low-value contracts”, which fall below the European Union threshold – currently £173,000.

He also said that councils would have to advertise all procurement opportunities worth £25,000 and above through procurement website Contracts Finder.

Both announcements were made despite the fact that a Cabinet Office consultation on procurement was not due to close until 17 October.

The LGA expressed concern about the timing of Mr Hopkins’ announcements.

The LGA’s consultation response, shared with LGC, said: “The government appears to have decided to legislate on these recommendations without engaging properly on how to change ways of working through consultation, non-mandatory guidance or other means.”

In his letter Mr Hopkins said: “The changes are a great opportunity for local authorities such as yours to achieve increased quality and value for money in the procurement of goods and services from small businesses.”

The LGA said there was no evidence to suggest the use of pre-qualification questionnaires for smaller contracts had limited the number of contracts awarded to small and medium enterprises. It said local government awarded 47% of its spend to SMEs while central government awarded 12%, despite having abolished pre-qualification questionnaires.

“If councils are not able to use a two-stage process to deselect, they will then be required to evaluate full tenders from all bidders,” an LGA statement said.

“This will increase the cost and resource burden of evaluation for councils but more importantly will increase the burden on suppliers to bid. In addition to evaluating many more full tenders, councils will need to provide feedback to more bidders, placing a further burden on resources. These regulations run counter to the government’s aim of ensuring a ‘timely and efficient’ procurement process.”

The LGA said making councils advertise procurement opportunities through Contracts Finder would not make the procurement process faster, more transparent and less bureaucratic.

It said a centralised system would “undermine local government’s ability to take into account social value and stimulate local economic growth, and could actually disadvantage local SMEs”. It added it would also “undermine” investment in local and regional advertisement portals, while concern was expressed about further development costs to link up to Contracts Finder.

The LGA believed a centralised system would be likely to increase the number of submissions local authorities received and added: “We would like confirmation that council funding for increased burdens has been considered given the additional resources that will be needed in the preparation and evaluation stages of tenders should these reforms be implemented.”

Mr Hopkins’ letter also said legislation would be introduced early next year, which would require all contracting authorities to pay valid invoices within 30 days and publish annual statistics relating to invoices which were paid late with their first-tier suppliers.

Mr Hopkins said: “The legislation is due to come into force in early 2015 and this requires all of us across the public sector to make the changes needed to our systems and practices so that we are ready when the changes take effect.”

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