PLC Public Sector reports:
This is the first of a new series of posts on key developments in public procurement policy in the UK that lawyers advising in this area need to be aware of. It will not consider case law, which is covered in our monthly public procurement case digest.
In this first edition, we look at the developments we have seen so far in 2013. Subscribers to Practical Law can keep up to date with latest public procurement developments by signing up to the PLC Public Sector e-mail update (available weekly) or the PLC Competition e-mail updates (available daily).
Public procurement reform
The end of 2012 saw the Competitiveness Council reach agreement on its general approach to the European Commission’s proposals for reform of the public procurement rules. The Council’s agreed approach will form the basis of discussions with the European Parliament. The European Parliament is due to have its first reading of the proposals in September 2013, by which time it is hoped (but not guaranteed) that the EU institutions will have reached agreement on the final texts of the reforms.
One of the more interesting details to emerge from the draft agreed by the Council is that Article 17 has been amended to include an additional form of reserved contract. This would allow contracting authorities to reserve the right to tender for public service contracts to organisations “whose main aim is the integration of former employees of public authorities into the private sector”. This is definitely a positive step for the government’s mutual/staff spin out agenda, however, questions remain over how workable the new exemption may be given the restrictions which it is proposed to place on it, for example, a requirement that the organisation must provide its services exclusively for contracting authorities.
The public procurement regime is not the only subject of reform. On 1 April 2013, many of the government’s NHS reforms introduced by the Health and Social Care Act 2012 (HSCA 2012) come into force. As part of these reforms, the National Health Service (Procurement, Patient Choice and Competition) Regulations 2013 have been published. Made under sections 75 to 77 of the HSCA 2012, the regulations impose requirements on the National Health Service Commissioning Board and clinical commissioning groups in order to ensure good practice in the procurement of health care services for the purposes of the NHS and to prevent anti-competitive behaviour by commissioners with regard to such services. For more information on the changes to NHS commissioning being introduced by the HSCA 2012, see our practice note.
Social value is here
Sections 1 and 2 of the Public Services (Social Value) Act 2012 came into force on 31 January 2013. These provisions require certain public authorities to consider how what is being procured might improve the economic, social and environmental well-being of their area, and how that improvement might be secured. Guidance has been published on the requirements of the Act and our “ask the team” sets out what steps authorities should consider taking to ensure compliance. However, a worry remains that authorities will only know the full extent of the requirements when they have been considered by the courts.
Public procurement crackdown on tax avoidance
On 14 February 2013, the government announced details of its plans to use the public procurement process to deter tax avoidance and evasion. From 1 April 2013, bidders for contracts to be awarded by central government (that exceed the thresholds for the application of the public procurement rules) will be required to self-certify whether they have had an “occasion of non-compliance” with the tax rules. A new “pass/fail” question will be developed and will be incorporated into the standard core pre-qualification questionnaire. An interesting question that arises from the new policy is if, at a time when the government has been encouraging contracting authorities to take all steps they can lawfully take to contract with British providers, this policy will potentially place non-UK providers at an advantage?
Leaving aside the public procurement reforms, 2013 is shaping up to be another busy year for procurement lawyers. Our next update will look at the latest government guidance on financial appraisal and Commission guidance on state aid and SGEI, as well as the other developments that are inevitably just around the corner.