Court boost to use of federations

A legal case this month is good news for any consortium considering collaborating with other consortia to carry out some of their functions. Some consortia are looking at setting up a legal entity to carry out various activities on behalf of a number of them. Any contract with a separate legal entity is in principle caught by the procurement rules. The recent case clarifies that if consortia come together and form a company to carry out certain back office functions or commissioning activities on behalf of them, the arrangement is exempt from the procurement regime.

This is an encouraging development in the current economic climate. Public bodies are increasingly turning to shared services or another form of collaborative arrangement to meet their needs. As consortia explore ways of working together, setting up an organisation on a regional basis may help achieve economies of scale.

Care will still need to be taken to ensure that any such a model complies with the exemption from tendering. Not too surprisingly it is narrowly drawn. And, of course, to set up a separate entity once consortia are statutory bodies they will need the power to do so. This will depend on the final wording of the Health and Social Care Bill, once enacted.

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