Duty to Consult on Outsourcing Decisions & Bringing Challenges in a Timely Manner

12 September 2013

Practice Area: Procurement

Jj

 R (Nash) v Barnet London Borough Council [2013] EWHC 1067 (Admin)

This case concerned Barnet London Borough Council (Barnet LBC), which is outsourcing most of its services to the private sector, and a constituent of the borough who brought an action against Barnet LBC to challenge the policy.

The proposed outsource

Barnet LBC is outsourcing almost £500 million worth of services over a ten year period in two substantial contracts which it claims will deliver savings of £165 million over the period. Barnet LBC has decided to limit the direct delivery of Services to “those activities that only the Council can”.

Barnet LBC’s outsourcing plan has caused controversy locally, and one disgruntled constituent, Mrs. Nash, challenged on the basis that the Barnet LBC had not acted in accordance with its legal obligations.

The challenge

Mrs. Nash argued the following:

Consultation: Barnet LBC had an obligation to consult before taking the decision to outsource and it had failed to comply with these obligations.

Public Sector Equality Duty: the Barnet LBC had failed to have due regard to the considerations contained in the Equality Act 2010.

Fiduciary Duty: that if Barnet LBC were to enter into the outsourcing agreement this would be a breach of its “fiduciary duty” to council tax payers.

The decision

The High Court rejected Mrs. Nash’s arguments about the Public Sector Equality Duty and Fiduciary, but did agree with the argument that Barnet LBC had failed to consult with representatives in the local area before taking the decision to outsource, and that this amounted to a breach of its obligations under “Best Value” legislation.

However, the challenge was judged to be out of time as all Judicial Reviews must be commenced within 3 months of the breach and Mrs. Nash had not brought the challenge until the procurement decision had been made.

Comment

Time to challenge – this case highlights the importance of bringing challenges in the field of procurement in a timely manner, seek legal advice sooner rather than later, and do not wait until after the result of the procurement process.

For councils it demonstrates the importance of publicising decisions early so as to start the clock running and thereby attempt to reduce the possibility of challenges being brought in time.

Duty to consult – an important aspect of this High Court decision for councils is the obligation to consult prior to the procurement of any substantial project. Where a council is under an obligation to consult it should consider the timing of this within the overall procurement timeframe and ensure that the consultation process is proportionate to the size of the proposed project.

Back