Key questions and answers
Please note that although the information in our our 5 in 25 webinars and FAQs was correct at the date of recording, this is an area of law subject to development and change.
Do check if in doubt as to the latest position - you can email [email protected].
Please note that the responses provided represent the general views of the public procurement team at Mills & Reeve, however they should not be relied on or treated as a substitute for specific advice relevant to a particular scenario/matter. If you require specific legal advice, our procurement team would be happy to discuss this further.
FAQs
- I didn't see any detail in the consultation as to what kind of spend is over £100m – all spend, or procurement spend? Capital or revenue or both?
Section 93 states that the reference value is where the authority “will pay more than £100 million under relevant contracts”. “Relevant contracts” is then defined as public services, supply or works contracts. This means that the section 93 obligation covers the total amount the authority is committed, or will be likely to be committed, to pay to the supplier in total under each of the public contracts it is planning to enter into during the reporting period. It would not include the authority’s payments to its own staff engaged on the contract – under their internal employment contracts. But, if the relevant public contract provided for the authority to make payments to the supplier’s staff as part of the amount payable to the supplier, this would presumably be covered.
- What about unplanned spend?
The consultation did note that there is no intention to hold authorities tightly to their pipeline notice to the extent that a new contract opportunity genuinely arises following publication of the notice. Where this happens, authorities should take care to document the circumstances which explain why the contract could not be included in the pipeline notice initially. When completing the pipeline notice, authorities will need to document their best understanding of the position at the time of completing the notice.
- Does the pipeline notice cover direct awards and routes to market via a framework? And, presumably, under Section 93 notices, "contracts" would include Frameworks/DPS?
Section 93 applies to all “relevant contracts” – which is then defined as public services, supply or works contracts. Contract awards directly or under a framework are “relevant contracts” in this definition, so our view would be that the pipeline notice does need to cover these contract awards.
- Whilst this covers procurements/contracts above £2m, do you know if there is likely to be any further guidance on publishing pipelines and pipeline notices for lower value opportunities (given the focus on being accessible for SMEs, for example)?
We are not aware of a specific commitment to produce guidance on this point, although we do expect extensive guidance to be made available in relation to the Act in due course.
- Will all values stated in the new regulations be inclusive of VAT, so that any trigger value (whether £30k, thresholds, or indeed matters such as pipeline notice trigger values) is on a level playing field in terms of how it is calculated?
Yes, section 122(2) of the Act is an interpretative provision which says that “a reference to an amount payable or paid, receivable or received, or to be paid or received, under a contract includes a reference to any amount referable to VAT”.
- What is the proposal for activities, that will need to land during the pipeline period, that come in after you've published the pipeline? And what will happen if you get funding become available part way through the year and want to carry out a procurement which wasn't on the pipeline notice?
The consultation did note that there is no intention to hold authorities tightly to their pipeline notice to the extent that a new contract opportunity genuinely arises following publication of the notice. Where this happens, authorities should take care to document the circumstances which explain why the contract could not be included in the pipeline notice initially. When completing the pipeline notice, authorities will need to document their best understanding of the position as it is at the time of completing the notice.
- Will pipeline notices need to be published for each financial year?
Yes – but note that the “financial year” is defined in section 93 as beginning on 1 April following the date the Act comes into force. This means that it may well not align with the authority’s own financial year.
If the Act comes into force in October 2024, the first “financial year” will begin on 1 April 2025, the second on 1 April 2026 (and so on).
- How formal does PME need to be to trigger publication of the PME notice? Does this mean that you should issue a PME before you can have ANY kind of conversations, however vague or speculative, with vendors to explore the market?
The obligation to publish a PME notice is triggered by carrying out preliminary market engagement as defined in section 16(1):- Developing the authority’s requirements and approach to the procurement
- Designing a procedure, conditions of participation or award criteria
- Preparing the tender notice and associated tender documents
- Identifying suppliers that may be able to supply the goods, services or works required
- Identifying likely contractual terms
- Building capacity among suppliers in relation to the contract being awarded
If you are doing any of these, even informally, then there is an obligation to publish a PME notice (unless you are happy to explain in your tender notice later why you declined to publish a PME notice).
However, the PME can be drafted in either a forward looking or backward looking way. That is, it can be issued ahead of the engagement – and operate as an invitation. Alternatively, you can complete the PME notice in a backward looking way, to document informal PME that you have carried out already.
- If the CA plans to conduct PME with suppliers on an identified framework, can it do this without having to publish a PME notice? If the CA plans to mini competition tender via a certain framework, then wider market input may not be appropriate, if those suppliers are not appointed to said framework. Will mandatory PME notice only be in respect of a potential future open tender?
This is an interesting question and one which may be addressed in later guidance.
The wording of section 17(1) does seem to tie the need to publish a PME notice to the publication of a tender notice later. If you are not planning to publish a tender notice, because the contract is a call off from a framework, does this mean that the obligation to publish the PME notice cannot be triggered?
Our view on the current drafting would be that the obligation may well not be triggered, but having said that, authorities are under the general transparency obligations and it would likely be best practice to publish a PME notice in this scenario.
- Could you be challenged if you do preliminary market engagement with a closed group of suppliers and don't open the opportunity up to anyone?
As mentioned above, there is no obligation to use the PME notice to advertise the PME to all suppliers – you can complete it in a backward looking way to document PME that you have already undertaken with a select group. The increased transparency under the new regime will probably increase the risk of a challenge, particularly if the authority is unable to demonstrate objective reasons for why/how it selected the closed group that it chose. As always in procurement, record keeping is key, and if engaging with a closed group it is important to be able to set out how that group selection was fair and non-discriminatory; that there were good reasons for the suppliers’ selection.
- In terms of communications for pre-market engagement – will this still be electronic – and any exceptions?
We are not aware that the current rules insist on use of electronic communication in PME – many PME events are in-person “supplier day” type events, for example. The Act is not prescriptive as to how PME may be carried out. Section 96 of the Act does require the notices to be published electronically of course, but this does not mean that the engagement itself must be managed electronically.
- Can a planned procurement notice be used like a PIN as a call for competition?
Since 25 May 2023, it has not been possible to use a PIN as a call for competition under regulation 48 Public Contracts Regulations 2015 – see our blog post on this.
Under the Act, it will still no longer be possible to use a planned procurement notice as a call for competition. It can however operate, if it is a “qualifying” planned procurement notice, to reduce the tendering period to a minimum of 10 days (subject to the general principles around setting reasonable timescales).
- Aside from possibly delaying the limitation period, what are the consequences/risks if an authority does not publish any of the mandatory notices? Many authorities will struggle with the resource implications. Also, what is likely to happen if a pipeline notice is not served in time?
If an authority fails to publish a notice within the required time frame, or indeed at all, it will have breached its obligations under the Act.
Section 99 makes it clear that the authority’s duty to publish these notices (where these are notices are mandatory) is enforceable in the courts under the remedies provisions in Part 9 of the Act.
Therefore, any delay in publishing or failure to publish could in principle be the basis for a challenge by a supplier, although it is perhaps hard to see what loss a supplier could allege had arisen out of a breach of this kind. It is perhaps more likely that a technical breach of section 93 might form one part of a wider challenge (with challenges usually arising mainly out of the evaluation phase).
The Act does create a new institution – the Procurement Review Unit – which will have the power to investigate complaints and “name and shame” authorities that are incompliant, and perhaps this would be the most likely consequence of a failure to publish in time.
- Just to confirm, these specific changes – including the PME notice – are not mandatory if contract value is under £2m? Or annual spend less than £100m?
The PME notice must be published wherever the authority has conducted, or plans to conduct, preliminary market engagement in relation to a contract to which the Act applies. The £2m and £100m thresholds are not relevant here.
Those thresholds are relevant in relation to pipeline notices only. Where an authority plans to spend over £100 million in a financial year, it must issue a pipeline notice listing out all contracts valued at £2m+ which form part of that £100m spend.
Planned procurement notices are not mandatory.