Anja specialises in all aspects of non-

contentious procurement advice and

regularly advises clients on a wide range of

commercial issues affecting public sector

services

Craig specialises in structuring complex

competitive dialogue procurements, drafting

and advising on strategic service

arrangements (including those between

public bodies) and advising public and

private sector clients on high

value PFI and PPP projects.

one year on

24 March 2016

• general update of the procurement

regime in England, Wales and Northern

Ireland

• impact of the PCRs on commissioners of

healthcare services after 18 April 2016

• current case law and how that has

assisted in interpretation of the PCRs

• guidance from central government

• Green Paper on modernisation of EU

public procurement policy published in

January 2011 (consultation process

followed alongside an evaluation of

impact and cost-effectiveness of EU

public procurement policy)

• European Commission proposals published

on 20 December 2011 (new Public Sector

Directive, Utilities Directive and

Concessions Directive)

• new directive adopted by European

Commission on 17 April 2014

• draft UK regulations - consultation

October 2014 - response to consultation

issued 30th January 2015

• new regulations came into force 26th

February 2015

• strategic use of public procurement to

address new challenges (fostering

innovation, respecting environment etc)

• simplification of rules

• greater flexibility for contracting

authorities and economic operators

• improving efficiency in public spending

• increasing access for SMEs (Lord Young

Reforms have also built on this EU driver)

• enabling sustainability and other societal

goals to be incorporated into

procurement process

• safeguarding against corruption

• promoting e-procurement

• works - £4,104,394

• supply, services and design contracts:

– central government - £106,047

– sub-central bodies - £164,176

• light touch –£589,148

• procedures available are:

– open

– restricted

– competitive procedure with negotiation

– competitive dialogue

– innovation partnership

• choice of which to use:

– open, restricted procedures freely

available

– innovation partnership freely available

where appropriate

• choice of which to use:

– Competitive Procedure with Negotiation

and Competitive Dialogue Procedure when

no readily available solution or cannot

define solution with enough precision,

innovative solutions required, negotiation

required to contract award, if

irregular/unacceptable previously tenders

received

• clear support for pre-procurement

engagement (reg 40)

• clear obligations to prevent, identify and

remedy conflicts of interest (reg 24)

• PIN can be used by sub-central authorities

as a call for competition (reg 26(9))

• new OJEU forms since 3 December 2015

but not on SIMAP yet

• electronic availability of documents (reg

53)

• self-certification and the European Single

Procurement Document (reg 59)

• duty to compile reports and send

information to Cabinet Office (reg 84)

• Teckal exemption codified in regulation

12 – PCR 2015 do not apply where:

– the contracting entity exercises over the

entity similar control that it exercises

over its own departments

– more than 80% of the activities are

provided back to the controlling

contracting authority

– no direct private capital participation

• can have reverse, horizontal and multi-

authority Teckal

• Hamburg Waste principle has been

codified in regulation 12(7) – PCR 2015

does not apply where:

– participating authorities contract to co-

operate to provide public services to

achieve common objectives

– implementation of that cooperation is

governed solely by considerations relating

to the public interest; and

– the participating authorities perform less

than 20% of the activities on the open

market

• the Cabinet Office has offered guidance

on FAQs on using the exemptions:

– ‘co-operation’ can take any legal form

and does not need to be a contract or

joint venture

– how to calculate the percentage of

activities

– clarifies application of exemptions

– still difficult to implement correctly so

may be advisable to seek further advice

• pressetext line of case law codified -

contract variation

• variations permitted by reg 72 include:

– changes provided for in initial

procurement documents

– additional works, services or supplies in

certain circumstances up to 50% of

original value

– changes due to unforeseen circumstances,

up to 50%

• pressetext line of case law codified -

contract variation

• variations permitted by reg 72 include:

– change of contractor in specified

circumstances

– low value changes (up to 10% for

service/supply contracts and up to 15% for

works contracts) if within threshold

– non-substantial changes

• substantial changes are those which:

– fundamentally change the character of

the contract

– introduce conditions which may have

changed the outcome of the procurement

if included at the outset

– changes the economic balance in favour of

contractor

• substantial changes are those which:

– considerably extends scope of contract

– replaces contractor except in

circumstances specified

• if prescribed exceptions do not apply

then a new procurement procedure must

be followed

• CCS guidance:

– PCR 2015 provides more certainty of types

of variation that can be made without re-

advertising

– not unlimited discretion but “recognises

the realities of public procurement”

– addresses uncertainties from pressetext

case and provides ‘safe harbour’ in

certain circumstances

– codification goes further than pressetext

• Edenred (UK Group) Ltd and another v HM

Treasury and others

• Supreme Court applied PCR 2015 which

came into force during litigation and

would apply if contract proceeded

• court considered whether proposed

amendments were a “material change”

• reg 72 allows for ‘non-substantial

variation’ where ‘substantial’ includes

considerable extension of scope

• reg 72 also allows modifications provided

for in initial procurement documents in

“clear, precise and unequivocal review

clauses”

• further case under PCR 2006 but

principles still relevant:

– Gottlieb, R (on the application of) v

Winchester City Council

– original contract awarded without a

procurement exercise

– variations resulted in an agreement that

was materially different in character

• further case under PCR 2006 but

principles still relevant:

– Gottlieb, R (on the application of) c

Winchester City Council

– demonstrated the parties intention to re-

negotiate the ‘essential terms’ of the

contract

– variations made development scheme

financially viable for the developer –

improving the position of the contractor is

never looked on favourably

• previously:

– exhaustive list of ‘part a’ services -

subject to the full rigour of the EU rules

– non-exhaustive list of ‘part b’ services -

subject to the EU rules only to a limited

extent

– no duty to advertise ‘part b’ services

contracts. Duty to advertise such

contracts could only arise under the

general treaty principles where the

contract was of ‘certain cross border

interest’

• under the new regulations (regulations 74

to 76):

– new regulations provides that all services

over relevant financial thresholds will be

subject to full rigour of rules unless they

fall within list of services in Schedule 3

(social, health, education and certain

other services)

• special light touch regime applies to

contracts for those services with a value

over €750,000 reg 5(1)(d) (circa

£589,000)

• regulations take a very minimalistic

approach (regulations 75 and 76)

• (reg 75) confirms the directive mandatory

provisions:

– contract notice or where permissible

under other sections a PIN (with required

information)

– award notices must be issued

• (reg 76) no set structure but MUST ensure

compliance with principles of

transparency and equal treatment

• advert (notice or PIN) must confirm:

– conditions for participation

– time limits

– the procedure to be applied

• lists matters which may be taken into

account when awarding

Must consider guidance issued by the

Cabinet office

• reg 73 requires authorities to ensure

contracts can be terminated on three

grounds:

– contract is substantially modified such

that a new procurement procedure would

be required under reg 72(9)

– at time of award, contractor should have

been excluded on one of mandatory

grounds in reg 57(1), or

– contract should not have been awarded to

contractor due to serious infringement of

obligations

• applies to all contracts amended since 26

February 2015

• termination rights on above grounds will

be implied into contracts awarded before

26 February 2015

• advertising provisions applies to ‘contract

opportunity’

• contract award notice must also be

published on contracts finder

• contracts for health services covered by

NHS regs are exempt from these

requirements – also maintained schools

and academies

• pre-qualification (PQQ) stage is banned

for below-threshold procurements but

can have ‘suitability assessment criteria’

• must ‘have regard’ to any guidance

published by the Cabinet Office in

relation to these new requirements

• regulation 107 requires contracting

authorities to have regard to Cabinet

Office statutory guidance on PQQs

• departures from the guidance which

constitute a ‘reportable deviation’ must

be reported to Crown Commercial Service

within 30 days of PQQ publication

• guidance provides standardised set of

questions for every procurement, where

relevant and proportionate

• mandatory and discretionary exclusion

questions should always be included (reg

57)

• Cabinet Office claims it will help SMEs

• core and additional module questions

must be used as set out in the guidance

• authorities to provide full details for each

question including scoring, weightings,

pass marks or minimum thresholds

• approach should be to take the PQQ

questions and apply these to the

authority’s requirements

• automatic suspension – more common to

lift than not:

– Counted4 Community Interest Company v

Sunderland City Council - damages

wouldn’t be a sufficient remedy – first

case to be heard for automatic suspension

under the PCR 2015

• automatic suspension – more common to

lift than not:

– Energysolutions EU Ltd v Nuclear

Decommissioning Authority – not bringing

a claim before contract was entered into,

thereby leading to an automatic

suspension, did not remove the ability to

claim for damages (under PCR 2006 but

remedies have not changed under PCR

2015) – if damages were due under the

PCR 2006 then the court did not have

discretion whether to award them or not

• automatic suspension – more common to

lift than not:

– Openview Security Solutions Ltd v The

London Borough of Merton Council –

damages were an adequate remedy and

the automatic suspension was lifted

• automatic suspension – more common to

lift than not:

– Bristol Missing Link Ltd v Bristol City

Council – damages were not an adequate

remedy as the claimant was a non-profit

making organisation and the bid made no

allowance for profit (usually the element

of costs awarded as damages) and it would

have a catastrophic effect on its ability to

provide other services – PCR 2006 but

remedies haven’t changed

• automatic suspension – more common to

lift than not:

– Woods Building Services v Milton Keynes

Council [No.2: Remedy] – HC upheld the

claim that there had been manifest errors

in the evaluation process - would not

order the award of the contract as this

was only for exception circumstances and

damages were an appropriate remedy for

the claimant

• several cases recently on the rights of

parties to early disclosure of documents:

– Fox Building & Engineering Ltd v The

Department of Finance and Personnel –

early discovery was granted on a limited

basis to allow the claimant to decide

whether it had a substantive claim to be

tried – the discover was limited in both

nature and the people who were allowed

to receive it

• several cases recently on the rights of

parties to early disclosure of documents:

– Goedesign Barriers Ltd v The Environment

Agency – anonymised bid documents of

other bidders could be disclosed if there

were no tender evaluation report from the

contracting authority to allow the

claimant to further assess its prospects of

success – concerns around the confidential

nature of bid documents was addressed by

establishing a confidentiality ring

Plethora of Cabinet Office procurement

policy notes (PPN) – most relevant:

• 03/15 – accessibility of procurement to

SMEs:

– abolition of PQQs for below threshold

– prompt payment throughout supply chain

– advertising in one place

Plethora of Cabinet Office procurement

policy notes (PPN) – most relevant:

• 14/15 – supporting apprenticeships and

skills:

– only applies to central government and

their related bodies but useful to

understand

– commitment to developing and

maintaining skills

• CCS also provides guidance:

– new subcontracting provisions

– public to public procurement guidance

– publishing on Contracts Finder

– Lord Young reforms FAQs

– framework agreements

– amendments to contracts during their

term

Please get in touch if you have any questions

or wish to discuss the topics we’ve covered

further…

anja.beriro@brownejacobson.com | +44 (0) 115 976 6589

Please get in touch if you have any questions

or wish to discuss the topics we’ve covered

further…

craig.elder@brownejacobson.com | +44(0) 115 976 6089