Privacy settings

LGO logogram

Review your privacy settings

Required cookies

These cookies enable the website to function properly. You can only disable these by changing your browser preferences, but this will affect how the website performs.

View required cookies

Analytical cookies

Google Analytics cookies help us improve the performance of the website by understanding how visitors use the site.
We recommend you set these 'ON'.

View analytical cookies

In using Google Analytics, we do not collect or store personal information that could identify you (for example your name or address). We do not allow Google to use or share our analytics data. Google has developed a tool to help you opt out of Google Analytics cookies.

Portsmouth City Council (20 008 105)

Category : Other Categories > Commercial and contracts

Decision : Upheld

Decision date : 25 Jun 2021

The Ombudsman's final decision:

Summary: The Council failed to fairly complete a tender process, in which Mr C was unsuccessful. This leaves Mr C with uncertainty about whether the result would have been different if properly completed. The Council has taken appropriate action to improve its procedures to prevent future problems. To acknowledge Mr C’s uncertainty, frustration, time, and trouble, the Council will apologise and pay him £300.

The complaint

  1. The complainant, who I will call Mr C, says the Council wrongly awarded a tender contract to a competitor. The Council has not given a clear reason why Mr C’s tender submission would not have been successful. Mr C says the Council’s tender documentation was inaccurate, but in November 2020 on a new tender opportunity the Council sent the same documents. Mr C says the Council consistently make mistakes in tender contracts, fail to adequately monitor its staff, and fail to make procedural changes to improve its service. Because of this Mr C says he has had time, effort, and lost income.

Back to top

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. 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)

Back to top

How I considered this complaint

  1. I considered:
    • Information provided by Mr C, including during a telephone conversation.
    • Information provided by the Council in response to my enquiries.
  2. Mr C and the Council had an opportunity to comment on my draft decision. I considered any comments received before making a final decision.

Back to top

What I found

  1. Mr C owns company A, which sells ice cream. The Council put out a tender for an ice cream concession which company A and company B applied for. Company B was successful; Mr C believes the Council’s process was unfair.
  2. The advert said it was for an ice cream concession offer only. The successful bidder will deliver a rental income to the Council around £10,000 per year.
  3. Company B’s bid was financially in the region the Council wanted, whereas Mr C’s bid was lower. However, company B was offering products other than ice cream, such as coffee and waffles. Mr C points out if he had included such products in his bid, he could have offered a higher rental income to the Council.
  4. The income was not the only reason company B’s bid was successful, the Council noted the following:
    • Locally made product.
    • Wide range of products offered with reasonable pricing.
    • Packaging used addresses environmental and sustainability considerations.
  5. The Council accepts it was wrong not to notice company B’s bid did not meet the criteria for ice cream only.
  6. However, the Council says Mr C’s bid also did not meet the criteria because it did not provide evidence of employer’s liability insurance and did not provide a health and safety policy declaration.
  7. Mr C says he has employer’s liability insurance, he did not provide the evidence because the Council’s documents say it is not a requirement for sole traders. When the Council wrote to him to say his bid was unsuccessful, it did not list the lack of proof of employer’s liability insurance as a reason.
  8. The minimum requirements listed on the Council’s application information and guidance were:
    • Experience of operating a similar business or details of transferable experience that will be used in this opportunity.
    • Supporting references.
    • Public liability insurance of at least five million pounds
    • Employers liability insurance of at least five million pounds where required by law
    • Health and safety policy declaration
  • Relevant certification or evidence of relevant training/prior experience as relevant to the proposal, for example, Food Hygiene Certificate.
  1. The Council says even without its errors Mr C’s application failed on two of these minimum requirements. That he did not have employers liability insurance and that he did not provide evidence he has a health and safety policy complying with current legislative requirements.
  2. Mr C completed the insurance section of the application form, stating yes to having public liability insurance and employer’s liability insurance. The application form stated “It is a legal requirement that all companies hold Employer’s (Compulsory) Liability Insurance of £5 million as a minimum. Please note this requirement is not applicable to Sole Traders.” Mr C believed because of this statement that because he is a sole trader, he did not need to evidence employer’s liability insurance.
  3. Mr C completed the health and safety policy declaration on the application form. The minimum requirements and the application form do not say you must provide supporting evidence. Mr C says he has won previous contracts with the Council and not had to provide employers liability insurance or health and safety policy documents.
  4. Despite telling Mr C in response to his complaint that its documents were wrong regarding employers liability insurance, in the next round of tendering for ice cream concessions, the Council’s documents still stated “It is a legal requirement that all companies hold Employer’s (Compulsory) Liability Insurance of £5 million as a minimum. Please note this requirement is not applicable to Sole Traders.” The Council confirms this is wrong and has amended its documents to now say "It is a legal requirement under the Employers' Liability (Compulsory Insurance) Act 1969 ("the Act") that employers hold Employer's Liability Insurance covering as a minimum £5 million. There are limited exemptions to this requirement and these are set out in detail in the Act and the regulations made under it. If you believe that you/your organisation are exempt from this compulsory insurance requirement please explain fully the reason for such exemption."
  5. The Council says if it had properly considered the tenders, and neither would have been successful, it could have chosen one of the following options:
    • Go back to both bidders to explain why their proposals were not acceptable and give them the opportunity to revise and correct their proposals. For company A this would be to provide the missing documents. For company B this would be to amend the proposal to one offering ice cream alone.
    • Revise the concession opportunity and re-advertise. This would be an opportunity to change the nature of the concession to one offering other products aside from ice cream if this were considered desirable.

Was there fault causing injustice?

  1. The Ombudsman must now consider whether there was fault by the Council which caused Mr C an injustice.
  2. The Council’s tender process on this occasion was flawed. The Council failed to identify that company B’s application did not meet the criteria because it included items other than ice cream, which would likely increase income.
  3. The Council says Mr C’s application also did not meet the minimum criteria because it did not include relevant evidence of insurance and health and safety policy. It is understandable why Mr C did not think he needed to provide evidence of employer’s liability insurance because he is a sole trader and the Council’s application form implied it was not needed. Mr C completed the health and safety declaration and did not think there was anything further required as the form does not state you must provide supporting evidence. However, question (d) says “Please provide evidence that your company has a Health and Safety Policy that complies with current legislative requirements”. The Health and Safety Executive says “A health and safety policy sets out your general approach to health and safety. It explains how you, as an employer, will manage health and safety in your business. It should clearly say who does what, when and how. If you have five or more employees, you must write your policy down.” Mr C does not have five or more employees so is not required to write the policy down, however the answer he gave in his application does not explain how he manages health and safety in his business, only that he has a 5* hygiene rating. I therefore find it possible his application could have failed on this point, as the Council suggests. Mr C’s bid was below the indicative amount the Council wanted to make as set out in the tender documents.
  4. For these reasons on the balance of probabilities I cannot say that had the Council realised the winning bid was non-compliant it would have awarded the contract to Mr C. If neither bid was complaint the Council should not have awarded the contract to either party, it should have taken the steps set out in paragraph 18. Awarding the contract to company B was fault.
  5. If the Council had acted properly, I cannot say who it would have awarded the contract to. It might have been properly awarded to company B and so Mr C’s situation would remain the same. I cannot therefore decide with any certainty the Council’s actions have resulted in a loss of revenue for Mr C, and I cannot recommend the Council compensate him for lost income.
  6. The Council’s actions leave Mr C with some uncertainty, frustration and upset at the flawed process. Mr C has invested time and trouble into a flawed process and had the time and trouble of complaining about it.
  7. The Council explains it has improved its processes to prevent future problems. Procurement for contracts below £100,000 do not have the involvement of the Council’s procurement service. In this case the contract was evaluated and awarded by an officer in the culture, leisure, and regulatory services department. Moving forward the Council now has a panel of senior officers doing the evaluation, rather than one individual. There is also a level of oversight into the process by a procurement professional who will provide advice and guidance as appropriate. The Council has reviewed and updated its documents to ensure they are now accurate.

Back to top

Agreed action

  1. I am satisfied with the actions the Council has taken to improve its service in future. To acknowledge the impact on Mr C the Council will apologise to Mr C for failing to note errors with both applications and failing to either ask the parties to amend their applications or start the tender process again. Had it done this Mr C could be confident the tender was properly awarded. To acknowledge his uncertainty and frustration, and the time and trouble he has had, the Council will pay him £300.
  2. The Council should complete the apology and payment within one month of the Ombudsman’s final decision. The Council should provide evidence of its compliance to the Ombudsman.

Back to top

Final decision

  1. I have completed my investigation on the basis the agreed action is enough to acknowledge the impact on Mr C and the actions already taken by the Council are sufficient to prevent future problems.

Back to top

Investigator's decision on behalf of the Ombudsman

Print this page