This relates to centrally provided services i.e. where one area provides services to others, for example, the Estates Department employs staff to provide security, cleaning or portering services or a science department operates a store buying in bulk and then selling on to other departments within the institution.
Further information on providing in-house services is available:
- Managing Department responsibilities [Procurement Office]
- Internal service provider (Supplier Department) responsibilities [Reprographics Unit]
- End Users
It is not compulsory to expose internal services to competition, unless it is decided to do so on the principles of best value. It is recommended that a full investigation into the practicalities of in-house provision is conducted before going out to tender and, if appropriate, discounted rather than to try to conduct an in-house bid alongside a tender process.
It is unlikely to be technically possible for an in-house team to submit a formal bid as part of a tender process because:
- An in-house team will not have separate personality from the authority. Full involvement in a tender process is only possible where the in-house team has formed a company or other legal entity that could submit a tender and a contract with the college.
- The in-house team's bid would not be comparable to the bids from external organisations because it would be relying on college premises, assets, employees and so on.
It is possible for an in-house team to submit a proposal that could be considered alongside the tender process. If the college decides the in-house option will provide best value, it could abandon the tender process and retain the service in-house, providing the tender documents make it clear that it could do this.
The advantages are likely to be:
- Improved workforce relations
- A possibility the college's personnel are best placed to deliver a value for money solution
The disadvantages are that:
- The message sent to the market may be that the college is not serious about outsourcing its requirement.
- If the market perceives the college as not being serious about the outsourcing, this could lead to providers not tendering and the college receiving an inferior solution.
- Evaluating an in-house bid that makes use of the college premises, assets and employees against tenders submitted from external organisation is extremely difficult and any attempt to do so risks being challenged by an unsuccessful provider.
Further guidance on in-house vs outsourcing can be found in the Central Governments Outsourcing Playbook that looks more closely at the decision to outsource (particularly in relation to services) and provides useful tips to those that decide to outsource.