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Community right to challenge

The Localism Act 2011 introduced a right for town and parish councils, community and voluntary bodies, charitable trusts and two or more local authority employees to submit an Expression of Interest in taking over the provision of a service on behalf of the authority. This is called the community right to challenge.

Who can submit an Expression of Interest?

An expression of interest can be submitted by a “relevant body”, comprising:

  • a Parish Council, but not limited to services or facilities within its area
  • a Voluntary Body – a body, other than a public or local authority, the activities of which are not carried on for a profit
  • a Community Body – a body, other than a public or local authority, which carries on activities primarily for the benefit of the community
  • a body or trust established for charitable purposes
  • two or more employees of the authority, whether or not they have formed themselves into a body for this purpose, or
  • such other persons or bodies as may be specified by the Secretary of State by regulations. To date, no such regulations have been made.

There is no requirement for a voluntary or community body to have any local connection and any of these bodies can submit an expression of interest in partnership with any other organisation, including a commercial organisation, or propose to sub-contract the work to a commercial organisation. Providing that this is done, there is no requirement for the relevant body to undertake the majority of, or any particular share of the work.

Which services can an Expression of Interest relate to?

The expression of interest must relate to the provision of, or assisting in the provision of, a “relevant service”, which means any service which is currently provided by or on behalf of the council.

The following services are “excluded services” which cannot be the subject of an expression of interest

  • services provided in partnership with NHS bodies and services commissioned by an NHS body on behalf of the council, in both cases only until 1 April 2014
  • a service provided to a named person with complex individual health or social care needs; or
  • a service which includes the exercise of a statutory power which cannot be delegated. So, the setting of council tax or the determination of a planning application is not legally capable of being undertaken by anyone other than the local authority, and so cannot be the subject of an expression of interest.

For example, an expression of interest can relate to services such as management and maintenance of playing fields or parks, heritage conservation, day care, running a branch library or providing Human Resource (HR) services.

The Expression of Interest

The Expression of Interest must be in writing and meet certain requirements. These include the provision of:

a) information about the financial resources of the relevant body which is submitting the expression of interest;

b) evidence that demonstrates that by the time of any procurement exercise the relevant body submitting the expression of interest will be capable of providing or assisting in providing the relevant service. This is particularly important when dealing with an emergent staff mutual or voluntary body, which may not be fully operational at the date of submitting an expression of interest;

c) information about the relevant service sufficient to identify it and the geographical area to which the expression of interest relates;

d) information about the outcomes to be achieved by the relevant body or, where appropriate, the consortium of which it is a part, in providing or assisting in the provision of the relevant service, in particular:

  • how the provision or assistance will promote or improve the social, economic or environmental well-being of the relevant authority’s area
  • how it will meet the needs of the users of the relevant service

e) where the relevant body consists of current employees, details of how that relevant body proposes to engage other employees of the relevant authority who are affected by the expression of interest.

The first stage of the process comprises the validation and acceptance or rejection of each expression of interest once received by the council.

When an expression of interest is received, the council will check that it is submitted by a “relevant body” for a “relevant service” which is not an “excluded service”. If it fails to meet these requirements, the council will notify the person who submitted the expression of interest that it is not a valid expression of interest, and will then take no further action.

There are ten grounds on which the council may reject a valid expression of interest, as set out below.

  1. that the expression of interest does not meet the statutory requirements, because it is not from a relevant body or is not for a relevant service
  2. that the supporting information is inadequate or incorrect
  3. that any member of the body making the bid, or of their consortium, is not suitable to provide the service. This would cover absence of a necessary qualification, or past conduct
  4. that the council has already taken a formal decision to cease to provide the service. So an expression of interest cannot be used as a means to challenge the council’s decision to close a facility or cease a service
  5. that taking this service in isolation would result in a loss of integration with NHS services to the detriment of users of the integrated service. This prevents expressions of interest un-picking integrated Section 75 arrangements
  6. that the service is already the subject of a procurement exercise
  7. that the council is already in negotiations in writing with a third party for the provision of the service
  8. that the council has already published its intention to consider the provision of the service by a body to be set up by two or more employees
  9. that the expression of interest is vexatious or trivial
  10. that the acceptance of the expression of interest is likely to lead to a breach of law or statutory duty. This would cover an expression of interest which would require delegation of statutory powers which cannot be delegated or where it would lead to a breach of the authority’s duty to secure best value, for example by causing greater cost by the break-up of shared service arrangements

Once an expression has been validated, the Head of Legal, Governance and Democratic Services will conduct a review of the expression of interest to determine whether it falls within any of the above ten criteria. This is partly a matter of fact and law, and partly a question of collecting information from the officer currently responsible for the running of the service. It is also a question of policy because, where an expression of interest falls within one of the grounds for rejection, the authority still has a discretion and may decide to accept the expression of interest anyway.

The Head of Legal, Governance and Democratic Services must then notify the persons or body who submitted the expression of interest of the decision and of the reasons for that decision.

Timescale and decision making

The window for receiving expressions of interest for all relevant services provided by the council has been set annually between 1 March and 30 April.

A maximum period of 26 weeks has been set between the receipt of an expression of interest and the council notifying the body which submitted the expression of interest of its acceptance or rejection.

A minimum period of 12 weeks and a maximum period of 39 weeks has been set between the acceptance of an expression of interest and the start of the procurement exercise.

The Head of Legal, Governance and Democratic Services has been appointed as the ‘proper officer’ for the receipt, validation and acceptance or rejection of expressions of interest in consultation with the relevant lead members. Where considered sensitive, decisions will be referred to the Policy and Resources Committee.

A report will be submitted to the Policy and Resources Committee summarising expressions of interest received, and decisions taken on an annual basis.

A procurement exercise

Once a valid expression of interest has been accepted, the council moves into procurement mode, and must conduct an appropriate procurement exercise. The scale of the procurement exercise will be dictated by the nature and value of the service concerned (including publishing OJEU notices where the EU thresholds are exceeded), and the council’s Contracting Rules.

The range of the service (in terms of the service and the geographical area) to be subject to a procurement exercise will be set by the expression of interest (e.g. maintenance of X Park). The council may only vary the range of services with the agreement of the body or persons who submitted it. But the specification to which the service is to be provided, the contract terms and conditions, and the criteria for evaluation of tenders are for the council to determine.

Although an expression of interest may be submitted by a genuine community or voluntary organisation, and the council may wish to encourage such community involvement in service provision, once the council goes out to open tender, it cannot prevent tenders being submitted by purely commercial organisations, and will be required to evaluate all tenders received on the same evaluation criteria.

There is nothing in the legislation to prevent the council submitting an in-house “bid” for the provision of the service, on the basis of its own employees. Such an in-house “bid” would not be a part of the statutory procurement exercise, but should be evaluated on exactly the same criteria as any third party bids, and can lead to the council determining on best value grounds not to accept any of the third party tenders.

The council’s Contracting Rules set out when a tender may be accepted by officers and when it must be reported to members for acceptance. The council’s normal contracting arrangements will start at this point. Where a Director / Head of Service, after consultation with the relevant lead members, decides that an in-house bid will be prepared and submitted, they must agree with the Director of Corporate Resources/Chief Executive arrangements for the identification of separate commissioning and bid preparation teams.

Contact:

John McCormack

Telephone: 01454 865980

Email: LegalSupport@southglos.gov.uk

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