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When a local tragedy highlights national public procurement concerns

Posted by emilypirie on July 7, 2017

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In light of the recent Grenfell Tower tragedy that shocked the nation, questions are being raised over local procurement policies across the country. Cost effectiveness and value for money are often the paramount objectives as local authorities continue to face budget cuts. It is paramount however that quality, and more importantly safety, is not jeopardised. Finding the right balance between cost saving and procuring services and products that are fit for purpose is key, but ultimately the welfare and well-being of the end user should be the priority.

Any buyer knows that cost doesn’t necessarily represent value or indeed quality but regardless, detailed specifications are there to be met and for a very important reason. What and who determines the specification, and exactly what this entails, is an important question and something buyers throughout the supply chain must be conscious of.

British safety regulations across many industries tend to be based on principle rather than set rules[1] which can create significant challenges to maintaining consistency and standards. Setting higher standards and adhering to best practice, rather than going with the cheapest bid which meets the specification, is something public procurement officers and regulators must consider.

This reinvigorates the debate over who should set these specifications and regulations. Should they be written by ‘experts’ from the relevant department of the contracting authority, or by that authority’s procurement officers? Or should this role be out-sourced to a third party within that particular industry and sector?

For example and in the case of the Grenfell Tower tragedy, there are no regulations stating fire-retardant cladding material should be used on the exterior of tower blocks and schools[2]. However, it has become clear that industry body, Fire Protection Association (FPA), has been lobbying for this to be a statutory requirement within local authorities and businesses.

Within just one area of local government procurement, say for instance housing and more specifically high rise residential buildings, the vast number of tenders and therefore specifications to be met, add to the complexity. Issues around accountability and quality rise as the procurement complexity grows. Combined with a need to cut costs, this becomes a significant challenge to overcome and get right. But get right all parties must.

In coming months as the impending public enquiry into the Grenfell Tower tragedy continues, more questions on how to improve the public procurement system will undoubtedly follow. Regardless of its outcome, more focus will be placed on the decisions that buyers make, transparency, and who is most qualified to set specifications.

Hindsight is a wonderful thing but nonetheless, there are some important lessons our sector can take away from this tragedy. Steps must be taken to ensure buying decisions are not considered a risk factor in the future.

I am keen to find out how you, as Buyers, feel about the responsibilities you encounter on a day to day basis and how you deal with this pressure. Please let me know your thoughts in the comments below.

[1] https://uk.reuters.com/article/britain-fire-cladding-idUKL8N1JD3YI

[1]https://www.theguardian.com/uk-news/2017/jun/16/manufacturer-of-cladding-on-grenfell-tower-identified-as-omnis-exteriors

 

 

 

 

 

Posted in Construction Tenders, Procurement Law, Public procurement | Leave a Comment »

Passive Housing by 2020

Posted by emilypirie on May 24, 2017

building-419204_1920Passive Housing or ‘Passivhaus’ is a building standard that is energy efficient, comfortable, affordable and ecological at the same time.

For buyers and suppliers in the construction industry, the Energy Performance of Buildings Directive was revised in May 2010 and called for all EU member states to require all new builds to be ‘nearly zero energy’ by the 31st December 2020.

What is passive housing?

Passive House characteristics:

  • Passive Houses allow for heating and cooling related energy savings
  • Structurally composed of: timber frames, being stone or concrete framed
  • Low primary energy use in kWh/m2 per year
  • Saving on water consumption
  • Having a ventilation system consistently supplies fresh air
  • Appropriate windows with good insulation

How can you get involved?

So with this legislation on the horizon for 2020, what has Tenders Direct shared for supplier opportunities?

South Dublin County Council are tendering for the Design and delivery of a sustainable integrated mixed tenure housing development in Kilcarbery, Dublin in line with the Kilcarbery Grange Preliminary Masterplan. This development has a capacity for 892 passive housing units.

This Prior Information Notice (PIN) for Housing Management Services lets us know The London Borough of Lambeth is preparing a tender for a scheme of 70 affordable homes. The contract notice will be advertised in the coming months for housing which will abide by the passive house legislation.

In Cardiff, the construction of four adaptive houses and seven bungalows is being tendered for. The properties, under the name of the ‘Holm View New Build’ scheme, will be built in line with the passive housing regulation.

Where are the opportunities?

If you are a construction supplier looking for new business, the ‘Passive House’ is the fastest growing energy performance standard in the world. With 30,000 buildings with this sanction to date, Tenders Direct will be sharing further tender notices as passive housing continues to grow.

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Accepting Electronic Submissions – what does it mean for buyers?

Posted by emilypirie on April 17, 2017

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From the 18th of April 2017, all Central Purchasing Bodies (CPB) will only be permitted to accept electronic submissions to procurement exercises. By September 2018 this requirement will be extended to all public contracting authorities. Whichever type of buying organisation you are, you’ll need to be aware of what this means.

What is a CPB?

This is defined as a contracting authority that acquires goods or services intended for one or more contracting authorities (“buyers”). Examples of CPBs include The Crown Commercial Service, The Scottish Government and APUC (Advanced Procurement for Universities and Colleges) as they procure on behalf of multiple contracting authorities.

What counts as an electronic submission?

Regulation 22 of the Public Contracts Regulations 2015 tell us what we need to know. The main thing to clarify is this – e-mails do not count as electronic submission. Electronic submissions must use a tool where the exact time and date of submission is provided. In addition to this, only authorised persons can access the data and therefore no one has access to the data transmitted prior to the deadline.  Electronic submissions must also include a tool to clearly detect infringement or any attempt of infringement of the access prohibitions.

There are a number of benefits to electronic submissions for both the buyer and the supplier:

  • Everything is automatically time-stamped and fully auditable
  • Reduced costs
  • Reduced impact on the environment
  • Quicker and more streamlined process on both sides of the procurement

So what does this mean for buyers?

Moving on to an e-procurement portal would benefit all buyers as it allows them to run procurement processes in compliance with the EU Directive and UK Regulations on Public Procurement by:

  • Attaching documents to their tenders
  • Allow the submission of tender documents
  • Allow one-to-one interaction with the suppliers

Want to find out more?

If you are a contracting authority, myTenders PRO is the ‘go to’ e-procurement portal for publishing contract notices. Our portal can facilitate electronic submissions to make sure you are compliant with these new regulations, and those that will come into place for all buyers in the future.

Call us on 0844 561 0670 or visit our website to find out more.

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

Posted by Duncan Dallas on March 31, 2017

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!

millstream

Posted in General Procurement, Politics of Procurement, Procurement Law, Public procurement, suppliers, Uncategorized | Tagged: , | 2 Comments »

Public Procurement Thresholds 2017 – update

Posted by emilypirie on February 6, 2017

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Just before the beginning of last year I wrote this blog introducing the new financial thresholds for mandatory publication of opportunities in the Official Journal of the European Union (OJEU). Since then we’ve received quite a number of queries on the subject. Although the current thresholds haven’t changed I thought I’d write an updated blog to include these discussion points.

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  in Scotland.

The current thresholds are as follows:

PUBLIC CONTRACTS

Supply, Services and Design Contracts Works Contracts Social and other specific services
Central Government £106,047

€135,000

£4,104,394

€5,225,000

£589,148             €750,000
Other contracting authorities £164,176

€209,000

£4,104,394

€5,225,000

£589,148            €750,000
Small lots £62,842

€84,000

£785,530

€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

€418,000

£4,104,394

€5,225,000

£785,530              €1,000,000

 

DEFENCE AND SECURITY CONTRACTS

Supply, Services and Design Contracts Works Contracts Social and other specific services
Defence and Security authorities £328,352

€418,000

£4,104,394

€5,225,000

 n/a

 

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 gives instruction on 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 5 186 000.

The Sterling equivalent is £4,104,394.

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?

My colleague Line recently wrote a blog to clarify this question: https://blog.tendersdirect.co.uk/2017/01/06/procurement-terminology-what-are-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.

I hope you find this blog useful. If you want more help with understanding thresholds and other public sector tendering procedures, Millstream’s Training and Consultancy team are available to answer any of your questions. Or, leave us a comment below.

 

millstream

Posted in General Procurement, Procurement Law, Public procurement, suppliers, Uncategorized | Tagged: , , , , | Leave a Comment »

Excluding suppliers based on poor past performance

Posted by Line Olsen on January 10, 2017

All of the UK has now transposed the new EUunacceptable Public Sector Directive 2014. One of the existing provisions is that buyers now have a discretionary right to exclude suppliers based on poor past performance.

We have all heard the stories. A supplier winning a contract because they make all the right promises, but when the contract starts, they just don’t meet the standards expected. The buyer is not happy. They are stuck in a contract that most likely ends up costing them more. In addition, the suppliers that didn’t win are demoralized. What is the point of bidding when other suppliers just lie and win? Therefore, this is a welcome provision by many, a hope of getting rid of the unscrupulous operators in the market.

But is it that easy? As a buyer, and you have had a bad experience with this one supplier who is bidding on your contract – or you have heard about their poor performance from someone else – can you decide to exclude them just like that?

Read the rest of this entry »

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Procurement terminology: what are ‘small’ lots?

Posted by Line Olsen on January 6, 2017

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.

Read the rest of this entry »

Posted in General Procurement, Politics of Procurement, Procurement Law | Tagged: , , , , , , , , , , | 2 Comments »

Legal Remedies in Public Procurement – how they are used in Framework Agreements and Call-Off contracts

Posted by emilypirie on November 15, 2016

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Framework Agreements allow a contracting authority (buyer) to enter into an agreement with one or more economic operators (suppliers) for a set period of time.  Buyers can run mini tendering exercises to call-off contracts from the frameworks under Regulation 33 of the 2015 Public Contracts Regulations (PCR 2015).  In general, there are legal remedies which can be used where a supplier wants to raise a challenge against the buyer. These remedies operate differently for frameworks and call-offs from a framework. To read more about Framework Agreements, please follow this link to our previous blog.

So what are the remedies available where there is a breach relating to a framework or call off contract? It’s a complicated topic – there are four main remedies which are outlined below:

1. Notification and Standstill

The standstill period offers a 10 calendar day pause from the point when the contract award decision is notified to bidders, and the point when the final contract is finalised, during which time suppliers can challenge the decision and claim the call off from the contract or framework as ineffective. A court may preserve a contract for overriding reasons of public interest as per Reg 103(5) where there is a claim of ineffectiveness.  The ability to challenge the decision is a legal requirement imposed through the remedies directives. It is worth noting that it is not mandatory for a buyer to give notification and standstill for call-offs under a framework, but, they can voluntarily do so for above EU threshold frameworks made after a mini-tender.  Reg 99 states that frameworks will be ineffective where there is an illegal direct award, unless the authority believes it was lawful to do so and a VEAT (Voluntary Ex Ante Transparency Notice) is published and the standstill period is observed. This does not apply to call-offs.

2. Damages

Suppliers are limited to claim damages for call-offs and these can also available when there is a breach of the award of the framework agreement. This could happen when there are lost profits or loss of future profits and bid costs.  Individual call-offs do not require call for competition and cannot be classed as ineffective for failure to publish a call for competition, and in this instance the notification and standstill period would not apply either.

3. Automatic Suspension

A contract arrangement can only be brought to an end as a result of an application made by a buyer to the court requesting suspension of the contract.  If the court considers that automatic suspension is not an option, then it would not be appropriate to make an interim order suspending the award. Attendance at automatic suspension hearings and consequently at hearings to challenge the continuation of automatic suspension, adds substantially to the cost involved and places the emphasis firmly on the balance of convenience and damages as an adequate remedy, which can undermine a supplier’s ability to obtain an effective remedy

4. Freedom of Information

Freedom of Information Act 2000 (FOIA) enables anyone to request information from a public body which is to be answered within 20 days. The exceptions include prejudice towards commercial interests of any person, trade secrets, breach of confidence and where incompatible with EU law or any enactment.

The obligation to disclose information may be difficult when dealing with call-offs from a framework. Under Reg 55 buyers must provide suppliers with their decision in relation to the conclusion of a framework agreement. It is unclear how far this extends to call-offs. Buyers send a notice to those who submit an offer in a mini-competition/mini-tender when a notification and standstill period is applied in above threshold call-offs. The Crown Commercial Service guidance suggests that the notification and standstill information is to be sent to all supplier who consider themselves qualified to bid within 15 calendar days under Reg 55(2) (but it is not clear whether this does apply to call-offs or not).

PCR limits information obligations to suppliers and not to ‘concerned citizens’ or organisations. Only suppliers can seek remedies under the PCR which is a further limitation on enforcement for breach of the PCR, as special interest groups, individuals or trade unions who may wish to seek enforcement are required instead to seek a judicial review route.

Case Study

The first and most recent case in the UK to deal with the remedy of ineffectiveness under the PCR 2015 is of Lightways (Contractors) Limited v Inverclyde Council CSOH 169. The facts of the case are as follows:

  • In 2015 the Council ran a mini-competition and a call-off of a CCS (Crown Commercial Service) Framework agreement for street lighting services. It was awarded to “Amey Public Services LLP”. The contract was entered into and had been previously awarded to this company in 2013.
  • Lightways was not on the framework and challenged the award on the grounds that Amey were not appointed under the framework and the contract award was in breach of Regulation 19(3) of the Public Contracts (Scotland) Regulations 2012, where only call-offs could be made to those appointed to the framework. Amey was in fact a different company, as it was “Amey OWE Limited” that was on the framework.
  • Amey OWE and LLP both had links to Amey, but were substantially different as the LLP company was a joint venture between Amey and Lanarkshire Council, and Amey OWE’s principal activity was in engineering consultancy. Each company had their own assets, employees and were separate.
  • Lightways’ argument was accepted and it was held that they had a right to challenge even though they were not party to the framework. The ruling did not accept the principle of proportionality applied to allow the court to correct the council’s mistake and substitute Amey OW to Amey LLP.
  • The court concluded that the Council had no defence to the challenge under Reg 19(3) and therefore made an order for ineffectiveness. Lord Tyre concluded that the contract had been awarded to a non-framework provider without being advertised and, as a result, a breach of the Procurement Regulations had occurred.

Where an ineffectiveness order is granted, the court is also obliged to fine the contracting authority. At the moment, the level of the fine in this case has not been stated, but it is obviously a concern for authorities in times of austerity. Any fine would be payable along with any with potential compensation payments to the exiting provider as well as potential damages to the challenger – so it could get costly. Inverclyde Council have been granted leave to appeal and, at present, the ineffective contract will continue until the appeal has been resolved.

Overall, the UK does seem to provide a satisfactory system of legal remedies with regard to the Public Contracts Regulations 2015 While the range of remedies appears satisfactory, there is a relatively small number of reported procurement judgements in the UK.  This can also suggest that the system is not being used to its full potential.

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Building on the outcome of Brexit

Posted by emilypirie on October 12, 2016

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Brexit: we don’t know what the impact on public sector spending will be and whether the approach to procurement as a result of the leave vote will change. The construction industry has seen uncertainty growing more recently and the impact of a potential EU exit is unknown.

Despite increasing uncertainty in the run-up to the referendum, over 1,900 public sector construction tenders were published, an increase of 29% compared to the six months prior and mirroring growth seen over the last two years with a particular increase in tenders for roads infrastructure, renewable energy and new build housing.

The public sector has a large construction project pipeline which includes new and ongoing infrastructure projects such as HS2 and the completion of affordable housing projects across the country which remain in high demand. Regardless of the leave vote, projects of this nature will carry on and continue to create future opportunities.

Public procurement is governed by UK regulations which originate from EU Directives, there won’t be any change for some time as the UK negotiates its exit. The current regulations will remain in force until they are repealed or revised. As we can see the Government has much higher priorities than revising a system that generally works well. So what could happen if the UK continues to have access to the Single Market? there will be very little change to public procurement and without it, the UK will likely operate under the World Trade Organisation’s Government Procurement Agreement (GPA). This provides similar access to bidders from the countries that are signatories meaning that UK construction contractors will be able to bid on contracts in Europe, whilst at the same time European contractors will be able to bid here in the UK.

For now, the approach from construction suppliers looking to bid for public sector work will not be altered by any changes to regulations.  Companies must ensure that they continue to meet the requirements set out in the tender, demonstrate efficiencies and remain competitive against the competition – it’s business as usual.

Ultimately, there is no reason why leaving the EU should mean that the public sector ‘downs tools’ on construction projects. Continued investment in the sector will have a direct, positive impact on confidence, growth and continued recovery. For now, we will just have to keep a watchful eye on proceedings…

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The new Selection Questionnaire – the end of the PQQ?

Posted by Gemma Waring on September 30, 2016

 

PreQualification

A simplified selection stage has been welcomed by both suppliers and buyers in the public sector.

 

On 26 September 2016, the Crown Commercial Service (CCS) released the new Selection Questionnaire which is, with immediate effect, replacing the Standard PQQ which was itself only released in February 2015.

So why the change? What exactly has changed? And, most importantly what does this mean for suppliers to the public sector?

Why the change?

The form has been changed to align closer with the text and structure of the European Single Procurement Document (ESPD). The usage of the ESPD has been mandated across Europe and will be rolled out fully across the UK in the near future. The ESPD has been created to make tendering easier for smaller businesses, a key driver of the amendments to the Public Contracts Regulations 2015, and means that suppliers can submit their ESPD during the selection stage rather than full tender documents.

So, why do we need the new Selection Questionnaire then? Simply put, the system in place in England is not yet able to roll out a uniform ESPD platform. So, for now the buying authorities can accept the ESPD, the Selection Questionnaire or use a procurement portal such as Millstream’s mytenders

What exactly has changed?

Read the rest of this entry »

Posted in General Procurement, Procurement Law | 4 Comments »

 
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