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Archive for the ‘Procurement Law’ Category

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?

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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.

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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?

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Posted in General Procurement, Procurement Law | 2 Comments »

Will we see an increase in SMEs winning contracts in Ireland?

Posted by Line Olsen on July 29, 2016

The Irish Public Sector spends €8.5 billion on goods and services annually.  Is your company getting a slice of this cake? Have you considered how to get into this market?

Did you know that if you are among the 99.7% of active enterprises in Ireland defined as an SME, statistically speaking, you have a higher chance of winning a contract than SMEs in the rest of EU? Where the European Commission reports that SMEs win 45% of the aggregated value of contracts, the Office of Government Procurement has previously reported that SMEs win an estimated 66% of contracts in Ireland.

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Who am I? Central or Sub-Central Organisation? And why does it matter?

Posted by Kim Postlethwaite on March 4, 2016

Contracting Authorities are divided into two types of organisations under both the 2014 EU Directive and 2015 UK Regulations. These are:

Central Government Authorities
Sub-Central Contracting Authorities

SO WHICH ARE YOU? AND WHY IS IT IMPORTANT TO KNOW?
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New standard forms for OJEU notices. Simplification or burden?

Posted by Line Olsen on January 13, 2016

The EU published the new standard forms for OJEU notices on 12th November 2015. In England and Wales, where The Public Contracts Regulations 2015 came into force in February 2015, the new standard forms for public sector came into force on 3rd of December 2015. It will be some time before all contracting authorities are using the new forms but a few are trickling in and you might have seen some of these on Tenders Direct already.

The new forms reflect the simplified rules and procedures of the new EU Directives. In this blog I will highlight some of the biggest changes we will see with the new forms and flag up some of the pros and cons they present to both buyers and suppliers.

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New Public Procurement thresholds 2016/2017

Posted by Duncan Dallas on December 29, 2015

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.

Posted in General Procurement, Politics of Procurement, Procurement Law | 35 Comments »

The 2015 Regulations on the aggregation of contracts and the use of Lots

Posted by Kim Postlethwaite on November 23, 2015

The aggregation of contracts refers to the grouping together of similar contracts. The requirement to aggregate contracts is not a new obligation however has been the subject of much confusion in the past. This blog post will aim to clarify when requirements are to be aggregated for the purpose of calculating the value of a contract and, more importantly, when specific Lots can be exempt from the rules. Read the rest of this entry »

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