Out-Law Guide | 13 Mar 2015 | 2:30 pm | 7 min. read
This guide was last updated in March 2015
For a brief overview of the circumstances in which the new regulations apply, as well as some exceptions, please see our separate Out-Law guide. This guide will set out some of the main changes to the previous regime introduced by the new regulations.
What changes can you expect to EU notices?
The standard form EU notices for publication in the Official Journal of the European Union, including contract notices and prior information notices, are in the process of being updated, as member states have until 18 April 2016 to implement the changes.
The UK's Cabinet Office has indicated that it is working with the EU's e-Senders branch to ensure that the new notices are available to member states that are implementing early as soon as possible. The Cabinet Office has also published guidance on how to adapt the existing notices to comply with the new 2015 Regulations in the mean time (26-page / 496KB PDF). Authorities should continue to adhere to this guidance until the new notices become available and are available via e-sender systems, at which point the Cabinet Office will issue further guidance.
Authorities can also expect a series of new EU notices produced to reflect new provisions in the directive; for example, a notice of modification of a contract during its term and a contract notice relating to the new 'light touch' regime contracts. These are also awaited alongside the updated standard form notices mentioned above.
What changes do you need to make to your tender documents?
Although this is not an immediate change, contracting authorities should be aware that the 'core PQQ' adopted at central government level and used by others will ultimately be replaced by the European Single Procurement Document - essentially a bidder's 'passport' to getting shortlisted for public contracts in the EU. This document will demonstrate a bidder's financial and economic standing, technical capacity and ability, and previous experience. A draft of this new document is under discussion by the member states and no final draft has yet been agreed. Authorities should be aware that their pre-qualification processes will need to be adapted in due course.
In the meantime, authorities should ensure any prequalification documents issued in relation to tender processes started on or after 26 February 2015 reflect:
All tender documents must refer to contracts being awarded on the basis of the "most economically advantageous tender" (MEAT). Lowest price can no longer be a headline award criterion. However, the wording of the regulations seems to permit an authority to determine the MEAT on the basis of cost alone; i.e. without conducting any qualitative tender evaluation of factors such as the quality of the bid or its technical merit. As such, it still appears possible to award contracts on the basis of lowest price alone, albeit an authority will have to express its approach to evaluation slightly differently.
An authority's choice of award criteria may include staff "qualification" and "experience" where the staff assigned to deliver the contract may have a significant impact on level of performance. This effectively implements previous EU case law in this area. Cost may be assessed on the basis of life-cycle cost, taking into account factors such as the energy or maintenance costs related to a tendered product. If this approach is taken, authorities must ensure they comply with the parameters on life-cycle costing set out in the regulations.
The regulations confirm the circumstances in which contracts may be varied without requiring a new procurement process. These circumstances include:
The most noteworthy development in the area is the ability to allow a new supplier to step into the shoes of the originally appointed supplier, in whole or in part, following corporate restructuring such as a takeover or insolvency, provided certain conditions are satisfied.
Tied to the above development, the regulations introduce the right for an authority to terminate the contract in three scenarios; one of which includes "substantial" modifications as set out above. Importantly, even if these cancellation rights are not included in the contract terms they will be deemed to apply by virtue of this new regulation, subject to reasonable notice being given. It is also open to authorities to define relevant terms and conditions to aid in the operation of these new termination rights.
The Cabinet Office has indicated that it will provide model contract clauses and guidance to assist authorities with these new termination rights. Authorities would be well-advised to clarify for suppliers how these new termination rights may operate – for example, where the right to terminate in the event of a "substantial" modification will be time-limited.
New reporting and retention requirements
Reporting and recording obligations are more extensive for authorities under the 2015 regulations than under the previous regime. Contracting authorities should ensure their internal systems are updated to reflect these new requirements, which include:
Additional UK-specific reporting and publication requirements arise under the Lord Young reforms, which are summarised below.
What are the Lord Young reforms?
Some provisions in the 2015 regulations go further than in the EU directive, implementing specific SME-friendly recommendations from Lord Young, the Enterprise Adviser to the Prime Minister. These provisions introduce rules that must be followed by authorities when awarding 'below threshold' contracts that are still above minimum thresholds of £10,000 (central government) or £25,000 (sub-central government authorities or NHS Trusts). These reforms do not apply to contracts also subject to the 2013 NHS Regulations.
The main requirements for above-threshold contracts are:
The main requirements for below-threshold contracts are:
These provisions will not apply in Northern Ireland, as it was felt that many of the principles were already addressed through Northern Ireland's procurement policy. For example, for a number of years public bodies in Northern Ireland have committed to pay invoices within just 10 days. Similarly, these provisions will not extend to most Welsh public sector bodies.
The Cabinet Office has published guidance in support of these reforms:
Guidance on the new transparency requirements for publishing on Contracts Finder (3-page / 405KB PDF)
Other changes contained in the 2015 regulations
This short guide highlights the main changes that contracting authorities must be aware of as of 26 February 2015 when approaching the market with public contracts. There are a whole host of other changes that authorities may be interested in, many of which might appear to be smaller changes but which could have potentially bigger repercussions. These include rules in relation to the opening of tenders under the open procedure, confirmation of the ability for authorities to operate two alternative methods of contract award under multi-supplier framework agreements within certain parameters, and a specific prohibition on designing a procurement with the intention of excluding or narrowing competition.