Decision details

The Cabinet Member:

1)    Approved the entry by the Council into a section 75 agreement with Peterborough Clinical Commissioning Group, as part of the joint procurement of Child and Adolescent Mental Health services; and

2)    Approved the Council’s financial commitment to the procurement.

1. Reduce risk of loss and liability to PCC as lead organisation

By leading the procurement and contracting with the successful bidder on behalf of the 3 parties PCC is taking on a significant liability. In the event CCC or the CCG reduce funding or pull out of the procurement (or post award) PCC would be left with financial and legal liabilities as the contracting body. Therefore a s.75 is essential to set out the parties’ financial contributions and responsibilities in a legally binding agreement.  Both CCC and CCG have signed the s.75 agreement already.

In addition, without a s.75 in place at this stage in the contractual process (i.e. leading up to the ITT and subsequent contract award) there is a greater risk that the procurement exercise may fail if funding is withdrawn, resulting in wasted costs to PCC as the organisation leading the procurement. The s. 75 Agreement provides that any party withdrawing its funding during the process leading up to procurement, must give at least six months written notice to the others and indemnify the others for wasted costs/losses which they have incurred. Given the financial pressure and uncertainty across all three organisations there is a real risk this could occur.

2. Reduce the risk to the procurement and the service

Having a s.75 agreement in place prior to issuing the Invitation to Tender (ITT) is good practice. Should the procurement fail it would also have a significant impact on service provision in Peterborough and Cambridgeshire. Current providers are contracted up until the ‘go live’ date of the new service. Last minute extensions to these services are problematic firstly as it is dependent on the willingness of the current provider to extend and secondly it would require both local authorities to act outside of the Public Procurement Regulations (PCR 2015), thus creating significant risk of legal challenge. Any disruption or break in service will also adversely affect staff and service users who are particularly vulnerable.

3. Prevent reputational damage to PCC

A failed procurement exercise as a result of a funding party’s withdrawal (- less likely to occur with the  s.75 agreement in place  - ) would cause reputational damage to PCC in a number of ways:

·         Reduce the market’s confidence in Peterborough as a procurer of services given the wasted time and cost of bidding for a contract that is not awarded

·         Reduce partner organisation’s confidence in Peterborough’s ability to procure services and lead on joint commissioning

·         Reduce the public’s confidence in Peterborough’s ability to procure and deliver services that are high profile and in great demand

4.  Support the Sustainability and Transformation Plan (STP)

One of the priorities within the STP is the system wide development of a new model for child and adolescent mental health (CAMH) services based on the IThrive framework. This joint procurement is a key part of the CAMH transformation and the first service element to be tendered. Therefore, ensuring the success of the joint procurement is of political and financial importance.

Option 1 - Progress the procurement without any 3 way agreement. This option was excluded as formal agreement between the 3 parties is necessary to indemnify Peterborough against any liabilities arising from partners reducing or withdrawing funding.     

Option 2 - Enter into a non-legally binding agreement such as a memorandum of understanding. This option was excluded for the same reason as option 1.

Option 3 - Each organisation procure the service independently of each other. This option was excluded as the joint procurement brings significant benefits to all parties including economies of scale, innovation, increased market interest and equity of provision across the area.

None.

None.