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Mary Mundy and Tim Dennis
21 May 2015
CIPS South Yorkshire branch
Procurement Law Update
Legal background EU directives
Concession Directive 2014/23/EC
Public directive 2014/24/EC
Utilities Directive 2014/25/EC
English law covers Wales and NI (separate Scottish Regs)
Public Contracts Regulations 2015 (PCR)
Public Contracts Regulations 2006 (as amended) still valid forhealth service purchasing under NHS (Procurement, PatientChoice and Competition) (No 2) Regulations 2013 – healthservice purchasing by NHS England and CCGs andconcessions
Case law
Guidance and PPNs
Concessions Directive Works/ services concessions over threshold (£4,322,012)
Must include transfer of operating risk covering demand/ supply orboth
All public, some utility provisions and defence
For social/ other services – contract notice and award notice only
Time limited - recoup investment and a return on capital
General process subject to Treaty principles
Minimum period for tenders 17 days
Award criteria in descending order of importance and potential to re-order where an unforeseen innovative solution with exceptional
functional performance arises
PCR 2015 In force 26 February 2015
Procurements with contract notice on/after that date
Works, supplies, non “light touch” services
Existing thresholds apply
Light touch regime for social and other specific services -replaces Part B
“Social and other Specific Services” Replaces Part B
Schedule 3 exclusive list of services by CPV code
£625,050 threshold
OJEU advertising: contract notice or PIN published “continuously”
Treaty principles apply - equal treatment and transparency
Significant flexibility in process, time limits to be reasonable, nostandstill required (?)
Contract award notice (can be published quarterly)
New obligations – SME friendly? Contracts Finder notices (above and below threshold)
All procurement documents must be available via the internet fromdate of OJEU publication
Standard CCS PQQ mandated - England
No PQQ below goods & services threshold
Contracts Finder award notice (above and below threshold)
Contracts Finder notices for framework call-offs (any value)
Justification for not subdividing into lots
30 day payment terms throughout supply chain and annualreporting on compliance
Available proceduresProcedure When?
OpenRestricted
Freely available
Innovation partnerships Where innovative need not freely available onthe market
Competitive dialogueCompetitive procedure withnegotiation
Where needs:- adaptation of readily available solutions- design or innovative solutions- prior negotiation of contract needed- technical specification cannot be established
Negotiated procedurewithout prior publication
Very limited grounds
Utilities free choice except negotiated without publication
Tendering processesOpen Restricted Negotiated Comp
dialogueInnovationpartnership
Pre marketengagement
Contract notice
PQQ x
ITT
Negotiation X X
Tender
Post selectionnegotiation
X X X
Award
Comp negotiation vs Comp dialogue Competitive negotiation
Know needs and characteristics
Negotiate with all on basis of initial and subsequent tenders,but not final tenders (runs like restricted)
Competitive dialogue
Know needs and requirements
Dialogue with all to identify solutions and means best suited tosatisfying needs, final tenders
Clarify, specify and optimise all tenders
Final negotiations to confirm commitments/ terms but not onessential elements or to distort competition
Innovation Partnerships Must be able to identify a need for an innovative product, service or
works that cannot be met by the current market
“Innovation” …new or significantly improved… including…production, building or construction processes, a new marketingmethod, or a new organisational method in business practices,workplace organisation or external relations including…helping tosolve societal challenges or support the Europe 2012 [2020]strategy for smart, sustainable and inclusive growth
One partner or several partners each conducting separate R&D
Negotiation permitted and must structure in successive phases: egR&D, prototype, manufacture, delivery
Must establish IP rights base to go to market
Value of delivery not disproportionate to value of investment fordevelopment
Pre Market Engagement Expressly permitted (and encouraged by Cabinet Office)
To prepare the procurement and inform the market of procurementplans and requirements
Authority must take appropriate measures to ensure thatcompetition is not distorted
Can only exclude where there are no other means to ensure non-distortion of competition
Must provide the tenderer with an opportunity to prove distortion ofcompetition will not result
CCS Standard PQQ Must use for all procurements (including light touch) if over
threshold
Core questions and additional modules
Must add your own evaluation methodology
“Reportable Deviations” cannot deviate from questions or questionwording unless justified and then must report to CCS within 30days of making PQQ available to candidates – from 1 September2015
Cannot use PQQ stage below goods & services threshold
Will be replaced by ESPD - European Single ProcurementDocument
PQQ grounds Mandatory exclusion criteria (5 years)
Discretionary exclusion criteria (3 years)
Significant or persistent deficiencies under a prior publiccontract which led to early termination, damages or comparablesanctions
Economic and financial standing
Minimum turnover (max 2x contract value unless exceptional)
Information on accounts (must state how scored)
Any minimum hurdles must be in contract notice or ITCI
Self cleansing/ declaration permissible
Continuing obligation throughout process
Contract award criteria Must award to “most economically advantageous tender”
On basis of price or cost – so can be price only
Or can include the best price/quality ratio
Price can include life cycle costing looking at acquisition,maintenance, end of life costs, usage eg energy consumption
Quality criteria can take into account e.g.
Technical merit, social, environmental and innovativecharacteristics
Qualifications and experience where significant impact oncontract performance
After sales service
Frameworks Methods of call off:
Single supplier framework – direct call off
Multi supplier framework – direct call off or mini-competition ORmini-comp only
Must set out in framework agreement:
Objective criteria for deciding between direct call-off or minicompetition
How decision will be made if direct call off; and
Mini-competition award criteria
Must publish contract award information on Contracts Finder foreach call off contract
Awards to mutual or social entities Contracts for limited range of social/ other specific services
including surgical and medical hospital services, education
Can restrict award to types of organisation where
its objective is a public service mission
profits are reinvested or distributed to participants
management/ ownership is based on employee ownership/participatory principles
haven’t awarded a contract for those services by that authorityin past 3 years
Limit of 3 years’ duration on the awarded contract
Competition amongst reserved bodies
“In house” awards Structural (Teckal) - award to a legal person governed by private or
public law
Control test - decisive influence over strategic objectives andsignificant decisions (can be jointly exercised)
Activity test - 80% of the activities must be carried out for thecontrolling authority
Capital – no direct private capital participation except requirednon-controlling, non-blocking without decisive influence
Public to public co-operation (Hamburg)
Co-operate to deliver public services driven by goal ofachieving common objectives
Governed solely by public interest considerations
Perform on the open market less than 20% of activities
Modification of contracts - allowed Modification can occur without a new procurement arising where:
Contract clearly and unequivocally provides for the change andit doesn’t affect overall nature
Additional provision not envisaged but a change of contractorcan’t be made due to interchangeability or interoperabilityissues or significant inconvenience/ substantial cost duplicationand not >50% of contract value
Couldn’t be foreseen, doesn’t affect overall nature and not>50% of contract value
Change of contractor due to merger, insolvency, acquisition etc
Change value doesn’t exceed the relevant threshold AND isless than 10% of the original contract value (services) or 15%of the contract value (works) – net cumulative value of changes
Not “substantial”
What is “substantial” modification Changes are substantial, and therefore give rise to a new
procurement, where it:
Renders the contract materially different in character to thatoriginally concluded
Introduces conditions which if included originally would havebrought other bidders/ different winner
Changes the economic balance of the contract in favour of thecontractor in a manner not provided for initially
Extends the scope of the contract considerably or
A new contractor replaces the original contractor (exceptinsolvency, acquisition, re-organisation)
Reporting Information on every contract/ framework agreement/ DPS
Authority details, the subject matter and value of the contract
Details of any shortlisting or de-selection and reasons;
Reasons for rejection of any abnormally low tenders
Winning bidder identity and reasons and if known any sub-contracting levels and main sub-contractor identities
Justification for the choice of procedure – negotiated/ dialogue
Reasons for any decision not to make an award
Reasons why any non-electronic communication has beenused for tender submission
Any conflicts of interest detected and subsequent measurestaken
Send to Commission or Cabinet Office on request
Documentation retention Keep documentation for at least 3 years to "justify decisions taken
in all stages of the procurement procedure" such as on
Communications with bidders and potential bidders and internaldeliberations
Preparation of procurement documents
Any dialogue or negotiation
Selection and award of the contract
Claims/ remedies
Pre contract award Post contract award
Breach of duty Automatic suspensionDamages
Damages
Ineffectiveness- illegal direct award- breach duty &
standstill- incorrect over
threshold frameworkcall off
Automatic SuspensionVoiding of contractDamagesCivil financial penaltiesContract cancellation
Voiding of contractDamagesCivil financial penaltiesContract cancellation
Issues relevant to litigation Reporting requirements and record keeping
Document Retention
Discretionary exclusion criteria – persistent deficiencies under aprior public contract – may result in more disputes between partiesduring contracts
Revised definition of “Economic Operator” – wider group ofpotential claimants under PCR 2015?
What we tell bidders Go fishing
Time is of the essence - act quickly
Use your contacts - “off the record” isn’t off the record!
Press the procuring body - debriefs
No stigma to challenging
Reasons/ issues can leak out more as you push to keep going
Get legal advice ASAP – don’t prejudice claim
Current trends Increasingly litigious area
Public Sector challenging Public Sector
Increasing claims in SOS services areas – stopping awards
Economics often driving challenges
Phone a friend
Mary Mundy
Associate
T: 0113 251 4727
M: 07711 389413
Tim Dennis
Associate
T: 0191 404 4003
M: 07725 642701
