The slippery slope of collusion in public procurement

It came to my attention by @JackOfKent on twitter yesterday that the London Criminal Courts Solicitor's Association (LCCSA) is collating information from various firms which may have put in tenders for the Legal Aid Crime Tender 2015 (put out by the Legal Aid Agency) and may be willing to withdraw them.

I do not have any comments for or against the Legal Aid reforms the LCCSA is fighting, other than by default all public contracts should be procured transparently and with respect for equal treatment (a boy can dream...), even Part B services as in this case. I have said time and time again that there is no fundamental reason why the procurement of legal services should be treated differently from any other.

The problem with the LCCSA approach to putting pressure on the MOJ as a means to force the Legal Aid reform to be dialled back, is that for now it comes dangerously close to collusion:

"Many of us felt compelled to submit a bid for a contract but did so with little, if any, enthusiasm. In the past 6 weeks members have told us that given the right circumstances they would withdraw their bids. We understand from informal soundings in meetings with London members that there is a belief that the great majority of solicitor firms who have submitted bids would withdraw them if they could be confident that other firms would act in a similar manner. This survey formalises those discussions and will inform our ongoing engagement with the MoJ.   
We intend to collate information from firms confirming whether they have bid, and if so, whether they will now refuse a tender offer or will withdraw bids if they felt confident that a sufficient number of other firms in their area/s would also refuse or withdraw. When the number of potential indications of bid withdrawals/refusals reaches a sufficient number we would then be in a position to share this information with the firms concerned and publicise the findings."

(emphasis mine)

There are a few ironies here. The first is that we are talking about solicitors making this proposal. The second, that I was patronised on twitter for not "reading deep enough" and not understanding the "smart contracting" technique being deployed by the LCCSA. Now, I am not a competition law expert but I have seen enough colluding practices in procurement to spot obvious ones, but maybe my instinct had failed me this time. So I asked Albert on his views which were beautifully put on this blogpost. Furthermore, it appears that Dr. Angus MacCulloch from Lancaster spotted similar worrying signs on a previous Legal Aid tender.

At this moment it looks as if there is no cartel yet, only the apparent intention by the LCCSA of forming one. Going from A to B depends on what actually happens with the information collated in the proposed surveying process and how solicitors act afterwards. To the LCCSA credit, it has introduced some firewalls to avoid information being disclosed, namely that a single solicitor from a firm which did not tender for the contract will collate the data. But the problem is not the data collection in itself, but what is going to be done with it afterwards. For the survey to have any benefit in the negotiations, the information contained herein must be released in some way or form.

The last sentence cited above suggests that the information will be disclosed with the firms involved (red flag) and also publicised (another red flag). Albert is particularly concerned with the first one and rightly so as the survey participants signalled an interest in a common approach by taking part in the survey. In addition, I am also worried by the impact that even disclosing anonymised/aggregated information may have in non-participants or even non-LCCSA members. How will the wider market react if a survey of say 100 firms indicates a willingness of 90% to withdraw their bids? It signals to the market that perhaps everyone else should do the same. Once more, I am not a competition law expert but perhaps this amounts to tacit collusion? There is a very good article by Prof. Carmen Estevan de Quesada on this from 2014 (Carmen Estevan de Quesada, "Competition and transparency in public procurement markets" P.P.L.R. 2014, 5, 229-244).

As for the public procurement angle, let's just say that perhaps the solicitors should look into the potential debarment consequences of these activities before getting involved, particularly paragraph 8(d) and (f) of Regulation 57 of the Public Contracts Regulations 2015.

A final comparative note on the LCCSA proposal:there would be no legal way to withdraw bids from a public procurement procedure in other jurisdictions such as Portugal and Spain...