We’re all familiar with the various thematic clichés associated with St Patrick’s Day celebrations: leprechauns, pots of gold, four-leafed clovers and good luck. But did you know that the phrase “luck of the Irish” does not necessarily refer to the good variety?
It’s Valentine’s Day. That time of year when people pay attention to the special connections they have in life and take a bit of time to celebrate them. Or maybe you are still looking for some special connections? Still searching for that one relationship with long term potential, stability and plenty of money…
Of course, here we’re talking about your business connections – specifically your connections with public sector buyers and tendering. With contract life spans of three years plus, 30 day payment terms and a high chance of you retaining a contract once you’ve won it once – what’s not to love? Continue reading “The tender matchmaker…”
** 2018/19 Public Procurement Thresholds Update Available HERE **
—
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:
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.
All of the UK has now transposed the new EU
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?
Continue reading “Excluding suppliers based on poor past performance”
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?”
Here ye, here ye, we’ve got some entertaining news.
2016 has drawn to a close. What happened in the 365 days that made up 2016?
Continue reading “Quirky Tenders: 2016’s most memorable tender notices”
On Monday of this week the Crown Commercial Service (CCS) released a Public Policy Note (PPN) on ‘Onerous Practices in Procurement and Contracting’. Put simply they are referring to procurement practices which place far too much risk on the supplier. This in
Continue reading “The end of onerous practices in UK Procurement?”
In October of 2016, the European Commission announced details of a study on CPV codes – Common Procurement Vocabulary codes – which tender notices are classified under.
There are around 10,000 CPV codes, and the list of codes was last updated in 2008. The codes range from very niche; animal ear tags (03340000); mange-tout (03221222); zirconium (14735000), to more common areas; building construction work (45210000); health and social work services (85000000) and computer supplies (302373000). The codes don’t reflect new technologies and computing mimicking the advance in technology in recent years, branding a lot of CPV codes out of date.
Despite this, buyers still list their contract notices under these codes in the hope of them being found by suppliers who want to bid for it.
The research carried out by the European Commission this October threw up some sobering news: in a sample of 405 notices tested, 23% had the wrong code associated with the scope of work tendered.
In around 10% of cases the code applied did not describe the work/supply/service procured; in some 8%, the code applied was too general, and in about 4%, the code was too specific.
So amidst this muddle of what code gets used where, what does this mean? In fact, it’s a pretty big deal for both buyers and suppliers.
If an incorrect code is used, a buyer is minimising the chances of there being a range of suppliers for them to choose from. They may not be able to choose from varying prices or scrutinise against the MEAT criteria: most economically advantageous tender. Public contracts can be awarded either on the basis of lowest price or MEAT, and buyers have to justify why they have chosen to spend a certain amount of money.
If they have very little to make comparisons on, buyers can end up spending more, either by using an expensive supplier due to lack of choice, or by using the cheapest supplier and getting a shoddy result which may have to be re-tendered for in the future.
For suppliers who supply works, services and supplies in a specific field, if a wrong code is used they are less likely to find contracts that they can tender for. CPV codes are a very specific classification and if the code isn’t correct, the supplier is missing out on opportunities which are destined for them. These could be SMEs who survive on providing specific services, and using the wrong CPV codes doesn’t benefit these niche businesses.
For example, for a contract ‘Collection of key qualitative and quantitative information on the European Commission’s merger decisions’ the code for ‘market research’ (code 79310000) was used, when in fact, something more appropriate like the code for ‘economic research’ (79311400) or ‘research services’ (73110000) could have been used. Due to the misuse of CPV code, the contract was never awarded.
The ill use of codes also affects the public. When work finally passes the business case for approval within an organisation, and for various stages to be passed, the work is still ‘undone’. If the tender needs to be re-advertised, we are looking at a similar timeframe to. Across the UK we are waiting for better roads, new schools, these things are all part of a very long queue.
Time is money. So what help is out there? Suppliers who don’t have access to a comprehensive tender alert service like Tenders Direct could be potentially missing out on lots of business opportunities thanks to incorrect CPV codes.
Tenders Direct is a wide-ranging tender alerts service which relies on a team of tender reviewers reading the contract and then classifying it against a set of key words that ensure tenders are classified to meet supplier requirements. We do not rely on CPV codes, we rely on experienced reviewers who can read between the lines and figure out exactly what work is being tendered for.
Our service helps marry up buyers with suppliers. A supplier is notified of tenders which fit the criteria of work they are looking to deliver, which is the way our service works. With our site, there is less likelihood of suppliers missing out on potential opportunities.
Our procurement experts help make procurement easier, and we take pride in being able to minimise the noise and help a buyer classify what they want, and feed the right opportunities directly into the right supplier mailboxes.
To CPV or not to CPV? That is the question.
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:
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.
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?”
Cindy Cheng
David Law
Duncan Dallas
Fiona Stevenson
Gemma Waring
John Cutt
Kim Postlethwaite
Nelson Poon
Line Olsen