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.
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?
With suppliers and buyers already busy understanding and implementing the 2015 Procurement Regulations they may find that the landscape shifts again after the general election in May. While the new regulations will stay in force and are unlikely to change with a new government, its important to understand what each of the main parties are saying about procurement and how that might impact the sector in the coming years.
Obviously wider policy initiatives such as NHS spending, defence projects and education reforms will have an impact on procurement but here is what each party has said in their manifesto about specific procurement policies (i.e. how they will change how procurement is conducted):
- Will raise the target for SME’s involvement in procurement raising their share of central government procurement from 25% to 33%.
The official public contracts regulations which govern UK public sector procurement have been published and are coming in to force on the 26th February 2015.
One of the main aims of the regulations and their precursor strategies ( such as Europe 2020 and the Lord Young report) was to encourage more participation from SME companies in tendering exercises and ultimately to get more SMEs supplying to the public sector.
The current government set the lofty target of 25% of government spend going to SMEs by 2015, a target which is a long way from being met so the key questions for organisations looking to supply into the public sector in light of the new regulations are 1) What has changed? and, more importantly, 2) What does this actually mean for me?
What has changed?
Some of the more significant changes in the new regulations are:
- Tendering documents have to be available from the date of OJEU advertisement – no more registering interest and chasing for updates from the contracting authority.
- Reduced timescales for procurement – on average they have reduced timeframes by a third and have introduced the new Accelerated Open procedure for OJEU tenders and have prohibited the use of a PQQ stage for low value contracts.
An inquiry to examine whether a UK scheme allowing publicly-backed funds to invest in Small and Medium Enterprises (SMEs) is being implemented in line with EU state aid rules. The opening of the inquiry gives interested third parties the option to comment on the measure under assessment.
The Audit Commission study found more than three quarters of all fraud was detected by one quarter of councils, and 79 per cent of district councils detected no non-benefit fraud at all. The number of fraud cases detected by local authorities fell to 107,000 cases with a total value of £178 million in 2012-13, but with an overall 15 per cent increase in the average value per case to £1,664.
The UK government has reported half-year savings of £5.4bn, with £1.8bn saved through collaborative purchasing and by using “sensible spending controls”
A report, commissioned by the National Council for Voluntary Organisations (NCVO) and authored by legal specialists Bates Wells Braithwaite , found the payment by results (PBR) mechanism in contracts to have “suffered from crude implementation” which has led to missed opportunities to improve public services.
The government consultation into streamlining the process of bidding for public sector contracts closed on 17 Oct and the outputs are awaited. SMEs represent 99.9% of the UK’s 4.5 million businesses, but just 10.5%of central government spend goes to them, at this time. The government aspiration is for this to be 25% by 2015.
The CBI has published a new statement of transparency principles for public service markets, which sets out performance information every contractor should provide and they believe this should include suppliers making disclosing their profit margins from their contracts.