Category: Politics of Procurement

Changes to procurement policy: Supplier relief due to COVID-19

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Businesses of all sizes are feeling the impact of the coronavirus pandemic, and on March 20th the Cabinet Office issued reassurance to suppliers with the Procurement Policy Note: Supplier relief due to COVID-19. The document serves as guidance for public sector bodies on protecting suppliers, their workforce and supply chains, helping to ensure service continuity now and into the future. 

The policy changes have been put in place with immediate effect until 30 June 2020, and the key actions are:

  • Urgent review of contract portfolio and inform suppliers who they believe are at risk that they will continue to be paid as normal (even if service delivery is disrupted or temporarily suspended) until at least the end of June.
  • Put in place the most appropriate payment measures to support supplier cash flow; this might include a range of approaches such as forward ordering, payment in advance/prepayment, interim payments and payment on order (not receipt). 
  • If the contract involves payment by results then payment should be on the basis of previous invoices, for example the average monthly payment over the previous three months. 
  • Ensure invoices submitted by suppliers are paid immediately on receipt (reconciliation can take place in slower time) in order to maintain cash flow in the supply chain and protect jobs.  
  • To qualify, suppliers should agree to act on an open book basis and make cost data available to the contracting authority during this period. They should continue to pay employees and flow down funding to their subcontractors. 

As a supplier, the final point highlights that during this period, you will need to work collaboratively and ensure there is full transparency and operate on an ‘open book’ basis. This means you should share data if requested, to demonstrate the payments you receive have been used in the manner intended.  

The PPN provides full details of how public sector bodies are to respond to issues that will affect contract delivery and are a direct result of COVID-19.

Click here to read the full PPN on GOV.uk

Changes to procurement policy: Responding to Covid-19

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On March 18th, the government acknowledged the strain on the public sector by making changes to procurement policy, and ensuring resources can be sourced as a matter of urgency.

These policy changes allow for the following:

  1. direct award due to extreme urgency;
  2. direct award due to absence of competition or protection of exclusive rights;
  3. call off from an existing framework agreement or dynamic purchasing system;
  4. call for competition using a standard procedure with accelerated timescales;
  5. extending or modifying a contract during its term.

What does this mean for suppliers?

If buyers can demonstrate that they have an ‘extreme urgency’ for goods, services or works, and/or there are no other suitable suppliers, they can enter into contracts without competing or advertising as long as they have satisfied several criteria categories. On top of this, buyers also have the ability to make changes or extend existing agreements.

For accelerated timescales, you will have to pay very close attention to tender notices:

  • Check your tender alerts thoroughly.
  • Make sure you have the people and resources needed to complete your bid.
  • Ensure your pricing strategy works for your business.
  • Check you have addressed all the key criteria.  

For suppliers providing ‘non-urgent’ goods and services

Despite uncertainty with other industries, the public sector will always have a requirement for goods and services. In the last week, the number of tender notices published for the UK was 1613, which is not far off the weekly average of 1664 seen in 2019. Looking across the UK, ROI and EU, there are around 25,000 live notices.

There is reassurance in knowing that there is still a drive to maintain normality during such unprecedented circumstances. We will be keeping a close eye on these figures and letting you know if there are significant changes and providing you with more insight into the sectors that may be affected.

We hope your workplace has not been affected too dramatically by the unprecedented situations caused by COVID-19.

Wishing you the best of health.

Free Webinar: ESPD for Buyers

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ESPD Buyer Webinar

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.

Book my space

Comment on De La Rue taking steps to appeal against passport decision

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UK passport

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

Public Procurement thresholds 2018/2019 – updated

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New Public Procurement thresholds 2018/2019

New Public Procurement thresholds 2018/2019

* 2020/2021 Public Procurement Thresholds Update Available here *

Public Procurement thresholds 2018/2019 – updated

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.

 

Public Contracts

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
[1] With the exception of the following services which have different thresholds or are exempt:
– Social and other specific services (subject to the light touch regime) Article 74.
– Subsidised services contracts specified under Article 13.
– Research and development services under Article 14 (specified CPV codes are exempt).
[2] With the exception of subsidised works contracts specified under Article 13.
[3] As per Article 74. Services are listed in Annex XIV.
[4] Schedule 1 of the Public Contracts Regulations lists the Central Government Bodies subject to the WTO GPA. These    thresholds will also apply to any successor bodies.

 

Social and other specific services are subject to the ‘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 £363,424

€443,000

 £4,551,413

€5,548,000

 £820,370

€1,000,000

Defence and Security Contracts

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

 

Clarifications

Concession Contracts

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:

  1. This Directive shall apply to concessions the value of which is equal to or greater than EUR 5 548 000.

The Sterling equivalent is £4,551,413

Calculating Estimated Value

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.

Contracts Subsidised by Public Funds

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.

What are Small Lots?

Read our blog about small lots.

How do I Know if a Contract is Classed as Works?

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.

 

Procurement in the 2017 Manifestos – The Facts

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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 msurvey-2316468_1280ay 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.

Conservative

Labour

Lib Dem

PC

SNP

UKIP.png

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.

 

Millstream Logo

 

References/links to Manifestos:

Conservative Party Manifesto

Labour Party Manifesto

Liberal  Democrat Manifesto

Plaid Cymru Manifesto

SNP Manifesto

UKIP Manifesto

Brexit: A “historic moment from which there can be no turning back” – but what does it mean for public procurement?

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eu-1473958_1920After 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!

Procurement terminology: what are ‘small’ lots?

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In public procurement, lots, and in particular ‘small lots’ small lotare 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?”

Tendering in Ireland: A new era of fair procurement practice?

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clover-445255_1920

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?”

New Public Procurement thresholds 2016/2017

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* 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.

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