Luton Borough Council (19 004 404)

Category : Other Categories > Commercial and contracts

Decision : Upheld

Decision date : 25 Feb 2020

The Ombudsman's final decision:

Summary: Mr X complained about the Council’s failure to formalise its relationship with his company. He said its failure to do so has caused his company financial and reputational loss. We found the Council took too long to decide Mr X needed to tender for new work. It has apologised which is an appropriate remedy. We will not investigate its actions before 2018 because Mr X could have complained about them to it, and us, sooner.

The complaint

  1. Mr X complains about the Council’s failure to formalise its relationship with his company, having successfully delivered several services over the past ten years.
  2. Mr X says the Council promised it would do this but delayed and then changed its position, now requiring him to start again, tendering for future work. Because of this, Mr X says he has lost out financially and reputationally.

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What I have investigated

  1. I have only investigated Mr X’s complaint about the Council’s actions in 2018 and 2019. I have not investigated earlier events for the reasons set out in paragraphs 37 and 38. I have not investigated Mr X’s complaint about use of data and a correspondence with a regulatory body for the reasons set out in paragraphs 39 and 40.

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The Ombudsman’s role and powers

  1. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
  2. We cannot investigate late complaints unless we decide there are good reasons. Late complaints are when someone takes more than 12 months to complain to us about something a council has done. (Local Government Act 1974, sections 26B and 34D, as amended)
  3. The law says we cannot normally investigate a complaint when someone could take the matter to court. However, we may decide to investigate if we consider it would be unreasonable to expect the person to go to court. (Local Government Act 1974, section 26(6)(c), as amended)
  4. Mr X could have gone to the court about the nature of his business relationship with the Council and any consequential compensation he believes he is owed. However, as his complaint concerned the apparent lack of a contract, we have exercised our discretion to investigate how the Council responded to his complaint about this matter in 2018 and 2019.
  5. When considering complaints, if there is a conflict of evidence, we make findings based on the balance of probabilities. This means that we will weigh up the available relevant evidence and base our findings on what we think was more likely to have happened.
  6. If we are satisfied with a council’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)

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How I considered this complaint

  1. I spoke to Mr X about his complaint.
  2. I considered the Council’s reply to my enquiries.
  3. I gave the Council and Mr X the opportunity to comment on my draft decision. I considered any comments received.

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What I found

Procurement legislation

  1. Public procurement is where public sector organisations such as councils pay for goods, services and works from third parties.
  2. Most public procurement is covered by Public Contracts Regulations 2015. Disputes about public contracts can be made to the courts and we would normally expect people to exercise this right.

Background

  1. Mr X’s company had provided a range of services to the Council for over ten years. The Council said it paid over several hundred thousand pounds for these services over this time, without a contract or service level agreement with Mr X.
  2. During the period covered by this complaint, from April 2018 to June 2019, the Council says it made 28 further five figure sum payments to Mr X’s company. It described these as being on “an ad hoc basis”, again without a contract or service level agreement.
  3. Because of concerns from Mr X about some delays with payments, in 2018 the Council said it would develop a service level agreement with his company. Several senior Council officer staff changes occurred. Mr X chased the Council for the agreement. In February 2019 the Council told Mr X it had arranged for procurement officers to start work moving from “ad hoc spot contracts to a regular agreement going forward”. The Council wrote to Mr X again in March 2019 and said it was still considering the matter.
  4. The Council met Mr X to discuss this in April 2019. It explained what would need to happen for it to buy services from Mr X’s company in future. It again referred to the need for a service level agreement.
  5. Mr X chased this up and said the Council reassured him it would take some time because of the complexity of services. However, further staff changes happened, and the Council did not complete the agreement.

Complaint to the Council

  1. Mr X complained to the Council in May 2019 that it had not developed a service level agreement for his company. He said his company had spent money to prepare because he understood the Council was developing an agreement.
  2. The Council replied to Mr X in June and recognised the work his company had completed supporting vulnerable service users. The Council explained it was reviewing its approach to buying from external suppliers. It could not say which suppliers would be successful in future. It would review what it needed and invite tenders for those services.
  3. Mr X asked the Council to further consider his complaint. Senior officers met with him in June to discuss the complaint. It wrote to him at the end of July at stage 2. It said it had:
    • Taken too long to deal with Mr X’s concerns and decide how to work with his company in future.
    • Shown poor practice working with Mr X’s company. It had learnt from this by improving its approach to procurement. It apologised for this historic poor practice.
    • Paid Mr X’s company a six-figure sum for work over a ten-year period without a contract or adequate monitoring.
    • Sometimes made late payments to Mr X’s company. It asked him for details about the impact of any late payments.
    • Eventually decided that it needed a contract in future to ensure necessary safety and quality. It therefore had to stop working with Mr X’s company until a contract was in place.
  4. It explained if Mr X’s company wanted to work with the Council again, it would need to apply using an online tender portal. It apologised for not having robust commissioning and procurement arrangements for work with Mr X’s company over recent years. It asked to meet him to discuss how to deal with client data held by his company.
  5. The Council said Mr X could ask for a Stage 3 review. After he asked for this, it apologised and said it did not have a third stage for this type of complaint. It referred Mr X to the Ombudsman.
  6. Mr X’s complaint to us said the Council’s actions have had a major financial impact on his company. He had, because of the Council’s assurances, invested in buildings, staffing and services. He wanted the Council to address the negative impact on his company’s reputation and loss of work.

Reply to my enquiries

  1. The Council cannot find any correspondence where it committed in writing to developing a contract with Mr X’s company from April 2018 onwards. It has provided emails from officers referring to its plan to do so.
  2. Since Mr X’s complaint the Council said it had strengthened its procurement procedures and introduced stronger controls on applying any exemptions from them. Agreed exemptions now need short contracts suitable to what Is being procured.
  3. The Council said Mr X had not registered on the Council’s procurement portal. Until he did so, it would not consider buying services from him.

My findings

  1. I have not investigated the Council’s actions about its relationship with Mr X’s companies before 2018 for the reasons set out in paragraphs 37-38.
  2. In 2018 the Council was entitled to decide that it needed to formalise work with Mr X’s companies. This decision recognised problems caused by the Council’s earlier ad hoc relationship with Mr X’s companies. This decision was made without fault. The Council also appropriately offered to discuss any problems caused by earlier delays in payment. It was open to Mr X to have responded to this.
  3. The Council’s correspondence with Mr X at first suggested formalisation of the relationship could be achieved through a service level agreement.
  4. It took several months for the Council to then decide Mr X needed to apply for tenders for any new work through the Council’s procurement portal. This delay was fault causing Mr X uncertainty about what was happening. The Council could and should have been clearer, earlier, that such an application was necessary to put the relationship on an appropriate footing.
  5. Notwithstanding this delay, the Council was entitled to decide that Mr X needed to apply through its online portal. It had regard to its new approach to procurement and the nature and scale of work undertaken by Mr X’s companies.
  6. Although the Council took too long to clarify the situation with Mr X, we cannot say, on the balance of probability, that this fault unavoidably led to significant injustice to Mr X requiring any additional remedy. If the Council had acted more quickly it is likely to have come to the same conclusion, that Mr X needed to use the online portal.
  7. Whilst the Council said it was starting to work on an agreement, Mr X took decisions about his businesses without an agreement or contract in writing. This was therefore at his own risk. If Mr X believes the Council’s actions or inactions were contrary to any contractual relationship that may have existed, the option of taking court action was open to him and he was aware of this.

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Final decision

  1. I have completed my investigation. The Council was not at fault for how it dealt with Mr X’s companies since 2018. It was at fault for delay in dealing with his requests in 2018 – 2019 and has apologised. This an appropriate remedy.

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Parts of the complaint that I did not investigate

  1. Mr X’s complaint concerns the Council’s failure to formalise its relationship with his companies over a ten-year period. Mr X could have complained to the Council about this at any time, and, if dissatisfied with its response, come to us.
  2. I have not investigated those parts of Mr X’s complaint concerning the Council’s actions or inactions before 2018. This is because Mr X could have complained to the Council about them and come to us, and it would have been reasonable for him to do so.
  3. I have also not investigated any parts of Mr X’s complaint concerning data held by him or the Council as these are matters for the Information Commissioner’s Office and relate to possible court action.
  4. I have also not investigated Mr X’s complaint about the Council’s correspondence with a regulatory body about his companies. The Ombudsman cannot make the Council write to the regulatory body about Mr X’s company and further investigation of this matter is unlikely to reach a different outcome.

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Investigator's decision on behalf of the Ombudsman

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