public procurement roadshow presentation

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The Procurement Workshop15 April 2015

Presenters

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Allan Wilson, Partner

[email protected]

029 2038 5482

Cathrine Bryant, Associate

[email protected]

029 2038 5414

Charlotte Kendrick, Senior Solicitor

[email protected]

029 2038 5304

mailto:[email protected]



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Workshop Agenda

Session 1: What should you be doing now to be PCR 2015

compliant?

Session 2: Becoming ‘tender ready’

Session 3: Conducting a successful procurement

Session 4: Standstill and contract award

Session 5: Q&A

Session 1: What should you be doing now to be PCR 2015 compliant?

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The Procurement Workshop

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Mobilisation

• Remember the transitional provisions – ensure you know when and

how the provisions come into effect

• Electronic availability of documents – how will you achieve this?

• Update all your precedents – new language, new regulation numbers

• Publishing contracts on Contracts Finder – how will you achieve this?

• Standing orders and internal procedures

• New contractual requirements around termination, payment of

invoices, modification of the contract – what are the practical

implications of this for you?

Session 2: Becoming Tender Ready

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The Procurement Workshop

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Becoming ‘Tender Ready’

Today’s Scenario

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Plan, plan, plan (and then plan some more!)

• Set the scope:

• What are the needs of the Contracting Authority – what to buy,

how to buy it and how much will it cost?

• Market research/testing – assessing bidder interest; Stakeholder

buy-in (genuine competition); involvement of SME’s; division into

lots?

• Prepare a business case and secure funding

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Plan, plan, plan (and then plan some more!)

• Engaging with experts (e.g. financial modelling)

• Evaluation criteria and weighting and methodology for applying

those criteria

• Carry out “dry run”

• Set the timescale & stick to it!

• Electronic Availability of procurement documents

• Practical issues – staff the procurement; data rooms; evaluation

teams; timetabling

• Choose the procedure which fits the requirement the best

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Timescales and Thresholds

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Thresholds under the PCR 2015:

Supplies Services Light Touch regime services

Works

Central Government Authorities (see schedule 1)

£111,676 £111,676 £625,050* (healthcare service contracts continue to have a threshold of £172,514 under PCR 2006 until the end of 2015, and such revised threshold as may be specified until the PCR 2015 become applicable to them in April 2016

EUR 5,186,000

Other public sector Contracting Authorities

£172,514 £172,514 EUR 5,186,000

Source: PLC

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Regulation 22 – Rules for Communication

• Staggered implementation of the provisions

• Electronic communication is the norm subject to the mandated exceptions

• Deviations must be reported in accordance with Reg 84(1)

• Keeping written records of oral communication

• Suitable alternative means of access

• Technical requirements for tools and devices

• Security Requirements

• Electronic signatures

Session 3: Conducting a Successful Procurement

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ADVERTISEMENT

PQQ & EVALUATION

INVITATION TO TENDER

BID SUBMISSION

EVALUATION

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Conducting a Successful Procurement

Advertisement

Conducting a successful procurement

Advertisement:

• Contract notice

• PINs

• Prescribed form

• Published in OJEU

• Remember – electronic availability

of documents

• Make sure it’s correct! Source: http://simap.europa.eu/docs/simap/pdf_jol/en/sf_002_en.pdf

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Pre-Qualification/Selection Stage

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The PQQ Stage:

• Essentially a short-listing exercise

• Pre-cursor to ITT stage

• Question to be asked is ‘can the bidder do this’?

Consider the headline points you would need to cover in the PQQ to be issued in respect of today’s scenario

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The PQQ:

• Only used to evaluate (1) the economic/financial standing (2)

technical/professional ability of suppliers and (3) eligibility :

• Any minimum levels set by contracting authorities must be

related/proportionate to the subject matter of the contract.

• Equal treatment and non-discrimination – ensure transparency

• The ‘must’ excludes and the ‘may’ excludes and ‘self-cleansing’

• Selection criteria are applied only at PQQ stage in order to short-list bidders

to be invited to tender and are not permitted to be re-assessed during award

stage.

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Developing the PQQ document: one size does not fit all!

• What are you seeking from the contract? What is each question asking for?

• Ensure the PQQ is structured to allow you to select suitable providers

• PQQ scoring model, weightings of evaluation criteria and PQQ itself should be drawn

up in tandem to ensure that they correspond. If possible/appropriate, keep it simple!

• Information requested in the PQQ should be relevant to the requirement, including

requests for policy documents (e.g. health and safety, HR etc).

• Complexity/structure should equate to the value/risk of the contract. Setting

unnecessarily high requirements should be avoided.

• Ensure that your evaluators understand how to assess the information provided and to

carry out the evaluation – put the right people in place

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Developing the PQQ document: one size does not fit all!

• European Single Procurement Document (“ESPD”) and eCertis

• Ensuring the financial robustness of supplier:• Beware outdated credit checks • Tangible net worth• Management accounts• PCGs, bonds, financial guarantees to mitigate risks • Consider engaging external auditors for high value/high risk projects• Cannot evaluate financial standing of bidder at award stage• Build in provision for refresh of PQQ prior to award

• Key message - don’t set arbitrary limits/requirements unnecessarily

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Invitation to Tender

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The ITT Stage:

• Sets out the contracting authority’s requirements and the

contracting authority marks responses received to this.

• Question being asked at this stage is: ‘how will the bidder

do this?’

Consider the headline issues you would need to cover in the ITT documentation to be issued in respect of today’s scenario

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The ITT Documents:

• Must set out the full details of:

• the contracting authority’s requirements/specification

• the applicable contract terms (note there is limited scope to change

these after ITT!)

• the full evaluation and scoring methodology - you must test these

methodologies to the fullest extent possible before issuing an ITT

• Basis for the award of the contract – now only Most Economically

Advantageous Tender (MEAT)

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Developing the ITT documents: one size does not fit all!

• The evaluation criteria and methodology (including the relative weightings) setting out

the basis on which the contract will be awarded must be disclosed.

• The evaluation criteria should (not exhaustive!):

• link to the subject matter of the contract and not free-standing

• be verifiable and capable of measurement

• be transparent, objective and clear

• be non-discriminatory

• be proportionate

• Limitations of using pass/fail hurdles

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Developing the ITT documents: one size does not fit all!

• Potential tenderers should be made aware of all the elements taken into

account by the contracting authority, including the full scoring methodology, so

that this is available when they prepare their tenders.

• Key messages:

• transparency! This is the overarching consideration when drawing up

documents/processes.

• disclose everything at the start (all criteria, sub-weightings,

methodology etc)

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New Contractual Provisions

• Regulation 72(1) – draft the contract with change provisions in mind

• Regulation 113 & 122 – Prompt payment

• Valid and undisputed invoices to be paid within 30 days

• Reporting obligations

• Regulation 73 – specific grounds for termination MUST be drafted in

otherwise will be implied

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Evaluation/Award Stage

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Evaluation of the ITT responses:

• Application of overarching ‘Treaty Principles’: Transparency, fairness and equal treatment.

• Clarifications – no post-tender negotiation permitted (only clarification, specification and fine-

tuning)

• Scoring:

• Do not confuse award criteria (ITT) and selection criteria (PQQ)!

• Only use criteria, weightings and scoring methodology that’s been disclosed

• Tender reports: keep an audit trail of the scoring awarded – brief, objective reasons

for scores

• Think about the merits of including a moderation/second review element in evaluation.

• Ensure evaluation panel has sufficient expertise and resource

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Session 4: Standstill and Contract Award

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Standstill and Contract Award

– Alcatel letters• Content• Purpose

– Standstill period• What you can/cannot do in the 10 days• Threat of ineffectiveness

– Debriefs• Good or bad idea?

– Challenges • Where might they come from?

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Regulation 86:

– Each tenderer to be sent notice of decision (save where contract can be concluded without prior publication, where there is only one tenderer, or where the award is under a Framework Agreement or a dynamic purchasing system)

– Contracting Authority must not enter into the contract without sending an “Alcatel” letter

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Notice must include:– Criteria for award– Reasons for decision including characteristics and relative advantages

of successful tender– Tenderer’s and winner’s scores– Name of winner– Precise statement of end of standstill period or date before which

contracting authority will not enter into contract (complying with Regulation 87)

– Reason for technical rejection

Can exclude certain information which:– is contrary to public interest– prejudices legitimate commercial interests– prejudices fair competition

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Objective of Alcatel letters

– Meet statutory duty to give notice of award– Provide required feedback about the

decision and the reasons for it– Start time running for limitation

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Content of Alcatel letters– How much detail? Regulation 86 v Regulation 92

• Headline scores? Summary per Alstom Transport v Eurostar?

• Scores for all questions/sections?• Explanation behind differential scores? • Statutory content: technical specification (Regulation

86(3))– UAB Guamina -v- European Institute for Gender Equality

• Challenger needs to be able to understand what was required of him and the elements of the successful bid that justified higher scores.

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• Solent NHS Trust v Hampshire County Council• Criteria

– MEAT– Quality/scope 90% Price 10%– 11 Quality requirements (weightings 5-11%)– Lowest price 10% Highest 0%

• Methodology– 100%, 75%, 50%, 0%

• Alcatel with evaluation report and explanation• Challenged on transparency, fairness and discrimination

grounds

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Regulation 87– Standstill period duration depends on method of

notification to bidders used– Fax or electronic: period ends at midnight at end of

10th day after relevent sending date (i.e. date on which Alcatel notice sent or last of dates if several sent)

– Other means: midnight at end of 15th day after relevant sending date

– Extend period if expiry falls on non-working day

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– Mandatory 10 days does not mean cannot do anything

– Can progress contract preparation but do not let contract

– Can correspond with bidders and provide additional feedback/deal with challenges

– Can provide debrief if you choose

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Regulation 98– Breach standstill at your peril– If ground for ineffectiveness exists Court

• Must make declaration to that effect and impose dissuasive civil fine (unless limited exceptions in Regulation 100 apply) = No contract any more

• May still impose financial penalty where no declaration of ineffectiveness made (Regulation 102) and/or may order contract to be shortened

• May make any order it considers appropriate in circumstances, including damages to innocent bidder

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Regulation 99

3 grounds for ineffectiveness:– First - direct award without prior publication of contract notice

(save 3 exceptions where thought permitted, or published voluntary notice, or waited at least 10 days after voluntary notice)

– Second - breach of Regulation 87 (standstill period), Regulation 95 (suspension ignored) or Regulation 96(1)(b) (breach of interim order) and is another breach of Regulations and economic operator deprived of change to start proceedings and breach has affected chances of winning

– Third - applies to Framework Agreements/dynamic purchasing (subject to exceptions)

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To debrief or not to debrief?

For debrief:– Preserve or enhance reputation in market/commercial relationships– Improve quality of future bids– Show confidence in evaluation process and outcome

Against Debrief:– Goes beyond what contracting authorities obliged to do – May disclose material bidders would otherwise not see, which may

bolster speculative challenges – May disclose inconsistencies between participants in process and

marking from different evaluators – May show weaknesses in evaluation

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• Any debrief:– Should be prepared carefully and scripted– Should be capable of explaining how result

was arrived at– Should be minuted– Should not involve admissions of errors– Should occur after the 10 day standstill if

possible

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Common grounds of challenge:– Unclear criteria– Use of undisclosed criteria/sub-criteria/weightings– Inadequate methodology or deviation from it– Manifest error– Discrimination/unfair treatment / lack of transparency– Successful bidder unable to meet specification– Inadequate or unfair evaluation process– Where scores are very close – whatever bidder can

think of!

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Suspension of contract process– Automatic if Claim Form issued and notified to

Contracting Authority– Serious issue to be tried– Adequacy of damages– Balance of convenience– Cross undertaking in damages– Conduct relevant to Court’s decision

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Session 5: Q&A

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Public Contracts Regulations 2015Simon McCann, Partner

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Introduction and presentation outline

• Morning – overview of the key changes• Afternoon – putting them into effect – workshop• 9.30 – 10.15 Commencement, Exceptions and Variations• 10.15 – 11.00 New Procedures• 11.00 – 11.15 BREAK• 11.15 – 12.00 Light touch regime and low bids• 12.00 – 12.45 Social, Environmental and SMEs – putting policy at

the heart of procurement• 12.45 – 13.00 Questions• 13.00 – 14.00 LUNCH• 14.00 – 16.00 Workshop

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About us

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2014 900+ 6

Formation People Offices

70 56 7

Legal disciplinesTop tier rankings in legal

directoriesCharities supported

Specialist public sector expertise

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SPECIFIC EXPERTISE

Health and social care Central, devolved and local government

Universities and colleges Social Housing

Police, fire and rescue services Professional regulatory bodies

Private clients enforcing public law rights

A strange, untrodden landscape ?

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A strange, untrodden landscape ?

• New procedures and rules• New obligations• Sheer size of Regs (122 vs 48

regulations)• Changes in familiar terminology• Old “Part B” services narrower and

need to be advertised

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Or a much–needed uplift ?

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Or a much–needed uplift ?

• Although more, much of new Regs permissive• You can –

– Be more flexible – Hold pre-tender consultations– Collaborate– Negotiate– Go further to achieve environmental / social

benefits

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Commencement, Exceptions and VariationsSimon McCann, Partner

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Transition – Old to New (1) (R118)

• PCR 2015 applies to procurement exercises advertised on/after 26th February 2015

• Procurements commenced before 26th under PCR 2006• Commenced includes:

– Contracts, Frameworks, DPS - advertised, awarded or called off pre 26/2

– Expressions of interest/offers sought – Response to unsolicited expressions /offers

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Transition – Old to New (2) (R118)

• PCR 2015 does not apply to– Contracts, frameworks, DPS - advertised or awarded pre 26/2– Calls off under a framework or DPS that were advertised or

awarded pre 26/2• Therefore new rules relating to contract variations/modifications

(R72) will not apply

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Early Access to Procurement Documents (R53)

• Electronic Access to Procurement documents • “unrestricted and full direct access” from

– date of publication of notice in OJEU, or– Invitation to confirm interest sent (PIN)

• Procurement documents widely defined includes the 2nd stage ITT documents (contract conditions and so forth)

• Planning and preparation – work front loaded• Speeds up process at the back end / bidders can make

informed choice early on• Exceptions – urgency, confidential material, technical rationale• What about CD process , iterative ITPD / ISFT stage docs ?

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Public - Public Collaboration (1) (R12)

• Codifies Teckal or quasi “in-house” exception• Exempt from PCR 2015 if:-

– CA has control over legal entity similar to its own departments. – “Control” = decisive influence over strategic and significant

decisions– Controlled body (CB) does more than > 80% of its activity for CA– No direct, controlling/blocking private capital interest

• Joint Control also permissible if above conditions fulfilled– 80% rule applies jointly across the CA’s – Interests of CB not contrary to those of CA’s

• Applies Vertically (upwards/ downwards)and Horizontally– Controlled body can award to controlling authority, and to another

controlled body of same authority(ies)

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Public - Public Collaboration (2) (R12)

• Hamburg exception also codified and made clearer• Contract between CA’s exempt from PCR 2015 if:-

– Co-operation to perform services conferred upon CA’s, with aim of achieving common objectives

– Governed solely by considerations in the public interest– CAs perform less than < 20% of the activities on the open

market • Has to be a genuine co-operation and commitment to

contribute• Mere pass-through of costs for procuring services from

another CA not enough• 20 % & 80% = 3 years turnover/activity or credible projection

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Contract Variations (1) (R72)

• Codification of Pressetext case – “material” changes to a contract could = new contract which

needs re-procuring – but what is “material”?• Legal Services Commission case

– fact there has been a variation clause apparent since tender stage is not enough

• Each variation therefore a question of fact and degree:- – how much change could reasonably have been understood from

the tender documents to be allowed for?• New rules seek to remove the uncertainty

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• Variations permitted where:-– Set out in tender docs in clear, unequivocal terms – e.g. price

variation/fluctuation clauses or options – Not included in original tender but can’t change contractor for

economic or technical reasons, or where would cause serious inconvenience or duplication (e.g. IT contracts, construction, etc.) subject to maximum of 50% of original contract value (cumulative)

– Unforeseen, and variation doesn’t alter nature of contract – again 50% value cap

– Change of contractor if provided for or as a result of merger, insolvency, step in

– Variation/Modification NOT substantial

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• Substantial Modification:-– Materially different in character– Alternative winning bid or expressions of interest – Pro-contractor shift in economic balance not provided for– Extend scope considerably– New contractor (other than permitted by R72)

• Uncertainty continues? • De-Minimis

– below OJEU threshold, and – less than 10% (supplies and services) 15% (works) of original

contract value, and– Nature of contract unchanged

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New Procedures

Simon McCann, Partner

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Procedures – what’s new ?

• New core principle of proportionality• Pre-tender consultation• Central / sub central authorities and PIN as call for competition• Open, restricted and comp dialogue largely the same (flexible time

limits)• Competitive procedure with negotiation• Innovation partnership• Frameworks tougher – prohibition on authorities joining later• Dynamic Purchasing System (improved)• Changes to selection stage and award criteria• Abnormally low tenders• Award processes, standstill etc largely the same

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Getting a sense of proportion

• “Contracting authorities shall treat economic operators equally and without discrimination and shall act in a transparent and proportionate manner” (R18(1))

• Fit tender to contract requirements – no more “one size fits all”

• E.g.: selection criteria, additional requirements on consortia (R58.4), technical specifications (R42.1), security requirements for e-procurement, decisions generally

• Could be a ground for challenge in its own right

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Pre-tender consultation

• Expressly recognised that can be done, and can use independent experts or market participants to assist. Only restriction - must not distort competition (R40)

• Prior involvement of candidates (for any reason – could include incumbent) – CA must take steps to avoid distorting competition e.g. equal access to information and sufficient time limits. Only exclude if no other way of securing equal treatment (R41).

• Conflicts of interest (for any reason) – CAs must take steps to prevent (e.g. employees/families, consultant who advises then joins bidder)(R24). If no other way of preventing; discretionary ground for

exclusion (R57(8))

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Contracting authorities

• Lighter regime for “sub-central” contracting authorities

– Central Govt, NHS, NDPBs and others named in Annex 1– Any not named in Annex 1 – e.g. Local Govt, HE/FE, police

• Benefits of being “sub-central”– Higher thresholds (E207k vs E134k)(R5)– Can use PINs as call for competition – valid for up to 12 months,

invite all who responded to confirm interest (PQQ), then run as restricted/competitive procedure with negotiation (R26(9))

– Flexible tender periods – can be set by agreement with bidders in restricted procedure (minimum 10 days)(R28(7))

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Procedures with negotiation (CD & CPWN) -

grounds (R26(4))

• Where needs cannot be met without adaptation of readily available solutions (new justification)

• Where the contract includes design or innovative solutions (new justification)

• Where the requirement is complex in nature, in its legal and financial make-up or because of its risks (extended version of the current justification for competitive dialogue)

• Where the technical specifications cannot be established with sufficient precision (as current negotiated procedure with a call for competition)

• In the case of unacceptable/irregular tenders (as current negotiated procedure with a call for competition)

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Competitive procedure with negotiation (R29)

• Very similar to competitive dialogue - slightly more flexible

• At outset - must describe subject matter well enough to allow EOs to decide whether to participate

• Selection – same as restricted or CD (can limit numbers to 3)

• Invitation to submit initial tenders

• Negotiate on initial/subsequent tenders (but not final tenders) to improve their quality. Can reduce numbers by applying award criteria

• No negotiation on award criteria or minimum requirements

• Can award on basis of first tender (if stated at outset) to save going through whole process. Otherwise, end negotiations and set deadline to submit new/revised tenders

• Evaluate in accordance with award criteria stated at start

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Innovation Partnership (R31)

• Needs “cannot be met by purchasing products, services or works already available on the market”

• Define minimum requirements and subject matter• Selection is qualitative

• Negotiation (except award criteria / minimum requirements)• Can choose 1/more partners, staged reduction option

• Partnership must be structured in successive phases with targets and milestone payments

• Contract structure must be proportionate to degree of innovation and activities necessary to bring to market

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Dynamic Purchasing System (1) (R34)

• Similar to formalised kind of approved list• Initially – procure by restricted procedure• 30 days PQQ. No time limits for subsequent requests to participate.• Open to any EO who fulfils selection criteria – can apply at any time.

Must assess within 10 days (15 where need to check info)• Completely electronic

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Dynamic Purchasing System (2) (R34)

• Can divide up by goods/services or geographical area. Can also impose maximum contract value

• Tenders – invite all who are eligible. 10-day minimum tender period. Do not need OJEU

• Award in line with advertised criteria (can refine)• Can ask participants to refresh periodically• Duration – not fixed• Must notify Commission if duration different than advertised

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Selection – the European Single Procurement Document (R59)

• CAs must accept ESPD• ESPD = self declaration (updated) that bidder:-

– Not guilty of any exclusion grounds– Meets required selection criteria– Meets objective criteria for short-listing

• CA can request supporting documents at any point in procurement• CA must get them from existing databases where freely available • Lists of databases in other Member States to be maintained and

published on e_Certis (R61)• CCS statutory guidance (England) – must use their slimmed-down

PQQ. Only vary with good reason and need to report to CCS

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Criteria (R67)

• Most economically advantageous tender• Must include price or cost, using cost-effectiveness (e.g. life-cycle

costing)• May include price/quality ratio• Can include staff qualifications, experience (Lianakis)• Must allow for effective competition• Must be linked to specifications that allow for effective verification of

how well criteria met• Much greater scope for inclusion of environmental / social factors

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The Light Touch Regime and dealing with low bids


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Light Touch Regime (1) (R74)

• Rules don’t apply at all unless value more than £625k – Transparency and non-discrimination may apply to sub-threshold LTR

contracts if compelling case of cross-border interest

• Covers health, social care, education, hotel/restaurant services, legal services (unless excluded), and a few others listed in Sch. 3.

• Carve out for NHS Clinical commissioning until April 2016– In the interim old rules apply - Part B’s and/or NHS Procurement, Patient

Choice and Competition (No.2) Regs. 2013 for NHS England

• No longer Part A / B split, shorter list than old “Part B” • If services not listed in Sch. 3 then fully regulated

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• Flexible – CA’s can– determine own procedures, – modify or adopt standard PCR 2015 award procedures

• MUST start with a Contract Notice or a PIN• MUST conclude with Contract Award Notice• No prescribed time limits – but reasonable and proportionate• Principles of transparency and non-discrimination • Debrief and Remedies (inc. ineffectiveness) will apply

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• Award Criteria :– flexible with selection based on range of factors e.g. quality,

affordability, needs of users, availability and comprehensiveness, and sustainability

• Designed to allow CAs to take a holistic, integrated approach to procuring services

• Resist private/3rd sector providers “cherry-picking” profitable/less risky elements

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• Take into account – overall effect on sustainability of services, weakened service

provision if key element contracted out?– user involvement and patient choice

• R77 – Reserved Contracts – voluntary sector / employee owned mutuals social enterprises– Services prescribed in CPV codes– Max 3 years

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Abnormally low tenders (R69)

• No definition of ‘abnormally low’• Duty on Contracting Authorities to consider whether a tender

appears ‘abnormally low’, if so • Must require explanation from bidder• Only exclude if evidence does not satisfactorily explain low cost• Must exclude if reason for low price is non-compliance with

environmental, social or labour law

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Social, Environmental and SMEs - Putting Policy at the heart of Procurement


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Social and Environmental issues

• Directive aims for “better integration of social and environmental considerations in procurement” – Recital 41 & 42

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Setting procurement free at last ?

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Criteria (1) (R67)

• MUST use most economically advantageous tender. Can be price alone or price/quality ratio

• Price must use cost-effectiveness approach such as life-cycle costing

• Life-cycle costing (R68) may include:-– Cost of acquisition– Energy consumption/running costs– Maintenance– Disposal

• Can include environmental impacts external to CA e.g. greenhouse gas emissions) (but must use EU-approved calculation method where provided)

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Criteria (2) (R67)

• Criteria can include environmental and social, if linked to subject matter

• Criteria are linked to subject matter where they relate to it in any respect and at any stage of its life cycle including:-

– any part of lifecycle (production, provision or trading)– A specific stage for another process in their lifecycle (e.g.

maintenance, disposal)• Even where not part of their “material substance”• Very wide scope to adopt criteria which favour environmental and

social objectives

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Labels (R43)

• Much wider – specifically includes environmental, social or other characteristics

– Must be linked to subject matter and drawn up on basis of scientific information established transparently and accessible to all interested parties

– E.g. environmental performance/emissions, or non-use of child/trafficked labour, health and safety of workforce, fair trade

• Must accept alternatives or (where not possible for bidder to obtain accreditation in time), technical dossier showing it meets requirements

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Non-compliance with environmental, social and labour law

• Breaches of social, labour or environmental law – MAY exclude bidders (discretionary) (R56(2))– MUST exclude if bid is abnormally low because of non-

compliance (R69)– Mandatory exclusion for forced labour, child trafficking, people

trafficking, etc. (R57)

• Failure to pay taxes/social contributions (R57)– MUST exclude if judicial finding– MAY exclude on other appropriate evidence– UNLESS bidder has paid or made binding agreement to pay

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Poor past conduct

• New discretionary ground for exclusion:- – Contractor "has shown significant or persistent deficiencies in

the performance of a substantive requirement under a prior public contract…which led to early termination of that prior contract, damages or other comparable sanctions" (R57(8)(g))

• What is “significant” or “persistent”, and “substantive requirement”? Could lead to subjectivity

• Some obvious examples – union blacklisting, systematic overcharging (as alleged in offender “tagging” cases)

• Could also include failure to meet environmental/social standards (where set out in a previous contract)

• But what about less serious matters? Delays/LADs?

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Selbstvereinigung

• Possibility of “self cleaning” (R57(13))– Contractor can provide evidence of remedial measures taken to

demonstrate its reliability despite existence of a ground for exclusion

– If contracting authority considers measures are insufficient, must provide reasoned decision

• Applies to mandatory and discretionary grounds• So – if contractor has skeletons in cupboard,

needs to provide evidence of remedial measures/explanations why it is unlikely to recur

• Can still exclude them if good reason• Maximum exclusion periods – 5 years if on the

judicial record, 3 years otherwise91

Supported Business (R20)

• Old law – could reserve participation to organisations employing more than 50% disabled persons i.e. only they can tender

• New Directive - can reserve participation to those organisations whose main aim is integration of disabled and disadvantaged persons, or provide for contract to be performed in this context, provided at least 30% of workers are disabled or disadvantaged

• Covers much wider range of social enterprises

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Spin-outs/employee-owned businesses (R77)

• Social enterprise spin-outs

– Health/social/cultural services – can reserve to organisations which meet conditions (inc. employee-owned or controlled, non-profit distributing)

– Max contract length 3 years and mustn’t have had a contract via this route in last 3 years

– Effectively allows CA to give spin-out companies a “safe launch” for first 3 years with minimal competition (only from other similar organisations)

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SME-friendly measures (1)

• Simplification of information requirements at selection:-– All selection criteria must be proportionate and related to subject

matter (R58(4))– Self certification (ESPD, R59, 60)– Not exclude for minor documentary failings/allow rectification so

long as doesn’t affect equal treatment (R56(4), Directive rec.101)

– Can call for supporting docs at any stage (R59(8))

• Lots (R46)– “to enhance competition, contracting authorities should in

particular be encouraged to divide large contracts into lots”– Choice is with CA, but must give reasons if not using Lots– Can limit number of Lots tendered for/awarded. Must state

criteria/mechanism to be used

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SME-friendly measures (2)

• Limits on requirements for participation (selection)(R58)– MUST relate to suitability for professional activities,

financial/economic standing and/or technical/professional capability and nothing else

– Turnover – maximum 2x contract value unless exceptional reasons

– Groups/consortia – any conditions imposed must be objective and proportionate

• Direct payments (Directive, art 71(3)– Sub-contractors may request direct payment from CA. Main

contractor has right to object to undue payments. Does not affect liability of main contractor

– Similar to Project Bank Accounts (Constructing Excellence pressing for use, currently being used on Crossrail)

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SME-friendly measures (3) – UK Govt measures

• Advertising sub-threshold contracts (R109 – 112)– Must advertise in Contracts Finder if between threshold and

£10k (central) or £25k (sub-central)– No pre-qualification. “Suitability” requirements but must be

proportionate and linked too subject matter

• Payment within 30 days (R113)– Authority must pay within 30 days– Contractor to pay subcontractors within 30 days– Terms implied if not included– Authority must publish on internet annual report of how well it

has complied

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Conclusion

• New Regs touch every detail of procurement practice

• Have picked out what’s most relevant – but many other changes

• Won’t be safe to assume “business as usual”• On plus side –

– Clarifies the often confusing and contradictory case law– Makes life easier for procurement officers and bidders alike– Particular benefits for SMEs– Much wider potential for use of environmental and social factors– Shorter, more flexible time limits– New, more flexible procedures

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Beware ! The beast is loose !

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public procurement roadshow presentation

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