VEAT notices - a safe harbour but not a port in a storm ...

Summary

The recent case of Italian Interior Ministry v Fastweb SpA (Case C-19/13) highlights the limited protection that the VEAT notice route can offer to contracting authorities wishing to make direct awards without following an OJEU process. A grey area remains around whether the protection of a VEAT notice will be available where the contracting authority genuinely but mistakenly considers it was entitled to award the contract without notice. It shows that the safe harbour will only be 'safe' to the extent that the legal justification for the direct award is in itself sound and ready to stand up to the increased scrutiny that the publication of the VEAT notice may well invite. In short it does offer a safe harbour but only where the waters are relatively calm already. If the legal justification is not robust the use of the VEAT route may well create more problems than it solves; it should not be used as a port in a storm.

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In legal-speak the phrase 'safe harbour' has a particular meaning; it is a provision of a statute or a regulation specifying that certain conduct is expressly deemed not to offend against a given rule.

A good example of a safe harbour is found in the Public Contracts Regulations 2006 (the Regulations). The Regulations allow claimants to apply to the court for a 'declaration of ineffectiveness' of a public contract in circumstances where that public contract was directly awarded without any OJEU notice. This is to protect the market against the awarding of public contracts without transparency and competition one of the principal ills that procurement law is designed to prevent.

Regulation 47K provides a 'safe harbour' within which contracting authorities may take shelter from this kind of claim. To qualify a contracting authority must:

  • consider - that it was entitled to award the contract without a notice; and
  • publish a 'voluntary ex-ante transparency notice' indicating that it intends to sign the contract (a VEAT notice); and
  • observe a standstill period.

If these conditions are satisfied a claimant will not be able to claim a declaration of ineffectiveness on the basis that an OJEU notice was not published the legislators taking the view that the VEAT notice answers the requirement for transparency and the standstill period the requirement for the opportunity for scrutiny and review.

The Regulations do not elaborate further on the consideration that must be given in order to satisfy the first condition. It seems reasonably clear that if the contracting authority actually knows that an OJEU notice is required but instead goes down the VEAT notice route then the test in the first condition will be failed as the contracting authority could not be said to have considered it was entitled to award the contract directly without a notice. However will the test also be failed where the contracting authority does in good faith consider it is entitled to do so but is mistaken.

The Regulations specify the content and form of the VEAT notice; it must amongst other things include a justification of the decision to award the contract without prior publication of an OJEU notice. However the Regulations do not of themselves impose an obligation on the contracting authority to act in good faith and they state neither how robust this justification must be nor the consequences for this safe harbour if the justification turns out to be insufficient or wrong. And it was these grey areas that the European Court of Justice had to look at in this case (while this was an Italian case the Italian regulations are of course derived from the same Remedies Directive as our Regulations).

The facts of the case were simple the Ministry entered into a contract with a supplier and on its expiry renewed the contract using the negotiated procedure without a notice route (on the grounds that for technical reasons or due to exclusive rights only the current supplier could perform the contract). It published a VEAT notice containing this justification and held a standstill period. Another supplier Fastweb (the claimant in the case) brought an action in the Italian court which decided that the conditions for using the negotiated procedure without notice had not been met and that the Ministry had relied on this route due to expediency rather than for any genuine technical reasons. However said the Italian court it was not permitted to issue a declaration of ineffectiveness as a remedy because the Ministry had issued a VEAT notice and held a standstill period. Fastweb countered that the VEAT notice safe harbour route merely gave the court a discretion or option not to declare ineffectiveness after weighing up the general and individual interests involved and that depending on the outcome of that balancing act a declaration of ineffectiveness could still be made. The Italian court referred the case to the European Court for guidance on these points.

The European Court decided that:

  • if the three conditions of the VEAT notice route were compliantly followed then the national court must allow the safe harbour to operate and could not choose to impose a declaration of ineffectiveness in any event; the safe harbour could not be treated as optional where all the conditions were met;
  • it was for the national court to determine on the facts whether the conditions had all been met including the condition that the contracting authority 'considered' that it had been entitled to award the contract directly without a notice;
  • the national courts must as part of their role as review body scrutinize the justifications to ensure that the contracting authority had acted diligently and that the justification used was valid particularly as the negotiated without notice route is a derogation from the procurement rules generally and as such is to be strictly and narrowly interpreted. It is for the national court to decide whether the justification used in the VEAT notice stands up and the contracting authority can therefore be said to have considered itself entitled to make a direct award. The court stopped short of ruling that the protection of a VEAT notice should always be available in the event of a genuine but mistaken belief that a direct award was permitted; instead it will be for the national court to assess how diligent the contracting authority was in formulating that genuine belief.

What does seem clear is that the protection of a VEAT notice route will not be available where the contracting authority acts in bad faith in full knowledge that a direct award of the contract is not permitted. Potentially the protection will also be unavailable where the contracting authority lacks proper diligence in considering whether a direct award is permitted 421 Primary care co-commissioning moves a step closer

At the end of September NHS England wrote to CCGs and area teams setting out in its ?Proposed next steps towards primary care co-commissioning: an overview? slides its proposed three main models of co-commissioning guidance and a timetable for implementation.

The  three main models are:

  • Model 1:  Greater involvement in primary care commissioning decisions within NHS England 
    This model envisages closer collaboration between CCGs and their area teams on decision making in primary care commissioning. As such no new governance arrangements or special approval process will be required.
  • Model 2:  Joint commissioning between CCGs and their area team
    Under this model CCGs will assume joint commissioning responsibilities with their area team. This will require CCGs to  amend their constitutions to establish joint committees.  The amended constitution will require the approval of members of the CCG and NHS England. Its proposed next steps slides state that a suggested model constitutional amendment is to be made available by NHS England after 1st October 2014 (when the legislative reform order giving CCGs the power to form joint committees with NHS England came into force).  

    NHS England will also need to be assured that joint commissioning proposals comply with the governance and financial framework for joint committees or committees in common which is being developed by NHS England in collaboration with CCGs and other key stakeholders.
  • Model 3:  Delegated arrangements for CCGs to take full responsibility for commissioning from NHS England
    Under this model NHS England will delegate primary care commissioning to CCGs but as liability for such commissioning will remain with NHS England it will require assurance that such delegated arrangements do effectively discharge its statutory duty.

    The CCGs will also need to satisfy NHS England as part of the approvals process as to how they will handle the increased number of conflicts of interests that are likely to arise for CCGs? governing bodies and GPs in commissioning roles.  Again NHS England?s proposed next steps slides state that work is underway to clarify expectations on how conflicts of interest will be managed. ​CCGs will also need to amend their constitutions to incorporate delegated commissioning arrangements.

Timetable for implementation

The proposed next steps slides include an implementation timetable. CCGs are invited (following working their members and area team to submit proposals to their regional office for joint commissioning on 30th January 2015 and for delegated commissioning on 5th January 2015. Amendments to CCG constitutions that relate solely to joint or delegated commissioning arrangements will be accepted at these points too. It is envisaged that any such arrangements approved by NHS England will come into force on 1st April 2015.

Scope of co-commissioning

NHS England is of the view that only general practice services should be within the scope of joint and delegated arrangements for primary care co-commissioning for 2015/16. It states that there may be scope in future years after full engagement with the relevant professional groups for commissioning of dental community pharmacy and eye health to be included within the scope of such arrangements.

Currently NHS England does not plan to allow revalidation and performer's lists or individual practice or performance management aspects of contract management to be delegated as it senses that there is no appetite from CCGs to take on these functions. But this may change if CCGs change their minds.

Summary

There is recognition by NHS England in its proposed next steps slides both that one size does not fit all and also that the degree to which CCGs may want to engage in the commissioning of primary care services varies. CCGs that do not currently want to undertake primary care co-commissioning may choose to do so in future years or to change the co-commissioning model that they use. The proposed next steps slides make it clear that if CCGs want to undertake delegated commissioning arrangements in 2016/17 their proposals must be submitted by 1 June 2015 for delegated budgets to be included in their allocations for 2016/17. It seems that however much CCGs manage to influence these proposals primary care co-commissioning is here to stay should CCGs wish to use it.  

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