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The wait is over – community right to challenge

Tuesday July 17th, 2012

The Localism Act is with us and, as of 27 June 2012, the community right to challenge is in effect.

David Hansom looks at the impact of this legislation, which aims to devolve power from central government to individuals, communities, voluntary organisations and local councils as part of the Big Society agenda.

The Localism Act 2011 gives community, charitable and voluntary groups, parish councils and local authority employees the right to submit an ‘expression of interest’ in taking over and running a service provided by a ‘relevant authority’ (which includes county, district and London borough councils) by explaining how they could run local services more effectively. The Act ensures that a challenge will need to be considered by a relevant authority, who must respond in writing either accepting the challenge or rejecting it. The Secretary of State has the power to provide support, assistance and guidance to the relevant bodies that propose to challenge.

While a local authority may accept a challenge raised under an expression of interest, this does not necessarily mean the group who raised the issue will be able to run that service. It is important for authorities to ensure they complete a fully compliant procurement process open to all, including both the group who raised the initial expression of interest and the private sector.

The resource and timing impact is clear to see – relevant authorities cannot circumvent the procurement rules under this right to challenge. While many of the services procured may be Part B services (so, at least currently, subject to a less onerous procurement regime), this will stretch already busy procurement teams even further.

In practice, the newly formed community group may not be the best provider of services when judged against other, more established competitors. If standard pre-qualification questionnaires are used, there is a real risk of such entities falling at the first hurdle if they are not able to demonstrate the typically required three years’ accounts or wider track record.

This means more work for contracting authorities in making sure that the procurement process used follows the Public Contracts Regulations/EU Directive, but also that the documents used are relevant and proportionate to what is being procured.

Even if the community group is not successful, the right to challenge could lead to a more collaborative approach between voluntary/local groups and local authorities, giving the chance for such groups to suggest ways for improvement. In this way, authorities can use local groups to help shape and mould procurement processes and service delivery with local issues at their heart.

While there have been concerns expressed as to whether or not this new innovation will be successful, the Social Investment Business (in partnership with Locality and the Association of Chief Executives of Voluntary Organisations) intends to deliver a three-year support programme worth £11.5 million including a dedicated advice phone line. Grants will also be available to help groups to use the new right and bid to run local public services.

The right to challenge brings with it its own trials for both the groups who take advantage of it and who will now increasingly be exposed to procurement processes and undertaking the running of such services, and the authorities who will not only be under an obligation to respond to such challenges but may also see an increase in the services going out for tender.

Despite mixed views from commentators, the introduction of this right can be seen by many as an opportunity for charities and other groups to influence and improve services and enter markets often previously seen as being closed off to them. As such, the opportunity that it offers authorities and other bodies is to explore new and innovative ways to deliver the services they provide. We live in interesting times.

David Hansom is a partner and head of Veale Wasbrough Vizards’ specialist public sector team. For more information or advice on this or any other procurement issue, he can be contacted on 0207 665 0808 or dhansom@vwv.co.uk. Website: www.vwv.co.uk

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