What is hot in procurement?

Stephen Pearson, Freeths, Nottingham

We set out below our recent thoughts on events that have happened over the past few months.

What effect have the Public Contracts Regulations 2015 had?

The short answer is lots of interest from experts and consultants! We have seen a new procurement under the competitive procedure with negotiation, which we are taking forward, and we think advisory and governmental organisations are taking this chance to promote the importance of good procurement practice. This means, for example, improving the quality of audit trails, ensuring that as many procurement documents as possible are available from the outset of the procurement process and seeking to raise sensitive issues that are subject to a ‘discretionary exclusion’ under the new powers contained within Regulation 58.

However, a word of caution. Some bodies are suggesting that the 2015 regulations change more than they actually do. For example, that the new regulations impose an entirely new regime – they do not. We also understand that the Crown Commercial Service and Cabinet Office are expressing their own views over the extent to which new procedures ought not to be used. The new procedures exist in order to utilise when they best meet your requirements. While government guidance can help explain the content of the regulations, they are not there in order to rewrite the eligibility criteria as to when a particular procedure can be used!

There is some concern over the apparent need to have all procurement documents available from the date of the Official Journal of the European Union contract notice publication under Regulation 53.1. There is some dispute about whether this is an over-interpretation.

It is essential to note that Regulation 22.3 offers a number of exceptions to this rule and that, realistically, all procurement documents may not exist at the point of publication. For example, final invitation to submit final tender documents under a competitive dialogue are a product of a dialogue that will not have taken place until some future date!

Scrutiny of procurement getting stronger?

Some of the more difficult and insidious effects of the New Procurement Regulations are hidden away at the back of the regulations, in particular Regulation 107 of PCR 2015. This requires contracting authorities to have regard to ‘any guidance issued by the Minister for the Cabinet Office’. Further information is given within the regulations that the guidance may include material relating to the use of questionnaires and the assessment of information. However, the Crown Commercial Service has just issued a procurement policy note 13/15 that is supposed to be for central government, but also says that ‘all other contracting bodies are strongly encouraged to adopt government steer approach’. This contains ‘guidance’ that authorities should explore disclosing the following:

  • performance matrices;
  • plans for management;
  • governance arrangements;
  • resource plans;
  • service improvement plans; and
  • ‘contract price and any incentivisation mechanisms’.

The latter appears to be suggesting that the government expects disclosure of pricing information to unsuccessful tenderers as part of debriefing information. Given that many of us have heavily resisted disclosure, whether made under procurement challenges or freedom of information requests, this is something that has to be treated with some concern and the government needs to be challenged on this suggestion.

The use of the Department for Communities and Local Government or European Court of Auditors hit squads

A number of public sector bodies have been subjected to what seem to be somewhat arbitrary clawback or reductions of contract award monies, typically in connection with projects funded by European Regional Development Fund monies. The Department for Communities and Local Government has appointed regional audit teams, including legal representatives, in order to scrutinise a number of procurements. In a number of cases up to 25 per cent of European Regional Development Fund support monies are being withheld or clawed back for reasons including:

  • alleged geographical discrimination, such as asking for reference sites to be local for convenience;
  • failure to have signed framework access agreements in place; and
  • taking into account experience when carrying out tender competitions or mini-competitions, relying on the Lianakis principle. For example, that tenders should be awarded on a prospective basis in terms of how bidders will deal with the actual scheme out to tender and any retrospective issues; such as relevant experience that should have been dealt with within an earlier phase of the procurement process, such as pre-qualification questionnaires selection stage. While this may not seem fair, it does reflect the law.

We understand that a freedom of information application has been submitted to the Department for Communities and Local Government concerning the extent of these penalties and hope to share the results of that in due course.

Legal challenge issues

In theory, courts will only set aside an authority procurement decision where there has been ‘manifest error’ in scoring of bids. However, what the individual judge regards as manifest error will range from case to case. Guidance should be given to evaluators that they should be able to fully justify the scores they award by reference to the content of the relevant tender question and the published scoring criteria. A common approach taken by challengers is to take issue with whether the authority’s scoring is properly based on the answer to the questions or, as often argued, instead on an overly-subjective impression of the response; perhaps created by buzz words and management speak rather than by specific commitments and detail on the part of the bidder.

In the event of a legal challenge the court will expect full disclosure. This includes copies of competitor bids and copies of contemporaneous evaluation notes to be made available to the claimant at any early stage. Judges will be sceptical of claims of confidentiality on the part of the bidder, when inviting the authority to resist disclosure, especially where the winning bidder failed to flag to the authority at the time of submitting its bid. For example in the context of possible future freedom of information requests made to the authority that any of the content was of a highly confidential nature, comprising trade secrets or the like.

This means that it is wise to adopt a precautionary approach and save and index notes of evaluation meetings, rather than collecting in and disposing of score sheets and notes at the end of bid evaluation meetings.

Stephen Pearson
Partner
0845 274 6900
stephen.pearson@freeths.co.uk

Robert Nieri
Senior associate
0845 274 6902
robert.nieri@freeths.co.uk