Public procurement roadshow presentation - Allan Wilson, Simon McCann, Cathy Bryant and Charlotte Kendrick

1. 16/04/2015 1

2. The Procurement Workshop
15 April 2015

3. Presenters
15/04/2015 3
Allan Wilson, Partner
Allan.Wilson@blakemorgan.co.uk
029 2038 5482
Cathrine Bryant, Associate
cathrine.bryant@blakemorgan.co.uk
029 2038 5414
Charlotte Kendrick, Senior Solicitor
charlotte.kendrick@blakemorgan.co.uk
029 2038 5304

4. 15/04/2015 4
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

5. Session 1:
What should you
be doing now to
be PCR 2015
compliant?
15/04/2015 5
The Procurement Workshop

6. 15/04/2015 6
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?

7. Session 2:
Becoming
Tender Ready
15/04/2015 7
The Procurement Workshop

8. 15/04/2015 8
Becoming ‘Tender Ready’
Today’s Scenario

9. 15/04/2015 9
Becoming ‘Tender Ready’
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

10. 15/042015 10
Becoming ‘Tender Ready’
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

11. 15/04/2015 11
Becoming ‘Tender Ready’
Timescales and
Thresholds

12. 15/04/2015 12
Becoming ‘Tender Ready’
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

13. 15/042015 13
Becoming ‘Tender Ready’
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

14. Session 3:
Conducting a
Successful
Procurement
14
15/04/2015

15. 15
ADVERTISEMENT
PQQ & EVALUATION
INVITATION TO TENDER
BID SUBMISSION
EVALUATION
15/04/2015

16. 15/04/2015 16
Conducting a Successful Procurement
Advertisement

17. 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
15/04/2015

18. 18
Conducting a Successful Procurement
Pre-Qualification/Selection Stage
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19. 19
Conducting a successful procurement
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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20. 20
Conducting a successful procurement
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.
15/04/2015

21. 21
Conducting a successful procurement
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
15/04/2015

22. 22
Conducting a successful procurement
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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23. 23
Conducting a Successful Procurement
Invitation to Tender
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24. 24
Conducting a successful procurement
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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25. 25
Conducting a successful procurement
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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26. 26
Conducting a successful procurement
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
15/04/2015

27. 16/04/2015 27
Conducting a successful procurement
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)

28. 28
Conducting a successful procurement
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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29. 29
Conducting a Successful Procurement
Evaluation/Award Stage
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30. 30
Conducting a successful procurement
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
15/04/2015

31. Session 4:
Standstill and
Contract Award
31
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32. 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?
3215/04/2015

33. Standstill and Contract Award
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
3315/04/2015

34. Standstill and Contract Award
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
3415/04/2015

35. Standstill and Contract Award
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
3515/04/2015

36. Standstill and Contract Award
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.
3615/04/2015

37. Standstill and Contract Award
• 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
3715/04/2015

38. Standstill and Contract Award
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
3815/04/2015

39. Standstill and Contract Award
– 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
3915/04/2015

40. Standstill and Contract Award
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
4015/04/2015

41. Standstill and Contract Award
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)
4115/04/2015

42. Standstill and Contract Award
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
4215/04/2015

43. Standstill and Contract Award
• 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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44. Standstill and Contract Award
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!
4415/04/2015

45. Standstill and Contract Award
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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46. Session 5:
Q&A
46
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47. 47

48. Public Contracts
Regulations 2015
Simon McCann, Partner
48

49. 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
49

50. About us
16/04/2015 50
2014 900+ 6
Formation People Offices
70 56 7
Legal disciplines
Top tier rankings in legal
directories
Charities supported

51. Specialist public sector expertise
16/04/2015 51
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

52. A strange, untrodden landscape ?
52

53. 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
53

54. Or a much–needed uplift ?
54

55. 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
55

56. Commencement,
Exceptions and
VariationsSimon McCann, Partner
56

57. 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
57

58. 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
58

59. 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 ?
59

60. 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)
60

61. 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
61

62. 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
62

63. Contract Variations (2) (R72)
• 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
63

64. Contract Variations (3) (R72)
• 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
64

65. New Procedures
Simon McCann, Partner
65

66. 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
66

67. 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
67

68. 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))
68

69. 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))
69

70. 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)
70

71. 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
71

72. 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
72

73. 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
73

74. 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
74

75. 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
75

76. 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
76

77. The Light Touch Regime
and dealing with low bids
Simon McCann, Partner
77

78. 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” 78

79. Light Touch Regime (2) (R74)
• 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
79

80. Light Touch Regime (3) (R74)
• 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
80

81. Light Touch Regime (4) (R74)
• 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
81

82. 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
82

83. Social, Environmental and
SMEs - Putting Policy at
the heart of Procurement
Simon McCann, Partner
83

84. Social and Environmental issues
• Directive aims for “better integration of social and environmental
considerations in procurement” – Recital 41 & 42
84

85. Setting procurement free at last ?
85

86. 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)
86

87. 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
87

88. 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
88

89. 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
89

90. 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 in90

91. 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 otherwise
91

92. 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
92

93. 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)
93

94. 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
94

95. 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)
95

96. 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
96

97. 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
97

98. Beware ! The beast is loose !
98