Procurement news blog
December 23, 2016 2:50 PM | Posted by
Beresford-Jones, Jenny |
At this time of year here in the Mills and Reeve procurement team we reflect on the year gone by and on all the queries we have answered via our procurement portal helpline. In no particular order of importance the top five issues this year seem to have been:
(1) Do I really have to advertise on Contracts Finder? How does that fit with our standing orders?
(2) Can I extend or change the contract without having to run a new process?
(3) Do I really need to have all the documents ready to publish when the advert is published?
(4) I think my bid was evaluated incorrectly. Can I challenge?
(5) And finally, will Brexit affect public procurement?
If you too are wondering about any of these questions, please get in touch!
Roundabout now we also usually succumb to a little festivity and this year is no exception……
<<fades to black and white scene by the fire, as the music begins …>>
I’m dreaming of a perfect procurement
That's advertised transparently
With a reminder
On Contracts Finder
Of every 'opportunity'...
I'm dreaming of a perfect procurement
That treats all bidders equally
With criteria apparent
In docs transparent
And published electronically...
I'm dreaming of a perfect procurement
With ev’ry OJEU form I see
May you always get value for money
And may all your procurements be challenge-free!
Merry Christmas and a Happy New Year from the Mills & Reeve procurement team!
November 16, 2016 2:38 PM | Posted by
Beresford-Jones, Jenny |
The Department of Health has published a guidance note, The Public Contracts Regulations 2015 and NHS Commissioners, summarising the main requirements of the Light Touch Regime (LTR) of the Public Contracts Regulations 2015 (PCR 2015) and highlights the changes to commissioners and those supporting them (Commissioning Support Units, NHS Trusts and NHS Foundation Trusts) with their procurement of healthcare services. The guidance should be read in conjunction with regulations 74-77 of the PCR 2015 and the Crown Commercial Service’s guidance on the LTR for health, social, education and certain other services.
Five areas for commissioners to be alert to
- The new provisions of the PCR 2015 relating to the award of clinical services came into force for clinically commissioned work within the NHS on 18 April 2016. Any new healthcare services contract procurement procedure that commences on or after that date will need to comply with the requirements of the PCR 2015.
- Under the PCR 2015 health, social and other specific services are subject to the LTR where the value of the contract is in excess of 750,000 Euros (£589,148 at current exchange rates).
- Under the LTR the PCR 2015 includes some additional requirements including the requirement to advertise in the OJEU either by a contract notice or a prior information notice the intention to award a public contract with a lifetime value of 750,000 Euros (£589,148) or more, except where there is a reason for using the negotiated procedure without prior publication; and that any variation to the procurement process must comply with the principles set out in Regulation 76(4) of the PCR 2015.
- Under the LTR commissioners have the freedom to determine the procurement procedure to use when awarding a contract provided that they satisfy the principle of transparency and equal treatment of providers.
- The guidance note provides that the “PCR 2015 regime is not a barrier to the integration of care services where this make sense for the local community.” - this being a key priority in the NHS Five Year Forward View. Indeed, points out the guidance, the 'light touch regime' specifically states that commissioners may use certain award criteria that are highly relevant to patient care when designing and running their procurement processes, including the needs of vulnerable users, and ensuring the quality, comprehensiveness and continuity of patient services.
What to take away
The introductory section of the guidance states that “The PCR 2015 … contain a number of flexibilities that, where justified, can be used by commissioners to dispense with the need for open competition.” It is important not to read this as suggesting that it is possible to dispense with the need to advertise in the OJEU if the value of the contract is over the threshold. It is true that an over-threshold LTR procurement need not follow one of the formal procurement processes provided that the principles set out in Regulation 76 are followed, but the requirement to advertise cannot be avoided if the contract is over the threshold.
That said, as touched on above, this advertisement need not be made via OJEU Contract Notice; it is instead possible to use a Prior Information Notice (PIN) as a call for competition, provided that the PIN meets the requirements in Regulation 75(1)(b). We have recently seen NHS England use PINs to call for competition for around £15 billion of specialised services contracts and has stated in the PINs its intention to award the contracts for 2017-19 to the incumbent providers, unless expressions of interest are received from alternative operators, triggering a competitive process. The latest guidance draws out the point that commissioners could use the negotiated with notice procedure set out at Regulation 32, provided that the grounds for its use are met. One of these grounds is the situation where in an open/restricted process (for which there has been a call for competition) has yielded no suitable tenders or requests to participate.
For more information on the LTR and how it operates in practice please see our in depth articles here and here.
November 11, 2016 10:18 AM | Posted by
Prandy, Helen |
Fat-finger syndrome, so the ever-reliable internet tells us, is the “occasional tendency of stressed traders working in fast-moving electronic financial markets to press the wrong button on their keyboard and, in the process, lose their employer a mint…”
Sadly any of us using a keyboard connected to the outside world is at risk of accidentally pressing the wrong button and bidders faced with an imminent deadline for submission of their tender via an electronic portal are no exception. If cases before the courts are any reflection then there are a significant number of tenders submitted accidentally either with the wrong information, out of date information or, worst of all, completely blank…it does happen just ask the Legal Aid Agency.
When this does occur the contracting authority has two choices: it can either reject the clearly defective tender out of hand or it can bring the obvious error to the attention of a bidder and ask for it to be remedied. Which approach is correct? While transparency and equal treatment are non-negotiable in bid evaluation contracting authorities do retain a margin of appreciation in matters of judgement provided the exercise of discretion is not manifestly wrong.
That means that both approaches could be correct depending on the circumstances.
A Scottish court has recently considered the correct approach when dealing with the extent to which a contracting authority should allow a bidder to correct an obvious error. In this case a bidder for demolition work had its bid rejected because in relation to Lots 1 and 2 it had omitted mandatory financial information and for Lot 3 had submitted a blank template. The contracting authority disqualified the bid but the bidder argued that as the omissions were obvious and easily corrected it should have been allowed to correct the mistakes so that the bid could be fully considered. It argued that the Authority was bound to seek clarification.
The Authority argued that the requirement of strict compliance was plainly set out in the tender documents given to all bidders. The bidder was not asking to be allowed to correct a formality as it had submitted no figures whatsoever and it was not obvious what it had intended to submit.
The court found for the Authority. It said that there was no duty on the Authority to give a bidder the chance to correct its bid. The reservation of a right in the bid documents to clarify allowed the Authority to resolve ambiguities but not to seek late submission of information which should have been supplied but was not. Had the Authority done so here it was likely that it would breach the principle of equal treatment.
It is not always easy to draw the distinction between an ambiguity which might be clarified and the kind of correction which effectively gives the erring bidder a second chance. In this case although the mistake was obvious allowing it to be corrected meant giving the bidder the chance to submit information it had been required to provide but had not something which is plainly unfair to bidders who had submitted their correct bid by the deadline.
Harsh though this might appear to the (perhaps junior) member of a bid team whose job it is to submit all of the tender on time it is an important reminder that it is never a good idea to leave bid submission to the last minute and to make absolutely sure that the bid is exactly what you need and want to submit.
As for what happens when you try to submit a bid and the computer says no well, that’s another story…
Case referred to: Dem-Master Demolition Limited v Renfrewshire Council  CSOH 150 CA78/16 by Helen Prandy
(click here to see Helen's profile)
November 1, 2016 4:54 PM | Posted by
Beresford-Jones, Jenny |
This article was first published in LexisPSL on 19/10/2016.
The Crown Commercial Service (CCS) has issued new guidance on the social and environmental aspects of the Public Contracts Regulations 2015, SI 2015/102 (PCR 2015). The guidance outlines how contracting authorities may incorporate criteria for compliance with social, environmental and labour law in the public procurement process and when assessing the performance of public contracts.
1. What prompted the guidance? What is the policy background?
The new EU Directive 24/14 on public procurement was implemented in England and Wales by the Public Contracts Regulations 2015 (“PCR 2015”) in February last year. This was the biggest shake up of the public procurement regime in a decade. The PCR 2015 contain greater flexibilities around using public procurement to promote supplier (and supply chain) compliance with social, environmental and labour laws as well as wider scope for evaluating social, environmental and labour law issues as part of the award criteria. That said, the government’s interest in using public procurement as a vehicle for the promotion of these (and other) policy considerations long predates the PCR 2015 – see for example the introduction of the Public Services (Social Value) Act 2012 which requires contracting authorities to have regard to economic, social and environmental well-being when commissioning public services contracts.
At around the same time that this guidance was issued, the Crown Commercial Service also released an updated Selection Questionnaire to replace the old Pre-Qualification Questionnaire. The SQ is mandated for use in over-threshold procurements and contains the “exclusion” criteria required by the Directive, including those around social, environmental and labour law compliance, and as such there is a relationship between these two documents which have both been published recently.
2. What are the key issues addressed by the guidance?
There are two core issues: (1) how can contracting authorities ensure their supply chain is compliant with social, environmental and labour law and (2) how can these factors be lawfully evaluated in the context of a public procurement exercise?
3. What should contracting authorities do in order to ensure compliance with relevant social, environmental and labour laws in delivering public contracts? Is the guidance helpful in clarifying the law in this area?
- The guidance puts the onus onto contracting authorities to decide how they ensure suppliers are compliant and that the approach adopted may vary on a case by case basis. However it makes the following suggestions:
- Do ensure enough information is obtained from the successful bidder to check it satisfied the exclusion criteria (which amongst other things assess compliance with social, environmental and labour laws); and
- Consider the risks of breaches as present within the particular supply chain and carry out checks to an appropriate level of sub-contracting (this will vary depending on the contract value and type).
Also, the guidance requires contracting authorities to use the standard wording provided at Annex B, giving the contracting authority a right to terminate a contract if breaches of social, environmental or labour law come to light.
4. What practical guidance is provided in relation to exclusion, specification, award, and contract lifecycle?
In relation to exclusion, the guidance helpfully sets out how exclusion grounds may be used to further social policy goals. Where a supplier is convicted of terrorist, child labour or human trafficking offences they must be excluded. Where the offence is a violation of social, labour or environmental conventions then the contractor may be excluded. The guidance helpfully also references the new Regulation 71 obligation to ensure that sub-contractors who breach these exclusion criteria are indeed replaced and contains an FAQ around how far down the supply chain the contracting authority is expected to probe. Interestingly the guidance does not mention the new “self-cleaning” mechanism set out at Regulation 57(13) onwards. This mechanism allows a supplier who has breached one of these criteria to provide evidence of measures it has taken to address the issue. The contracting authority can then decide whether it views these measures as adequate and whether to exclude the supplier.
Around specification, the guidance highlights how labelling requirements could be used to allow a contracting authority to further environmental goals (for example, labels to certify energy efficiency standards). There is a reminder of the conditions the label concerned must meet in order to be acceptable under the PCR 2015 (particularly, the requirements for use of the label must be based on objective and non-discriminatory criteria and be established by an authority not linked to the contracting authority, “equivalent” labels must also be accepted and there must be a clear with the subject matter of the contract in question.). The guidance also notes the requirement at Regulation 42(8) to actively include accessibility criteria where the end result of the procurement is product or service destined for use by individuals.
In terms of award criteria, attention is drawn to the fact that Regulation 67(2) now expressly states that award criteria may include environmental or social aspects as long as a clear link with the subject matter of the contract can be demonstrated. So, where products are being acquired, the criteria could take into account not only price and operating cost but also social/environmental issues such as recyclability and the involvement of disadvantaged persons in the manufacturing process. Other examples might include fair trade requirements, such as the requirement to pay a fair price to producers. The new provisions at Regulation 68 on life cycle costing allow the assessment of the cost over the whole lifecycle of a product and allow scope to consider environmental factors such as disposal costs.
The guidance reminds readers that the Directive does not permit contracting authorities to require suppliers to have corporate social responsibility or environmental responsibility policies in place in a generic sense. This is because award criteria (including social or economic award criteria) need to be linked to the specific contract being procured.
Finally, there is a new provision expressly requiring contracting authorities to reject tenders that are abnormally low where the reasons for the low tender is because the supplier is not compliant with national or international labour, social or environmental law.
Once the contract has been signed, social and environmental factors can still play a role. For example Regulation 70 allows special conditions to be included in the contract around its performance, provided this has been highlighted in the procurement documents and the condition can properly be linked to the contract. An example might be conditions around recycling of waste or packaging, or in relation to fair trade requirements.
5. What are the key overarching policy and statutory requirements that contracting authorities should take account of in delivering public contracts in addition to the environmental and societal impact? Is this expected to change in light of Brexit?
While the general approach of the government is to favour light touch regulation, nonetheless it has not shied away from the opportunity to use public procurement regulation as a tool through which to further policy goals. As well as social and environmental goals we have seen other policy objectives. For example:
- Improving access to public contracts for small and medium sized entities (SMEs). This policy goal has led to extra regulation (at Part 4 of the Public Contracts Regulations 2015) around advertising on Contracts Finder and rules around the use of the selection stage to ensure that SMEs are not prejudiced unduly); and
- Increased transparency about opportunities available and contracts awarded. Again, the aim of the Contracts Finder site has been to improve the position here, although perhaps recent Crown Commercial Service reminders about these obligations suggest that not all contracting authorities are compliant.
Although it looks like we will end up with a “hard Brexit” and a very British solution to our relationship with Europe nonetheless we are unlikely to see much change in the public procurement regime at least in the shorter to medium term (although longer term it is possible that the regime will be tweaked or recast). Public procurement is unlikely to be high up the agenda of the post-Brexit legislators. In any event, as the above shows, the government has always had a healthy appetite for regulation in this area, often going beyond the core requirements imposed by the EU Directives.
6. What are the key takeaways for public sector lawyers? Are there any grey areas?
Public procurement is notorious for its “grey areas” and the issues practitioners grapple with are rarely straightforward. Instead we are usually required to apply core principles to a particular circumstance in order to arrive at a view and make a judgment as to how best to proceed. The question of how to introduce social and environmental factors into a public procurement is no exception. The new regime does introduce greater flexibility to evaluate these issues but do bear in mind that:
- Any criteria must be properly linked to the subject matter of the contract and not merely generic; generalised statements about compliance will be insufficient and could open the procurement;
- A contracting authority must not impose requirements that are discriminatory, for example requiring an environmental label that is only available in one member state; and
- Transparency is key, so for example any contract conditions must be set out in the procurement documents, any life cycle costing formula needs to be objectively based and set out upfront in the procurement documents.
7. When is the new guidance effective from? Is further guidance expected?
The new guidance is effective now. Given the CCS’ workload it is perhaps unlikely that further guidance in this area will be issued for a while now, unless responses to this document indicate a need for this.
September 27, 2016 2:17 PM | Posted by
Beresford-Jones, Jenny |
The Crown Commercial Service (CCS) has just published a procurement policy note containing statutory guidance on the selection stage and an updated version of its standard pre-qualification questionnaire. This is mandated for use in over-threshold procurements by virtue of Regulation 107.
Why was a new PQQ document needed?
The old PQQ needed updating in order to fit together with the requirements of the European Single Procurement Document (“ESPD”). There has been an obligation on contracting authorities to accept ESPDs since January of this year and of course a mismatch has arisen between the standard form ESPD and the CCS’s PQQ. The ESPD allows suppliers to simply self-certify that they meet the requirements, with the contracting authority seeking evidence of this only from the winning bidder at the end of the process. The new document is aligned with the ESPD.
Key points to note
- The “Pre-Qualification Questionnaire” (PQQ) is now known as a “Selection Questionnaire” (“SQ”).
- Authorities should stop using the old PQQ and start using the SQ with immediate effect. The guidance is silent on the question but we assume this instruction is in relation to new SQs being issued and there is no requirement to recall PQQs that are already being used in a current procurement.
- The SQ is structured in three parts, not dissimilar to the old PQQ. Part 1 of the standard SQ covers the basic information about the supplier. Part 2 covers a self-declaration regarding whether or not any of the exclusion grounds apply. Part 3 covers a self-declaration regarding whether or not the company meets the economic, financial, technical and professional selection criteria. There then follow some "additional" questions at the end of the document.
- The exclusion grounds in the SQ now correlate to those in the latest version of the Public Contracts Regulations 2015 and in the ESPD (e.g. including, where applicable, exclusions around the Modern Slavery Act 2015).
- Contracting authorities will need to brief potential candidates on how they can access the SQ and submit their responses. The guidance envisages three options (1) include all three parts of the SQ with the procurement documents; (2) direct suppliers to the Commission's EU-ESPD service for parts 1 and 2, and include standard selection questions separately within the procurement documents; or (3) provide access details to an e-procurement system that asks the same questions as listed in the standard SQ plus any procurement-specific questions.
- Self-certification declarations are required as part of the selection stage not only from suppliers but also from any other supplier being relied on to meet the selection criteria. The guidance reminds contracting authorities of the "self-cleaning" procedure which allows suppliers who have breached the criteria to demonstrate that they have "righted their wrongs".
- Contracting authorities must accept self-certifications via the EU-ESPD template, even if this is in the format adopted by another member state.
- Evidence of compliance need not be requested until award stage (although the winning bidder's evidence must be checked prior to award). That said, evidence may be requested at an earlier stage if the contracting authority decides this is necessary.
- Deviations are not permitted from Parts 1 and 2. You can deviate from Part 3 provide you report. The guidance says you must report:
- changes to the wording of the standard questions and instructions; and
- additional questions that are included which are not specific to the individual procurement.
- Helpfully, the guidance confirms that additional questions which are specific to the procurement do not need to be reported, nor does the decision to leave out a question or tweak wording to make it compatible with e-procurement systems. You only need to report once (which is helpful for those authorities wishing to report an on-going deviation in their standard form SQ).
- The prohibition on holding a separate selection stage for under-threshold procurements remains.
- The guidance notes that, while completing parts 1 and 2 is not mandatory for over-threshold 'light touch regime' procurements for health, social and other services, nonetheless it would be good practice to exclude a supplier against those criteria in any event, and recommends that parts 1 and 2 are used even where the procurement is light touch, together with part 3 around economic and financial standing and technical and professional capacity.
- Interestingly, the SQ no longer contains the "additional PQQ modules" on, for example, Health and Safety, Environmental Management or Compliance with Equality Legislation that used to feature at the end of the old PQQ. Instead, additional modules on e.g. Steel, skills and apprenticeships are set out, to be included depending on whether the relevant policy in those areas applies to the contracting authority in question. Presumably, however, the old additional modules could still be included in the additional modules section if desired.
September 16, 2016 12:17 PM | Posted by
Souter, Katherine |
Yes, apparently you do!
The ECJ has just handed down a preliminary ruling on request of the Danish Supreme Court in Finn Frogne A/S v Rigspolitiet ved Center for Beredskabskommunikation Case C-549/14.
In short, this is a surprising decision and one which may cause difficulty for contracting authorities and disputes lawyers. The inference from this decision seems to be that, unless the terms of a settlement, agreed between a contracting authority and a supplier who are embroiled in a commercial dispute over a public contract fall within the remit of:
(1) Regulation 72 “modification of contracts during their term”; or
(2) Regulation 32 “use of the negotiated procedure without prior publication”,
then it is possible for the terms of that settlement to itself constitute an illegal modification to a public contract which should have been advertised and procured under the procurement rules (with possible consequences of ineffectiveness of the settlement and damages to the aggrieved third party supplier).
Facts of the case
The Centre for Emergency Communication of the National Police in Denmark (CFB) awarded a contract to Terma for the supply and maintenance of a communications system for all emergency response services worth around €70m. A dispute arose between the parties relating to delivery times. The parties agreed a settlement of that dispute which involved reducing the scope of the contract to:
• the supply of a radio communications system for regional police worth under €5m;
• the sale of two central server farms to CFB worth under €7m (Terma had purchased the latter for the purpose of leasing the servers to CFB under the original contract).
The parties waived all other rights from the original contract as part of the settlement. CFB published a VEAT notice in respect of the settlement and Frogne (who had not been involved in the original procurement exercise at all) brought a challenge to the settlement on the basis that it constituted a material amendment to the original contract and should have been competed under the procurement rules.
The Danish Supreme Court then referred a question to the European Court of Justice (ECJ) for interpretation of the procurement rules, asking whether the procurement rules must be interpreted as meaning that, following the award of a public contract, a material amendment cannot be made to it without a new tendering procedure being initiated, even in the case where the amendment is objectively a type of settlement agreement where both parties agree to mutual waivers designed to bring an end to a dispute with an uncertain outcome, which arose from the difficulties encountered in the performance of that contract.
Decision of the Court
The Court decided that:
- an amendment of a contract consisting in a reduction in its scope may result in the contract being brought within reach of a greater number of economic operators (particularly smaller economic operators who may not have otherwise qualified for the larger original contract);
- it was irrelevant that the settlement agreement did not arise from the desire of the parties to renegotiate the essential terms of the contract, but instead out of objective difficulties with unpredictable consequences encountered in the performance of that contract. Contracting authorities can opt for a direct award of a contract, that is to say, negotiating the terms of the contract with a selected economic operator without prior publication of a contract notice, only in the circumstances expressly referred to in the procurement rules (in the UK these are contained in Regulation 32 “use of the negotiated procedure without prior publication”); and
- contracting authorities may retain the possibility of making amendments to a contract after it has been awarded, on condition that this is provided for in the documents which governed the award procedure. By expressly providing for the option and setting the rules for the application of them in those procurement documents, the contracting authority ensures that all suppliers interested in participating in the procurement procedure have been made aware of that possibility from the outset and are therefore on an equal footing when formulating their respective tenders. The position would be different only if the contract documents provided for the possibility of adjusting certain conditions, even material ones, after the contract had been awarded and fixed the detailed rules for the application of that possibility.
Our first thought on reading this case was to consider whether we should update dispute resolution clauses in public contracts to provide expressly for this kind of settlement, and thus try to ensure that any settlement is a "permitted modification" because it has been clearly precisely and unequivocally set out in the original contract. However we soon discounted this strategy as unfeasible: we don’t think a general term permitting modification as part of a settlement would be capable of ever being specific enough for the particular circumstances in which it was ultimately used.
This case also serves as a reminder that material changes to public contracts can relate to reducing the contract scope as well as increasing it.
This case was a reference for a preliminary ruling, which the Danish Supreme Court requested from the ECJ to aid the Danish Court’s interpretation of European derived law. Similarly in the UK, our courts must still refer to and use ECJ jurisprudence when deciding matters derived from European law, but once the UK has left the EU, the UK Courts may not still be bound and may decide not to follow the decision.
Finally, if you are wondering, “what is a VEAT?” you’ll find the answer here on our procurement portal.
by Katherine Souter - click here for more about Katherine
The Procurement Portal aims to provide a "one stop shop" for procurement law queries and advice.
Call 0344 880 2963 to speak to someone in our team or email us with your query.
Subscribe by email
> Subscribe to our blog updates by email
The "FeedBurner" subscription service is provided by a third party and Mills & Reeve LLP therefore accepts no responsibility or liability for this service. Please also refer to our full terms and conditions.
We have over 100 questions and answers on a host of topics, from advertisement to managing a procurement challenge.
> Click here to find out more