1 Obligation to consult prior to outsourcing or privatisation

(1) If a relevant authority proposes to enter into a public services contract in
circumstances where those services were previously provided or secured by
that authority, or where it has an obligation to provide such services, it must
5consult on the proposed contract in accordance with subsections (2), (3) and (4).

(2) Before starting the process of procurement for a public services contract, the
relevant authority must publicise its intention to enter into the proposed
contract in such a manner as the authority reasonably thinks it will bring the
proposal to the attention of the majority of people who would be affected by it.

(3) 10Any consultation held under subsection (1) must be open for response for at
least 28 days and must, in particular, allow consultees to express a view as to
whether they wish the services to be provided by the relevant authority.

(4) Where the proposed contract relates to an asset held by the relevant authority,
any consultation held under subsection (1) must allow consultees to express a
15view as to whether they wish the asset to remain the property of the relevant
authority.

(5) The relevant authority must, when deciding whether to proceed with the
process of procuring a public services contract, have regard to any responses
to the consultation that the authority has received.

2 Internal bids

(1) Where a relevant authority has held a consultation and decides to proceed with
the process of procurement for a public services contract, it must consider any
internal bid.

(2) 5Where the relevant authority determines that an internal bid is not practicable,
it is required to give reasons for this decision and publicise those reasons in
such a manner as the authority reasonably thinks it likely to bring them to the
attention of the majority of people who would be affected by the outcome of
the procurement exercise.

3 10Contracts with relevant authorities and the promotion of organisations with
a social purpose

(1) The Schedule has effect.

(2) In that Schedule—

(a) Part 1 requires the Secretary of State to make regulations prioritising
15bids by public authorities, not for profit entities and social enterprises
and also makes consequential provisions;

(b) Part 2 provides that where a relevant authority is engaged in the
purchase, management, disposal and hire of goods or the carrying out
of works, it is required to consider how what is proposed to be
20procured might improve the economic, social and environmental well-
being of the relevant area, and how, in conducting the process of
procurement, it might act with a view to securing that improvement;

(c) Part 3 amends provisions of the Local Government Act 1988 relating to
the exclusion of non-commercial considerations in the case of local and
25other public authority contracts.

4 Requirement for a break clause

(1) Where a relevant authority enters into a public services contract it must include
in that contract a break clause.

(2) A relevant authority is entitled to exercise the break clause under a public
30services contract and re-tender for the contract where the relevant conditions
are triggered.

(3) The Secretary of State may by regulations define the trigger conditions to be
included in a break clause under subsection (1).

(4) In respect of a nationally provided public service, such regulations may in
35particular require contracts for public services to—

(a) require the relevant authority to provide a complaints procedure and
record the number of complaints received about the service provision;

(b) prescribe a defined threshold of complaints after which the relevant
authority is obliged to consider whether an adequate service is being
40provided under the contract;

(c) prescribe that in circumstances where the threshold of complaints is
reached, and the relevant authority concludes that an adequate service
is not being provided under the contract, it is entitled to exercise the
break clause and re-tender for the contract.

(5) In respect of a local or regionally provided public service, such regulations may
in particular require a contract for public services to—

(a) require the relevant authority to provide a complaints procedure and
record the number of complaints received about the service provision;

(b) 5prescribe a defined threshold of complaints after which the relevant
authority is required to consider whether an adequate service is being
provided under the contract.

(c) prescribe that in circumstances where the threshold of complaints is
reached, and the relevant authority concludes that an adequate service
10is not being provided under the contract, it is entitled to exercise the
break clause and re-tender for the contract.

(6) When a break clause is exercised under section 4, regulations must preclude
the payment of any financial compensation under the contract.

5 Transparency

(1) 15Where a relevant authority starts the process of procurement for a public
services contract, it must make available to the public details of all bids
received prior to the conclusion of the procurement exercise.

(2) Where a relevant authority enters into a public services contract, details of that
contract shall be made available to the public within 28 days of the
20procurement decision.

6 Freedom of information

(1) The Secretary of State must designate as a public authority, pursuant to section
5(1)(b) of the Freedom of Information Act 2000, companies or other bodies
which enter into a public services contract.

(2) 25“Public services contract” has the meaning contained within section 8 of this
Act.

(3) The Secretary of State shall maintain a list of companies designated under
section 6(1) of this Act.

(4) Requests under the Freedom of Information Act 2000 in respect of such
30companies or bodies can only be made in respect of information relevant to the
provision of a public services contract.

(5) The Secretary of State must designate as a public authority, pursuant to section
5(1)(b) of the Freedom of Information Act 2000, any utility company subject to
regulation by regulatory authorities as defined in section 8.

7 35Orders and regulations

(1) Any power to make regulations under this Act is exercisable by statutory
instrument.

(2) A statutory instrument containing regulations under this Act is subject to
annulment in pursuance of a resolution of either House of Parliament, save as
40specified in subsection (3).

(3) A statutory instrument containing regulations under section 3 may not be
made unless a draft of the instrument has been laid before and approved by a
resolution of each House of Parliament.

8 Interpretation

In this Act—

• “asset” means an asset worth in excess of £50,000;

• “internal bid” means an in-house bid by public sector staff employed by
  5the relevant authority;

• “public service contract” means all contracts for public services, whether
  national or local, worth in excess of £50,000;

• “regulatory authorities” includes Ofwat and Ofgem;

• “relevant authority” means a person or body that is a contracting
  10authority for the purposes of the Regulations;

• “the Regulations”, in the definition of “relevant authority”, means the
  Public Contracts Regulations 2006 (S.I. 2006/5S.I. 2006/5), or any regulations
  replacing those regulations, as from time to time amended.

9 Financial provisions

15There is to be paid out of money provided by Parliament—

(a) any expenditure incurred under or by virtue of this Act by the Secretary of
State, a Minister of the Crown, a person holding office under Her Majesty or
by a government department, and

(b) any increase attributable to this Act in the sums payable under any other Act
20out of money so provided.

10 Short title, commencement and extent

(1) This Act may be cited as the Public Services (Ownership and User
Involvement) Act 2014.

(2) This Act comes into force at the end of the period of 2 months beginning with
25the day on which it is passed.

(3) This Act extends to England, Wales, Scotland and Northern Ireland.

Section 3

Schedule Contracts with relevant authorities and the promotion of organisations with
a social purpose

Part 1 5Proritising social enterprises, not for profit entities and public sector bodies

1 The Secretary of State shall make regulations, providing that where a
relevant authority contracts for a public services contract, it may reserve the
right to prefer a bid by a public sector body, a not for profit entity or a social
enterprise.

2 10Such regulations may consider the circumstances in which the right to prefer
in paragraph 1 may be exercised, including consideration of a public benefit.

3 Any regulations made under paragraph 1 of this Schedule may require the
Secretary of State to compile a list of bodies that would qualify as a not for
profit entity or a social enterprise for the purpose of this Act.

4 15The bodies referred to in paragraph 3 shall include, but are not limited to—

(a) charities;

(b) industrial and provident societies;

(c) community interest companies;

(d) mutuals wholly owned by staff.

20Part 2 Contracts with relevant authorities

5 Where a relevant authority is engaged in the purchase, management,
disposal and hire of goods or the carrying out of works the authority must
consider—

(a) 25how what is proposed to be done might improve the economic,
social and environmental well-being of the relevant area, and

(b) how, in conducting the process of purchasing, managing, disposing,
hiring or carrying out works, it might act with a view to securing that
improvement.

6 30The authority must consider under paragraph 5(b) only matters that are
relevant to the activities proposed under that paragraph and in doing so,
must consider the extent to which it is proportionate in all the circumstances
to take those matters into account.

7 The authority must consider whether to undertake any consultation as to the
35matters that fall to be considered under paragraph 5.

8 If an urgent need to arrange the activities proposed under paragraph 5
makes it impractical to comply with the requirements in paragraphs 5, 6 and

7, a relevant authority may disregard the requirements to the extent that it is
not practical to comply with them.

9 Paragraph 8 does not apply to the extent that the time available is reduced
by undue delay on the part of the authority after this section has come into
5force.

10 The “relevant area” for the purpose of paragraph 5(a) means the area
consisting of the area or areas of the one or more relevant authorities on
whose behalf the activities are intended to be conducted.

Part 3 10Amendment of Local Government Act 1988

11 In section 17 of the Local Government Act 1988 (exclusion of non-
commercial considerations in the case of local and other public authority
contracts), after subsection (11) insert—

“(12) This section does not prevent a public authority to which it applies
15from exercising any function regulated by this section with reference
to a non-commercial matter to the extent that the authority considers
it necessary or expedient to do so to enable or facilitate compliance
with a duty imposed on it by the Public Services (Ownership and
User Involvement) Act 2014.”