The regulations to implement the utilities directive came into force on 18 April 2016.  This briefing note provides a high level analysis of some of the key changes in the Regulations that Train Operating Companies​ (TOCs) need to be aware of:

Electronic availability of documents

Regulation 73 of the Regulations requires that all “procurement documents” shall be available from the date of publication of the relevant OJEU notice. “Procurement documents” is widely defined in the legislation itself and includes technical specifications, tender documents and contract terms and conditions. This is a significant change to current practice which has a more staged approach and all key stakeholders should be made aware of this requirement to “front load” the process.

Ensure precedent documents are updated

All documents will need to reference the new regulations and regulation numbers.  This will be especially important for template standstill letters which routinely refer to the relevant regulation (Regulations 101 and 102). “MEAT” now has a slightly different meaning and there is a new term of “best price quality ratio” which should be taken into account when drafting award criteria (Regulation 82).  Any evaluation based on life cycle costing must comply with the requirements in Regulation 83.

Timescales

Ensure all timescales are in accordance with the new requirements – we have a new revised comparison timescale document which is available.

Reporting

There are new reporting requirements in regulation 99. A simple checklist could be prepared to ensure that the reporting requirements are met – for each procurement a report must be prepared with key decisions and steps taken during the procurement. All procurement documents must be kept for at least 3 years from the date of the award of the contract.

Contracts

For existing contracts note that Regulation 88 now sets out clear parameters on changes to existing contracts which can be implemented without triggering the need for a new procurement – again, a checklist approach may be helpful. Ensure contracts contain relevant change control mechanisms to assist with the use of the “safe Harbour” provisions.

Contracts must include provisions to allow for termination in the circumstances covered in Regulation 89.  It is probably better to have standard terms to deal with giving notice, consequences of termination and so on than to have to rely on the deeming provisions in the regulations. 

These provisions apply to any contracts – regardless of when they were entered into – where change is proposed after 18 April 2016.  This is likely to present a real change in current practice.

Abolition of Part A and Part B services

All services are now effectively Part A services (full regime) unless they fall within defined categories which are subject to a “light touch” regime set out at Regulation 90 and Schedule 2.  The regime only applies if the services contracts exceed a higher threshold which is currently one million euros (£785,530).  The list of services in the light touch regime is reduced from what used to be in Part B so it will be necessary to carefully check the list.

Pre-procurement engagement and conflicts of interest

Pre-procurement market engagement is officially endorsed provided it falls within the remit of Regulation 58.  Also worth noting is Regulation 59 which deals with where a supplier has had prior involvement in preparing the procurement. Conflicts of interests are dealt with in regulation 42 requiring utilities to take measures to prevent, identify and remedy conflicts.

New/amended procedures

The competitive dialogue procedure is made available to utilities for the first time (Regulation 48) though as utilities still have free access to the negotiated procedure we do not expect to see a large take up for this procedure. Innovation partnership is an entirely new procedure (Regulation 49) and allows for the output from an R&D type project to be awarded without a further competition.  This may be relevant for sectors where there is a high R&D requirement. Frameworks are now limited to a maximum 8 year duration except in specific circumstances (Regulation 51). Dynamic purchasing systems may also be more useful under the existing regulations because they no longer need an OJEU notice each time a call off is made (Regulation 52).

Are TOCs covered by the UCR16?

Our view is that franchises awarded either under the new Concessions Contracts Regulations or Regulation 1370/2007 will not convey special or exclusive rights and therefore the TOC operating such a franchise will not be caught by the UCR16. However, the position is far less clear cut for direct award franchises and such franchises may well constitute a utility activity under the UCR16. A further guidance note is available on request.