Public Contracts Regulations 2015

EU procurement may not always seem the sexiest topic but it affects most aspects of public services and is vitally important for all who are involved in infrastructure and the delivery of publicly funded projects and services. David Hickman explains the importance of the new Regulations.

EU procurement law is going through its biggest change for ten years. New Directives were brought into force in 2014 and now member states, including the UK, are bringing these into effect. This Alert focuses on the Public Contracts Regulations 2015 (PCR), which came into force in England, Wales and Northern Ireland (with limited exceptions) on 26 February 2015. NHS procurements are excluded from the application of PCR until April 2016. Also please note that separate regimes apply for utilities and concession contracts.

One of the key themes of PCR is making public procurement faster, more flexible and easier, especially for SMEs. This will probably strike a chord with many private sector players who struggle with the current complexities and timescales of bidding for government work.

Key changes at a glance

• New and revised procedures: There is a new accelerated open procedure for simple projects. The restricted procedure, which is popular with authorities, will remain in place with shorter time limits.The new regime also gives authorities more flexible forms of procurement. In particular, the revised “competitive procedure with negotiation” (CPN), which used to be called the negotiated procedure with notice, will be much more widely available. CPN will allow contracting authorities the opportunity to negotiate with short-listed bidders in a structured manner before inviting final tenders. There are strict requirements relating to the recording of the process and the non-disclosure of confidential information. The use of this procedure need not become long and drawn out but does overcome a problem with non-negotiated procedures that will only be apparent if bidders have understood what the contracting authority is really hoping for when final tenders are opened. By this stage, it is too late if they have got it wrong!In addition the competitive dialogue procedure (“CDP”) has also been made more widely available and this also allows negotiation as the process of selecting a bidder unfolds. As before however, CDP should only be used on more complex projects.A new innovation partnership procedure has been introduced, which allows contracting authorities to encourage suppliers to develop innovative products/ works/ services. The partnership will be structured in phases to match the research/ innovation process.

• Reduced time limits for OJEU notices and award notices. The time limits allowed for responses in OJEU advertisements and PIN notices are being reduced, generally by around a third. Also award notices must now be published within 30 days in all cases.
• Category A and Category B types of services have been ditched. A new “light touch regime” (LTR) has been brought in for “social and other specific services” (“SOSS”) which will include many, but not all, of the old Part B services. As the name suggests, most of these services are in the heath, social care and education sector. The LTR will mean that the authorities procuring such services have a large level of flexibility: they do not have to use one of the formal procedures (first bullet, above) and they may be able to change the scope of the job as long as they stick to the core principles of transparency and equal treatment. This is fairly radical.
• Changes in thresholds, mainly a new, much higher €750,000 threshold for the new SOSS category, although some old Part B services will not fall within the SOSS definition. The thresholds for other works, services and supplies will continue at their existing levels for the time being, namely €5.186 million for works and €134,000 for supplies and services to central government, €207,000 for supplies and services to sub central authorities. Readers should also bear in mind that those ex Part B services which are not within the new SOSS category are caught by the full EU regime as long as the procurement is above the relevant threshold.
• Most Economically Advantageous Tender (MEAT) is now officially the only game in town for assessing tenders- ie lowest price has been dropped. The Regulations provide some guidance on how contracting authorities may assess the most economically advantageous tender, including consideration of life cycle costs.
• Use of lots and of minimum turnover requirements – to counter the perception that many opportunities have in the past been packaged so as to make them appealing only to larger organisations, contracting authorities must now give an indication of their main reasons for their decision NOT to subdivide into lots. In addition, contracting authorities cannot impose a requirement that bidders have a minimum yearly turnover greater than twice the estimated contract value unless they can justify a higher requirement.
• Pre Qualification Questionnaires will not be permitted on “sub threshold” procurements. Even on above threshold procurements, the use of disproportionate levels of questioning is no longer allowed. Here, and on some other areas, the Cabinet Office will be taking on an overseeing role. The Cabinet Office has now published guidance here which requires that on all procurements, except public works contracts (where PAS 91 is allowed), a new standard approach and model PQQ (included in the guidance) should be followed. For more information on PAS 91 go to: http://shop.bsigroup.com/upload/PASs/PAS91-2013.pdf
• The advertising of opportunities: For smaller procurements (ie £10,000 and over for central government, £25,000 and over for other authorities), it becomes mandatory to use the Government’s Contracts Finder website: http://online.contractsfinder.businesslink.gov.uk regardless of whether an OJEU notice has been done. NB the use of Contracts Finder also applies to most larger procurements, again even where an OJEU notice has already been issued.

• All “procurement documents” must be available from day one, ie when the OJEU notice is published. Being available means being accessible free of charge on a website, to which a link is provided within the information published on Contracts Finder and in any OJEU notice published. This is quite tough for authorities who must now complete documents such as the ITT, draft contract terms and conditions and technical specifications when advertising their opportunity. However it seems more bidder friendly, allowing them at the outset to be able to assess more readily whether they should bid. Having said this, bidders will need to devote more resources up front to reviewing the procurement package!

The above is a brief summary of a complex area. Procurement managers and other professionals will need to be fully conversant with this. Here are some immediate things contracting authorities should be looking to do now:

1. Review and update Standing Orders, precedents, and other regularly used documents and forms.
2. Review the pipeline of procurements they are planning and ensuring staff appreciate the need to have procurement documents available “up front”.
3. Training and awareness sessions for staff.
4. Monitor the Cabinet Office guidance which will be important.
5. Consider which types of procurement process to follow- the new, more flexible approaches offered by CPN and (on complex procurements) CDP may be more attractive in some cases but may be “resource heavy”.
6. Get used to using Contracts Finder.

What steps should bidders take?

1. Again, make sure you and your team understand the key new changes brought in by PCR with training and awareness sessions.
2. Bidders will need to be geared up to procurements being more front end loaded. With projects moving forward at a faster pace this may require more concentrated use of resources.
3. Be aware of some of the other important changes introduced in PCR, for instance the new provision requiring that head contracts and sub contracts contain clauses requiring payment of undisputed amounts within 30 days.
4. Review your standard documentation used in bidding processes and your sub contracts and other regularly used items. These will need to comply with PCR.
5. Monitor Contracts Finder for opportunities.