A local authority in Wales has defended its decision to introduce a price cap to its school contract tendering process for 2024/25.
Bridgend County Borough Council, which introduced the cap within its invitation to bid for school contracts in June, says it made the decision after facing a reduction in funding of more than £88.4 million.
The cap means bids can only be submitted if they are equal to, or lower than, the financial cap stipulated in the tender.
The move has faced criticism from operators for departing from the traditional model where, when local authorities put contracts out to tender, any operator can collate costs, calculate a profit and submit a price.
The council has defended its decision, saying it will not impact service standards.
“Like all local authorities across the UK, we have spent the last 14 years dealing with hugely significant financial challenges,” a spokesperson explains. “As the UK local government funding crisis is ongoing, we anticipate that a further reduction of £32m is going to be necessary by 2027-28 if the council is to meet its legal responsibility of setting a balanced budget every year.
“Against this extremely difficult financial backdrop and as a direct result of the national funding crisis, we have introduced price caps across the majority of the council’s procurement exercises. “As well as ensuring that the caps remain sensitive to local market conditions, the historic pricing of goods and services and the amount of available budget, the council also follows robust procurement processes in order to guarantee high standards of quality and safety at all times.”
The decision has come under fire from businesses in the area, with one warning that the price cap risks a “race to the bottom” in pricing and service standards in addition to locking out many operators from seeking tenders.
“While low-cost operators always pick up contracts they want because they’re the cheapest options, there has always been a door in for the more expensive operators, because there aren’t enough low-cost operators for all of the contracts,” says the operator, which wishes to remain anonymous. “I now have a concern that, as the Welsh government coffers become tighter and tighter, and the pressure on local authority department heads to save money gets higher, this could potentially be something other councils look at.
“What we risk ending up with is a bunch of low-cost operators running the oldest vehicles, paying drivers the lowest wages, and investing very little in developments such as pension schemes, sick pay schemes, employee perks, vehicles or technology — because the rates won’t allow it.”
routeone is not aware of any other local authorities that have introduced a price cap to their tendering process.
