Are you ready for ESPD?
Join us at 1.00pm on Thursday 19 April for a free webinar to find out more about how to create an ESPD request. We’ll also explain more about the different versions of ESPD as well as what impact Brexit will have on the document.
With the recent news* that British company De La Rue are looking to initiate appeal proceedings against the government’s decision to award the contract to make UK passports to French-Dutch company Gemalto, Penny Godfrey, General Manager of Millstream, comments:
“There are great benefits to British companies that have the opportunity to bid for European contracts and our public sector has to reserve the right to invite bids from outside the UK – these principles could shape how competitive our economy will be after Brexit. In this instance we must be aware that this display of political or domestic preference could be riding roughshod over fair market principles.
“De La Rue has the right to appeal the Government’s decision, but will have to base that appeal on a breach of wider procurement rules. There is no clear definition of what constitutes an abnormally low tender offer, but the risks to the contracting authority of an unsustainably cheap offer are clear: poor performance, the potential for hidden costs, and, ultimately, incurring the additional cost of re-tendering if things go awry.”
*Related article: http://www.bbc.co.uk/news/business-43623750
With the ongoing uncertainty over whether or not Brexit negotiations will result in an agreement, changes to public procurement remain a distinct possibility (see our blog on the UK Government’s contingency for e-procurement in the event of a “no-deal” scenario).
Despite this, it is important to remember that the regulatory framework for public contracts will remain in place in the UK for the foreseeable future regardless of the outcome. EU Public Contract Regulations were passed into UK law in 2015 and will remain in place unless or until they are repealed and replaced.
Considering the time frames involved in formulating and ratifying new legislation, the thresholds detailed below will almost certainly remain in effect until the end of 2019 regardless of the outcome of the negotiations.
When procuring goods or services over the financial threshold a public authority must do so under the Public Contracts Regulations 2015 in England, Wales and Northern Ireland and the Public Contracts (Scotland) Regulations 2015. These regulations transposed the European public contracts directive (2014/24/EU) into national law.
The main point of interest from our readers’ perspectives is that buying organisations must advertise any requirement over the new thresholds in the Official Journal of the European Union (OJEU), rather than just advertising it nationally. The calculation of the estimated value of a procurement shall be based on the total amount payable, net of VAT, as estimated by the contracting authority, including any form of option and any renewals of the contracts as explicitly set out in the procurement documents.
Between the 2016/2017 thresholds and the 2017/2018 thresholds we have seen a small increase in the thresholds in both Pounds Sterling and Euros. Due to the relatively small increase it is unlikely that buyers or suppliers will notice much change in the size of contracts advertised at European level.
Supply, Services[1] and Design Contracts |
Works Contracts[2] |
Social and other specific services[3] |
|
Central Government[4] |
£118,133
€144,000 |
£4,551,413
€5,548,000 |
£615,278
€750,000 |
Other Contracting Authorities |
£181,302
€221,000 |
£4,551,413
€5,548,000 |
£615,278
€750,000 |
Small Lots |
£65,630
€80,000 |
£820,370
€1,000,000 |
n/a |
Social and other specific services are subject to the ‘light touch regime’ as described in a previous blog.
| Supply, Services and Design Contracts | Works Contracts | Social and other specific services | |
| Utility Authorities | £363,424
€443,000 |
£4,551,413
€5,548,000 |
£820,370
€1,000,000 |
| Supply, Services and Design Contracts | Works Contracts | Social and other specific services | |
| Defence and Security authorities
|
£363,424
€443,000 |
£4,551,413
€5,548,000 |
n/a
|
For the first time Concession Contracts are covered in EU Law under a separate directive and therefore separate regulations in the UK.
The EU Directive is found here:
http://eur-lex.europa.eu/legal-content/GA/TXT/?uri=celex:32014L0023
The UK regulations here:
http://www.legislation.gov.uk/uksi/2016/273/contents/made
The UK Directive outlines how the value of a concession contract should be calculated:
http://www.legislation.gov.uk/uksi/2016/273/regulation/9/made
The thresholds for publication in the OJEU refers to Article 8 (1) of the EU Directive which is:
The Sterling equivalent is £4,551,413
The calculation of the estimated value of a procurement exercise shall be based on the total amount payable, net of VAT, as estimated by the contracting authority, including any form of option and any renewals of the contracts as explicitly set out in the procurement documents.
All applicable contracts which are subsidised by 50% or more of public funds must be advertised in the OJEU. From time to time a public body may part fund a project and request that the recipient of funding must advertise the procurement in line with public contracts regulations even if their contribution is less than 50% of the overall value. As such any recipient of public funding on a project should verify with the funding body what is expected of them in procuring for the project.
Read our blog about small lots.
Many contractual requirements are a mixture of works and services. Whichever element is the highest in value should be taken as the contract nature when determining what threshold to apply. If you are unsure whether a specific element is classed as works or services then you can refer to Schedule 2 of the regulations which lists all activities which constitute works by CPV code:
http://www.legislation.gov.uk/uksi/2015/102/schedule/2/made
If the CPV code which fits your requirement is not in that list then it is not classed as a Works contract.
Tenders Direct can alert you to suitable public contracts as soon as they’re published. Visit our website or call us on 0800 222 9009 to learn more.
With recent global, politically disruptive events such as Brexit and the election of Donald Trump, there were already enough question marks floating around about what it would all mean for UK public sector procurement.
So now with the added and unexpected complexity of the 2017 General Election in just one week’s time, procurement professionals and suppliers m
ay be wondering what changes procurement may face 12 months down the line.
At Millstream, we have taken a look at each of the main party’s manifestos to see what mention there is of procurement, and also if there are any major policies that might impact the sector. NOTE: Text in italics is lifted directly from the manifestos.
So there you have it – Labour and UKIP have produced definitive actions regarding procurement which would have significant impacts on how the public sector procure goods, services and works. The other parties, focusing their messages on encouraging SMEs and localised spend.
Whatever your choice on 8th June, it is good to know how your vote might influence your job or your business.
References/links to Manifestos:
After the referendum result last June and the resulting legal challenges, parliamentary debates, votes and royal assent (not to mention the debates down at the pub and on social media) Prime Minister Theresa May has finally triggered Article 50 notifying the European Council of the UK’s intention to withdraw from the EU. Whichever side of the debate you found yourself on one thing is now clear – the UK is leaving the EU and that is likely to have a huge impact for us all.
Unfortunately, but unsurprisingly, the PM’s letter to the European Council triggering Article 50 made no specific reference to public sector procurement – it’s unlikely to be at the top of any agenda – but point v.i. of her “suggested principle” for the negotiation deals with trade.
If any major change is to come in relation to public procurement it will be as a result on the outcome of the negotiations relating to trade between the EU and the UK. It is important to note that at present and until the negotiations are complete and the UK leaves the EU, the procurement regulations will remain the same. The European Council’s Directive on Public Procurement has been transposed into UK and Scottish law by the current Public Contracts Regulations 2015 and Public Contracts Regulations (Scotland) 2015 respectively. After exiting the EU, the UK will have the option of amending or replacing these regulations but it seems unlikely that they will change drastically.
All EU member states have roughly the same ambitions when it comes to public sector procurement – openness, transparency, fairness, VfM, increasing access for SMEs – and therefore the current regulations were designed with these in mind.
If you were hoping for a removal of perceived EU “red tape” in public sector tendering I believe you’ll be disappointed. Indeed, you may instead experience some “red, white and blue tape” as the UK lawmakers amend the relevant regulations whilst ensuring that all the principles of good public procurement processes remain in place.
If the UK is to become part of the European Economic Area, a status held by the non-EU countries of Iceland, Norway and Liechtenstein then very little is likely to change. The EEA countries are bound by their membership agreement to follow the principles of EU public procurement and all three countries advertise their above threshold procurement requirements in the Official Journal of the European Union (OJEU).
Even if the UK does not join the EEA, it is still a signatory of the World Trade Organisation’s Government Procurement Agreement, which imposes the principles and practices of fair procurement on all its members. The public sector will still need to purchase what it does today and will need to advertise it openly. This may just mean that the opportunities are advertised on national platforms rather than in the OJEU. Either way you can be sure that Tenders Direct will be picking them all up and distributing relevant opportunities to our members!
In public procurement, lots, and in particular ‘small lots’ 
are often an area of much confusion. What is a small lot and what does the small lot threshold mean?
Hopefully this SMALL blog entry will answer a LOT of your questions.
Continue reading “Procurement terminology: what are ‘small’ lots?”
Working with customers in Ireland through our Tenders Direct Ireland service we have traditionally heard anecdotal tales of poor procurement practices. Worrying issues such as cartels controlling certain sectors, bid price rigging and corrupt evaluation processes have all been highlighted not just by our customers but through news sources in Ireland. The net impact of this on the spend of buying authorities in Ireland is catastrophic: an Continue reading “Tendering in Ireland: A new era of fair procurement practice?”
* Click here to view the 2018/19 Public Procurement Thresholds *
The European Commission has confirmed the new financial thresholds to be applied to public procurement. The new thresholds will apply from 1st January 2016 and be in place until the end of 2017.
When procuring goods or services over the financial threshold a public authority must do so under the Public Contracts Regulations 2015 in England, Wales and Northern Ireland. Scotland has not yet transposed the new EU directive and so is still operating under the Public Contracts (Scotland) Regulation 2012. The new thresholds apply to all European Union member states irrespective of whether they have introduced the European legislation, which in any case they must do by April 2016.
The main point of interest from our readers’ perspectives is that buying organisations must advertise any requirement over the new thresholds in the Official Journal of the European Union (OJEU), rather than just advertising it nationally. The calculation of the estimated value of a procurement shall be based on the total amount payable, net of VAT, as estimated by the contracting authority, including any form of option and any renewals of the contracts as explicitly set out in the procurement documents.
The European Union is also a signatory to the World Trade Organisation’s (WTO) Government Procurement Agreement (GPA) and so compliance with the European procurement directives is designed to ensure compliance with the GPA. While European legislation sets out the financial thresholds in Euros, the GPA defines them in the form of Special Drawing Rights (SDRs), which is an asset established by the International Monetary Fund (IMF). The value of the SDR varies daily and is based on the relative values of a basket of currencies consisting of the euro, Japanese yen, pound sterling, and U.S. dollar.While this time around the thresholds have been increased in Euros, the equivalent sterling value has actually decreased because of the strength of sterling against the Euro.
For UK buyers this means that they now have to publish more of their requirements, rather than less, in the OJEU and if anything is going to be more of a burden on their resources as they must adhere to stricter and more bureaucratic rules.
For UK suppliers this means that from 2015 to 2016 more UK contracts but fewer European contracts will be subject to OJEU publication. This could well mean that the competition on our own national contracts from across the channel will be stiffer but anyone from the UK looking to bid on EU contracts will have less opportunity than before.
A corporate blog wouldn’t be a corporate blog without me telling you our solution to the problems. For buying organisation’s in England we provide the myTenders service, which allows buying organisations to manage their OJEU and non-OJEU procurement exercises. Our helpdesk are well versed in EU procurement law, with some working towards the LLM Public Procurement Policy and Law at Nottingham University and another two having already attained distinction in this qualification. For suppliers we provide the Tenders Direct service, providing all the OJEU notices and sourcing all the sub-OJEU notices in the UK to give you our market leading notice alert service.
And so on to the new thresholds. I have provided the previous thresholds for 2014-2015 in brackets for reference.
PUBLIC CONTRACTS
Supply, Services and Design Contracts |
Works Contracts |
Social and other specific services |
|
Central Government |
£106,047 (£111,676)€135,000 (€134,000) | £4,104,394 (£4,322,012)€5,225,000 (€5,186,000) | £589,148 (n/a) €750,000 (n/a) |
Other contracting authorities |
£164,176 (£172,514)€209,000 (€207,000) | £4,104,394 (£4,322,012)€5,225,000 (€5,186,000) | £589,148 (n/a) €750,000 (n/a) |
Small lots |
£62,842 (£66,672) €84,000 (€80,000) | £785,530 (£833,400)€1,000,000 (€1,000,000) | n/a |
Social and other specific services are subject to the new ‘light touch regime’ as described in a previous blog.
UTILITY CONTRACTS
Supply, Services and Design Contracts |
Works Contracts |
Social and other specific services |
|
Utility authorities |
£328,352 (£345,028) €418,000 (€414,000) |
£4,104,394 (£4,322,012) €5,225,000 (€5,186,000) | £785,530 (n/a) €1,000,000 (n/a) |
DEFENCE AND SECURITY CONTRACTS
Supply, Services and Design Contracts |
Works Contracts |
Social and other specific services |
|
Defence and Security authorities |
£328,352 (£345,028) / €418,000 (€414,000) | £4,104,394 (£4,322,012) / €5,225,000 (€5,186,000) |
n/a
|
As ever, please don’t hesitate to let us know what you think by commenting below.
In 2014 the European Union adopted new procurement Directives for Public sector, Utility sector and Concessions contracts. With the reform of the Directives they hope to achieve better access to public contracts for SMEs. One of the measures set into place to do this is the rule encouraging contracting authorities to split contracts into lots. The Public Contracts Regulations 2015 transposed the 2014 Public Sector Directive in February 2015, and with it the “Split your lots” rule. With this blog I hope to make it a bit more clear what a contracting authority is required to do.
Continue reading “SME access by splitting contracts into lots”
What many have failed to realise is that with the Public Sector Directive 2015 the Cabinet Office has introduced strong restrictions on Public Sector Buyers when it comes to prequalification of suppliers and the use of supplier questionnaires.
The use of prequalification procedures has been banned for some procurements and the use of standard supplier questionnaires introduced for others. Contracting authorities that fail to follow these restrictions are also expected to self-report. There is no doubt that these changes will have a big impact on the public sector going forward, and suppliers will be affected as well.
So why has this been introduced?
Continue reading “The ban on PQQs and restrictions for use of supplier questionnaires”
