The ban on PQQs and restrictions for use of supplier questionnaires

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5. Studying the regulations with regard to the use of the PQQ relative to procedures, am I correct that for the Open procedure a buyer would only have to extract the relevant mandatory and discretionary exclusions from the standard PQQ and that technically the questionnaire should not be referred to as a PQQ, since it cannot be applied as a PQQ/used to score/assess in the Open procedure? I have been advised on good authority that to do so would be considered illegal.

   1. Hi Nick

      Thanks for your question.

      For procurement below the OJEU threshold the guidance states that PQQs are not permitted but allows for ‘suitability assessment questions’. For above OJEU threshold the guidance reads that in an open procedure the PQQ should be used to test that suppliers meet minimum levels of suitability.

      I am not too sure that referring to the document by the name the Government has given it – Standard pre-qualification questionnaire – in itself would be illegal. As long as the buyer does not use the document to pre-qualify or rank suppliers in an open procedure but purely use it as a way to exclude suppliers unsuitable to perform the contract.

      I do agree it could be very confusing for suppliers to refer to a PQQ document when there is no pre-qualification. In an open procedure I think it could be appropriate to refer to it as “supplier suitability assessment questionnaire”.

      To complicate the matter further the European Commission has completed the development of the European Single Procurement Document (ESPD) referenced on page 2 of the guidance (https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/524353/New_PQQ_requirements.pdf) however the guidance has not been updated to take this into account yet.

6. Hi,

   More and more organisations are using e-portals to run their procurement exercises. The PQQ and Suitability Questionnaires do not seem to differ in respect to content, but allows for additional questioning to be applied if applicable depending on the nature of the project being procured.

   This process, for both buyers and suppliers is timely and consuming if this has to be done every time you wish to go through the exercise. What implications would it have if e-portals were to apply the PQQ/Suitability Questionnaire’s to their website as part of their registration process? Suppliers can only join/bid if they meet the standards. Once a year, this can then be updated.

   I am not too sure if there are any legal implications against EU regulation for this, but if this was done once at registration and renewed once a year, the suppliers would not have to fill out timely and costly paperwork and the buyers would not have to go through a long list of documentation and shorten the process.

   Is this at all viable?

   Kind Regards

   Keith

   1. Hi Keith,

      I’m afraid that your suggestion of asking the exclusion/selection criteria as part of an annual registration would run into legal problems, but we are about to see some big changes in the way supplier questionnaires are ‘asked’ and ‘answered’. In my opinion I think we will see that over the next few years that buyers will be fully dependent on e-portals to comply with the requirements for electronic procurement, from keeping documents online and submitting bids electronically.

      One of the changes we will definitely see is that Suppliers will have a bank of saved ‘answers’ to standard questionnaires online and Buyers will have access to check them online. My company, Millstream, will shortly be implementing these facilities on Tenders Direct and myTenders.org.

      The latest Public Contracts Regulations, introduced the concept of the, catchily named, European Single Procurement Document (ESPD). This gives Buyers a core set of exclusion and selection questions to ask potential Suppliers. The Supplier’s response is a self-declaration that none of the exclusion criteria apply and that they can meet the minimum requirements of any thresholds (turnover, insurance cover, etc.). The intention is that the Buyer only has to check the evidence from the successful suppliers, although they can ask for evidence at any time during the process. The Supplier’s response can also include links to online copies of certificates or other evidence which means that they do not have to provide additional copies to the Buyer.

      The European Commission (EC) have developed a demonstration version of a simple online ESPD. The EC demonstrator doesn’t allow the Buyer to specify pass/fail criteria, or set thresholds, but the underlying system is capable of handling a more sophisticated interaction, so that it is possible to automatically score the responses. The intention is that if a Supplier has banked all of the relevant answers required in the ESPD request, then they can answer with the click of a mouse and system will evaluate all of the responses for the Buyer.

      The ESPD was implemented by Regulation (EU) 2016/7 of 5 January 2016 and so should technically have been used by all Contracting Authorities in England and Wales since 25th of January. The legislation is running ahead of the available infrastructure though and so there are transitory arrangements in place until 18th October 2018. The ESPD must be in electronic format and so there will be online systems (such as in Tenders Direct and myTenders) where buyers can select the questions they want to use (or reuse previous ESPDs) and suppliers can save their answers for later reuse and keep an updated online database of certificates and supporting documents.

      We’ll provide more information on how the ESPD will be implemented in Tenders Direct and myTenders as soon as we have a firm date for release.

      Kind regards,
      Line Olsen

7. Hi,

   This is a really useful article. As a SME with no bid writer or bid unit, I welcome the abolition of the PQQ stage. A PQQ for a large procurement does involve a large amount of resource to be dedicated to it, and the ITT stage can involve the same amount. I’d rather do all of it in one go. It is hard enough to get people to slot in time for 1 stage of a procurement let alone two. In addition the team has to re-engage and get up to speed with the opportunity twice. Even at the PQQ stage we will have discussions bout the strategic merit of getting involved. Those debates are had a gain at the ITT stage, based on new or more detailed information contained in the ITT documents. Give us it all at once, it will save me time

   1. Hi,

      Thank you for your comment. You make some very good points, but I am not sure I fully agree with you. You probably do save some time doing it all in one go, but is that time worth it when you weight it up against the contracts you end up not winning because in the end you were found not suitable?

      With the new rules the contracting authorities have to take care with the suitability questions, as to not make them overly complex or unreasonable when compared to the value of the contract. There is the standard questionnaire when the value is above EU thresholds. And then there are the requirements to allow suppliers to self certify that they are suitable, removing the burden of providing proof of certificates and other documents. These steps have been put in place to make it easier and less time-consuming for suppliers to complete the questionnaires.

      The questionnaire is now supposed to be an exercise of ticking the boxes and only needing to provide the evidence of what you promise if you win. I know, it is never going to be as simple as that in reality, but I do believe we will start to see this part of a procurement process becoming simpler and less time consuming. Once that happens, the most time consuming part of the process will be preparing the bid. For suppliers there are two advantages to a pre-qualification stage; first you make sure you are considered qualified before you put too much effort into writing a full tender; second you limit your competition and can select to put in the time only where you have a fighting chance of winning. By abolishing prequalification you have to prepare a full bid every time regardless of whether you are qualified to do the work and with no inclination as to how many other suppliers you are competing against.

      What would really save your time is getting ALL the relevant information at the time of publication of the contract notice, regardless of the procedure. I think that an argument can be made that the new public contracts regulation 2015 makes this a requirement now also, at least for EU procurements.
      Regulation 53 requires contracting authorities to provide electronic access to procurement documents from the date of publication in the official journal. Regulation 2 defines procurement documents as any documents that “describe or determine elements of the procurement”, for instance the technical specifications, proposed conditions of and applicable obligations among others. This definition combined with the rule of electronic access from the start should be seen as an obligation to provide ALL documents from day one, including the information previously only sent out at the ITT stage.

8. I agree fully with the author re cost of bidding we have walked away from tenders which are open itt as you have no idea of how many people are bidding and therefore cannot make a sensible assessment of your chances

9. Hi
   It’s very good article and I agree with your views that removing PQQ stage from low value procurement does not necessarily give more access to smaller organisations for the reasons you have mentioned.

   I work for a medium size RSL and can see the changes around PQQ would only add problems for us. Even though I am clear about most of what has been suggested, could you please let me know if that’s what your understanding on the points below-

   1. In low value procurement, PQQ is prohibited, however we can ask suitability assessment questions. That means I can ask for some of the policies and financial information as part of my ITT, give some % weighting and then evaluate this part (exactly the same way as PQQ) along with the price and method statement. Then based on overall score, decide the Interview stage. Can I do this?

   2. In OJEU procurement, we have to use the standard PQQ as issued by Crown Commercial Service. I can see there is very strict guidance on using the PQQ and not deviating from it, can I add additional questions in part-6 & 7. In part-6, I want to add as 6.6 the References details. In part-7, can I add the Quality, Training and Customer care Policy as point F, G &H? I can justify this because I want to make sure that the supplier has a good quality, training and customer care policies.

   3. The new PQQ is more like a tick box when it comes to policies/evidence etc. and can only be asked after the final tender evaluation decision. What if at that point you find that the evidence/policies are inadequate, what would you do?

   4. Will I be deviating if I ask to see the copies of the policies/evidence at the PQQ stage?

   5.We need to identify the risk and protect our organisation at early stage and not at the point of awarding the contract. I can’t understand the logic behind this.

   Looking forward to your response/opinion.
   Regards

   1. Hi Anil,

      Thanks very much for your comments. My views on the points you have raised follows below. It’s worth bearing in mind that these are new regulations and so until we see some challenges in the courts in some cases it might be difficult to predict the outcome.

      1. Below threshold – Suitability Assessment
      Regulation 111 sets out what is permissible in assessing suitability for below threshold procurement. I think it is quite clear that the prohibition is aimed at a separate pre-qualification stage such as you would find in a Restricted procedure. You are effectively limited to an Open type procedure, but all this means is that the qualitative selection process takes place at the same stage as the evaluation of the tender. You can ask suitability assessment questions, i.e. information or evidence for the purpose of assessing whether candidates meet requirements or minimum standards of suitability, capability, legal status or financial standing, provided they are relevant to the subject-matter of the procurement and proportionate.

      In a below threshold procurement exercise such as you describe, you can therefore assess a candidates suitability as the first step in the evaluation process. If they do not meet the minimum standards then you can exclude them from the rest of the process and do not need to evaluate their tender any further. What you cannot do though is rank the responses of candidates who meet the minimum standards and only evaluate the top 5 as you might have done under a Restricted procedure previously.

      What you describe is therefore not quite correct in that suitability assessment is a Yes/No type exercise where a candidate either passes or fails. There is no score to incorporate into the overall evaluation.

      2. Above threshold – Additional PQQ questions
      The guidance reads that you should select from the core/additional questions and not deviate from the wording. The guidance also reads that if you wish to include additional project specific questions they should be relevant and proportionate. Even though the guidance allows additional questions, I suspect this would be considered deviating from the original wording and would need to be justified. If you can argue that the questions are relevant and not unreasonable when looking at the size of the project then I suspect this would be acceptable.

      The rationale of this new approach is to make it easier for candidates to provide the information. If every authority changed the wording or added their own additional questions it would frustrate the aim of being able to use the same responses each time a PQQ is submitted.

      3. Above threshold – Assessment of quality, training and customer care
      The tick box approach of the PQQ to equality, environment and health and safety is to assess whether the candidate meets the legal requirements.

      If quality, training and customer care are important factors in your procurement exercise there is nothing to prevent you from evaluating them in the tender and giving them a score. You just cannot use them as a reason for exclusion.

      4. Above threshold – Evidence of suitable policies at PQQ stage
      The general principles of the guidance are that you should allow the suppliers to self-certify that there are no grounds to exclude them, and for contracting authorities to only obtain this information from the winner once the decision has been made. Although the guidance allows for this to be obtained at an earlier stage if necessary, I suspect this will be considered acceptable only as an exception from the norm.

      As in my answer No. 4 above, I do not believe that it is permissible to use policies as a qualitative selection measure unless they comply with statutory requirements. The standard PQQ allows you to determine statutory compliance and so there is no need to ask for copies of the policies, etc.

      5. Above threshold – Self-certification
      The reasoning behind this is simple (in theory); it is meant to reduce the administrative burden on both suppliers and buyers. Suppliers will not be required to spend time and money to provide the contracting authority with documents unless they win. Contracting authorities will not need to spend time checking a huge pile of documents; they will only need to make sure the winner’s documentation is satisfactory.

      I am sure though that there will be examples where a supplier self-certifies even though they do not meet the requirements. The new rules do have measures to discourage suppliers from doing this. Regulation 57 (8) (h) (i) opens up for excluding suppliers that misrepresent information about their suitability and regulation 57 (12) show that suppliers could face being banned from participating in public procurement for three years to further discourage this behaviour.

      It might be sensible to make sure that your suppliers are fully aware that they will be excluded and could be banned for 3 years if they provide inaccurate or incorrect information.

      Even if there are some occurrences of misrepresentation it should reduce the overall amount of work required across all the procurement exercises you run during the year, as there will be considerably less documentation to check and store.

10. Hi, In regards to ‘Low Value Procurements’ I had the understanding that PQQ’s were permitted for sub-OJEU Works that where above £172,514 in value:

    Chapter 8 Regulation 111. Assessing suitability refers to all procurements below £172,514 (Supplies, Services AND Works). By the fact that it is contained within Chapter 8 it doesn’t apply to below £25k procurements (for Sub-central authorities), but I think that is an error of drafting – unless there’s another convoluted exception)

    This means that:
    a.Between £25k and £172,514 low value procurements MUST NOT include a PQQ (although Suitability Assessment Questions may be asked), MUST NOT be restricted, MUST be of an open nature.

    b.Works procurements between £172,514 and £4,332,012 can include a pre-qualification stage.

    Look forward to your response/opinions.

    1. Thank you for your comment. You are correct, the PQQs are indeed permitted for some works where the value is below the EU threshold. In fact, on closer look this is also true for the social and other specific services too (the new Part B services).

       The drafting of the regulations makes it hard to read and, in my opinion, Regulation 111 contradicts regulation 109 in a way. This is complicated further by the fact that when you look at regulation 111 you have to look at regulation 109 AND 5 and when looking at regulation 5 you then have to look at Article 4 of the EU directive. You have to keep your wits about you to get it right.

       Regulation 109 reads that chapter 8 does not apply when the value of the notice is below the national thresholds or above the EU threshold. Regulation 111, however, changes the parameters of the EU thresholds and implies that, for the purpose of Chapter 8, the EU supplies and services threshold is the higher threshold for ALL procurement types (including works and social and other specific services). This is further supported by the Crown Commercial Service’s own Policy Note (page 3) on the matter where it clearly reads that the prequalification stage is not permitted in ANY procurement below the thresholds set for goods and services. This does, in effect, leave many works and social and other specific services out with the coverage of the regulations.

       So here is what it all means:

       Regulation 5 (1) applies different thresholds for the following categories:
       (a) Works
       (b) Supply and Services awarded by Central Government
       (c) Supply and Services awarded by Sub-Central authorities
       (d) Social and Specific Services

       When looking closer at Regulation 111, paragraph 2 and 3, I can see that it has to be read as: Where the procurement is that of (a) or (d) (i.e. works or social and specific services) regulation 111 only applies if the threshold is below that of (b) or (c) (i.e. Supply and Services).

       So in reality, regulation 111 only has thresholds for two categories:
       All procurements awarded by Central Government – Threshold is £111,676
       All procurements awarded by Sub-Central authorities – Threshold is £172,514

       To sum up, PQQs and prequalification stages (restricted procedure) are NOT permitted for:
       Sub-Central authority when the value of the procurement is above £25k and below £172k.
       Central Government when the value of the procurement is above £10K and below £111k.

       As aforementioned, this does mean that for works and social and other specific services below the EU thresholds, but above the £172k/£111k value, neither Regulation 107 nor 111 applies. On paper, it looks like contracting authorities are therefore free to do whatever they like for these procurements – not having to consider the Cabinet Office guidance at all. I doubt that this was their intention.

11. Great article and one which I wish I had access to during my less than fruitful discussion with the Scottish Government. I would have to agree that there is a clear lack of effective instruction from government to Local Authority. Indeed I have been advised by government that once the new legisation is passed to Local Authority it is down to them to manage effectively with no further input from government. It was insinuated that as such most Local Authorities will choose the path of least resistance, hence the incorrect decisions to inflict this awful procedure on all contracts irrespective of value. I would say that the private sector has coped with procurement in a far more efficient manner by simply pre-qualfying a company once and placing a responsibility on that company to provide any new or other pertinent information on an annual basis which may change a companies standing. Filling in PQQ’s for ecah and every public contract is a gigantic waste of time and money for all parties with absolutely no clear benefits gained from the process. It is purely an academic process which ticks boxes and I’d be glad to see the back of it. I can also say that PQQ’s have not changed the way we conduct our business (demolition) one little bit and there is often nothing to be gleaned from a paper exercise which would allow a client to better assess our worth. Prcouremtn in my field had worked just fine for decades and as the old addage goes ‘If it isn’t broken, don’t fix it’.

    1. Hi Craig,

       Thanks for your comment.

       First, let me clarify that the Public Sector Regulation 2015 regulates England. Scotland has not transformed the new EU directive into new regulation for the public sector yet, though they are expected to do so by the end of this 2015. As far as I know, the provisions that restrict the use of PQQs will not be part of the Public Sector Regulation in Scotland.

       If you participate in procurement in England, you are probably still going to have to fill out questionnaires similar to PQQs I am afraid. The provisions do not prevent questionnaires aimed at assessing the qualifications of a supplier and their suitability to perform. For low value procurements, it is only the prequalification stage that has been abolished. This means contracting authorities cannot prequalify suppliers before inviting them to bid. So all suppliers will now have to send in a full bid for all contracts they want to compete for regardless of whether they are qualified to do the work or provide the goods/services.

       You do however have more power to complain if those types of questions are not relevant or proportionate to the contract. Should you come across this in any contract opportunities you can take use of the Mystery Shopper Scheme to raise concern about the contracting authority’s practice. You can read more about the scheme here: https://www.gov.uk/government/publications/mystery-shopper-scope-and-remit.