The draft Public Contract Regulations 2015

On 19 September the Cabinet Office launched a consultation on the draft Public Contracts Regulations for England, Wales and Northern Ireland. The consultation period will close on 17 October 2014.

The draft Regulations transpose Directive 2014/24/EU and include some additional provisions not in the Directive. The additional provisions relating to the “light touch” regime, below threshold procurements and commissioning of health care services for the purposes of the NHS, will be covered in future updates.

Most of the provisions in the Directive are mandatory. They have been transposed into the Regulations using a copy out approach, meaning that they mirror as far as possible the drafting in the Directive. The same headline numbering scheme has also been used.

Implementing optional provisions

A few of the provisions in the Directive are optional. Member States have a choice on whether and/or how to implement them. In 2013/14 the Cabinet Office undertook informal consultation with stakeholders on the implementation of those provisions. Annex B in the Consultation Document explains the approach which has now been adopted.

This update highlights some of the optional provisions which will be of particular practical interest to those working in procurement.

General comment: in keeping with stated policy, as much flexibility as possible has been retained with significant discretion lying with the contracting authorities. For example, the Government has chosen not to regulate how suppliers are to comply with social, environmental and labour laws nor has it established standard terms for how groups of economic operators meet requirements for financial standing and technical capacity. Contracting authorities are left with the maximum possible discretion on deciding whether to exclude contractors on discretionary grounds. The Government has also chosen not to use the Regulations to mandate the use of frameworks for particular purchases or limit the evaluation criteria which can be used.

e-procurement – extended time period for implementing some provisions (Regulation 2)

The Directive requires the use of e-procurement methods for advertising, the provision of tender documents and submission of tenders.

It was acknowledged at EU level during the negotiations of these provisions that for some member states and contracting authorities these requirements were a considerable change in practice, requiring significant investment. Member states therefore have the option to extend the timescales for implementation of certain of the e-procurement provisions. These extended timescales go beyond the general implementation date of 18 April 2016* (*the general implementation date in England, Wales and Northern Ireland will be an earlier date when the Regulations come into force).

The Government has adopted the extended timescales. This means that most contracting authorities will still have the flexibility to use a range of communication methods, including electronic methods, until 18 October 2018 (Reg. 1(2) and Reg. 119). The obligation on central purchasing bodies to conduct procurement procedures using electronic means of communication is delayed to 18 April 2017 (Reg. 1(3)(b), 1(4)and Reg. 37) The requirement for the European Single Procurement Document to be in an electronic format and use of e-Certis is delayed to 18 October 2018 (Reg. 1(5)). 

Warning: The extensions do not apply to all provisions relating to electronic communication. A good example is the requirement in Regulation 53(1) to make available procurement documents free of charge by electronic means from the date of publication of the OJEU contract notice or invitation to confirm interest. Contracting authorities will have to comply with this requirement from the general implementation date.

Prior Information Notice (PIN) as a call for competition (Regulation 26(8) and 48(6))

Sub-central authorities (all contracting authorities not listed in Schedule 1) will have the option of using a new form of OJEU advertisement – a “PIN as a call for competition”. This method is available when running the restricted procedure or the competitive procedure with negotiation.

A PIN as a call for competition can be used to advertise one or more contracts, using the same notice, up to 12 months in advance of the start of the procurement, longer in the case of “light regime” services. The information included in this type of PIN is more detailed than that required for a normal PIN. Following publication of the PIN as a call for competition there is no further obligation to publish a contract notice in the OJEU. Contracting authorities can then limit the competition to those economic operators who expressed an interest in response to the PIN. The tender documents could be issued several months after the PIN was published.

10 days or less for the receipt of tenders when using the restricted procedure (Regulation 28(7)&(8))

Sub-central authorities will also have the option, when using the restricted procedure, to agree with tenderers the time limit for return of tenders. Where they cannot get agreement from tenderers then the minimum time scale is 10 days. This represents a very significant reduction from the current standard period for return of tenders of 40 days.

This provision needs to be read in conjunction with the requirement to make tender documents available at the date of publication of the call for competition - so tenderers will have the tender documents at an earlier stage in the process -  and the overarching requirement for tender timescales to take account of the complexity of the contract and time required to draw up tenders (Regulation 47).

Division of contracts into lots (Regulation 46)

Contracting authorities are free to decide whether or not to divide contracts into lots. Where they choose not to do so they must explain their reasons. The explanation must be set out either in the procurement documents or in an individual report on the contract procedure required under Regulation 84.
 
Management of lots: Where contracting authorities do decide to divide a contract into lots they can specify whether tenders may be submitted for one, several or all lots. Contracting authorities may award contracts combining several lots. They are also permitted to limit the number of lots awarded to a single tenderer. Contracting authorities must inform economic operators of their intention to use these “lot management” approaches by specific references in the call for competition.

Criteria to apply where a tenderer wins more than the maximum permitted number of lots: Contracting authorities are also required to set out in the procurement documents the “objective and non-discriminatory criteria or rules” which they will apply to decide which lots to award to a tenderer who wins more than the maximum number of permitted lots.

Exclusion periods – mandatory and optional grounds for exclusion (Regulation 57)

The government has opted for the maximum periods of exclusion: 5 years from the date of conviction for an offence falling within mandatory grounds for exclusion and 3 years from the date of a relevant event comprising an optional ground for exclusion. Decisions to exclude must be considered on a case by case basis and are subject to “self cleaning” provisions permitting economic operators to demonstrate why they should not be excluded.

Sub-contracting (Regulation 71)

The current flexibilities have been retained so it is for contracting authorities to decide whether to ask bidders to indicate what share of a contract they intend to sub-contract or provide information about their sub-contractors and supply chain. Direct payment to sub-contractors is optional.

Termination of contracts (Regulation 73)

The Directive sets out three grounds where a contracting authority must be entitled to terminate a contract:

• where the contract has been subject to a substantial modification that constitutes a new award;
• where it is discovered after contract award that the contractor should have been excluded on mandatory exclusion grounds; and
• where the European Court of Justice has declared a serious infringement.

The draft Regulations require contracting authorities to ensure that every public contract they award contains provisions enabling them to terminate the contract in those cases. Where a contracting authority fails to include the relevant provisions then the power to terminate in those cases will be an implied term of the contract.

Emily Heard is a partner and Susie Smith is a consultant at Bevan Brittan. Emily can be reached on 0870 194 8997 and This email address is being protected from spambots. You need JavaScript enabled to view it., while Susie can be contacted on 0870 194 1604 and This email address is being protected from spambots. You need JavaScript enabled to view it..