Details

20.Dec.2011

The European Commission has today unveiled its long-awaited proposals for a radical simplification and modernisation of EU procurement law.

The reforms, if adopted, would include enabling contracting authorities to make greater use of negotiation with tenderers to improve the quality of their offers.

Regional and local contracting authorities could also be allowed to replace the publication of individual contract notices with the publication of a general notice for their planned procurement for the next year.

Brussels set out as well its ideas for what it claimed would be a dramatic reduction in documentation requirements.

The Commission said this would be achieved in particular through the compulsory acceptance of self-declarations, “whereby a bidder declares on oath that he fulfils the criteria which are a pre-condition for tendering, e.g. has no conviction for corruption etc”.

Only the winning bidder would then be required to supply the documentary evidence to prove the facts declared in his self-declaration.

Contracting authorities would also be prohibited from requiring economic operators to re-submit documents which were previously submitted to them within the past four years in an earlier procedure and which were still valid.

Brussels claimed that these reforms alone would reduce the administrative burden on companies tendering for contracts by more than 80%.

Member states will meanwhile be expected to set up new national independent oversight bodies to be in charge of monitoring, implementation and control of public procurement.

These bodies will provide support to public authorities and businesses through structures or mechanisms offering legal and economic advice, guidance, training and assistance, the EC said. They would also be expected to cooperate and share best practice.

Brussels’ proposals also envisage a “specific and much simpler” regime for social, health and education services, on the basis that they generally have a limited cross-border dimension.

These areas will be subject to a higher threshold (eur500,000) above which member states will remain free to determine the procedural rules applicable, “while respecting the basic principles of transparency and equal treatment”.

The only obligations will consist in the publication of a contract notice and of a contract award notice, Brussels said. “In addition, member states would have to make sure that contracting authorities may take into account inter alia all quality and continuity criteria they consider necessary for the services in question. Member states may also eliminate the price as sole award criterion for such services.”

The EC said the standard rules – except for social services – would now apply to all services, including legal services.

Brussels argued that it was no longer justified to restrict the application of the normal procurement regime in these other areas, “given that the cross-border tradability of the services which were not covered by the full regime is not significantly lower than those of the others”.

Other significant proposals announced today include:

• A new directive on service concession contracts (for more information, see the bottom of this story)
• Measures on electronic procurement aiming at full electronic communication in public procurement within a period of two-year time after the implementation deadline of the adopted Directives. This should generate “significant savings”
• Shortening of deadlines
• The alleviation of publication requirements
• A new partnership procedure where a contracting authority can cooperate with a company – selected in a regular competitive tender procedure – to develop an innovative product, work or service that does not exist on the market
• Measures to facilitate cross-border procurement
• Improvements to the competitive dialogue procedure
• Specific definition of conflicts of interest, illicit conduct and the limits to when modifications of a contract during its execution are acceptable without new tender procedures
• Contracting authorities should not award a contract to the best bidder if the latter cannot provide the required documentation or if he has provided a false declaration “either on the absence of any privileged links with members of the contracting authority or on the absence of illicit conduct from his side”
• Abnormally low tenders should be investigated
• An established violation of EU obligations in the field of social and labour law or environmental law or violation of the international social and environmental law would lead to the rejection of the tender
• Contracting authorities would be able to specify critical tasks which must be executed by the principal tenderer only and may not be subcontracted
• Changes to the regime applicable to the utilities sector. These include clarification of the notion of special and exclusive rights.

Michel Barnier, European Commissioner for the Internal Market and Services, described the reforms as “necessary, ambitious and realistic”.

He said he wanted the directives to be simpler, more effective and easier for those involved in public procurement.

The Commission said the competitive procedure with negotiation would “simplify public procurement and make it more flexible for more complex contracts”.

The reform would enable contracting authorities to purchase works and services better adapted to their needs and budgetary constraints, it added.

But Brussels admitted that it was conscious of the risks involved in the procedure in relation to transparency, non-discrimination and equal treatment.

“Negotiations shall therefore be supervised: contracting authorities shall specify at the time of prior publication the subject matter of the contract, the award criteria and the minimum requirements to be met,” it said.

“These shall not be changed in the course of negotiations. Any change in those parts of the technical specifications that are open to negotiations must be communicated to all firms participating in the negotiations so that they can submit new, adapted tenders. Before the negotiations are concluded, everybody must be given the possibility to submit a final tender.”

The Commission said that the conduct of the negotiations would have to be documented in the report on the procedure to be drawn up by the contracting authority. All contracting authorities would be subject to oversight by the national independent body.

Brussels has meanwhile rejected calls for increasing the thresholds from their current levels, saying it was not convinced this would achieve further simplification of EU procurement policy. "In essence, increasing the thresholds would mean that a larger proportion of procurement would no longer be covered by the directives, and therefore, only subject to national rules, which might not always ensure the same level of transparency and non-discrimination as provided for by EU law."

It also said the EU had to respect its international obligations and in particular those imposed by the WTO’s agreement on government procurement.

The Commission claimed that its proposals – particularly in relation to the acceptance of self-declarations – would benefit small to medium-sized enterprises, for whom the costs and time of supplying the documents was often a serious obstacle to participation in public tender procedures.

“Furthermore, the list of possible selection criteria is made exhaustive; yearly turnover requirements may not exceed three times the estimated contract value,” it said. “This will hinder contracting authorities from imposing exaggerated turnover requirements which automatically exclude SMEs from participating in the procedure.”

Brussels added that contracting authorities would be ”encouraged” to split contracts into lots allowing for the participation of more bidders and would have to specifically explain why if they were not doing so.

It also suggested that member states might foresee direct payments to subcontractors, “so that these subcontractors – which are often SMEs – get paid quicker and do not suffer from sometimes bad payment practice of the prime contractors”.

The Commission also insisted that its proposals contributed to the Europe 2020 strategy objectives for a “greener, more social, innovative and inclusive economy”.

It has suggested the introduction of a life-cycle cost concept, to encourage public authorities to consider the full life-cycle of products in their purchasing decisions.

Contracting authorities will also be able to take into account criteria linked to the production process of the goods or services to be purchased, and require (subject to safeguards) that works, supplies or services bear specific labels certifying environmental, social or other characteristics.

The current contracts’ reservation in favour of sheltered workshops will also be broadened.

The Commission's proposals will now pass to the Member States and the European Parliament for negotiation and adoption.

If they are adopted by the end of 2012 as provided for in the Single Market Act, the Directives would have to be implemented by Member States at the latest by 30 June 2014.

Philip Hoult

A new directive on the award of concession contracts

The Commission has also unveiled plans for a new directive on the award of concession contracts.

“Unlike public contracts and public works concessions, the award of service concessions is not subject to any clear and unambiguous provisions, being guided only by the general principles of transparency and equal treatment of the Treaty on the Functioning of the EU,” it said.

“This loophole gives rise to potentially serious distortions of the Internal Market such as direct awards of contracts without any competition (with associated risks of national favouritism, fraud and corruption) and generates considerable inefficiencies.”

The EC said the main elements of its proposal were:

• “A clearer and more precise definition of a concession (building on the Court's case law)
• Coverage of award of works and services concessions both in the classic sector (all other sectors not covered by utilities) and in the utilities sector
• Compulsory publication of concessions in the Official Journal of the EU, when their value is equal to or greater than €5m
• Pragmatic solution for dealing with changes to concessions contracts during their term notably when justified by unforeseen circumstances
• Establishment of a minimum deadline of 52 days for the submission of applications for the concession
• Establishment of certain obligations with respect to the selection and award criteria to be applied by the contracting authorities and contracting entities when awarding concessions. These rules aim at ensuring that such criteria are published in advance, are objective and not discriminatory. In general, they are less rigid than similar provisions currently applicable to public contracts
• No specific award procedures but instead definition of certain general guaranties aimed at ensuring transparency and equal treatment with particular reference to negotiation;
• Application of the Remedies Directives to all concessions above the threshold.”

Brussels said it would be for member states to define the applicable procedures for the award of concessions “in observance of certain general rules concerning selection and award criteria and procedural guarantees”.

Details

19.Dec.2011

A county council has warned that “alarms bells should be ringing across local government” after a High Court judge ordered it to retake – for a second time – a decision on the level of fees paid to care home providers.

Pembrokeshire County Council’s original decision to pay £390 a week per resident in 2010/11 was quashed by Mr Justice Hickinbottom in the Forest Care Homes case in December 2010. The local authority subsequently raised its payment per resident to £464 per week.

But in Mavalon Care Ltd & Ors, R v Pembrokeshire County Council [2011] EWHC 3371, the claimants – seven care home providers that deliver 22.4% of all beds in the area – sought a judicial review of that new decision as well.

The principal challenge was to Pembrokeshire’s conclusion that the appropriate rate of return on capital was 6% rather than the 12% used since 2008.

The claimants argued that the council was in breach of its statutory duty under section 21 of the National Assistance Act 1948. It was submitted on their behalf that the methodology the local authority adopted in arriving at the 6% rate for return on capital, which resulted in a fee of some £52 per resident per week lower than it would otherwise be, “lacked any rational foundation, failed to take account of its legitimate current and future costs, did not consider what they needed in order to be viable, and gave no incentive for care home providers in Pembrokeshire to improve their facilities”.

An important part of the council's reasoning was said to proceed on its error (also identified in the Forest Care Homes case) in considering that the rate of return to be allowed in cases where the aim was to maintain the sector differed from the rate to be allowed where the aim was to encourage new building.

The new decision was also challenged on three further grounds. These were that:

• Pembrokeshire failed to consider and to take into account whether, in particular in the light of Mr Justice Hickinbottom’s judgment, underpayment of fees by the council in the past had left an accumulated deficit in the claimants' capital reserves which needed to be addressed because of its impact on the sustainability of their homes
• The council failed to consider the interests of residents and the impact of the lower rate on them
• The council failed to take account of relevant guidance by the UK government and the Welsh Ministers.

Pembrokeshire did not defend claims that its director of social services (Mr Skone) had either lost sight of or had insufficient regard to guidance given by Mr Justice Hickinbottom in the Forest Care Homes case. However, it argued that, on the basis of his considerable experience in the sector, the conclusion he reached on the rate of return was a lawful one.

Counsel for Pembrokeshire said that it did not necessarily follow from the fact that the methodology may have been flawed that the fee level that was set was wrong. It was also argued that the director had addressed the key issues of quality and sustainability of a service that achieved at least the minimum standards.

But Mr Justice Beatson found in favour of the claimant, concluding that Pembrokeshire was effectively asking the court to put aside the process and consider the merits of its decision.

“Since the court is not the primary decision-maker, the approach urged on it…. is to infer the legality of what was done from the size of the percentage increase in the rate and Mr Skone's expertise,” the judge said.

“However, notwithstanding the size of that increase and the undoubted considerable expertise and bona fides of Mr Skone, it is not possible to ignore the fact that the reasoning in the decision letter contains two errors.”

These errors were:

• Treating the fact that the council did not want to incentivise new building as a reason for paying less by way of capital return, even though Mr Justice Hickinbottom had expressly stated that this was wrong.
• It appeared that Pembrokeshire considered that the 25% fall in the market value of care homes identified by Christie & Co (a specialist care home agent) justified lowering the rate of return, “although there was no inquiry by PwC or anyone else as to whether there is a link between the fall in market value and the rate of return. This could have been done…”.

Mr Justice Beatson backed the claimants' contention that an important part of Mr Justice Hickinbottom’s judgment in Forest Care Homes had been lost sight of.

“Also, as far as the link between the fall in market value and the rate of return, Mr Skone, or probably the consultants who were advising the council, failed to take reasonable steps to acquaint themselves with the relevant information as to the significance of the fall in market value,” he added. “In that sense, the council fell into public law error.”

The judge said these errors could be analysed in one of two ways: that it failed to ask itself the right questions; or that its decision was based on irrelevant factors.

“It is, in this context, also to be noted that there is no positive external support; either contemporaneous to the decision….or subsequent to it...., for the adoption of 6% as the appropriate rate of return of capital,” he added.

Mr Justice Beatson suggested that the clear message from Mr Justice Hickinbottom’s judgment was that “a decision-maker who agrees to use a model, but then wishes to depart from it, needs to take great care lest the departure is an inappropriate one”.

The judge said it was not possible to assume that, if Mr Skone and the council had properly understood that the return on capital should be the same whether or not the council was seeking to incentivise new buildings, his decision as to the appropriate fee would have been the same.

He therefore concluded that the decision must be set aside and remitted to the council for the redetermination of the rate for 2010/11.

However, the judge also ruled that the council was not obliged to deal with the issue of the providers’ accumulated deficit.

A spokesman for Pembrokeshire said: “Obviously the council is disappointed with the judgment and we need to reflect upon the detail in it. The matter will be considered by members in the New Year.

“The position in which Pembrokeshire County Council finds itself will set alarm bells ringing throughout local government. Across the whole of the UK, adult care is already a service in financial crisis.”

The spokesman claimed that Pembrokeshire – among the 22 local authorities in Wales – already paid one of the highest rates to care homes.

However, the council welcomed the fact that the judgment had ruled out retrospective payments. These would have meant an estimated cost to the local authority of £6m.

Alison Castrey, the claimants’ solicitor, said: “The new Pembrokeshire judgment is one small step closer to the obviously desirable end result - that we as a society agree the standard of care we require for the vulnerable, and then we provide and pay properly for it.”

She added: “There may well have to be a political solution as to where the money comes from – which may involve some very difficult decisions being taken – and providers must undoubtedly expect to be scrutinised closely about exactly what they have done with the money.  What is no longer acceptable is to expect either commissioners or providers somehow to achieve what has been described as 'financial alchemy' – the production and sustaining of gold standard services out of base metal resources."

Philip Hoult

Details

15.Dec.2011

A recent High Court ruling is a reminder that where there is a total breakdown in the relationship between a care home or local authority and a family member, a fact-finding hearing may be necessary. The Court of Protection team at 39 Essex Street report.

In HN v FL and Hampshire Council [2011] EWHC 2894 (COP) HN was the sister of FL, who suffered from multiple sclerosis and lacked capacity to make decisions about her care, residence and contact with others. There was, as the judge observed, an intractable dispute between HN and the local authority as to whether the current care home, where FL had lived for some eight years, was capable of looking after FL properly, and tensions between the care home and HN had led to restrictions being imposed on her visits and interaction with FL.

There had been two previous sets of proceedings in the Court of Protection - cancelling HN’s power of attorney for financial affairs, and welfare proceedings concerned with care, residence and contact which had culminated in 2009 a consent order.

The disagreements between HN, the care home and the local authority had continued, despite the consent order, and when the matter was eventually returned to court by HN, DJ Ralton agreed that a fact-finding hearing was necessary.

After a four-day hearing, the local authority was successful, and District Judge Ralton found that HN had undermined FL’s placement at the care home and breached the 2009 Order. She had been "so determined to ensure that her opinion prevails that she [had conducted] herself vexatiously in her sister’s affairs" including by waging a campaign of "groundless complaints".

An Order was made which provided that it was in FL’s best interests to remain in the care home and for there to be restrictions on HN’s contact with her, supported by penal notices. The judge noted that while the ethos of the MCA was a collaborative approach to best interests decision-making, the Court would step in to resolve disputes if necessary, ideally with as little intervention as possible.

Comment

This case is not unusual, but is a reminder that where there has been a total breakdown in the relationship between a care home or local authority and a family member, ‘agreed’ orders may not be effective long-term solutions, and a fact-finding hearing may be essential.

The case was also of interest because the Independent was granted permission to attend and report on the proceedings, which they duly did in a very balanced and accurate manner. This was the first welfare case in which the media was permitted to attend and report on private proceedings where P’s identity was not to be disclosed.

Alex Ruck Keene, Victoria Butler-Cole, Josephine Norris and Neil Allen are barristers at 39 Essex Street.

Details

12.Dec.2011

The government has launched a consultation on making forced marriage a specific criminal offence.

The consultation will also cover implementation of the Home Office’s already announced plans to criminalise the breach of Forced Marriage Protection Orders (FMPOs).

The orders are a civil remedy under the Forced Marriage (Civil Protection) Act 2007 aimed at preventing forced marriage and assisting victims where a marriage has already taken place.

There were 339 FMPOs between November 2008 and June 2011, but breach of the orders is not a criminal offence.

Home Secretary Theresa May described forced marriage – which as “an appalling form of abuse”, adding that “perceived cultural sensitivities should not stop us doing more to tackle it”.

The consultation closes on 30 March 2012. The paper can be downloaded here.

The government’s Forced Marriage Unit has meanwhile provided support to more than 1,700 people in 2010.

Details

08.Dec.2011

The High Court has quashed a local authority’s decision to freeze the fees paid to care home providers for the second year running.

His Honour Judge Langan QC’s ruling against Leicestershire County Council at the Administrative Court in Leeds comes just weeks after a high-profile judgment against Sefton Council.

The challenge against Leicestershire’s decision to freeze care home fees was brought by EMCARE, which represents the owners of 104 care homes in the county, the City of Leicester and Rutland.

In East Midlands Care, R v Leicestershire County Council [2011] EWHC 3096, HHJ Langan QC quashed the local authority’s decision, which was taken on 7 March 2011 and related to the fees to take affect on 1 April 2011.

He ruled that the county council had:

• failed to consult with the care home providers. Such consultation as there was failed to meet the requirements of the Coughlan case. “What EMCARE got was too little, too late”
• failed properly to assess or take into account the actual cost of care, and
• failed properly to assess the risks consequent upon a freeze in fees.

However, HHJ Langan QC rejected claims that the council had failed to comply with s. 49A of the Disability Discrimination Act.

The judge rejected Leicestershire’s argument that the remedy should be withheld as a matter of discretion as (a) the proceedings had been issued on the edge of the three-month time limit and (b) it was too late in the financial year to unpick a decision which took effect on 1 April. He ordered Leicestershire to pay EMCARE's legal costs.

David Collins of niche law firm David Collins Solicitors, which advised EMCARE, claimed that the ruling was “highly important”, adding that it endorsed the judgment in Sefton.

Collins said:
"This is the second time in a month that the court has ruled that the practice of councils setting fees for care home services in an arbitrary manner is unlawful. The Sefton and Leicestershire decisions undoubtedly clarify the legal duties on councils and highlight the many failures in their decision-making processes.

“However, the process of engagement with councils remain complex and I remain cautious in my views as to whether councils will genuinely embrace a properly balanced working relationship with the private care sector. With this caution in mind, how providers and their associations approach the fee review process remains both crucial and complex.”

A Leicestershire spokesman said: “The judicial review related to the council’s decision not to increase payments to providers of residential care for adults and older people in this financial year (2011/12). In the extremely challenging financial climate facing the council, most care providers understood the reasons for the decision, but EMCARE challenged it in court.

“The judge has quashed the council’s decision, which means it must be considered again and a new decision taken. The judge did not decide that the decision itself was wrong and said that ‘the actual decision not to increase fees may well be one which can be supported by a number of factors’. The judge also decided that the council had complied with its requirements in relation to the Disability Discrimination Act in reaching its decision.”

The spokesman said Leicestershire would now consult with providers of residential care and with EMCARE and ensure that the revised decision complied with the court’s judgement.

“Any possible increase in fees will be backdated to 01 April 2011,” he said. “In the meantime, the council continues to conduct business in the usual way with care home providers and will continue to make placements at its current rates.”

Philip Hoult

Details

06.Dec.2011

The Local Government Ombudsman has accused Leeds City Council of causing a woman injustice of a nature and scale that is “difficult to express or quantify”, after the authority wrongly prevented her from seeing her dying mother in a care home.

The decision meant Ms B, the complainant, was unable to speak to her mother before the latter’s death.

The background to the case was that Ms B had been estranged from her family. Shortly before Christmas in 2008, she had found out that her mother was in a home and was unlikely to live much longer.

The placement in the nursing home had been arranged and was managed by a Joint Care Management Team staffed by social and healthcare professionals from the city council and Leeds Community Healthcare NHS Trust.

But Ms B’s brother wrote to the care home claiming that she would try to remove their mother from the home and would upset her by talking about money. The care home providers passed the information on to council officers and told Ms B that she would not be allowed to visit her mother.

An officer from the joint management team asked the brother a couple of days later to provide more detail on his allegations. He withdrew the allegations but expressed concern that a visit from Ms B would upset their mother.

A manager said the officer concerned was told that Ms B could not be prevented from seeing her mother. However, they were also told that, because of the concern that the mother (Mrs B) might be distressed, staff should assess Mrs B’s capacity to decide whether or not to see her daughter.

What then happened was that the home continued to tell Ms B that she could not visit her mother. The complainant was forced to stand outside the home and hand a Christmas gift for her mother to staff.

The officer also arranged for a specialist to assess Mrs B's capacity, but this took a month. Ms B was prevented from seeing her mother during this time, even though there was no legal power to stop her from visiting.

Unfortunately by the time that the assessment had been completed and Ms B could pay a visit, the mother had had a stroke. This meant she was unable to recognise or communicate with Ms B. The mother died the next day.

The Ombudsman found Leeds guilty of maladministration in preventing Ms B from seeing her mother for more than a month, and for failing to review the situation after any of the nine contacts she made.

The LGO, Anne Seex, said: “Relatives and friends have the right to visit and see each other without undue interference and the right to respect for family life is enshrined in law. Ms B was told unexpectedly – and without there being any evidence – that she was regarded as a threat to her own mother, denied access to her, made to hand over a Christmas gift outside the home and made to wait for over a month for the council’s processes before finally being told that she could see her mother.”

The city council and the NHS trust have accepted the Ombudsman’s recommendations, which included making a full written apology to Ms B and paying for a bench with an inscribed plaque in a location of Ms B’s choice.

The council has also agreed to help the complainant find out where her mother was buried or cremated, and pay her £5,000 in recognition of the distress caused to her.

The LGO acknowledged that the joint service had delivered comprehensive staff training since the complaint was made.

In a statement both Leeds City Council and Leeds Community Healthcare NHS Trust said they deeply regretted the distress caused to Ms B.

Both organisations insisted that they had acted swiftly to take action to address the issues raised by the case, where practice failed and led to the chain of events described in the Ombudsman’s report.

Sandie Keene, director of adult social services at Leeds, said: “The Ombudsman’s report describes a standard that, on this occasion, fell well below what the council expects when dealing with such a sensitive situation. On behalf of Leeds City Council, I extend deepest apologies for the distress Ms B has experienced.

“Immediately after the events, we commissioned an independent review of our safeguarding practice. This discovered that this was an isolated series of errors and misjudgements, which I am relieved to say was not the result of fundamentally flawed policy within our joint care services.

“We have learned a number of important lessons in communication, training and management. Together with colleagues in the Leeds Community Healthcare NHS Trust, we will continue to ensure that these lessons are used to strengthen the quality of our services.”

Rob Webster, chief executive of the Leeds Community Healthcare NHS Trust, said it accepted the findings in the LGO’s report and its recommendations in full.

He said: “I am reassured that the Ombudsman recognises that we acted quickly to make improvements and deal with the issues raised. Cases like this are a reminder that we must work tirelessly to ensure we provide the highest quality care.

“We are committed to working jointly with our colleagues in Leeds City Council to improve the delivery of health and social care for families across the city.”