Contract Tendering

[cluelessuk]

Can anybody advise if this is legal or not.


A major worldwide company (Company A)

The company A's UK operation deceided to outsource a department of up to 10 people.

several of the company A's staff members / contractors formed a company, (Company B )and did the outsourced work. They were awarded a 5 year contract that wasn't tendered.

That contract ran 5 years, and had 3 x 1 year extensions

total = 8 years

The contract after 8 years (again) didn't go up for Tender, at the end of the 8 years, the contract was "single or sole sourced" to Company B without tendering again.

During the initial 8 years, company A sold some of it's business to Company C, and company A who have the contract took this role over by default.

When company C went to tender, company B didn't put in a tender offer.


As I see it
Ex-staff created a company (B) and took the work
Current staff of company (A) give them the work and never put it to tender, that contract is protected

With company C tendering the work, Company B either couldn't put a tender together through lack of commercial experience, or company (A) suggested they don;t tender, as if they lost it, it may raise questions within company (A).

I would guess the contract value annually would be approx £350-£500K per year based on no of people, guesstimate salaries and profit. I suppose companies house info would highlight the annual figures, however would have to wait until the period after company (C) revenues are off.

When Company A senior management were contacted, a letter responded saying that it had been single sourced in lines with internal procedures etc

anybody see any legal problems with the above?

 

[Joseph H]

I dont see any problem with that as on a smaller scale I contract out electrical work I get to one company that I have done for years.

 

[Talay]

Surely companies can do what they want whereas government departments and public bodies need far more transparency and accountability.

If one of my companies wants to give a contract to Company A without any form of tender or consultation, I don't see whose business it is apart from the shareholders of my company.

 

[cluelessuk]

As the company is listed in a number of stock exchanges. It would be quote hard for themn to demonstrate they are acting in the interest of the shareholder.

There is some European law about contract tendering, as other work I do for a lesser value must go out for 3 competetive quotes. This is driven by the value. There is something that stops this practise.

There is some guidance if you search for seupb peace III procurement and tendering.

In manpower contracts like this, staff can transfer under TUPE.

A number of people connected to this work have already said, that there is something "unusual" about the arrangement and that somebody may have their fingers in the till.

if anything, by going to tender you demonstrate that you have assessed the market suppliers and picked the best one for the companies needs. Including cost. if anything it shows fair and open competition.