In the lead up to the launch of our UK construction guide, each week we will be releasing one chapter of the guide. The full version will be available in April. Read the second chapter below "EU procurement rules and planning"
EU procurement rules
The EU public procurement rules impose obligations of transparency, equal treatment and non-discrimination (unequal treatment based on nationality) where contracts for works, supplies, or services above given financial thresholds are awarded. Concessions and decisions to enter into PPPs are also caught by these rules.
Since 1 January 2016 the procurement rules apply to public works contracts worth €5,225,000 or more, or in pound sterling £4,104,394. For supply and service contracts awarded by central government authorities the threshold is €135,000, or £106,047 and in the case of supply and service contracts awarded by sub-central contracting authorities, €209,000, or £164,176. The threshold above which the public procurement rules apply to public service contracts for social and health and education contracts is €750,000, or £589,148. In the case of utilities, the works contracts threshold is the same as for public authorities but in the case of supplies and services contracts the thresholds are higher, being €418,000 or £328,352.
In such cases, use of OJEU tendering procedures will generally be required where public authorities award contracts or enter into partnerships with private entities. These procedures require that contract opportunities are advertised in the Official Journal of the EU, that criteria applied - at pre-qualification stage, if there is one, and at tender evaluation stage - are non-discriminatory and uniformly applied, and that there is transparency of dealings with bidders. They also prescribe minimum time limits to enable tenderers to respond to invitations to tender.
In recent years the public procurement rules have become more ‘contractor friendly’ when it comes to challenging authorities’ decisions. Once a decision has been reached on the selection of the successful bidder, unsuccessful bidders must be notified of the details of their performance and scoring in relation to the winning bid and a contract may not be entered into during a standstill period of 10 days. An action brought by an unsuccessful bidder during this period will automatically suspend the contract award procedure, without the contractor having to apply for an injunction or offer a cross-undertaking in damages, which would normally be required in other cases. If the complaint is well founded, the authority will be required to re-run the award procedure.
Failure to observe the public procurement rules can expose an authority to an action for a declaration of ineffectiveness – that the contract is void, where for example, it has been awarded without an OJEU procedure or the requisite standstill procedure post award has not been taken place – as well as fines. Contractors also have the right to bring actions for damages for wasted expenditure and/or loss of profit up to 30 days from the date of reasonable awareness of any breach.
These rules, including in particular, the rules on ineffectiveness should be borne in mind where an authority agrees changes to a contract awarded, where these may be favourable to the contractor or are otherwise ‘material’, or renews an existing contract. The time limit for an action for ineffectiveness is generally six months from the date of the contract.
There are notices - ‘voluntary transparency notice’ or ‘contract award notice’ - which may be placed in the OJEU to reduce the time limits for declarations of ineffectiveness to ten or 30 days respectively.
There are also exceptions to the obligation to tender and means of legitimately avoiding there being the award of a works contract within the meaning of the rules, which may be worth exploring.
We conclude by mentioning one scenario where in our experience, unexpected problems can arise, in the absence of any third party complaint, namely where EU funding, such as ERDF funding has been offered to an authority. In such cases, random audits are sometimes carried out (often several years after the funding has been granted) and claw-backs may be sought where irregularities, such as breach of the EU public procurement rules, are found. Particular care is required in such cases.
New development in the United Kingdom is heavily regulated by the planning system, the overriding objective of which is to direct development to the most sustainable locations to the benefit of local communities, the economy and the environment. The planning system is plan-led, which means that there is a presumption in favour of the development plan (which is made by the local authority and contains policies relating to its area) when making planning decisions. However, regard is also had to national planning policy as published by the Government.
Most new development requires a grant of planning permission, which is sought on application to the local authority. Planning applications should be determined within around 13 weeks but many take significantly longer than this. Subject to the size of the proposed development, the planning application may be decided either by officers employed by the local authority or by the authority's planning committee; if refused, there is a right of appeal to an independent inspector who is appointed by the Government.
In determining an application officers and councillors consider the proposal's consistency with both the development plan and national policy. Virtually all planning permissions are granted subject to conditions and/or legal agreements (known as planning obligations), which (amongst other things) regulate the manner in which the development is carried out and/or require contributions to be made to local infrastructure etc.
There is a separate policy and legislative framework for nationally significant infrastructure projects ("NSIPs") such as power stations and major transport schemes. The process aims to streamline the decision-taking process for such schemes, and requires an applicant to conduct extensive consultation with key stakeholders before an application is submitted. To proceed, a NSIP requires a Development Consent Order ("DCO") from the Government; if granted, it removes the need to obtain separate consents such as planning permission, and is intended to be a much quicker process.
An application for a DCO is submitted to the National Infrastructure Planning Unit and would then usually take around 12 – 15 months to be determined. Such applications are subject to an examination in public (chaired by an examiner(s) appointed by the Government) which is intended to be more informal than a public inquiry.
The NSIP regime has most recently been used to secure consent for the construction of Hinkley Point C Nuclear Power Station and the Thames Tideway Tunnel in London.
To read the other chapters, please click here.