Public Procurement: An introduction to the new regime

26 November, 2014

The Government has until 18 April 2016 to implement the new EU Directives on public procurement but aims to do so earlier.

 

The directives aim to improve efficiency and value; promote social goals such as environmental issues, employment and social inclusion; and help small and medium sized enterprises to compete for public contracts. There is one for most public procurement; another for utilities; and the last deals with concession contracts.

 

We will deal with some changes in more detail in later articles but here are a few major points to note on the main directive:

• The law relating to when a contracting authority can let a contract to a subsidiary without the need for a public competition (the Teckal Exemption) has been codified. In future the procurement rules won’t apply if the authority has similar control over a body that it has over one of its departments, at least 80% of the body’s activities are for the authority or other legal persons it controls and there is no direct private capital in it. There are further rules where the operator is jointly owned by more than one authority.

 

• The Open, Restricted, Negotiated Procedure without Advertisement and Competitive Dialogue procedures are now supplemented by the Competitive Procedure with Negotiation and the Innovation Partnership – which is based on the Competitive Procedure with Negotiation and enables the setting up of partnerships to develop and sell innovative products, services or works.

 

• Unless you are central government you often won’t have to publish a contract notice if you have published a prior information notice in relation to a restricted or competitive procedure with negotiation.

 

• Mandatory e-procurement in nearly all cases by 18 October 2018

 

• All contracts will have to be awarded to the most economically advantageous tender (MEAT).

 

• Contracts can be modified if the modification value does not exceed the threshold and is less than 10% of the initial contract price (services and supplies) or 15% (works) but not if the modification would alter the contract’s overall nature. There is also room for modification required by unforeseeable circumstances but subject to limits. A contractor can be replaced where the contract so permits.

 

• Authorities may base pricing elements on life-cycle costs.

 

• Contracts can be divided into smaller lots to encourage SMEs and if they don’t there will have to be an explanation. Also, tenderers can be prohibited from bidding for or winning more than a fixed number of lots.

 

• SMEs should not normally be required to have turnover more than twice the value of the contract.

 

Reviewed in 2015