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Is Crown Commercial Service misleading their customers about the Contingent Labour ONE extension?

Crown Commercial Service (CCS) is suggesting that the Contingent Labour One (CL1) framework has been extended for 12 months, and its that customers are free to use this whilst the replacement framework is being procured. But is this true, or do customers who use CL1 after 18 June 2017 run the risk of breaching the procurement regulations?

Background

In our previous article, we explained how the Government’s central buying agency, Crown Commercial Service (CCS), is planning a new uber-framework for public sector resourcing, and how this is due to go live in June 2018. We explained how this gave them a problem, as their current preferred framework, CL1, is due to expire a year before this, and we feared that they would agree questionable extension to this framework beyond its legal expiry date.

Malcolm Harrison’s evidence to the Public Accounts Committee

In parallel with this, following a critical National Audit Office report in December 2016, the Public Accounts Committee conducted their own enquiry into the performance of CCS. As part of this, they called the Chief Executive of CCS, Malcolm Harrison, to give evidence. One of the areas they explored was where CCS frameworks were extended beyond their legal expiry dates, something that CCS has been guilty of in the past. From the formal minutes, Mr Harrison told the Committee that “in terms of frameworks being extended beyond their expiry date, that should not happen” (Q88) and assured them that “It is not a question of, ‘We just have to extend this’, it is that that’s the least worst thing to do, because it is very important that we still have the commercial vehicles in place that ensure our users can buy the goods and services they need in order to provide their services to our citizens.” (Q91)

This set Mr Harrison’s intentions on a clear break from the past practice of extending frameworks past their expiry dates, and was clearly welcomed. But how did this reflect practice? The CL1 framework was awarded to three suppliers, Capita, Brook Street and Hays, on 19 June 2013 and had a maximum term of four years. So legally it has to expire on 18 June 2017. Despite this, in late March rumours began to surface that CCS had decided to extend it by 12 months. This, however, would contradict the evidence given by Mr Harrison to the PAC, in particular because this was not the “least worst thing to do” – there is a perfectly satisfactory alternative framework, the CCS-run Non-Medical Non-Clinical framework, which can be used in exactly the same way as CL1 (but which is also far more SME-friendly and has multiple engagement models within it).

Naritas seeks clarity on whether CL1 is being extended past its expiry date

 

On 31 March, Naritas wrote to Mr Harrison pointing out the discrepancy between his evidence to the PAC that they would only extend a framework beyond its legal expiry as a last resort, and the practice of his “Workforce Category” team who seemed to be ignoring this and just extending CL1 anyway. After four weeks (and the email being read over 100 times by eight people) we received a response from Peter Lawson, the Strategic Category Director in the Workforce Category team. This said that they were not extending the framework. The “ordering period” in the framework had already been extended to 18 June 2017 (the last possible date), but they had decided to exercise a clause in the Framework Agreement that allowed the current providers to continue to provide services for 12 months beyond the “ordering period”.

This would have been perfectly satisfactory – clearly there is a need to be able to service any existing contractor placed through the framework for a period following the expiry date, ie to allow them to continue to complete timesheets and get paid, as otherwise there would be no point securing resource through it if they had to be terminated a couple of weeks later. It is almost always the case that existing contracts in place when a framework expires are allowed to continue for a period, and there is a specific provision (clause 2.5) in the CL1 framework agreement to allow for this for 12 months following the end of the contract.

 

However, Mr Lawson then went on to explain that they would advise customers that they could continue to use CL1 alongside NMNC for the 12 month period from 19 June 2017. This is simply not the case. The CL1 framework agreement is clear (in clause 2.2 and 2.3) that there is an “ordering period” (when new contracts can be placed) which expires on 18 June 2017. There is no provision in the contract to extend the ordering period. So the 12 month run off period is clearly only for existing contracts already in place when the ordering period expires.

So when is an extension not an extension?

We immediately sought confirmation from Mr Lawson that this was the case. Nothing was forthcoming, but then CCS issued a Q&A document on the replacement framework, Public Sector Resourcing. On page 17 of this they explain that the CL1 “ordering period [has already been] extended to 18 June 2017” and that there is a contractual provision for the suppliers to provide services for a further 12 month period beyond the ordering period. They are then deliberately ambiguous, stating that “CL1 will continue until 18 June 2018”. Whilst CL1 will continue until June 2018, they should explain that this is only for existing contracts. They do not say that the ordering period is being extended, and any new contracts would have to be placed within the ordering period ie by June 2017. We have waited for more than a month for clarity from CCS on the simple question of whether the further 12 month period is just for existing contracts or for new ones, and despite it being opened almost 30 times during that month on 8 different devices they have still not responded. With the end of the ordering period rapidly approaching, we do not feel we can wait any longer before putting our concerns in the public domain.

So what does this mean for public sector bodies?

In simple terms, any existing contractors in place through CL1 can continue to be supplied through this framework up until 18 June 2018; the existing CL1 suppliers will have to continue to service these contracts for this extra 12 month period. However, any new contracts placed through CL1 after 18 June 2017 are outside the ordering period, and so are not covered by the framework. They are therefore classified as “direct awards” under the Public Contracts Regulations.

If these are for more than £106,047 in Central Government or £164,176 outside Central Government, it would be unlawful to make these direct awards. Unless the customer wants to conduct a full procurement process, they must use an alternative legal and in-date framework. There are various of these available which cover specific groups of customers, but the easiest route is likely to be the Non-Medical Non-Clinical framework which was awarded by CCS in 2014 and is available across the whole public sector, and which can be used for neutral vendors, managed vendors or to engage with specific specialist suppliers.

Summary

In summary, we believe that CCS is being deliberately ambiguous about what is happening with CL1. The reality is that the ordering date – for new contractors – is not being extended past 18 June 2017 as there is no legal route to do so. All that is allowed under the CL1 framework agreement is the continuation of existing contracts for an extra 12 months to 18 June 2018. Any new requirements for contractors cannot legally be met under the CL1 framework, and must use an alternative framework or go through a full procurement process.

 

The question now is whether CCS will admit that they have been rumbled and tell customers that they cannot continue to use CL1 for new contractors engaged after 18 June 2017, or whether they will continue to mislead them that it is business as usual for another 12 months. Or perhaps they will actually extend the Ordering Date for CL1 until June 2018, but that would specifically go against the evidence given by Malcolm Harrison to the PAC that this would only happen if it was the least worst thing to do, which it clearly is not. If that were to happen, we would hope that the PAC would recall him to explain the discrepancy and to ask him to justify why it was necessary to extend the framework past its expiry date when there was a perfectly acceptable alternative framework already in place to engage new contractors.

Ultimately, whatever CCS says, it is the individual public bodies that will be responsible for taking the risk if they place contracts other than in accordance with the framework. So regardless of what CCS says, the safer option for them will be to switch to using the NMNC framework and avoid the risk of breaching the procurement regulations.