How to win in the public sector

Public sector maintenance contracts require special handling, says John Forde, senior associate in the projects and construction team at law firm Trowers & Hamlins.

For a building or maintenance contractor, a local authority or housing association can be a valued client, with guaranteed workstreams, reliable payment records and minimal risk of insolvency.

But since the recent decline in new build, public sector procurement is increasingly focused on repairs and maintenance programmes, which, according to an Audit Commission survey, account for around £2.86bn of social landlords' annual spend.

However, unlike private sector procurement, bidding for public sector programmes involves a number of complexities that new entrants to the market can stumble over.

So I thought I would outline some of the biggest stumbling blocks firms can face in the tendering process – and each time give my top tip on how to navigate your way around these.

EU procurement regulations
Local authorities and housing associations are required to procure all their works, services and supplies contracts above set financial values in accordance with the Public Contracts Regulations 2006. Social landlords must follow one of a prescribed set of tender processes, assessing bidders' past experience and ability to undertake the programme. EU tendering can be expensive – particularly under the popular competitive dialogue procedure, involving structured dialogue sessions between the client and shortlisted bidders. To add to the complexity, new EU regulations are on the way and due for implementation in 2014.

Top tip: You need to understand what's required of you in the EU tendering processes, and make sure you don't miss critical deadlines.

TUPE transfers
Outsourcings of repairs and maintenance programmes typically trigger a "transfer of undertakings" under the TUPE regulations. This means the incoming contractor may be required to employ the outgoing employees of the previous service provider – and guarantee those employees' existing employment terms and benefits.

Top tip: With this is mind, seek as much accurate information from social landlords about potential employee transfers during the tender process so that you can price this cost accurately.

Pensions risk
Incoming contractors may also find themselves responsible for maintaining transferring employees' pension entitlements. Where transferring employees are members of a local authority pension scheme, this can be onerous for incoming contractors.

Top tip: Again, seek as much accurate information as possible from social landlords during the tender process.

Freedom of information
Local authority clients are required to follow the Freedom of Information Act, but they usually step down their obligations to contractors to provide information as part of an information request.

Top tip: You should be clear about your contractual obligations, and ring-fence commercially sensitive information in your tender that you think should be exempt from disclosure under the Act.

Stock conditions data
Pricing a tender for public sector works programmes can be difficult, depending on the availability and accuracy of stock condition survey data. If data is poor, or non-existent, contractors can find themselves bearing the financial risk of additional works required for poorly maintained properties.

Top tip: Try to minimise your risks by asking to complete your own surveys via pilot projects. Or develop a risk-sharing mechanism with clients for unforeseen additional costs.

Pricing requirements
Increasingly, social landlords are asking for fixed price bids or price-per-property sums for works and services programmes. This can be challenging for bidders, especially where stock conditions or TUPE and pensions data is incomplete or where the full scope of the programme is not yet known.

Top tip: Review your pricing requirements carefully and consider your risk profile, especially for unknown costs.

Getting customer service right
Repairs and maintenance programmes require the most landlord-tenant engagement of any other public sector landlord service, and the quality of a repairs service is consistently the number one issue for most tenants. As a result, social landlords have high expectations of their contractors, requiring constant measurement of performance indicators and, increasingly, financial remedies – or even early termination – for poor performance.

Top tip: You need to understand your performance targets and resource the contract accordingly.

Termination rights
In an uneasy sign of the times, many social landlords, backed by their boards and residents, want quick get-out mechanisms in their contracts, making it difficult for contractors to rely on guaranteed, long-term programmes.

Top tip: Remember to think about how demobilisation costs, overheads and lost profit could be recovered in the event of early termination.

Personnel and consultants
Effective personal relationships with clients are critical to ensure the success of any contract. For many cash-strapped public sector clients, experienced in-house resources may be scarce, leading to reliance on externally appointed consultants.

Top tip: Make sure you confirm whether key roles – contract administrator, employer's agent, clerk of works, cost consultant, etc – are being undertaken internally or are being outsourced, and ensure that externally appointed consultants have been appointed under robu

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