For some time now, Procurement Pulse has been tracking the development of the 2014 EU procurement directives. They came into force on 17 April 2014, and EU member states have until 17 April 2016 to implement them into national law. The UK Government has always maintained that it will pursue an ambitious transposition time table, and first draft implementing regulations for the public sector directive (2014/24/EU) were issued on 19 September. The Scottish Government will issue separate implementing regulations.
The Public Contracts Regulations 2015 (the 2015 Regulations) will repeal and replace the Public Contracts Regulations 2006 (the 2006 Regulations). The draft is accompanied by a consultation which invites responses (by 17 October 2014) on twenty key issues. Some of those issues are generic, and will impact equally on implementation of the utilities and concessions directives (2014/25/EU and 2014/23/EU respectively), but it is clear from the 'Technical note on drafting' (issued with the 2015 Regulations) that implementing regulations for the utilities and concessions directives will not be finalised until after the 2015 Regulations have force of law in England, Wales and Northern Ireland. The Cabinet Office has also made it clear that it will wait until the last date for implementation of the new rules to the extent that they will apply to clinical healthcare services. Until that time, in England, commissioners of clinical healthcare services will continue with the existing Part B service regime and the Procurement Choice and Competition Regulations 2013.
Clearly the end date for the new law to be in force is some time in 2015 - how early in 2015 will depend on when the 2015 Regulations are signed off and laid before Parliament. It would be reasonable to expect the Cabinet Office to take four to six weeks to assess responses to its consultation, and issue revised draft wording for the Regulations. It may achieve a shorter time table, as pre-consultation "discussion documents" were issued to interested stakeholders during 2013, to take informal soundings on - in particular - the policy choices which EU Member State governments are entitled to make in transposing the three directives.
These are the areas which will be of real interest to contractors involved in government contracting across more than one EU jurisdiction. There is the potential for procurement compliance to raise different challenges in different jurisdictions, depending on how each member state implements the policy choices.
From its 19 September consultation, we can see that (subject to compelling consultation responses to the contrary) the Cabinet Office has chosen (to the extent that the policy choices below apply in each of the public, utilities and concessions directive):
- to defer implementation of mandatory electronic communication until April 2017 for central purchasing bodies, and October 2018 for contracting authorities. Whilst the Government supports the efficiencies that e-procurement can achieve, contracting authorities will be given the flexibility to decide whether to use eg Building Information Modelling (BIM) in their specifications, or electronic catalogues in their procurement processes. Equally Government will not prescribe security levels centrally, or the circumstances in which electronic signatures must be used
- not to legislate for compliance with social, environmental and labour laws. The position will remain as currently, that contractual provisions should regulate compliance. The Government will issue guidance and a standard for appropriate contract wording
- not to legislate on how consortia should meet requirements for financial standing and technical capacity at selection stage
- to continue to allow contracting authorities to award contracts by negotiated procedure without a call for competition. The grounds for using the procedure remain broadly the same as set out in the 2006 Regulations.
- to allow sub-central contracting authorities to:
- use a Prior Information Notice as a call for competition (rather than a separate Contract Notice) in open and restricted procedure procurements
- agree with tenderers the time scale for receipt of tenders in a restricted procedure procurement
- not to require contract award notices for call offs made from a framework agreement. The choice to be made was whether or not award notices should be grouped, and reported, on a quarterly basis
- to allow contracting authorities to decide whether or not to divide contracts into lots. In the event that they decide not to - to protect SME involvement in procurement processes, authorities will be required to justify their decision. Contracting authorities can accept bids for combined lots, if the tender documents reserve that possibility
- not to mandate (but to leave to a contracting authority's discretion) the extent to which the contracting authority might regulate sub-contractors eg requiring bidders to indicate the extent to which contractual obligations will be sub-contracted, or to provide information about members of its supply chain
- to require a provision (in the contract ultimately awarded), pursuant to which the contract will terminate if it is substantially varied, if mandatory grounds for exclusion are unearthed during the contract term, or if EU infraction proceedings are commenced in connection with it. If the contracting authority fails to do so, the 2015 Regulations will imply such a provision into the contract (regulation 73(3))
- in terms of implementing a 'light touch' procurement process for social and other specific services (valued at or above Euro 750,000), subject to advertising such contracts and issuing a contract award notice, the 2015 Regulations allow contracting authorities to determine their own procedure, provided that it complies with the general principles of transparency, proportionality and equal treatment. Specific provision is usefully included to clarify that contracts which justifiably use the negotiated procedure without advertisement, will not be subject to the 'light touch' regime
- that maximum periods provided in the directives for exclusion from a procurement process, will be implemented - that is:
- 5 years, if a tenderer breaches the defined mandatory grounds for exclusion - subject to 'overriding reasons relating to the public interest', proportionality in the case of tax/social security infringements and certain 'self-cleaning' provisions. The period starts to run from "the date of the conviction [by final judgement]" - the Cabinet Office's square brackets indicate uncertainty over the term - 'final judgement' will mean different things in different jurisdictions. This was an issue raised in one of the 2013 discussion documents, and is still to be ironed out during this consultation
- 3 years, if a tenderer breaches the defined discretionary grounds for exclusion - subject to 'self-cleaning' provisions. The period starts to run from the date of the act which constituted a discretionary ground for exclusion.
In considering whether and how to implement its policy choices (the list above is a selection only of around 40 policy choices that the Government has had to consider), it has sought to retain the most flexible position possible for contracting authorities. Where policy choices (for example, how to prevent and remedy conflicts of interest in a procurement process) are to be transposed by guidance (rather than legislated for), explanatory notes will be issued - one presumes within the same timescale as that for implementing the 2015 Regulations.
The 2015 Regulations are composite in nature; they bring together a number of different strands :
- the provisions of Directive 2014/24/EU itself
- the Remedies Directive (89/665/EU) - by incorporating relevant wording from the 2006 Regulations, adjusted to interface with the "copy-out" wording from the 2014/24 directive
- two autonomous sections, to implement initiatives set out in Cabinet Office guidance and Procurement Policy Notes to enforce:
- transparency and the use of Contracts Finder for below threshold procurements
- efficiency measures, by avoiding a prequalification stage for below threshold procurements
- 30 day payment terms in government contracts
- deviations from approved qualitative selection methodologies.
These sections apply, unless equivalent provision already exists - for example in NHS legislation and in relation to Academies and maintained schools. Specific provision in the text makes it clear that breach of these domestic requirements will not impact the validity of a contract (and therefore render it subject to challenge).
The 2015 Regulations will only apply to procurement processes beginning on or after the date that they come into force. For those who have not followed negotiations on the EU directives, they will take a little getting used to - the Government followed through on its proposal to follow a "copy-out" approach, and has reproduced the wording sequence of Directive 2014/24/EU, rather than the format we had become used to in the Public Contracts Regulations, 2006. Part of the responses invited by the consultation is therefore to assist Cabinet Office with crafting alternatives to European delicacies of expression, which might cause ambiguity from an English language perspective.