Out-Law News 3 min. read

'Significant' changes to public procurement rules to be introduced in weeks

A raft of major changes to the regulation of procurement in the public sector in England, Wales and Northern Ireland is set to be introduced later this month.

Public procurement law expert Stuart Cairns of Pinsent Masons, the law firm behind Out-Law.com, said public bodies must "prepare to start doing things differently".

On Thursday, the UK government laid the new Public Contracts Regulations before parliament. The rules part-implement EU public procurement rules that were finalised last year. Many of the provisions in the new Regulations will come into force on 26 February. Separate regulations to implement the EU reforms will be introduced in Scotland.

"The new Regulations contain significant changes and introduce some innovative new ways that public bodies can procure, but there will be uncertainty around how some of these newer rules will work," Cairns said. "It will take time for the reforms to bed in but in the mean time authorities will need to get their head around the new rules. Those that fail to do so potentially expose themselves to a greater risk of challenge to their procurement procedures and decision making."

"Of particular note in the new Regulations is the introduction of a new 'light touch' regime, covering contract awards for health and social services and educational and cultural services, among others. Contracting authorities must get to grips with what those rules mean in practice. Related to that is the removal of the distinction between 'part A' and 'part B' services, as well as the creation of the concept of innovative partnerships. These reforms have the potential to deliver benefits for the public sector, but authorities must first spend time understanding the new rules," Cairns said.

In implementing the reforms, the UK government has decided against imposing a requirement that contracting authorities in England, Wales and Northern Ireland divide public contracts into lots. Instead, the new rules give bodies the option of splitting them in this way but they are not required to do so. It confirmed the approach in a response it has published at the end of a consultation process on the draft Regulations which had prompted 204 responses to the legislative proposals.

The new Regulations will force public bodies to explain any decision not to use lots, but the Cabinet Office decided (31-page / 635KB PDF) not to include "an exhaustive list of the permissible reasons not to lot" in the new rules. It also decided against prescribing a maximum limit to the number of lots one supplier can win.

"If a supplier considers he has been disadvantaged by an authorities failure to provide reasons for not dividing a contract into lots he could pursue action under the existing remedies regime," the Cabinet Office said.

Under the 'light touch' regime, public bodies will have freedom to determine the procedures that will be applied to those procurements but generally require those authorities to "conduct the procurement, and award any resulting contract" in conformity with those stated procedures.

However, authorities will be able to award contracts in accordance with a different process from the one it has previously communicated in its tender notice so long as certain conditions are satisfied, including that "the failure to conform does not, in the particular circumstances, amount to a breach of the principles of transparency and equal treatment of economic operators".

The Cabinet Office also decided against requiring public bodies to use electronic communications during all tender processes from the moment the new Regulations take effect. Instead the obligations on e-procurement and use of a new European single procurement document will not be mandated until October 2018.

"Postponing mandatory adoption of e-procurement gives greater flexibility, allows authorities and suppliers the time to prepare for mandatory usage, and reduces the risk of breach of the new rules," the Cabinet Office said.

It also confirmed it will not "to impose a single central solution" on e-procurement and that guidance will be issued which will take account of matters raised by consultation respondents about the e-procurement requirements, including the use of "advanced electronic signatures".

The Cabinet Office rejected calls to set out "detailed security requirements" for e-procurement within the new Regulations on the basis that to do so would "risk rapid obsolescence" and that security standards would be better set out in guidance that could be "updated readily as necessary".

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