the impact of public contracts regulations 2015 on public procurement exercises webinar - anja...
TRANSCRIPT
Anja specialises in all aspects of non-
contentious procurement advice and
regularly advises clients on a wide range of
commercial issues affecting public sector
services
Craig specialises in structuring complex
competitive dialogue procurements, drafting
and advising on strategic service
arrangements (including those between
public bodies) and advising public and
private sector clients on high
value PFI and PPP projects.
one year on
24 March 2016
• general update of the procurement
regime in England, Wales and Northern
Ireland
• impact of the PCRs on commissioners of
healthcare services after 18 April 2016
• current case law and how that has
assisted in interpretation of the PCRs
• guidance from central government
• Green Paper on modernisation of EU
public procurement policy published in
January 2011 (consultation process
followed alongside an evaluation of
impact and cost-effectiveness of EU
public procurement policy)
• European Commission proposals published
on 20 December 2011 (new Public Sector
Directive, Utilities Directive and
Concessions Directive)
• new directive adopted by European
Commission on 17 April 2014
• draft UK regulations - consultation
October 2014 - response to consultation
issued 30th January 2015
• new regulations came into force 26th
February 2015
• strategic use of public procurement to
address new challenges (fostering
innovation, respecting environment etc)
• simplification of rules
• greater flexibility for contracting
authorities and economic operators
• improving efficiency in public spending
• increasing access for SMEs (Lord Young
Reforms have also built on this EU driver)
• enabling sustainability and other societal
goals to be incorporated into
procurement process
• safeguarding against corruption
• promoting e-procurement
• works - £4,104,394
• supply, services and design contracts:
– central government - £106,047
– sub-central bodies - £164,176
• light touch –£589,148
• procedures available are:
– open
– restricted
– competitive procedure with negotiation
– competitive dialogue
– innovation partnership
• choice of which to use:
– open, restricted procedures freely
available
– innovation partnership freely available
where appropriate
• choice of which to use:
– Competitive Procedure with Negotiation
and Competitive Dialogue Procedure when
no readily available solution or cannot
define solution with enough precision,
innovative solutions required, negotiation
required to contract award, if
irregular/unacceptable previously tenders
received
• clear support for pre-procurement
engagement (reg 40)
• clear obligations to prevent, identify and
remedy conflicts of interest (reg 24)
• PIN can be used by sub-central authorities
as a call for competition (reg 26(9))
• new OJEU forms since 3 December 2015
but not on SIMAP yet
• electronic availability of documents (reg
53)
• self-certification and the European Single
Procurement Document (reg 59)
• duty to compile reports and send
information to Cabinet Office (reg 84)
• Teckal exemption codified in regulation
12 – PCR 2015 do not apply where:
– the contracting entity exercises over the
entity similar control that it exercises
over its own departments
– more than 80% of the activities are
provided back to the controlling
contracting authority
– no direct private capital participation
• can have reverse, horizontal and multi-
authority Teckal
• Hamburg Waste principle has been
codified in regulation 12(7) – PCR 2015
does not apply where:
– participating authorities contract to co-
operate to provide public services to
achieve common objectives
– implementation of that cooperation is
governed solely by considerations relating
to the public interest; and
– the participating authorities perform less
than 20% of the activities on the open
market
• the Cabinet Office has offered guidance
on FAQs on using the exemptions:
– ‘co-operation’ can take any legal form
and does not need to be a contract or
joint venture
– how to calculate the percentage of
activities
– clarifies application of exemptions
– still difficult to implement correctly so
may be advisable to seek further advice
• pressetext line of case law codified -
contract variation
• variations permitted by reg 72 include:
– changes provided for in initial
procurement documents
– additional works, services or supplies in
certain circumstances up to 50% of
original value
– changes due to unforeseen circumstances,
up to 50%
• pressetext line of case law codified -
contract variation
• variations permitted by reg 72 include:
– change of contractor in specified
circumstances
– low value changes (up to 10% for
service/supply contracts and up to 15% for
works contracts) if within threshold
– non-substantial changes
• substantial changes are those which:
– fundamentally change the character of
the contract
– introduce conditions which may have
changed the outcome of the procurement
if included at the outset
– changes the economic balance in favour of
contractor
• substantial changes are those which:
– considerably extends scope of contract
– replaces contractor except in
circumstances specified
• if prescribed exceptions do not apply
then a new procurement procedure must
be followed
• CCS guidance:
– PCR 2015 provides more certainty of types
of variation that can be made without re-
advertising
– not unlimited discretion but “recognises
the realities of public procurement”
– addresses uncertainties from pressetext
case and provides ‘safe harbour’ in
certain circumstances
– codification goes further than pressetext
• Edenred (UK Group) Ltd and another v HM
Treasury and others
• Supreme Court applied PCR 2015 which
came into force during litigation and
would apply if contract proceeded
• court considered whether proposed
amendments were a “material change”
• reg 72 allows for ‘non-substantial
variation’ where ‘substantial’ includes
considerable extension of scope
• reg 72 also allows modifications provided
for in initial procurement documents in
“clear, precise and unequivocal review
clauses”
• further case under PCR 2006 but
principles still relevant:
– Gottlieb, R (on the application of) v
Winchester City Council
– original contract awarded without a
procurement exercise
– variations resulted in an agreement that
was materially different in character
• further case under PCR 2006 but
principles still relevant:
– Gottlieb, R (on the application of) c
Winchester City Council
– demonstrated the parties intention to re-
negotiate the ‘essential terms’ of the
contract
– variations made development scheme
financially viable for the developer –
improving the position of the contractor is
never looked on favourably
• previously:
– exhaustive list of ‘part a’ services -
subject to the full rigour of the EU rules
– non-exhaustive list of ‘part b’ services -
subject to the EU rules only to a limited
extent
– no duty to advertise ‘part b’ services
contracts. Duty to advertise such
contracts could only arise under the
general treaty principles where the
contract was of ‘certain cross border
interest’
• under the new regulations (regulations 74
to 76):
– new regulations provides that all services
over relevant financial thresholds will be
subject to full rigour of rules unless they
fall within list of services in Schedule 3
(social, health, education and certain
other services)
• special light touch regime applies to
contracts for those services with a value
over €750,000 reg 5(1)(d) (circa
£589,000)
• regulations take a very minimalistic
approach (regulations 75 and 76)
• (reg 75) confirms the directive mandatory
provisions:
– contract notice or where permissible
under other sections a PIN (with required
information)
– award notices must be issued
• (reg 76) no set structure but MUST ensure
compliance with principles of
transparency and equal treatment
• advert (notice or PIN) must confirm:
– conditions for participation
– time limits
– the procedure to be applied
• lists matters which may be taken into
account when awarding
Must consider guidance issued by the
Cabinet office
• reg 73 requires authorities to ensure
contracts can be terminated on three
grounds:
– contract is substantially modified such
that a new procurement procedure would
be required under reg 72(9)
– at time of award, contractor should have
been excluded on one of mandatory
grounds in reg 57(1), or
– contract should not have been awarded to
contractor due to serious infringement of
obligations
• applies to all contracts amended since 26
February 2015
• termination rights on above grounds will
be implied into contracts awarded before
26 February 2015
• advertising provisions applies to ‘contract
opportunity’
• contract award notice must also be
published on contracts finder
• contracts for health services covered by
NHS regs are exempt from these
requirements – also maintained schools
and academies
• pre-qualification (PQQ) stage is banned
for below-threshold procurements but
can have ‘suitability assessment criteria’
• must ‘have regard’ to any guidance
published by the Cabinet Office in
relation to these new requirements
• regulation 107 requires contracting
authorities to have regard to Cabinet
Office statutory guidance on PQQs
• departures from the guidance which
constitute a ‘reportable deviation’ must
be reported to Crown Commercial Service
within 30 days of PQQ publication
• guidance provides standardised set of
questions for every procurement, where
relevant and proportionate
• mandatory and discretionary exclusion
questions should always be included (reg
57)
• Cabinet Office claims it will help SMEs
• core and additional module questions
must be used as set out in the guidance
• authorities to provide full details for each
question including scoring, weightings,
pass marks or minimum thresholds
• approach should be to take the PQQ
questions and apply these to the
authority’s requirements
• automatic suspension – more common to
lift than not:
– Counted4 Community Interest Company v
Sunderland City Council - damages
wouldn’t be a sufficient remedy – first
case to be heard for automatic suspension
under the PCR 2015
• automatic suspension – more common to
lift than not:
– Energysolutions EU Ltd v Nuclear
Decommissioning Authority – not bringing
a claim before contract was entered into,
thereby leading to an automatic
suspension, did not remove the ability to
claim for damages (under PCR 2006 but
remedies have not changed under PCR
2015) – if damages were due under the
PCR 2006 then the court did not have
discretion whether to award them or not
• automatic suspension – more common to
lift than not:
– Openview Security Solutions Ltd v The
London Borough of Merton Council –
damages were an adequate remedy and
the automatic suspension was lifted
• automatic suspension – more common to
lift than not:
– Bristol Missing Link Ltd v Bristol City
Council – damages were not an adequate
remedy as the claimant was a non-profit
making organisation and the bid made no
allowance for profit (usually the element
of costs awarded as damages) and it would
have a catastrophic effect on its ability to
provide other services – PCR 2006 but
remedies haven’t changed
• automatic suspension – more common to
lift than not:
– Woods Building Services v Milton Keynes
Council [No.2: Remedy] – HC upheld the
claim that there had been manifest errors
in the evaluation process - would not
order the award of the contract as this
was only for exception circumstances and
damages were an appropriate remedy for
the claimant
• several cases recently on the rights of
parties to early disclosure of documents:
– Fox Building & Engineering Ltd v The
Department of Finance and Personnel –
early discovery was granted on a limited
basis to allow the claimant to decide
whether it had a substantive claim to be
tried – the discover was limited in both
nature and the people who were allowed
to receive it
• several cases recently on the rights of
parties to early disclosure of documents:
– Goedesign Barriers Ltd v The Environment
Agency – anonymised bid documents of
other bidders could be disclosed if there
were no tender evaluation report from the
contracting authority to allow the
claimant to further assess its prospects of
success – concerns around the confidential
nature of bid documents was addressed by
establishing a confidentiality ring
Plethora of Cabinet Office procurement
policy notes (PPN) – most relevant:
• 03/15 – accessibility of procurement to
SMEs:
– abolition of PQQs for below threshold
– prompt payment throughout supply chain
– advertising in one place
Plethora of Cabinet Office procurement
policy notes (PPN) – most relevant:
• 14/15 – supporting apprenticeships and
skills:
– only applies to central government and
their related bodies but useful to
understand
– commitment to developing and
maintaining skills
• CCS also provides guidance:
– new subcontracting provisions
– public to public procurement guidance
– publishing on Contracts Finder
– Lord Young reforms FAQs
– framework agreements
– amendments to contracts during their
term
Please get in touch if you have any questions
or wish to discuss the topics we’ve covered
further…
[email protected] | +44 (0) 115 976 6589
Please get in touch if you have any questions
or wish to discuss the topics we’ve covered
further…
[email protected] | +44(0) 115 976 6089