A Guided Tour of the Public Contracts Regulations 2015

Gayle Monk20th April 2015

What will we cover?

A look at some of the key changes and new rules in the Public Contracts Regulations 2015 focussing on: New procedures, and changes to existing ones Lots and how they are used Changes to the exclusion and selection processes Changes to contract award and evaluation criteria Pre-market consultation The different rules for social and other services – the “light

touch regime” “Reserved” contracts Treatment of subcontractors Part 4 and the Young Reforms

New procedures and changes to existing onesWhat does the process look like? Procedures (Regs 26 & 29-31)Open and restricted procedures remain largely unchanged

“Competitive procedure with negotiation” (CPN) and “competitive dialogue” (CD) now both available where: requirements “cannot be met without the adaption of readily

available solutions” contract “includes design or innovative solutions”; or contract cannot be awarded without negotiations because of

specific circumstances related to “complexity, legal or financial make-up or risk”

Innovation partnership (IP)covers initial product development and subsequent purchasestendered procedure – similar to CPN

Open & restricted procedures – minimum timescales (Regs 27, 28, 47)Procedure Situation PQQ Tenders

Open normal N/A 35 days*

with PIN N/A 15 days

accelerated

N/A 15 days

Restricted normal 30 days 30 days* (except central government)

with PIN 30 days 10 days

accelerated

15 days 10 days* 5 days less if tenders submitted by electronic meansAccelerated procedure available where: state of urgency “duly substantiated by the

contracting authority” makes normal time limits “impracticable”

Time limits must be sufficient to complete PQQs/tender (Reg 47)

Lots and contract limits (Reg 46)Can limit the number of lots a tenderer can: bid for; and/or win

Maximum number must be stated in OJEU notice

How lot contracts are awarded to bidders who “win” more than the maximum number of lots: criteria must be “objective and non-

discriminatory” i.e. cannot simply “let contractor choose”

Contracting authority can choose to combine several (or all) lots in these circumstances as well provided they state this up front.

Small lots rule remains the same.

Divide or explain

• Client must justify decision not to break down contracts into separate lots

• Justification must be set out in the procurement documents or the client’s procurement record

Being Ready - Procurement documents & e-tenders (Regs 2 & 53) Online availability of procurement documents including: Contract, specification, cost model ITT, tender submission requirements and

“additional documents”

Compulsory e-tendering & communications From 18 April 2018 (buying clubs 2017) Data integrity system requirements (e.g.

no access to tenders until after deadline) Must document verbal communications

impacting on tender submission or evaluation

“Contracting authorities shall by

means of the internet, offer unrestricted

and full direct access free of charge to the procurement documents

from the date of publication [of the OJEU

notice]” Reg 53(1)

Contractor reliability- prequalification (Regs 56-65) New standard PQQ mandated by

the Crown Commercial Service New terminology Reg 58 - minimum standards

To prequalify “suitable” bidders Pass/fail questions Called “selection criteria”

Reg 65 - tender list selection Can limit the number of bidders “meeting

the selection criteria” that are invited to tender

Scored questions “Invitation criteria”?

European Single

Procurement Document

Self-declaration of compliance

Standard form from Commission

“Verified” just before contract award

Challenge risk if “untrue” and rejected

Exclusion (Regs 24 & 57)

New exclusion grounds “Significant or persistent deficiencies in the

performance of prior public contract which led to early termination, damages or other comparable sanctions”

Conflicts of interest, collusion, breaches of environmental or employment law etc.

“Self-cleaning” provisions “Active collaboration”, compensation & “active

measures” to prevent recurrence Default exclusion period - 3 years (for

discretionary exclusion) or 5 years (for monthly exclusion)

Reflected in the standard PQQ

Exclusion for previous contract delivery

problems

• Problems must have been “significant” or “persistent”

• Must be on a prior public contract

• Deficiencies must have led to “early termination, damages or other comparable sanctions” – would not apply if termination was under a “break clause”

Selection - financial (Regs 56, 58 & 60)Economic and financial standing information Bank reference & insurance details Published accounts and turnover statement Group company info

Impact No use of credit reference agencies Need to identify “special risks” if using higher

minimum turnover Protections may be sought instead (e.g.

payment in arrears, performance bond, retention)

Financial

Annual turnover no more than 2 times contract value unless “special risks”

Minimum turnover in “area” (of work) covered by the contract unless “special risks”

Financial ratios Minimum

insurances

Selection – technical (Regs 56, 58 & 60)References Can be used only to establish a “sufficient level of

experience”

Express ability to exclude for poor performance may limit the opportunity to regard this as part of technical ability

Information that can be requested: subcontracting proportions List of previous contracts - 5 years works or 3 years services/supplies Technicians, technical facilities and workforce & managerial staff Supply chain management & tracking systems (new) Educational & professional qualifications Environmental management Average annual manpower Tools, plant, technical equipment Quality assurance certificates

Implied contract terms (Reg 73)

Compulsory termination Implied into contract if not included

But implied terms may not deal with timing and consequences of termination

30 day payment terms Apply if invoice “undisputed” “Undue delay” in “verifying invoices” is no

excuse Must be cascaded down supply chain

Must terminate if: European

Court decides serious breach of Treaty / EU Directives

substantial change occurs

contractor should have been disqualified (mandatory exclusion)

Compulsory termination

Contract Award Criteria (Regs 67 and 68)MEATIdentified on the basis of price or cost using a cost effectiveness approach Best price-quality ratio Can include environmental/social aspects Linked to the subject matter of the contract Where the cost element takes the form of a fixed price or cost

bidders can compete on quality criteria only

LIFE-CYCLE COSTING This must be stated in the procurement documents if used Objective and non discriminatory Accessible

Pre-Market Consultations (Reg 40)Preliminary market consultations40.—(1) Before commencing a procurement procedure, contracting

authorities may conduct market consultations with a view to preparing the procurement and informing economic operators of their procurement plans and requirements.

(2) For this purpose, contracting authorities may, for example, seek or accept advice from independent experts or authorities or from market participants.

(3) Such advice may be used in the planning and conduct of the procurement procedure, provided that it does not have the effect of distorting competition and does not result in a violation of the principles of non-discrimination and transparency.

Light touch regime for some services contracts (Regs 74 to 76)

New light touch regime for certain services:health and social services

legal services

educational services (but not training)

Over the threshold of €750,000 (£625,050)

“Other services” (residual category) will now be fully regulatede.g. grounds maintenance

Crown Commercial Service guidance

Some services

now subject to “full”

tendering regime

• Grounds maintenance

• Agency staff (other than in care or health sectors)

• Rail transport

Schedule 3(CPV Code) DescriptionSupply services of domestic help personnel, supply services of nursing personnel and supply services of medical personnel. Private households with employed persons and manpower services for households, agency staff services for households, clerical staff services for households, temporary staff for households, home-help services and domestic services.

Health, social and related services

Administrative, defence and social security services; educational and training services, exhibition, fair and congress organisational services, seminar organisation services, event services, cultural event organisation services, festival organisation services, party organisation services, fashion shows organisation services and fair and exhibition organisation services.

Administrative social, educational, healthcare and cultural services

Compulsory social security services

Benefit servicesOther community, social and personal services including services furnished by trade unions, political organisations, youth associations and other membership organisation services

Religious servicesCatering services for private households, meals-on-wheels services, meal delivery service, catering services, catering services for transport enterprises, catering services for other enterprises or other institutions, school catering services, canteen services, canteen and other restricted-clientele cafeteria services, canteen management services and school-meal services

Hotel and restaurant services

Schedule 3(CPV Code) Description

Legal services, to the extent not excluded by Regulation 10 (1)(d)Other administrative services and government services

Provision of services to the communityPrison related services, public security and rescue services to the extent not excluded by regulation 10(1)(h)

Investigation and security services, security services, alarm-monitoring services, guard services, surveillance services, tracing system services, absconder-tracing services, patrol services, identification badge release services, investigation services and detective agency services, graphology services and waste analysis services.

Investigation and security services

Services provided by extra-territorial organisations and bodies and Services specific to international organisations and bodies

International services

Postal and telecommunications services, post and courier services, postal services, postal services related to newspapers and periodicals, postal services related to letters, postal services related to parcels, post office counter services, mailbox rental, post-restante services, Internal office mail and messenger services.

Postal services

Miscellaneous services

Light Touch Regime (Regs 74 to 76)

Publication of notices Must publish a contract notice or a PIN to start the procedure,

which should include details concerning:o Conditions for participation;o Time limits for contacting the contracting authority;o The award procedure to be applied.

Must publish a contract award notice at the end of the procedure but can “group” CANs quarterly

Principles of awarding contracts Procedures to be determined by the contracting

authority Must be at least sufficient to ensure transparency and

equal treatment May deviate from the information given in the contract

notice or PIN but only if:o Doing so doesn’t breach transparency and equal treatment;o Contracting authority has duly considered the matter, documented

its conclusions and informed participants;

Time limits must be reasonable and proportionate; Can follow procedures that correspond with the

“normal” procedures

Light Touch Regime (Regs 74 to 76)

Principles of awarding contracts

Contracting authorities may take into account any relevant considerations when awarding the contract, including:

(a) the need to ensure quality, continuity, accessibility, affordability, availability and comprehensiveness of the services;

(b) the specific needs of different categories of users, including disadvantaged and vulnerable groups;

(c) the involvement and empowerment of users; and

(d) innovation.

Light Touch Regime (Regs 74 to 76)

Reserved contracts – supported businesses (Reg 20)

Contracting authorities may reserve (ring-fence) competition for contracts to:

• Sheltered workshops• Economic operators whose main aim is the social and

professional integration of disabled or disadvantaged persons

Or may provide for the contract to be performed in sheltered employment programmes.

At least 30% of the workforce of the economic operator must be disabled or disadvantaged workers.

Reserved Contracts – public service mutual organisations (Reg 77)Contracting authorities may also reserve contracts for certain services to “qualifying organisations” which fulfil the following conditions:

• Objectives are the pursuit of a public service mission linked to the delivery of the services;

• Profits are reinvested with a view to achieving that objective; any distribution of profit is based on participatory considerations;

• Management or ownership structures are based on employee ownership or participation, or require the active participation of employees, users or stakeholders.

The organisation must not have been awarded a contract under Reg 77 by the contracting authority in the preceding 3 years.

Contract is for a maximum of 3 years.

Services that can be “reserved”

75121000-0 Administrative educational services

75122000-7 Administrative healthcare services

75123000-4 Administrative housing services

79622000-0 Supply services of domestic help personnel

79624000-4 Supply services of nursing personnel

79625000-1 Supply services of medical personnel

80110000-8 Pre-school education services

80300000-7 Higher education services

80420000-4 E-learning services

80430000-7 Adult-education services at university level

80511000-9 Staff training services

80520000-5 Training facilities

80590000-6 Tutorial services

85000000-9 – 85323000-9 85000000-9 – Health and social work services

85100000-0 – 85172000-5 – Health services

85200000-1 – 85210000-3 –Veterinary services

8530000-2 – 85323000-9 – Social work and related services

92500000-6 Library, archives, museums and other cultural services

92600000-7 Sporting services

98133000-4 Services furnished by social membership organisations

98133110-8 Services provided by youth associations

Subcontracting arrangements Contracting authority can ask tenderers to

indicate any share of the contract they intend to subcontract and any proposed subcontractors

Without prejudice to the main contractor’s liability

For works contracts (and services at a facility under the direct oversight of the client) the contracting authority must:o require from the main contractor the names,

contact details and legal representatives of its subcontractors

o Require the main contractor to notify it of any changes, including any new subcontractors

Provisions may be extended down the supply chain at the contracting authority’s discretion

Mandatory exclusion can be extended to subcontractors

Regulation 71 (Subcontracti

ng)

Part 4 and the Young Reforms

Ostensibly about making procurement opportunities more accessible to smaller businesses and voluntary organisations

See CCS PPN 03/15CCS guidance on PQQsCCS Standardised PQQ

Not applicable to:- NHS bodies (at the moment)

- Academies and maintained schools

Part 4 Using Contracts Finder “where contract notices are used” – Regulation 106

“Where a contracting authority sends a contract notice…..”

Information to be published – Regulation 106(2) (advertisement)

Have regard to Cabinet Office Guidance

When does a contracting authority identify an opportunity? – see Regulation 110(5)

Below Threshold Procurement – Regs 109 - 111 Apply to contracts between £25,000 and the threshold

for services (£172,215) – whether for works, supplies, services or “light touch regime” services

Contracts Finder:

Where the contracting authority advertises a contract award opportunity

Not where the contracting authority makes an opportunity available to only a number of particular economic operators selected for that purpose (whether ad hoc or under a framework agreement)

PQQs:

Contracting authority cannot use one between those thresholds

e.g. for light touch regime you can use PQQs if above £172,215

Contract Awards – publication of information on Contracts Finder – Regs 108 and 112

If you publish a contract award notice (above threshold contract): Contractor, date, value (Reg 108)

For below threshold contracts: Contractor, date, value, whether contractor is an SME or VCSE (Reg 112)

VCSE is “a non-governmental organisation that is value-driven and which principally reinvests its surpluses to further social, environmental and cultural objectives”.

PQQs - Regulation 111 – below threshold

No PQQ stage in procurement for below threshold contracts (at services level for all procurements)

But, in any event, contracting authorities can ask suitability assessment questions!

“Suitability assessment questions” means …

“a question which relates to information or evidence which the contracting authority requires for the purpose of assessing whether candidates meet minimum standards of suitability, capability, legal status or financial standing.”

Have regard to Cabinet Office guidance

Reportable deviation

PQQs - Regulation 107 – above threshold

Have regard to guidance about qualitative selection, which says:o Only use the standard PQQ or otherwise PAS91 for public works

contracts above threshold

o Technical and Professional Ability – Paragraph 8 of the CCS Guidance

o “Contracting authorities are permitted to ask further project specific questions …. as part of selection.”

Is silent on:o Works contracts between the threshold for services and the

threshold for works

o Light touch regime services between the €207,000 and €750,000.

Payment of undisputed invoices (Reg 113)Payment within 30 days by contracting authorities, contractors and subcontractors:

Except for health and schools/academies

Mandatory provisions in contract conditions

Publication of payment record

Validity of contracts (Reg 114)

A material failure to comply with any requirement of this Part does not, of itself, affect the validity of a public contract that has been entered into.

Questions

News and legal updates:

www.anthonycollings.com/news-and-events/briefings.aspx

Advice:

Mark.Cook@anthonycollins.com Gayle.Monk@anthonycollins.com