Do we really need to have all the procurement documents ready?up front? This is one of the most common questions we have been asked since the publication of the Public Contracts Regulations 2015 (PCR 2015).
We have previously blogged about Regulation 53(1) of the PCR 2015, which requires contracting authorities to offer unrestricted and full direct access free of charge to the 'procurement documents' from the date that a notice is published in the OJEU commencing a procurement. The problem is the very wide definition of 'procurement documents', which is as follows:
'procurement document' means any document produced or referred to by the contracting authority to describe or determine elements of the procurement or the procedure, including the contract notice, the prior information notice where it is used as a means of calling for competition, the technical specifications, the descriptive document, proposed conditions of contract, formats for the presentation of documents by candidates and tenderers, information on generally applicable obligations and any additional documents.
The breadth of the definition at first glance suggests that a contracting authority needs to have the PQQ, ITT, terms and conditions of contract, specification and so on ready for publication electronically on day one. Obviously this is a step change in what has been common practice previously (i.e. to prepare the procurement documents on a linear, 'stage by stage', basis) and has caused considerable concern amongst contracting authorities. Could a bidder make a procurement challenge merely on the basis that one of the procurement documents was not published electronically on day one? How is it possible to publish documents in respect of a negotiated or competitive dialogue process where, by definition, the specification and terms and conditions will not even be known on day one? Clients have also flagged very legitimate concerns about confidentiality and security issues if full documentation such as specifications have to be published online with the OJEU.
The Crown Commercial Service has now issued some guidance which is helpful to contracting authorities. It suggests that you can take a purposive view of the definition of procurement documents and that 'where individual regulations refer to procurement documents what is meant by that wording changes based on the different stages of the process that has been reached.'
The guidance goes on to suggest that at the very early stages of the procurement 'few if any' of the procurement documents will be included in the definition and as the procurement becomes more crystallised further documents will be generated and supplied. If this view is correct it suggests that contracting authorities can prepare and publish some of the key procurement documents following the OJEU notice provided that the description of the procurement given in the OJEU notice and accompanying documents which are published with the OJEU (such as any descriptive document or memorandum of information) is sufficiently detailed to allow bidders to form a proper view of the nature scope and scale of the procurement so as to enable them to decide whether or not they wish to take part in the competition.
The CCS notes that the PCR 2015 do not specifically address the situation where elements of the final documents may necessarily depend on the outcomes of negotiations or dialogues (i.e. where the procurement is following the competitive with negotiation competitive dialogue or innovation partnership procedure). It notes that the core information requirements are set out in Regulations 29-31 (for each procedure respectively) and that information needs to be 'sufficiently precise to enable suppliers to identify the nature and scope of the requirement and decide whether to request to participate'.
The guidance gives the example of a construction contract being let by a two-stage process and suggests that procurement documents at the outset would need to explain the final output (in terms of building size limitations use and so on) so that bidders could decide whether or not to express interest but that the contracting authority would not be expected to produce a full specification at the outset in the context of a negotiated process.
Finally the guidance addresses the question of whether a PIN notice counts for the purposes of Regulation 53(1). The issue here is that Regulation 53(1) simply refers to a notice rather than a contract notice and therefore on the face of it looks like the electronic publication requirement could apply even where only a PIN is being published. Taking a purposive view again the CCS guidance suggests that procurement documents will be at an embryonic or non-existent stage if the PIN is being used merely as market pre-engagement tool and therefore that the obligation to publish more detail will only bite at the later point when a full contract notice is issued. If on the other hand the PIN itself is being used as the call for competition (i.e. as an equivalent to the OJEU notice) then the guidance suggests that the same approach needs to be taken as if it were a standard contract notice (as discussed above).
Contracting authorities need to keep in mind that this is an area of the law which is as yet untested by the courts and that the guidance offered by the CCS is an interpretation only of the EU rules as implemented in the UK there is of course no guarantee that the courts would reach the same conclusion. On a literal reading of Regulation 53(1) it clearly states that you need to publish all the procurement documents (as defined) on day one.
That said the possibility of a bidder mounting a successful challenge on the basis of a breach of Regulation 53(1) is perhaps remote; a supplier would have to demonstrate somehow that the incomplete publication of the procurement documents on day one meant that it either expressed or failed to express an interest in competing and thereby suffered some quantifiable loss. A more likely scenario might be where a bidder brings some wider claim about the loss of an opportunity to bid in a fair and transparent process and uses a perceived failure to comply strictly with Regulation 53(1) as evidence of the lack of transparency. It might also be used tactically during the procurement process to put pressure on a contracting authority. For example if a new document arrives later on in the process that contains something not previously disclosed then a bidder may use Regulation 53(1) to lean on the contracting authority perhaps as a way to seek more time or even to try to force the contracting authority to drop an aspect of their requirement on the basis that it should have been published earlier with the OJEU notice.
It is also worth noting that it is good practice in any event to prepare a number of the key procurement documents before starting a supplier selection procedure; our experience is that clients who have got the key documents ready pre-OJEU are much less likely to face issues with their procurement process down the line. So there remain good reasons to look at preparing a number of the key procurement documents in particular the ITT or equivalent prior to issuing the OJEU notice and if a document is finalised and ready to consider publishing it. However contracting authorities should note that there is limited flexibility to add to or amend the procurement documents once published to bidders. In particular any changes must not be sufficiently material so as to change the nature of the procurement or the specification and you must always consider whether an extension of time limits is appropriate when procurement documents are amended.
Overall then the CCS guidance is helpful to contracting authorities and reflects what a number of commentators in the field have been suggesting on this point. It gives some reassurance that it should not be necessary to produce an entire suite of procurement documents on day one provided that sufficient information about the requirement is provided at the time of OJEU so that bidders can make an informed decision whether to compete for the opportunity or not.
We conclude this article with a few 'best practice' reminders around the drafting and publication of the OJEU notice and other key procurement documents:
- In an ever more litigious sector 472 Location, location, location. Specifying location requirements can be a tricky business when running an EU procurement exercise. Get this wrong and you risk a challenge on grounds of lack of equal treatment and/or for creating an unjustified obstacle to open competition. A Spanish contracting authority recently learned this the hard way when specifying its location requirements for a health service contract with the result that the matter was referred to the ECJ.
The facts were that in an attempt to reduce the pressure on public hospitals in the Basque region of Spain their Department of Health decided to outsource various public health care surgical services to private hospitals. The surgical procedures were still to be performed by surgeons of the public health service but they would travel to the hospital facilities of the selected private hospitals to carry them out.
The Department of Health advertised two separate contracts for these services under the open procedure. The procurement directive in force at the time was Directive 2004/18 and as these were above threshold Part B services the rules in the Directive on technical specifications applied. A minimum requirement of the Department's technical specifications was that the private hospitals offered had to be located in Bilbao. The precise wording of the requirement was as follows:
'Having regard to the need for services to be provided with sufficient proximity patients and their families the availability of public transport and travelling time and the need to minimise the necessary travel by medical staff of the hospitals the health care centres proposed must be situated in the municipality of Bilbao.'
A private hospital located in a municipality adjacent to Bilbao challenged the procurements on the grounds that the Bilbao location requirement was unjustified and contrary to the principles of equal treatment and freedom of access to public procurement procedures.
It was relevant that the services covered by the contract(s) were not exclusively for patients who resided in Bilbao and covered patients living in other nearby localities. Further that the hospital facilities offered by the challenger although not located in Bilbao satisfied all other conditions of the procurements including being sufficiently close and accessible for patients their families and the public health surgeons who were required to travel there.
The Court agreed with the challenger and concluded that the location requirement in the specification (i.e. for the hospitals to be located in Bilbao) which resulted in the automatic exclusion of the challenger was contrary to the Directive's rules on technical specifications as applicable to Part B contracts (in particular Article 23(2)) as it did not allow equal access for tenderers and was an unjustified obstacle to competition.
Although the decision is not surprising it serves as a good reminder of the need for care when drafting specifications. This is not only with regard to location but also generally to ensure your requirements are justified and do not pose an unnecessary obstacle to competition. It is worth noting that in this case the court did not criticise the more general proximity requirement in the specification (as that was clearly justifiable) but the requirement to be in Bilbao which was the only point which the challenger could not meet and led to its automatic exclusion was unnecessary unjustified and a step too far.