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AoC Conference - shared services strategy and structures - March 2013; Ruth Smith M&R


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AoC Conference - shared services strategy and structures - March 2013; Ruth Smith M&R

  1. 1. Strategy andhere Title goes Structuresfor Shared Services Subtitle goes here12 March 2013 Name Surname OneRuth Smith Name Surname TwoNational Head of ProcurementLaw
  2. 2. Shared services strategy – where tostart?o What does sharing services really mean? “By shared services we mean institutions cooperating in the development and delivery of services, so sharing skills and knowledge, perhaps with commercial participation.” Learning & Skills Council (2008)
  3. 3. Where to start?o Your vision – what do you want to achieve?o Which services?o Who will collaborate?o Private sector input?o Timescales?o Cost and resource?o Governance and project management?o … and don’t forget about EU procurement ! …
  4. 4. So many models so little time! Framework Agreement Inter-college Joint co-operation Employment Informal joint Employee Which model? working Mutual Contract for Teckal Company services Joint purchasing / outsourcing
  5. 5. Plan your strategy … lots of models … andopportunities … Procurement Structure Vision Strategy
  6. 6. Understanding where EU procurementmay apply – a quick reminderThe key elements:o Contracting Authorityo Written contract or Framework Agreemento For works, goods or serviceso Considerationo Above financial threshold
  7. 7. When EU procurement applieso Are you a ‘contracting authority’ (CA):o “a corporation established, or a group of individuals appointed to act together, for specific purpose of meeting needs in the general interest, not having an industrial or commercial character, and – Financed wholly or mainly by another CA; or – Subject to management supervision by another CA; or – More than half board of directors or members are appointed by another CA.”o R. v HM Treasury Ex p. University of Cambridge (Case C-380/98)
  8. 8. Your model: when may EU procurementapply?EU Procurement may apply EU Procurement does not applyJoint Purchasing ‘Teckal’ companiesFramework Agreements Inter-college co-operationContracts between separate Informal joint workinglegal entitiesJV Cos (with private sector) Joint appointments / employmentEmployee mutuals ?
  9. 9. Collaboration where EU procurementapplieso Joint purchasing / outsourcing: Two colleges jointly outsource their back office finance and payroll function to the private sectoro Framework arrangement: One college procures a framework agreement for back office support services on behalf of itself and a number of otherso Central purchasing body
  10. 10. Collaboration where EU procurementapplieso Joint ventures with Private Sector: A college forms a joint venture with the private sector to provide HR and payroll services to other Colleges in the area
  11. 11. Collaboration where EU procurementapplies College Private sector JV Co College C College B College D
  12. 12. Collaboration where EU procurementapplieso Employee mutuals (currently …): Spin out employee mutual provides services back to its originating college Mutual College
  13. 13. Collaboration which avoids EUprocuremento The ‘Teckal’ (or “in-house”) companyo Three colleges want to merge their finance and accounting functions through establishing NewCo New Co College A College B College C
  14. 14. The ‘Teckal’ companyo Must satisfy 2 tests: TEST 1: Colleges exercise [joint] control over NewCo similar to that which they exercise over their own departments – Power to give directions over strategic decisions – Private sector capital will be fatal to the control test
  15. 15. The ‘Teckal’ company TEST 2: NewCo carries out the ‘essential part’ of its activities with the controlling Colleges – So NewCo’s activities must be devoted “principally” to the colleges with other activities of only “marginal” significance – Not market-orientated(Risk Management Partners Ltd v Brent LBC [2011] UKSC7)
  16. 16. Collaboration which avoids EUprocuremento Inter-college co-operationo Co-operation between colleges with the aim of ensuring that a public task that they all have to perform is carried out (Case C-480/06 Commission v Germany [2009])
  17. 17. Inter-college co-operation – keyrequirementso Only between public entities – not private sectoro “Contract” is non-commercial in character (no profit)o Provides a means to ensure a public task which colleges are required to perform is carried outo Governed solely by considerations and requirements relating to the pursuit of objectives in the public interesto Of little or no interest to a private sector supplier
  18. 18. Other collaboration which avoids EUprocuremento Informal joint working - no contractual relationshipo Joint appointments / joint employment
  19. 19. A look to the future – proposals for newEU Procurement Directiveo On Teckal … and joint control … – Decision making body - representatives from all participating colleges – Decisive influence over strategic objectives and significant decisions – NewCo does not pursue interests which are distinct from the controlling colleges – No payments to NewCo other than reimbursement or re- allocation of funds
  20. 20. A look to the future – proposals for newEU Procurement Directiveo On Teckal … and the Essential Part test – “More that 80% of its activities” carried out with the controlling entities – 80% based on average total turnover in the last 3 yrs (or if not available “credible” turnover based on projections)
  21. 21. A look to the future – proposals for newEU Procurement Directiveo On Inter-college co-operation … the conditions: – Genuine co-operation to jointly carry out public service tasks – Governed solely by considerations in the public interest – Participating colleges perform, on the market, less than 20% of activities concerned by the co-operation – No financial transfers other than reimbursement or re- allocation of funds – No private capital
  22. 22. A look to the future – proposals for newEU Procurement Directiveo And new opportunities to reserve contracts for Mutuals … – Organisations whose “main aim is the integration of former employees of public authorities into the private sector”
  23. 23. A look to the future – proposals for newEU Procurement Directiveo And new opportunities to reserve contracts for Mutuals …PROVIDED: – 75% of mutual’s employees have left a contracting authority to deliver public services through the mutual – Mutual provides services exclusively for contracting authorities – Employee ownership or engagement has significant impact on mutual’s governanceo Maximum term of 3 years (from date Mutual operational)
  24. 24. Conclusion: Think carefully about yourstrategy – get that right and the rest shouldfollow Procurement Structure Vision Strategy
  25. 25. Contact Detailso Ruth Smitho Mills & Reeve LLP, National Head of Procurement Lawo Email: ruth.smith@mills-reeve.como Tel: 0121 456 8434