Practical Law

The Public Contracts Regulations 2015 (SI 2015/102) (PCR 2015) come into force tomorrow. In this post, John Bennett, co-author of the loose-leaf encyclopedia EU Public Procurement: Law and Practice suggests how practitioners can keep on top of the changes arising from the new regulations.

1. Keeping up to date: The government will be producing guidance and information including online training, so regularly review the government’s updates page (direct or through Practical Law). For general procurement guidance, keep the Cabinet Office’s Procurement Policy Notes (PPNs) under review. Also keep an eye open for developments regarding the Small Business Enterprise and Employment Bill and use of clause 38 for further national regulations. (See Legal update, Cabinet Office statement and response to consultation on public procurement regulations under Small Business, Enterprise and Employment Bill.)

2. Alert clients to the need to be aware of the correct procurement rules applicable to their procurement activity: The PCR 2015 rules only apply to procurement activity that commences after 26 February 2015. Procurement activity commenced before that time is under the “old rules” within the Public Contracts Regulations 2006 (SI 2006/05) (PCR 2006). This is likely to be most relevant for challenges to those procurement procedures started before 26 February 2015, but note that although the numbering of the regulations relating to Applications to the Court is now neater under the PCR 2015, the rules are just about identical to those within regulation 47 of the PCR 2006 as amended in the Public Contracts (Amendment) Regulations 2009 (SI 2009/2011).

3. Review procurement policies for below threshold procurement: Note that the regulations to support SMEs, also known as the Lord Young reforms are summarised in PPN 03/15 and contained within Part 4 of the 2015 regulations (see Practice note, Public procurement: “Light touch” regime and obligations under Part 4 PCR 2015 and Legal update, Government decisions on making public sector procurement more accessible for SMEs). The new rules require public bodies to advertise contract opportunities on Contracts Finder within 24 hours of advertising them elsewhere. This requirement applies to contracts valued at £10,000 and above for central government and £25,000 and above for sub-central authorities.  Other measures include forbidding a PQQ stage (regulation 111). Ensure clients are aware of the scope of the flexibilities for sub-threshold contracts.

4. Review procurement policies for social and other services: This is a major change with the abolition of the former Part B service category into which most of these would have fallen, and its partial replacement by the new light touch regime (“LTR”) for contracts above EUR 750,000 (or £625,050, sterling equivalent subject to confirmation) in value within regulations 74-76. Note that for below threshold contracts there is the new regime applicable to advertising contracts above £10,000 (central government) and £25,000 (local government and other sub-central authorities) (see 3 above).

5. Prepare procurement documents early: Remember that regulation 53 expects all procurement documents to be available electronically, when the OJEU Notice is published. This may well mean deferring the date of the publication of the OJEU Notice. Flexibility is given in regulation 53(1) as they may be made available “on the date on which an invitation to confirm interest is sent”.

6. Do you need a template for a procurement report?: One obligation that has been clarified/changed in the new regulations is the need for a comprehensive procurement report on each exercise (regulation 84), and for higher value contract conditions to be made available during the contract period to interested parties (subject to confidentiality, regulation 85). Debrief information will also need to include information on the conduct of negotiations and dialogue with bidders (regulation 53(2)(d)).

7. Public sector to public sector arrangements: Note that the former case law exemptions have been clarified and regulated under regulation 12 (see Practice note, Public to public collaboration and the procurement rules).

8. Reviewing and changing the terms of existing contracts: Note the new flexibilities for questions around sub-contracting (regulation 71) and the obligation regarding payment of sub-contractors within 30 days of an undisputed invoice in regulation 113 (and the requirement to carry on this obligation down the supply chain). Does this mean a change to your standard form contracts? If you need to change a contract during its term, then the former case law exemptions have been clarified and regulated under regulation 72 (see Practice note, Varying public contracts). Regulation 73 also requires all public contracts to contain new rights to terminate for various breaches, including where the contract has been substantially varied in a manner not provided for in regulation 72.

9. Pre-General Election – Not long now! Keep an eye open for what the parties are saying about how they would use procurement to further other policies (for example, SMEs, NHS and tax). In particular, the new provisions mean significant change for the NHS and social care. From 26 February 2015, all contracts must be advertised if they exceed the threshold. NHS trusts and local authority social care departments will be particularly affected by this change. However, note that the government has delayed implementing the new rules for NHS England and clinical commissioning groups. Their contracts for health care services, which are subject to the National Health Service (Procurement, Patient Choice and Competition) (No 2) Regulations 2013 (SI 2013/500), will be subject to the old rules under the PCR 2006 until 18 April 2016. Given the focus on competition in the NHS, it will be interesting to see whether the parties propose to make any further changes in this area. In addition, the government proposes further regulation of procurement processes to assist SMEs, see Legal update, Cabinet Office statement and response to consultation on public procurement regulations under Small Business, Enterprise and Employment Bill.)

10. Post-General Election: There are two more directives to implement, one on utilities and one on higher value concession contracts. These must be transposed by April 2016, whoever wins the Election (see Legal update, New public procurement directives and concession contracts directive published in Official Journal).