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  1. Government Computing
October 24, 2014

Use of VEAT notices to avoid contract competition grows

NHS is typical user of notices which allow only a ten-day standstill period for companies to challenge contract awards

Public sector market intelligence specialist Kable’s procurement training and consultancy practice has uncovered the growing adoption of procurement practices that discourage competition.

An investigation has shown that NHS buyers, for example, are increasingly using a form of public sector contract notice that only gives wronged companies ten days to mount a legal challenge to a contract award.

Voluntary Ex Ante Transparency (VEAT) notices are a form of notice which was first introduced in December 2009. They allow users to issue awards to companies who they believe are the only company selling something that they need to procure. VEAT notices, which note the award of a contract, will be typically reported in the Official Journal of the European Union (OJEU).

What is key is that once published, they give companies who feel they could have competed for the contract just a ten day ‘standstill period’ in which to mount a legal challenge. After that date, no later challenge can be made which would see the contract award being declared ineffective by the courts, and therefore rescinded or annulled.

Being on top of when VEAT notices are issued is likely to be beyond many companies’ resources, especially SMEs. And yet the expectation is that the number of such VEAT notices will increase.

The increase is largely because of the European Remedies Directive which was implemented in December 2009. Previously, under British Law, a contract once awarded, could not be declared ‘ineffective’ and be annulled by the courts. In effect, the legal remedy under contract law was not to cancel the contract and re-award the contract to the ‘dis-satisfied’ company, but to award damages.

But since December 2009, UK courts have instead been able to declare a contract ‘ineffective’ and cancelled in the event of a failure to comply with procurement legislation. Typically the time limit for challenging any tender outcome is six months from the contract award date, though this can be reduced to 30 days in some circumstances.

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By publishing a VEAT notice, a purchaser can reduce the risk of a legal challenge and contractual ineffectiveness.

Earlier this year, one Scottish NHS Board was forced to respond to a Freedom of Information Request over its use of a company to undertake outpatient consultations and inpatient and day case treatment across a range of specialties.

The NHS Board said it “was unable to identify any other contractors able to provide equivalent model at scale required therefore a tender evaluation exercise was not undertaken. This work has been covered by the publication of a Voluntary Ex Ante Transparency (VEAT) notice under the terms of public procurement regulations for Part B services.”

Although in this case, the procurement was for medical services, it is likely that future VEAT notices issued by NHS or other public sector bodies, will cover the provision of IT products and services.

Sixfold’s Andy Haigh, author of “Winning Public Sector Contracts” says, “It is possible that some organisations may be using the VEAT process to award contracts to their favoured suppliers and hoping other potential competitors will not notice. Then, even if they do find out, the buyer is hoping that the competitors will not have the resolve to mount a formal challenge.”

He added, “Of course, if there is only one supplier that could possibly supply, then the VEAT is a good idea; it protects us as taxpayers from some unnecessary procurement costs. However, when one arises in the IT space with such a plethora of suppliers, it could be that the VEAT notice is a red flag for something potentially odd going on?

“So, look out for VEAT notices. If you think you could do the job and you are within the 10 day standstill period, you need to push back on the procurement team. If you only make an informal challenge the procurement team is still very likely to reconsider the award process. However, you must have the political appetite within your business to make a bit of a fuss. As you might expect, we would encourage your senior management to support a protest if you have the slightest suspicion of anything untoward going on. After all, we are taxpayers too!”

Understanding the use of VEAT notices and knowing what steps to take to challenge them will be a key element of a forthcoming Kable one-day course which will detail how companies of all sizes, from large vendors to SMEs, can exploit procurement rules to gain a competitive advantage. With new EU procurement rules due to be implemented by 2016, the day will show how vendors can increase their chances of winning by not only knowing the rules, but also utilising them most effectively.

How to Win Crucial Public Sector Contracts is an advanced training day that deals with the written and unwritten rules affecting those who sell to national and local government. It addresses challenges faced by public sector sales executives and shows how the process can be exploited to help give bidders a significant competitive advantage.

Topics to be covered will include:

  • Gaining control by understanding the process. Achieving an edge by understanding the public sector client agenda and processes.
  • Compliance, and the role of qualification during the process. Understanding how to overcome potential non-compliancies.
  • Leveraging the evaluation process in your favour and using executive summaries to best advantage.
  • Knowing how to exploit the decision making processes to improve your ability to respond correctly.
  • Finding out what the competition is bidding by creative use of the Freedom of Information Act to gain competitive advantage.
  • Using politics to enhance your chances of winning and knowing what is really wanted in the response.
  • Making sure that the evaluators have no option but to award highest marks and identifying every point in the process that you can use to influence the agenda.
  • Increasing your win chances by finessing the question response process.
  • Recovering from finding out you are not winning, and learning how to challenge effectively and how to overcome the winner decision.

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