It finally happened; on 28 March 2014 the directives that will make up the new procurement regime were published in the Official Journal. For more information on the changes, see our practice note and we will be publishing further detailed guidance on some of the key issues as the government confirms its implementation plans.
For those looking to get to grips with the key changes but with little time to spare from dealing with issues under the existing regime, the following ready reckoner should help you bluff your way in procurement circles.
What’s it all about?
- There will be three new directives (instead of two) (when one of the stated aims was simplification..). They cover: public procurement, procurement by utilities and, the new member of the family, concessions contracts.
- They will come into force on 17 April 2014.
- Member states have two years to implement but the government has stated it intends to do so in a far shorter timescale, perhaps as early as October 2014.
- The Cabinet Office intends the new procurement regulations to mirror the wording of the directives as closely as possible.
What’s changing?
The key changes from the existing regime are:
Two new procurement routes: more negotiation is expected, as the competitive negotiated procedure and the innovation partnership routes will be available. It’s not clear what an innovation partnership is yet, but the competitive negotiated procedure will be useful. The competitive dialogue procedure is no longer limited to particularly complex contracts.
New light touch regime: Part B services are to be a thing of the past. Instead, we will have contracts which are subject to a “light touch regime”, available for many of the same services, such as social, educational, health and cultural services valued at EUR750,000 or more. Subject to a requirement to advertise, member states can determine the procurement rules for contracts for these services, as long as such rules require the contracts to be awarded fairly and transparently.
Modifications: we will have greater legislative clarity on when contracts can be varied in certain limited circumstances. For example:
- For additional work not foreseen at the time the contract was let (as long as the value of the modification is less than 50% of the original contract value).
- Where the contractor is replaced due to a corporate restructuring.
- Where the value of the modification is less than the relevant threshold and 10% of the initial contract value for goods and services contracts, or 15% for works contracts.
- Where the modifications are not substantial, as defined in the directive.
Public to public arrangements: the case law on public to public arrangements which fall outside the procurement rules is codified; nothing new here, but good to see the principles of Teckal and Hamburg waste brought together in one place. To recap: contracting authorities can directly award contracts to entities controlled by, and which carry out the majority of their activities for them. Key points to note about the new Teckal exemption are:
- Reverse Teckal (awarding to parent) and group Teckal (awarding to a sibling) are permissible.
- 80% of the Teckal company’s activities must be carried out for the controlling authority or authorities.
- There must be no private participation in the governance of the company.
The principles of Hamburg waste are reflected in the directive as follows:
- Contracting authorities can award contracts to each other without going through a procurement exercise where the purpose of the contract is to enable the parties to cooperate in the discharge of their functions, and the arrangement is governed solely by public interest considerations.
- The authorities must perform less than 20% of the activities concerned on the open market.
Measures favouring SMEs and promoting social values: a number of new measures have been introduced designed to promote participation in public contracts by SMEs and social values. These include:
- It will be possible to reserve some contracts for bids from social enterprises or employee-led organisations only.
- Inclusion of social criteria at award stage.
- Mandatory turnover requirements for bidders limited to twice the value of the contract.
- Ability to exclude bidders from selection phase for breaches of social or environmental law.
- New mandatory exclusion for crimes including child labour and human trafficking.
By far the most important change is Article 53, which says,
“Contracting authorities shall by electronic means offer unrestricted and full access free of charge to the procurement documents from the date of publication of [the OJEU contract] notice”.
“Procurement documents” are defined in Article 2 as including the ITT, contract, specification, payment terms, KPIs etc.