After a period of relative uncertainty, post-consultation exercise back in September/October 2014 in relation to the first draft, the Cabinet Office have finally published the final version of the new Public Contracts Regulations 2015 (implementing the long awaited Public Contracts Directive 2014/24/EU) which will, in large part, come into effect on 26 February 2015.
What are the big headlines? What has changed? In summary, while clearly this is seen as an opportunity to move along the regulatory framework to take into account changes in practice, discipline and circumstances and to make procedures quicker and simpler, in reality the changes are not necessarily as dramatic as were originally feared.
We have picked up on some of the more significant changes below:
Part A/Part B?
The long heralded removal of the distinction between Part A services and Part B services has materialised, albeit morphing what we traditionally understood Part B services to be into a new classification of Schedule 3 services for ‘social and other specific services’.
Where Schedule 3 services are being procured in excess of a value of £625,050, the only real change from current practice is that an OJEU Notice or a PIN (as a call for competition) must be used to advertise the opportunity from the outset (and, in the case of an NHS trust, if the contract value is greater than £25,000, that opportunity must also be advertised on Contracts Finder within 24 hours of the OJEU Notice or PIN being despatched).
Finally, and in some ways a more significant development, is the removal of the catch-all ‘other services’ at the end of the existing Part B service list; the presumption moving forward will be that if a service does not come within the exhaustive Schedule 3 list, that it is otherwise subject to the full rigours of procurement.
Health service commissioning
In a remarkable, and arguably politically motivated move, given the proximity to a General Election, the commissioning of health services for the purpose of the NHS which are currently subject to the NHS (Procurement, Patient Choice and Competition)(No.2) Regulations 2013, have been completely excluded from the application of the new 2015 Regs until 18th April 2016 at the latest. CCGs and NHS England therefore are able to disregard the new rules when commissioning health services for the NHS until April 2016, by which time a new administration will have had to grapple with how to deal with this particularly thorny issue.
It is worth mentioning though that non-health service purchases by CCGs and NHS England will continue to have to comply with the general procurement requirements, thereby creating a two-tier procurement system until 18 April 2016 at the latest.
- A new Innovation Partnership Procedure has been introduced for use in very specific circumstances where a contracting authority has identified a need for an innovative product, service or works that cannot be met by purchasing products, services or works already available on the market. Where this is appropriate to be used, a contracting authority is permitted to engage with a number of ‘partners’; during the competition, to pay them contractually for work undertaken during the competition; to undertake the negotiation in successive stages and to reduce the numbers of participants as it proceeds.
- A new Competitive Procedure with Negotiation has been introduced (looking very similar to the old Negotiated Procedure). This new procedure includes a right to request initial and subsequent tender submissions. However, the pre-condition for using the procedure has been aligned exactly with the new pre-condition for use of the Competitive Dialogue Procedure which makes it difficult to understand whether one procedure is preferable over another… time will tell.
New shorter mandatory time limits
The mandatory minimum time limits for existing procedures, which in the main remain largely otherwise unchanged (Open Procedure, Restricted Procedure, Competitive Dialogue Procedure), have been reined back considerably:
- Open - ITT - 35 days (reduced from 52), reduced by a further 15 where a PIN has been issued and a further 5 days where submissions can be made by electronic means
- Restricted - PQQ - 30 days, ITT - 30 days, reduced to 10 days where a PIN has been issued and by a further 5 days where tender submissions can be made by electronic means
- Competitive Dialogue - PQQ - 30 days
Use of PIN as call for competition
While the use of the Prior Information Notice has long been a mechanism to warm up the market to planned public purchasing, the new Regulations go a step further and permit the use of the PIN itself as the call for competition, which would otherwise have been set out in an OJEU Notice. How this will work in practice will remain to be seen from a planning perspective.
Codification of case law concepts
For many years, we have had to rely upon EU and English case law to develop concepts for which the existing procurement law didn’t make explicit provision. In recognition of the importance of the need for procurement law to be dynamic and to change with the needs of the market, various specific areas developed by case law have now been inserted into the new Regulations themselves giving certainty and clarity around these concepts:
- Teckal - the ‘in-house exception’; finally, the principles which have been used for many years to create public sector companies (wholly or jointly owned across public sector parents) for the provision of services back to its parents has been formally recognised; one key clarification is the insertion of a definite figure (80%) of the subsidiary’s activities which must be provided back to its parents to take advantage of the exception
- Pressetext - the rules around the sorts of variations which can be made to a contract once awarded, and during its life without having to retender have been recognised and clarified
- Hamburg Waste - the case which finally forced a discussion around what kinds of public/public shared service arrangements might be permitted without having to undertake a competitive procurement have been formalised
Turnover threshold limit
In a move to give greater access to small and medium enterprises (SMEs) to public sector contracts, a cap on turnover has been introduced as a selection criteria; unless there are exceptional circumstances (which would need to be justified), when procuring, a body cannot require a provider to have a minimum yearly turnover that exceeds twice the estimated contract value (over its life).
What has stayed the same?
The well-worn Open, Restricted and Competitive Dialogue Procedures remain largely intact (as does the Negotiated Procedure without Prior Publication).
Perhaps most importantly, the remedies regime remains exactly as it has since being first introduced in 2009.
As previously mentioned, clearly the devil is in the detail around the changes to a certain extent, but in the main, the changes are intended to make procurement simpler and quicker, which ought to reduce the risk of challenges and to promote best practice. Well, that‘s the theory…