The Cabinet Office released a Procurement Policy Note (PPN) on 8th November setting out government policy to ensure bidders' past performance is taken into account in certain future government procurements - which I am sure you will all agree is a sensible step. This PPN will initially apply to departments their executive agencies and non departmental public bodies for goods and/or services in respect of ICT facilities management or business processing outsourcing with a contract value exceeding £20m (excluding VAT).
It applies in relation to framework agreements but only where it is anticipated that there will be call-off agreements in respect of such goods and/or services with an individual anticipated value of £20m or greater (excluding VAT).
The policy requires departmental bodies to assess bidders' past performance when considering technical or professional ability in accordance with regulation 25 of the Public Contracts Regulations 2006 (PCR) for specified contracts. Consequently all bidders will need to be ready to explain why any contract failures have occurred in the past and what steps have been taken to guard against any reoccurrence.
The Cabinet Office also issued a reminder for departmental bodies that in setting and applying minimum standards for reliability based on past performance and in assessing all other aspects of a bidder's suitability to be awarded a public contract they need to observe the fundamental principles of transparency and proportionality and of equal treatment and non-discrimination. However it is not clear how new entrants to the market will meet this new requirement. The PPN does state that new entities who have taken over an undertaking from another entity may refer to the past performance of that original entity but there is no advice to those entirely new to the market. Perhaps the Cabinet Office is not expecting such entities to bid for contracts of this size.
The Cabinet Office is also encouraging departments to provide certificates of performance to their own suppliers upon request and will be establishing a central repository of certificates and other information which will be used to verify past performance submissions.
Regulation 25 PCR makes express reference to 'reliability' and many contracting authorities/utilities already ask bidders for example for details of any previous contract breaches. However following recent events potentially including the G4S headlines during the Olympics this issue appears to be a sensitive one for government and it is seeking to standardise the approach and mandate what it considers to be procurement best practice. The Cabinet Office has also published the Government's Strategic Supplier Risk Management Policy which seeks to address poor performance of the Government's High Risk suppliers.
Whilst the PPN is not binding upon the wider public sector or utilities other purchasing entities like clinical commissioning groups (CCGs) and clinical support units (CSUs) might nevertheless wish to adopt a similar approach in assessing reliability and poor performance. In any event all purchasing entities are likely to start receiving requests from current customers to complete certificates of performance on their behalf.