Touching on tender points

Your report on 18 March on the ECJ judgment on Suzen suggested that local authority in-house departments might now be more competitive against tendering bids.

Under the current CCT regime, if there is no Tupe transfer and the in-house team has not won the bid, then local authorities are entitled to add a figure representing the council's redundancy costs on to the value of the external bid in any event. The external bids are then evaluated in comparison with other bids and the internal bid on the basis of the increased figure.

If there is no Tupe transfer to external tenderers because, as a result of Suzen, it is deemed that there is no economic entity, then tenderers will not normally need to build in a large figure for redundancy costs at the end of the contract. Most contracts are of relatively short duration (for example, three to five years), and therefore any potential redundancy costs at the end of the contract will not be substantial.

Where the greatest uncertainty lies is where a tender may be accepted on the basis of a Tupe transfer but that the law continues to change during the lifetime of any contract awarded now so that redundancy payments are due at the end of the contract.

Rather than either party being required to bear the full cost of the potential redundancies in this situation, this would seem to be an area where, subject to views of the councils' auditors, local authorities and tenderers might be able to negotiate and share the risk.

However, it should always be borne in mind that public sector in-house legal teams are normally extremely cost-effective and it is very difficult for the private sector to compete on price in any event.

Sarah Frith

Blake Lapthorn