The new UK Public Contracts Regulations came into force yesterday, 26th February 2015. As we’ve commented in other posts on this blog the regulations impose some new statutory obligations on public sector bodies which are designed to increase the number of small and medium sized companies bidding for and winning public contracts.
The two most major changes that are having an immediate impact on public bodies are:
- All contracts with a value estimated to be greater than £25,000 (£10,000 for central government) have to be advertised on the Crown Commercial Service website Contracts Finder. This requirement doesn’t just apply to contracts between £25,000 and the European threshold of £172, 514 (£111,676 for central government), it also applies to notices published in the Official Journal (OJEU), so procurement officers will have to enter the information on one system for the OJEU and then on another system for Contracts Finder. To add to the confusion you are not allowed to publish an OJEU notice on Contracts Finder until it has been published in the Official Journal.
- The second change is an obligation to make all of the procurement documents available online at the same time as the contract notice is published. The term ‘procurement documents’ is defined quite widely and is intended to include the full tender specification and all the supporting documents, not just a pre-qualification questionnaire, so that any interested supplier can understand the full requirements before deciding to proceed.
myTenders Pro, which is managed by Millstream who also run Tenders Direct, takes the pain out of these two new obligations.
- Using mytenders Pro to compile and publish contract notices means they can automatically be submitted them to both Contracts Finder and the Official Journal without the information having to be typed in twice and all of an organisations contract notices can be managed and controlled in one easy to use and low cost service (Regulations 106 & 110).
- Public bodies can also provide unrestricted and full direct access free of charge to the procurement documents from the date of the publication by making them available to download from myTenders (Regulation 53).
- Suppliers can submit their completed bids in a secure online postbox which allows procurement officers to reduce the minimum timescales of OJEU procurement but also to prepare for the statutory requirement to conduct fully electronic eprocurement (Regulation 22, not mandatory until October 2018).
We first developed the myTenders procurement portal in 2002 and it now powers Public Contracts Scotland, and Sell2Wales as well as introducing electronic tendering in Ireland and Norway with the eTenders and Doffin websites. The system is in regular use by 11,000 procurement officers and more than 140,000 suppliers, so it has been very thoroughly field tested. We take the hassle out of publishing over 10,000 OJEU notices every year for our public sector customers and a further 25,000 notices for contracts under the OJEU threshold, mini-competitions, etc.
Our dedicated UK help desk provides unlimited support by phone or email to both public sector procurement staff and also their prospective suppliers. Our friendly and knowledgeable staff have years of experience and many are qualified to postgraduate level in the policy and law of public procurement.
Our Information Security system is accredited to ISO 27001 and we are a supplier on the Government’s G-Cloud 6 digital marketplace.
If you are a public sector purchasing officer and are interested in finding out how myTenders Pro can take some of the pain out of these new obligations give us a call on 0844 561 0670 or click here to find out more.
Although the public sector are generally quite good at paying on time a new requirement in the Public Contracts Regulations is that every public contract must stipulate that payment is made within 30 days from the receipt of a valid invoice (Regulation 113).
Perhaps even more importantly any subcontract awarded by the successful contractor must contain the same 30 day payment terms from the contractor to the subcontractor.
This requirement applies to every contract in the supply chain no matter how far removed from the contracting authority.
There are certainly many cases in the past where a contractor at the top of the supply chain has been paid on time, but delays payment to its suppliers which has an adverse ripple effect as the delay increases further down the chain. This new provision should hopefully ensure that such behaviour is a thing of the past.
Public bodies will be required to publish annual statistics setting out the proportion of invoices paid on time, the liability to pay interest and the actual amount of interest paid.
Click here to find new business opportunities on Tenders Direct
Today’s Telegraph includes an article about the new Public Contracts Regulations 2015, which will come into effect at the end of this month. As well as implementing the European public contracts directive (Directive 2014/24/EU), these new Regulations introduce a number of measures, collectively known as the Lord Young Reforms, that aim to help small firms win more government contracts.
One of these reforms, the removal of the pre-qualification questionnaire (PQQ) process, while undoubtedly well intentioned will instead significantly and adversely affect the ability of small firms to win public sector contracts.
All firms being considered for a government contract will still require to be qualified, e.g. to have adequate financial strength, appropriate levels of insurance, quality management processes and a track record of having successfully completed similar contracts. The ban on PQQ’s, simply moves the qualification process from a separate preliminary stage and instead embeds it in the first stage of the full tender evaluation.
This means that instead of completing a relatively short questionnaire to demonstrate their qualifications, a candidate for a public contract will have to provide exactly the same information as part of their tender, but will also have to complete a full tender proposal. A full tender proposal will often consume a very significant amount of time and resources.
If a company would have failed the qualification exercise under the PQQ system they will still fail, but the process will have cost them much, much more. In my view it is inevitable that over time this will lead to far fewer small companies submitting tenders for public contracts.
There will also be a much greater cost imposed on the public bodies who are evaluating the tenders submitted. Instead of evaluating perhaps 5 or 10 tenders from qualified candidates, they will have to carefully evaluate all of the tenders that are submitted to them.
In his second report on small firms, ‘Growing Your Business’, Lord Young, the PM’s adviser on enterprise, recommends the removal of pre-qualification questionnaires across the public sector for all contracts below the EU threshold of £173,934.
According to the report, Lord Young believes that the “abolition of PQQs together with the replacement of completion bonds by an insurance scheme would transform the opportunities for small firms and result in a stronger SME sector and at the same time save the taxpayer considerable expenditure”. In this he is building on the initiative of Francis Maude, who scrapped PQQs for central government early in 2011.
Although a well intentioned initiative to enable access to public contracts for SMEs, this is a badly flawed policy that will have exactly the opposite effect. It sounds beneficial to remove bureaucracy from the tender process, but what is actually being removed here is the ‘pre’ element. The qualification questionnaire would still remain, but instead it would be bundled with the full tender response.
This dramatically increases the workload for any company wishing to bid as a full proposal is now required, together with the qualification information. This may be acceptable to a larger company that is confident of winning a high proportion of its bids, but disastrous for any SME’s making a more speculative approach.
It’s undoubtedly true that many PQQs have gold-plated requirements and even more frustratingly each organisation require answers to essentially the same questions in a different format. What is actually required is a reform of the qualification process that efficiently assesses the capability of a supplier. This should be standardised across the public sector so that it only has to be completed once a year.
The final revisions to the EU procurement directives are due next month. The main changes, so far, are as follows:
1. Greater involvement of small companies (SME’s)
Selection criteria must be “appropriate” and “related and strictly proportionate” to the subject matter of the contract. If they are used minimum turnover requirement must be no more than three times the contract value and insurance requirements must also be proportionate.
Purchasers will be required to divide tenders into lots wherever possible or provide an explanation of why they haven’t.
2. Financial Thresholds
Purchasers claimed that the rules made tendering more expensive and time consuming and would have liked the thresholds increased to remove the requirement for smaller contracts. In reality the market is more open through increased visibility of opportunities. The lengthy tender process is frequently due to poor organisation.
3. Changes to contracts
Changes to the terms of a contract have always been allowed where they are not material. Materiality is now defined as changes affecting less than 5% of the value.
As it’s our core business, I’m delighted to see the moves towards e-procurement. Contract notices must be submitted online and tender documents must be available for download when the notice is published.
5. In-house suppliers
A purchaser using its own resources to fulfil a need, has always been allowed. The test for in-house provision is set out in three parts:
- Control must be as if the contractor were an internal department;
- 80% or more of the contractor’s turnover is for the authority; and
- There is no private ownership.
6. Part A and B Contracts
I’m pleased to say that the artificial distinction between Part A & B categories of services will be removed. Part B services which previously haven’t subject to most of the rules, cover requirements such as accountancy, legal services, health and social services. There are of course national restrictions related to qualifications, etc., but if for example a UK company can satisfy French rules, why shouldn’t it bid for a contract in France on the same terms as a French supplier?
New rules that will allow government departments to ban companies and individuals which take part in failed tax avoidance schemes from being awarded Government contracts have been unveiled by Chief Secretary to the Treasury, Danny Alexander and Minister for the Cabinet Office, Francis Maude today, Thursday 14th February.
Many large companies make massive profits from their participation in government contracts and I suspect that few tears will be spilt by taxpayers if any company is excluded from future contracts because it hasn’t being paying the ‘correct’ amount of tax on those profits. Whenever the government intervenes there are always concerns about yet more bureaucracy (especially for SMEs), the scope for subjective decision making beyond existing tax law, but it is also interesting to see how this fits as part of the wider ‘mood music’ from government and their relationship with larger companies.
The rules, which are proposed to come into effect on 1 April 2013, are outlined in draft guidance published for consultation by the Government. They will require potential suppliers to notify contracting departments of their recent tax compliance history, and specifically to tell the department if any tax return has recently been found to be incorrect as a result of:
- HMRC successfully challenging it, including under the new General Anti-Abuse Rule (GAAR); or
- a failed avoidance scheme which the supplier was involved in and which was, or should have been, notified under the Disclosure of Tax Avoidance Scheme (DOTAS) rules.
Suppliers will also be required to disclose if they have been convicted for tax related offences or have been subject to a penalty for civil fraud or evasion. Continue reading “Tax avoiders excluded from government contracts”
At midnight last night the Department of Transport released the following announcement:
Transport Secretary, Patrick McLoughlin, said “I have had to cancel the competition for the running of the West Coast franchise because of deeply regrettable and completely unacceptable mistakes made by my department in the way it managed the process.”
Bombardier Zefiro High Speed Train
Any of us who tender for public contracts are only too fully aware of the sometimes less than perfect award criteria and a decision making process that owes more to being able to write a creative tender, stuffed with ISO standards, Prince2, ITIL and other accreditations, rather than a process that identifys the most suitable supplier, but how can things go so wrong with such a high profile decision?
Continue reading “West Coast Rail Franchise – the latest procurement fiasco”
Earlier this summer the Department of Health published two documents aimed at improving procurement within the NHS. The first titled NHS Procurement:Raising Our Game is guidance setting out the immediate steps that the NHS needs to take in order to save £1.2 Billion of the current £18 Billion annual procurement spend under the Quality, Innovation, Productivity and Prevention (QIPP) programme. The second document NHS Procurement Standards sets out the standards against which Trusts should be measuring themselves in order to ensure that they improve procurement performance and ensure Value for Money (VfM).
Continue reading “Improving NHS Procurement”
Millstream, the company behind the Tenders Direct service, has secured a £4.8million deal to run Norway’s national procurement database, cementing the company’s expertise in connecting suppliers with public sector buyers.
Alex Salmond, First Minister of Scotland
Scotland’s First Minister Alex Salmond has praised the contract win, citing it as an excellent example of Scottish companies developing strong ties with Norway, a key export partner.
Continue reading “Millstream wins £5 million contract to provide national procurement website for Norway”
An investigation into the corruption of civil servants has concluded at Belfast Crown Court after all four defendants admitted their involvement. The case centred around payments to show favour for the tendering and continuation of CCTV contracts in Northern Ireland.
Their guilty pleas mark the conclusion of a joint investigation by the Serious Fraud Office and the Ministry of Defence Police, into bribery allegations, which began in 2002.
Continue reading “MoD civil servants plead guilty in CCTV contract corruption case”