The early rounds of compulsory competitive tendering (CCT) for white collar services in the private sector have generated a dismal rate of market penetration.

There have also been many complaints about the anti-competitive conduct of local authorities (see [1996] Gazette, 20 March, 26).

Consequently last month the government unveiled its latest guidance on CCT (DOE 5/96).The document attempts to do too many things and loses credibility in the process.

The government tries to set out the principles on which a tendering exercise should be based and suggests a hands off approach by government.

However, the appendix to the guidance repeats much of the old prescriptive advice.

The provisions are far from clear and have, if anything, created more confusion than existed before.

Only private sector contractors are likely to be happy with the guidance.

There could be worse to come for local authorities as a consultation paper on the framework for white collar CCT was announced this week.

Local authorities do not expect the government's attitude towards them to have improved in the interim.CCT is the only area where guidance is actually binding.

Prior to CCT circulars, guidance had been purely administrative in its effect.

This was not found to be satisfactory in the case of CCT as guidance was regularly avoided by local authorities.

Therefore the government took powers in s.9 of the Local Government Act 1992 to permit the secretary of state to have regard to whether a local authority had followed his guidance in determining whether an authority had acted anti-competitively.

As this is largely a subjective decision the result seems a foregone conclusion.The new guidance covers five key principles.

The first is transparency and fairness, which the government believes will be enhanced by greater involvement by councillors in the CCT process.

We doubt whether there is any evidence to support this view.

The stages at which council members should receive reports are listed in the guidance.

They include continuing reports on performance of work by the direct service organisation.

The government appears to have forgotten that anti-competitive behaviour only applies until the award of work is made and that failure to implement this guidance would therefore seem to be outside the drafting of s.7(7) of the Local Government Act 1988.The second principle, which looks at the operation of the market, is the most controversial and far reaching part of the guidance.

It appears to create a new duty for authoritie s to stimulate competition by consulting with contractors on how tenders might be offered.

The guidance states that in the view of the secretary of state local authorities will only have satisfied the legislation: 'where they have taken steps to ensure that their tendering practices are consistent with securing a good market response'.

This is an attempt to change the statutory purpose of CCT by guidance.

There is no mention in the 1988 Act of a duty to stimulate competition, only of a duty to ensure that work is offered for tender and that a tendering exercise is held among those who have expressed an interest.Local authorities are understandably concerned that the duty put forward by the guidance is neither precise nor clear and could be open to many interpretations.

This has been an unfortunate feature in previous CCT guidance and has done little to forward the government's CCT cause.The third principle focuses on the specification document which is pivotal to any CCT exercise.

It states that output based specifications should be used, which leaves private sector bidders free to say how they want to perform the work.

However, the government shows every sign of wanting to have its cake and eat it by insisting that quality is specifically included in the specification.

To include quality creates a move towards input specification, which is frequently proclaimed by the government to be anti-competitive in effect.

The guidance adds further confusion by suggesting that method statements should be used sparingly, even though there is no other way for an authority to check that a contractor is able to deliver what it offers in response to an output specification.

Unfortunately the Department of the Environment (DoE) has illustrated its inexperience of how CCT exercises are conducted.Tender evaluation is the subject of the fourth principle, another area of great significance to CCT, and one where the government has been particularly unhappy with the conduct of local authorities in the past.

The DoE has long believed that tender evaluation in a good tendering practice is simply a matter of whose tender is the lowest.

In the guidance the government's comments are based on the unsound foundations of the specification provisions.

It believes if quality is specified then there is no need to look any further than the lowest tender.

It appears that this guidance does not apply where a local authority has not specified quality but intends to leave this to the evaluation stage of the process, provided the criteria on which tenders will be evaluated have been disclosed prior to evaluation.The fifth principle returns to the theme of fairness and covers a variety of areas, for example assets and the Transfer of Undertakings (Protection of Employment) Regulations 1981.