Academy trusts: A reminder of their obligations under procurement law

Academy trusts must comply with their procurement obligations under the Academy Trust Handbook 2022 and the Public Contracts Regulations 2015.

Academy trusts must comply with their obligations under the Academy Trust Handbook 2022 and the Public Contracts Regulations 2015 (‘PCR 2015’) as a requirement of their funding agreements with the Secretary of State. We provide a brief overview of their procurement obligations and take a look at the recent High Court ruling of Bromcom Computers plc v United Learning Trust and another [2022] EWHC 3262 (TCC) where breaches of the PCR 2015 were sufficiently serious to justify an award of damages against United Learning Trust. 

Academy Trust Handbook 2022

The Academy Trust Handbook 2022 details the governance and financial responsibilities of academy trusts due to their status as charitable companies acting in the public interest. Academies must ensure that public funds have been used as intended by Parliament, all spending decisions represent value for money and internal delegation levels are applied.  In addition, academies must ensure that a competitive tendering policy is in place and that they comply with procurement rules and thresholds in PCR 2015.

Public Contracts Regulations 2015

Academies are deemed to be ‘contracting authorities’ because they largely receive their funds from the UK taxpayer via the Department of Education (‘DfE’). As a contracting authority, academies must consider the PCR 2015 every time they place a significant order for goods, services or building works. These apply when the following thresholds are met:

• For goods and most services – £172,514;
• For social and other specific services (including catering) – £625,050; and
• For building works – £4,322,012.

If the academy is planning on buying something that costs more than the procurement threshold, it must assess the market and see if it can acquire what it needs using the find a DfE recommended framework tool. Next, the academy must prepare both a contract and an invitation to tender and consider whether to use (1) the restricted procedure, to reduce the number of bids it has to assess or (2) an open procedure, to include all bids.

The academy must then advertise a contract notice using the UK e-notification service, Find a Tender. The invitation to tender (and all other documents) must be available electronically from the time that the contract notice is published. All bids that the academy receives must be assessed fairly and using the same process and criteria. The academy must award the contract to the highest scoring bid supplier.

The case below is an example of the potential liability that academies may face if these obligations are not met.

Bromcom Computers plc v United Learning Trust and another [2022]

United Learning Trust (‘ULT’) is a large multi academy trust. It used a competitive dialogue procedure for the award of a contract to supply a management information system to 57 of its academies. Bromcom Computers and Arbor reached the final stage of the procurement process. Arbor won the contract but Bromcom subsequently alleged ULT had committed multiple breaches of PCR 2015.

The High Court held that there had been several breaches of procurement law and, if they had not occurred, Bromcom would have won the contract (as the highest scoring bidder) by a significant margin. The Court concluded that the breaches were "sufficiently serious" to merit an award for damages, just how much will be determined at a later hearing.

The breaches can be outlined under three main headings:

Price scoring

The Court found that ULT had incorrectly calculated the bidders' scores. ULT should have given each bidder a single score for each section. Each evaluator should have determined their individual score and then discussed their reasoning during a moderation meeting with the other evaluators to agree a collective score for each section. Instead ULT simply took the average of all of the evaluators' individual scores without holding a meeting. This meant that ULT was unable to provide an explanation as to how the scores had been reached.

Arbor's bid submission

The bid documents had to be submitted by email. The winning bidder’s emailed contained a link to a drop-box account from which its bid documents could be downloaded. This meant that Arbor had continuous access to the drop-box and ULT had no way of monitoring whether the bid was altered after the tender deadline. Whilst there was nothing in the notice or the tender materials which expressly prohibited such a method of submission, permitting the use of a drop-box which the bidder continued to have access to was held to be in breach of the procurement rules.

The Rebate

As part of its bid Arbor offered a rebate, or discount, on a separate contract with ULT for 15 schools which fell outside the scope of the procurement process. The Court agreed with Bromcom that the rebate was a breach; the tender assessment did not make any provision for it to be taken into account, and it rewarded the winning bidder for offering something which did not relate to the contract in question.

The case is a useful reminder for academy trusts that a breach of procurement rules can lead to claims (with the time and costs that involved) and can lead to damages being awarded.