9.12 Government policy requires public sector bodies to obtain VfM in their use of public monies. VfM can be difficult to assess in selecting a partner for a JV (Chapter 4 sets out some of the issues in detail). Usually, the best way to obtain and demonstrate VfM is to run a competition to select a JV partner. In particular:
● competition is likely to be the best, and in some cases the only, way to test the market and establish a justifiable price for the public sector's contribution to the JV;
● a well-run competition will allow the public sector to demonstrate that it has sought and achieved best value;
● the chances of a challenge under the State Aid rules may be mitigated (see Chapter 3 and Annex C), although holding a competition is in itself no guarantee that the requirements of the State Aid rules have been met; and
● a competition will usually be the best way to demonstrate compliance with EU Procurement Rules. If there are particular instances, such as the ownership of intellectual property or specialist assets or skills, which may limit the number of potential partners (e.g. where there has been a development agreement leading to joint ownership of intellectual property)77 then the public sector body should seek legal advice as to the application of the EU public procurement rules to its situation. The overarching aim is always to ensure best value, bearing in mind the benefits that an open and competitive environment can deliver and the requirements of the EU public procurement regime.
9.13 There are broadly two methods of selecting a partner competitively: open competition or (subject to EU Treaty principles) a targeted approach. The process for each are described below.
9.14 In cases where a private sector partner approaches a public sector body with an innovative idea, which it does not want advertised more broadly (e.g., if it has any intellectual property right to protect), public sector bodies should take appropriate steps to protect the intellectual property of the potential partner. If a competitive process follows an approach with an innovative idea, the process should be designed to test whether the market can deliver alternative propositions meeting the public sector body's requirements rather than competing claims based on the original innovative idea.78
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77 Note that public sector bodies should therefore be careful about taking actions which may limit future competition.
78 If the public sector body considers it appropriate to pursue a JV without following a competitive process, and particularly if the contract is for works or services and is above the relevant EU threshold, it is likely to require advice on the procurement law implications of this. It is possible in certain circumstances to use the negotiated procedure without competition, i.e. use a "single tender action", but the circumstances are carefully circumscribed.