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Hyper-competitive businesses file ever more complaints

The number of complaints raised by businesses over the awarding of public sector contracts has more than doubled over the last year, according to new figures.

According to data released by the Cabinet Office following a freedom of information request by Pinsent Masons, the law firm behind Out-Law.com, business complaints about how public sector contracts were awarded rose from 73 in 2010/11 to 196 for the 12 months ended 30 June 2012.

Competition and procurement law expert Stuart Cairns of Pinsent Masons said that the 168 per cent rise indicated the importance of winning public sector contracts for businesses in a struggling economy.

"With the economy continuing to struggle, public sector contracts are now absolutely vital for many companies’ survival," Cairns said. "Contracts are therefore much more fiercely and bitterly contested, with more complaints and more litigation between rival businesses."

"Businesses are exploring any avenue that they can to stop a rival gaining an advantage in the procurement process, and complaining to the Cabinet Office is one low-cost way of doing that," he added. "For example, businesses will complain about the procurement strategy that public sector body is following if they think that strategy favours their competitor."

Whilst businesses need to launch court proceedings in a bid to overturn contracts that have been signed, complaints to the Cabinet Office about the procurement process can lead to bidding rules for a Government contract being altered as bidding for the contract is ongoing. In 2011/12 changes were made to the terms of Government procurement contracts whilst bidding was ongoing in 11 per cent of the 175 investigated complaint cases, whilst a commitment was made to change bidding procedures in future was made in 45 per cent of the cases.

In 19 per cent of the cases investigated no serious concerns were found, according to the data.

"Making a complaint while the bidding process is still open could delay things long enough to give a business crucial extra time to prepare its own bid," Cairns said.

According to the figures disclosed, the Cabinet Office investigated 175 of the 196 cases it received complaints about during 2011/12. In 2009/10 it investigated just 21 of the 47 complaints it received about how public sector contracts were being awarded, but in 2010/11 it investigated 65 of the 73 complaints it received.

"The Government has stepped up its investigations into complaints in recent years," Cairns said. "It has been much more open to reviewing complaints to ensure government contracts provide value for money for taxpayers, and that contracts are awarded fairly."

A drive to increase value for money for the taxpayer has also led to the increased number of investigations launched into complaints by the Cabinet Office, Cairns added.

"The government has sought to outsource more in the last twelve months, but new contracts are often at low margins as the government looks for cost-savings. This puts bidders under pressure to win more work to compensate for these lower margins," he said. ®

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Out-Law.com is part of international law firm Pinsent Masons.

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