Public Contracts Regulations 2015

Public Contracts Regulations 2015

The Public Contracts Regulations 2015 (the “2015 Regulations”, a copy of which can be downloaded here)  came into force on Thursday 26 February 2015 and will open-up all public sector procurement opportunities in England and Wales and streamline procurement processes so as to remove the barriers to small and medium-sized enterprises (SMEs).

As well as implementing the latest European Union (EU) Directives on procurement and updating earlier regulations, the 2015 Regulations bring into effect a number of key reforms that were recommended in Lord Young’s 2013 report ‘Growing Your Business’, such as the implementation of a new “light touch” procurement regime for social and other specific services, new rules for low value procurement and the way in which contracts for legal services might be affected. It is presently envisaged that, by ensuring SMEs have access to all government contract opportunities, around a quarter of the Government’s spend on procurement will go to SMEs, either directly or through supply chains.

Under the 2015 Regulations:

  • pre-qualification questionnaires (PQQs) are abolished in certain circumstances for procurements below the Official Journal of the European Union (OJEU) thresholds;
  • there is a requirement that all subcontractors are paid by tier-1 suppliers within 30 days (which astonishingly some 15 years since the implementation of the Construction Act remains a key and frustrating issue for the many SMEs in the construction industry);
  • all public sector projects and contracts must be advertised on the Contracts Finder website and, while this is currently Government policy, this will now become law;
  • all tenders now have to be awarded on the basis of Most Economically Advantageous Tender (MEAT), rather than lowest compliant offer.

Furthermore, where a contracting authority is seeking to award a low value contract, if it advertises the opportunity generally it is required to publish information regarding the opportunity on the Contracts Finder website before or at same time as it publicises the opportunity elsewhere. The contracting authority must include information regarding the procurement process and a link to any relevant contract documents.

For each tender process that leads to the award of a public contract or framework, the contracting authority must now also produce a written report to include all the key information on the process followed, reasons for decisions taken (including choice of procedure used) and why the successful tenderer was chosen. Documents relating to the progress of all procurement procedures must be kept by contracting authorities for three years.

There is also now an obligation on public bodies to share information about any contact they have had with potential bidders prior to the start of a competition, during pre-procurement activity (such as market engagement or ‘soft’ market testing).  This requirement extends to requiring the contracting authority to publish information about the award of the contract on Contracts Finder, even if the opportunity was not originally advertised on there (e.g. if the original notice was advertised via the contracting authorities own eTendering solution).

The relative size of a bidder (expressed in terms of annual turnover) when compared to the annual value of the contract to be awarded has also been clarified, so as to make it easier for SMEs to assess their suitability and subsequently access public sector contracts. Contracting authorities now have to use a ratio of twice the annual value of the contract as the threshold test for organisations, unless there are compelling reasons for the contracting authority to go higher. The 2015 Regulations also now expressly allows contracting authorities to take account of environmental criteria in evaluating bids and enables them to impose social and environmental conditions.

There are also changes in the 2015 Regulations to the ‘competitive dialogue’ procedure that was introduced in the Public Contracts Regulations 2006 (the “2006 Regulations”). The competitive dialogue procedure approach provided an alternative to contracting authorities to the use of negotiated tendering, in that the procedure provided for parallel dialogue with two or three bidders before the finalisation of the contract documentation, but expressly forbid negotiation once the tenders were evaluated.

Under the 2006 Regulations, the negotiated procedure did not require or set out a process for dialogue, but provided for post-tender negotiations on the final contract. However, this procedure was only available under limited circumstances. The 2015 Regulations now relax the constraints on the use of negotiation with a tenderer (or tenderers) through the introduction of the ‘competitive procedure with negotiation’ procedure that will permit the use of negotiation with one or more tenderers throughout the process.

It’s worth noting that the use of e-sourcing portals is now not only fully embedded in practice and procedure, but also now the law. This means that the OJEU bulletin process may not always be the route that purchasers use to advertise their opportunities. Therefore, you will need to ensure you are registered on all the portals used by your customers for advertising opportunities. However, mandatory electronic communication is deferred until April 2017 for central purchasing bodies, and October 2018 for contracting authorities.

The 2015 Regulations will only apply to procurement processes beginning on or after 26 February 2015. Procurements that have been commenced and are ongoing prior to this date will not be subject to the 2015 Regulations, but instead remain subject to the 2006 Regulations (where applicable).