Lengthy and onerous pre-qualification questionnaires (PQQs) have long been an aggravation to suppliers to the public sector. The impact is particularly felt among SMEs where disproportionate PQQs are just one obstacle to winning government contracts. With this in mind, the government has taken various steps to restrict the use of PQQs.
In February 2012, the government published Procurement Policy Note 01/12 which restricted the use of PQQs by central government departments, their executive agencies and non-departmental public bodies for below threshold contracts. It also mandated the use of the standard PQQ for all above threshold contracts (see Legal update, Cabinet Office note on use of pre-qualification questionnaires).
In May 2013, Lord Young published his report on enabling greater access to public contracts by SMEs. The government responded with its report, Small business: GREAT Ambition, setting out its proposals for helping small businesses grow, including the abolition of the PQQ for below threshold contracts (see Legal update, Government decisions on making public sector procurement more accessible to SMEs). Some of these measures have been codified in Part 4 of the Public Contracts Regulations 2015 (see Legal update, Guidance on the new light touch rules under the Public Contracts Regulations 2015 and the new standard pre-qualification questionnaire).
The Public Contracts Regulations 2015 contain two provisions dealing with the use of PQQs, in addition to the regulations dealing with the questions that can be asked and means of proof.
Regulation 107: Contracts above the EU thresholds
Regulation 107 states that contracting authorities must have regard to guidance issued by the Cabinet Office. That guidance, published on 27 February 2015, applies to contracts above the EU thresholds. For these contracts, contracting authorities must adhere to the guidance. This includes a requirement to select from the bank of core and additional questions set out in the standard PQQ which has also been revised. Any deviation from the guidance must be reported to the Crown Commercial Service from 1 September 2015, with reasons, though the CCS may carry out spot checks before this date (see Legal update, Crown Commercial Service guidance on Public Contracts Regulations 2015).
Regulation 111: Contracts below the EU thresholds
Regulation 111 prohibits the use of PQQs for contracts below the services threshold of £111,676 (or £172,514 for sub-central authorities, such as local government). These thresholds apply to works and Schedule 3 services contracts too, though the thresholds that bring them within scope of the remainder of the regulations are considerably higher, at £4,322,012 and £625,050 respectively.
Although contracting authorities cannot use PQQs for below threshold contracts, they can ask candidates to answer suitability assessment questions, if they are relevant to the subject matter of the contract and proportionate. The Cabinet Office may also issue guidance under this regulation, though so far none has been published.
This two-pronged approach to regulating the use of PQQs, and the application of the approaches to contracts of varying thresholds creates a confusion about when PQQs can be used.
Practical Law has prepared this ready reckoner:
| Contracts up to £10,000 (or £25,000 if sub-central authority). | No restrictions on use of PQQ (though PQQs are unlikely to be necessary or proportionate). |
| Contracts valued between £10,000 (or £25,000 for sub-central authorities) and £111,676 (or £172,514 for sub-central authorities). | Use of PQQ prohibited by regulation 111(1). Contracting authorities may only ask candidates suitability assessment questions which are relevant to the subject-matter of the procurement and proportionate. Contracting authorities must have regard to any guidance issued by the Cabinet Office. |
| Contracts above the threshold of £111, 676 for goods and services (or £172,514 for sub-central authorities), or £4,322,012 for works. | Contracting authorities must adhere to the guidance issued by the Cabinet Office on qualitative selection. Contracting authorities should adopt the standard PQQ and, from 1 September 2015, must report any deviations from the standard wording to the Crown Commercial Service. |
Contracts above the threshold of £111,676 (or £172,514 for sub-central authorities) but:
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Contracting authorities may use PQQs, however, as the procurement falls largely outside the regulations, the authority would not be obliged to adhere to the guidance issued under regulation 107, but could do so if it wished. |
| Contracts for Schedule 3 services contracts at or above the threshold of £625,050. | Contracting authorities must adhere to guidance issued under regulation 107. Contracting authorities should adopt the standard PQQ and, from 1 September 2015, must report any deviations from the standard wording to the Crown Commercial Service. However, contracting authorities are not obliged to adhere to the procedures referred to in the guidance. Therefore, contracting authorities should adhere to the guidance to the extent that it is relevant to the procedure which they have chosen to run in compliance with regulation 76. |
This post has been amended to clarify the position in relation to works contracts, following a request from one of our subscribers.
After many years waiting, many pages of writing , its welcome news that the PQQ system looks like it will be simplified and in some cases, abolished.
This will allow SME’s to concentrate on what they do best- be judged on their service provision, not their ability to fill in PQQ’s.
Do you think this will be a good thing?