Procurement in a nutshell – the Mystery Shopper Service

This week’s update provides a reminder of the Mystery Shopper Service (MSS). It looks at how it operates to tackle any concerns that suppliers – particularly SMEs – may have regarding poorly conducted procurement processes which they have been part of.

What is it?

Previously known as the ‘Supplier Feedback Service’ and launched in February 2011, the MSS sits within the Crown Commercial Service. The scheme provides an alternative way for suppliers to bring a complaint about poor procurement practice outside of the legal regime.

Existing and potential government suppliers can informally and anonymously raise concerns about unfair public sector procurement practice. The Government can then investigate and resolve these concerns. The Service also conducts spot checks on procurement processes.

The Government uses the information it obtains to help challenge procurers to be more transparent and open by publishing the results of the investigations. Only the contracting authority (CA) is named in the publications.

Rationale behind the Service

The MSS was introduced as part of a range of measures to build the commercial capability of CAs through their adoption of good procurement policy and practice. A key objective was ensuring that public procurements do not impose unnecessary barriers to small businesses when bidding for public contracts.

Procurement Policy Note (PPN) 09/15

In 2015, section 40 of the Small Business, Enterprise and Employment Act (SBEEA) 2015 strengthened the service by providing a statutory basis for certain procurement investigations. The statutory requirements are explained in PPN 09/15.

The PPN applies to CAs as defined by the Public Contracts Regulations but with some specific exceptions. Exceptions include schools and academies, procurement of Healthcare Services for the purposes of the NHS and bodies exercising functions that are wholly or mainly devolved.

CAs covered by the statutory requirements must give reasonable assistance and must provide information and documents required by the MSS within 30 calendar days. Although the duty to reply has a 30 day deadline the PPN states that the MSS will expect CAs to reply sooner, usually within two weeks, where the issues relate to a concluded procurement.

Acceptance criteria for cases

The MSS investigates and aims to resolve enquiries satisfying the following criteria:

• the enquiry relates to a specific procurement that has taken place within the past two years, concerning an English contracting authority; and
• the enquiry relates to procurement practice and highlights a potential conflict with best practice or the Public Contracts Regulations 2015. This can be at any stage of procurement.

What resolutions can be expected?

If there are shortcomings with a ‘live’ procurement exercise, the MSS may make recommendations to the CA as to how these might be resolved immediately.

If the procurement has already been completed, then the MSS would usually focus its recommendations on helping the CA improve their procurement practices for the next time.

Consequences of failure to comply

There are no formal sanctions for failing to comply with the SBEEA or PPN 09/15. However the MSS can issue a formal statutory notice obliging a CA to assist with a procurement investigation.

Should a CA continue to not comply, it can expect to be ‘named and shamed’ when the Mystery Shop results are published. CAs should consider the impact that this will have on their reputation. Non-compliance may also be picked up on during an audit process.

Why is this important?

Although the MSS does not have the same bite as the enforcement sanctions of the procurement regulations, CAs should still take serious heed of the service.

Lessons can be learned from the Mystery Shopper results about strengthening compliance and how to avoid some of the common pitfalls of poor procurement practice. Indeed, this is the case for a CA that finds itself the subject of an investigation, which would be well-advised to seriously consider any recommendations made by the MSS.

The scheme is not a precursor or substitute to legal action. For some CAs the intervention by the MSS may avoid the expense of legal sanctions by appeasing aggrieved tenderers.

However, tenderers who have suffered harm as a result of procurement breaches have a right to bring a claim. Allowing the insights of the MSS to influence procurement practices can play a role in preventing the risks of sanctions for non-compliance such as the setting aside of decisions, damages and, at worst, a ruling of ineffectiveness.

How can I find out more?

If you have any queries on the issues raised or on any aspect of procurement, please contact us via our procurement hotline on 0191 204 4464.