A new public procurement regime for the UK

Transcription

1 A new public procurement regime for the UK The Public Contracts Regulations 2015 (the PCR 2015 ) came into force last month and introduced key changes to the procurement landscape in the UK (excluding Scotland). The UK is the first European Member State to transpose EU Directive 2014/24/EU (the Directive ) into national law. There are two more directives to implement: one on utilities which is expected to be implemented in summer 2015 and the other on higher value concession contracts which must be transposed by April The Cabinet Office has been keen to facilitate the early transposition of the Directive into UK law in order to: Allow employee-led organisations/mutuals to gain experience of running public services prior to full and open competition. Introduce shorter, less burdensome procurement processes which should reduce costs and barriers to competition. Give more flexibility for authorities to follow best commercial practice to achieve the best procurement outcomes. Give better access to public procurement to small and medium-sized enterprises, consistent with nondiscrimination and a value for money approach. This article will detail some of the material changes introduced to public procurement in the UK by the PCR 2015 which aim to facilitate the achievement of the above goals. Updated procedures and revised timelines In pursuance of the aim to streamline the public procurement process, the PCR 2015 reduces the timescales for return of pre-qualification questionnaires. Long timescales can increase the costs of procurement and deter some participants from engaging in the process. To combat this, the new timescales are around 30% shorter than those under the previous procurement rules (the Public Contracts Regulations 2006 (the PCR 2006 )). Where a contract is to be awarded by the restricted procedure or competitive procedure with negotiation (similar to the negotiated procedure with prior publication which existed under the PCR 2006), a call for competition can now be made by means of a prior information notice rather than solely a typical contract notice. A new innovation partnership procedure has been introduced which allows contracting authorities to encourage participants to develop works, supplies or services not currently available on the market, through long-term partnerships. This procedure is expected to be used in the development of new products which will be developed through the partnership between the contracting authority and participant. Introduction of light touch regime for social and other specific services contracts with a value above 750,000 The distinction between Part A and Part B services in the PCR 2006 has been removed from the PCR However, contracts for social and other specific services are subject to a separate procedure under the PCR Contracting authorities must publish a contract notice detailing the opportunity for the purchase of social and other specific services contracts with a value which exceeds 750,000. 1

2 This new light touch regime is not prescriptive in detailing how such procedures must be evaluated. Contracting authorities are afforded the scope to determine such procedures taking into account the specifics of the services in question. The PCR 2015 suggest that contracting authorities may take into account considerations such as the need to ensure quality, continuity, affordability, accessibility and availability of services; and the specific needs of different categories of users in relation to contract award under this light touch regime. Contracts of this type with a value below this threshold are assumed to be of no cross-border interest, so no advertising by a contracting authority is necessary. Regime for contracts with a sub-threshold value (applicable only to England) Contracts with a value below 25,000 (net of VAT) for sub-central contracting authorities or NHS Trusts and below 10,000 for central government bodies are excluded from the scope of the PCR These contracts are likely to be awarded in compliance with a contracting authority s Contract Procedure Rules or constitution. Contracts which have a value below the thresholds set out at Regulation 5 (for works, goods and services) are subject to a regime where the opportunity, if a contracting authority has chosen to advertise at all, must be advertised on Contracts Finder. A pre-qualification questionnaire must not be used for such procurements and instead, a suitability assessment question may be put to candidates by a contracting authority. As with the light touch regime for social contracts with a value above 750,000 (currently estimated to be 625,050), the PCR 2015 are not prescriptive in detailing how such bids should be evaluated and so as long as a contracting authority observes the EU Treaty principles of openness, fairness and non-discrimination, it should comply with the PCR 2015 when evaluating bids for contracts with sub-threshold values. Codification of the Teckal exemption The PCR 2015 codify the Teckal exemption which has developed through European jurisprudence in recent years. A contract will fall outside the scope of the PCR 2015 where a purchasing authority: Exerts a control which is similar to that which it exercises over its own departments over a supplying authority. 80% of the supplying authority s activities are undertaken for the purchasing authority or other bodies controlled by it. Where there is no direct private capital participation in the supplying authority. The same is the case where the supplying authority is jointly controlled by more than one contracting authority. Post-contractual modifications It is an established principle of procurement law that a material change to a contract in the post-award stage must not be made without the initiation of a new competition. The Pressetext principles have been codified in the PCR From Pressetext, a modification is considered substantial if: It introduces conditions which had they been part of the initial procurement procedure, would have: 2

3 (i) Allowed for the admission of other candidates than those initially selected. (ii) Allowed for acceptance of a tender other than originally accepted. (iii) Attracted additional participants in the procurement procedure. It changes the economic balance of the contract in favour of the contractor in a manner not provided for in the initial contract. It extends the scope of the contract considerably. Under the PCR 015, an amendment will not be considered material if: The amendment is provided for in the initial procurement documents in clear, precise and unequivocal clauses (such as an option to extend or a price revision clause). Additional work is necessary and changing the contractor would involve significant inconvenience or duplication of cost and would not be practicable for economic or technical reasons provided that the amendment is not greater than 50% of the original contract value. Contract change is needed for unforeseeable circumstances, provided the nature of the contract is unaltered and the price increase is less than 50% of the original contract value. A new contractor may replace the existing contractor if, for example, an express clause allows for that or in the event of a corporate restructuring including takeover. The value of the change is not greater than 10% if the contract value (15% for works contracts) and the value of the change is within the relevant threshold value (i.e. for services and supplies, less than 172,514 for all contracting authorities other than central government (which has a threshold of 111,676) and 4,322,012 for works contracts. Contracting authorities must also include in contracts a condition which allows, but does not require, termination where a contract has been substantially modified and constitutes a new award. Contracts with mutuals The PCR 2015 give effect to the Government s public service mutuals agenda, as certain services contracts (mainly social, health and educational) may now be reserved to organisations which meet all of the following criteria. The organisation: Has as its objective the pursuit of a public service mission linked to the delivery of the services. Reinvests profits to meet this objective. Is owned or managed on the basis of employee ownership/participatory principles or the active participation of employees, users or stakeholders. Has not been awarded a contract for the services concerned by the contracting authority concerned pursuant to this reservation within the past three years. Such reserved contracts must not exceed three years and must be open to all relevant participants under the PCR 2015 and must be awarded in accordance with the light touch regime also introduced by the PCR

4 Division of contracts into lots The PCR 2015 encourage splitting contracts into separate lots in order to assist access for small and medium-sized enterprises. Whilst there is no formal requirement to divide contracts into lots, contracting authorities must provide an indication of the main reasons explaining why they have chosen not to subdivide contracts into lots in the procurement documents which accompany a tender. Contracting authorities should indicate, in the contract notice, whether tenders may be submitted for several or all lots. Contracting authorities may, even where tenders may be submitted for several or all lots, limit the number of lots which may be awarded to one tenderer, provided that the maximum number of lots per tenderer is stated in the contract notice. Where the application of the award criteria would result in one tenderer being awarded more lots than the maximum number, contracting authorities must set out in the procurement documents the rules they intend to apply for determining which lots will be awarded. Where more than one lot may be awarded to the same tenderer, contracting authorities may award contracts combining several or all lots where they have specified in the contract notice that they reserve the possibility of doing so and indicate the lots which may be combined. Preliminary market consultations In a bid to stimulate increased competition in the market and reduce procurement timescales by minimising the dialogue needed during the formal procurement process, the PCR 2015 expressly permit contracting authorities to conduct market consultations with a view to preparing a procurement, before a commencing a procurement procedure. Such advice may be used in the planning and conduct of the procurement procedure, providing it does not have the effect of distorting competition. A participant s input should not be such that competition related to other participants is distorted. For example, the participant has been so involved in the preparation of the procurement as to have effectively already influenced the contracting authority in its favour regarding the imminent procurement. If a distortion of completion cannot be guaranteed to be avoided by the contracting authority, the participant who has assisted the contracting authority in the run up to the procurement process risks being excluded. Other changes introduced by the PCR 2015 In addition, the following changes have been introduced by the PCR 2015: From 1 April 2015, where a contracting authority sends a notice to the EU Publications Office for publication, the contracting authority must also ensure that such information is published on Contracts Finder within twenty four hours of publication by the EU Publications Office. This provision is not found in the EU Directive and places an additional burden on contracting authorities. There is now an obligation on contracting authorities under the PCR 2015 to pay undisputed invoices within thirty days. This provision supports the cash flow position of small and medium-sized enterprises which may suffer detrimentally if invoices are not paid promptly by contracting authorities. 4

5 There is an obligation in the PCR 2015 for all communication and information related to a procurement to be transmitted electronically (although implementation is not immediate in all cases). The sole contract award criterion under the PCR 2015 is the most economically advantageous tender ( MEAT ). Under the PCR 2006, there was the option to award a contract on the basis of lowest price. However, under the PCR 2015, the MEAT criterion includes price, cost and best price: quality ratio. The PCR 2015 do not, however, completely remove the ability to award to the tender with the lowest price, as a contracting authority may specify, in the procurement documents, that price alone will carry the complete weighting for an award. The PCR 2015 revises the threshold for discretionary exclusion of participants who have performed poorly under previous public contracts. Under the PCR 2006, a participant could be excluded where it has committed an act of grave misconduct in the course of his business or profession. However, the PCR 2015 contain a new provision which allows for the exclusion of participants where the participant has shown significant or persistent deficiencies in the performance of a substantive requirement under a public contract which led to early termination of the prior contract, damages or other comparable sanctions. This will be a welcome amendment for contracting authorities who have had negative experiences of certain candidates in past contracts. The PCR 2015 contain a so-called self-cleaning provision which allows economic operators which have been subject to a mandatory or discretionary exclusion ground to provide evidence to the effect that measures subsequently taken by the participant are sufficient to demonstrate its present-day reliability despite the existence of a relevant ground for exclusion. Under the PCR 2006, a contracting authority could take into account the overall turnover of an economic operator for the three previous financial years when assessing minimum standards of financial standing. However, the PCR 2015 go further and allow contracting authorities to impose requirements for economic operators to have a minimum yearly turnover up to twice the estimated contract value (except in cases with special risks attached, where the minimum threshold may be set higher). For queries on all aspects of procurement, please contact a member of our team: Michael Mousdale: Head of Local Government / DD: Jonathan Branton: Head of EU & Competition / DD: Colin Murray: Senior Associate / DD: Bradley Martin: Solicitor / DD: for further updates and commentary on the PCR 2015 and all other local government updates. 5