Public Contract Regulations 2015

Peter Ware, Browne Jacobson

Cabinet Office consultation draft

The Cabinet Office’s consultation on the new Public Contract Regulations 2015 are designed to transpose directive 2014/24/EU.

The draft regulations and accompanying consultation documents make it clear that the Cabinet Office, in line with governmental policy, will endeavour to transpose the directive as faithfully as possible without any ‘gold-plating’. Accordingly, many of the things which were set out in our article in June will be copied into the regulations. Although I do not intend to go over that review again, I will however highlight those areas where the Cabinet Office has exercised areas of discretion and any other points which I think might be of interest. I will also reflect on the implementation of the Lord Young Reforms which have been designed to improve access to public sector contracting for small and medium sized enterprises.

It is also worth pointing out that the draft regulations have sought to consolidate the requirements of the Remedies Directive. The drafting has been lifted directly from the Public Contract Regulations 2006 (2006 Regulations) into the draft regulations without any significant amendment.

The lack of ‘gold-plating’ has limited the extent to which the directive has been deviated from and most of the directive is mandatory (although of course historically the UK drafting style has been to take the opportunity to transpose directives in a manner which utilises UK drafting conventions and clarifies any deemed ambiguity or inconsistencies). It is finally worth noting that much of the policy position and explanatory positions will be delivered by way of statutory guidance to be issued by the Cabinet Office in due course. Accordingly, it is difficult at this stage to fully outline the Government position which will not be fully explained until this guidance has been issued.

The consultation period is for four weeks only. Accordingly, by the time you are reading this article the date for responses to the consultation (the 17 October) will have passed. In any event, the consultation itself had a very limited scope this was partly because of the limitations on the drafting protocols, as highlighted above, and partly, one would imagine, in order to speed up the consultation process due to the delays in issuing these draft regulations. In total 20 questions were asked in the consultation in relation to the drafting, these largely revolved around the policy choices taken by the Cabinet Office over the non-mandated requirements of the directive. It is in relation to these questions that I will focus the remainder of the article as they by and large set out the things that contracting authorities need to be aware of over and above those matters which are set out in our June article.

In line with previous directives’ transitional policies, the Cabinet Office has sought to only apply the new procurement processes to those procurements which begin on or after the effective date of the regulations. This seems to be a sensible approach in order to ensure that there is no misunderstanding in relation to how procurements are run by contracting authorities. Accordingly, the draft regulations have also taken advantage of the opportunity to postpone, amongst other things, the use of the mandatory electronic European single procurement document and to recourse to the e-Certis central certificate repository.

The Cabinet Office has not sought to implement the option which would require contracting authorities to split large contracts into lots. This of course is a welcome approach by the Cabinet Office and in line with the responses initially received at previous round of consultation on these non-mandatory provisions. It does however implement the provisions in relation to the ability to accept (where a procurement has been split into lots) a variety of combinations of different lots depending on what that solution means to the contracting authority.

Because the UK will still be at the forefront of implementation, it is possible that the new public procurement forms necessary for the new directive will not be ready. The Cabinet Office has set out its general approach to utilisation of the existing forms if the new forms are not ready. This largely surrounds putting the required additional or different information in the free text boxes on the existing forms.

As those of you who have monitored the progress of the public procurement directive from its initial draft will note, the European Commission was particularly concerned to try and ensure that the controls round conflicts of interests and exclusion for breaches of taxation and social environmental legislative obligations were towards the top of the agenda. The Cabinet Office has not elaborated further on the requirements for contracting authorities to identify and remedy conflicts of interest and will issue guidance in due course. The Cabinet Office has, in draft Regulation 57 (the mandatory exclusion grounds), set out the UK specific legislative framework, although they have not identified specific non-payment of tax as the directive does not set out specific European tax offences which have to be interpreted into UK law. Regulation 57 (4) does not make exclusion mandatory for breach of tax obligations short of a final judgment. The regulations also then go on to provide that mandatory exclusion grounds can be disregarded where disproportionate or for overriding public interests reasons.

The implementation of the light touch regime is set out in draft Regulations 74 to 77 and as with other drafting within the regulations the Cabinet Office has endeavoured not to over regulate or indeed go further than that which is absolutely required by the directive in this regard. For example the procurement timescales are not prescribed, merely that they need to be ‘reasonable and proportionate’. However, at the moment the drafting is not particularly clear in some places and may require some clarification. It is however, worth noting that draft regulation 118 provides that the light touch regime for health and social services which are governed by the NHS Procurement, Patient Choice and Competition Regulations 2013 (Patient Choice Regulations) will only apply as from the 18 April 2016. Up until that date the existing Part B service regime under the 2006 Regulations will be utilised and sit alongside the Patient Choice Regulations. It is also worth being aware that disappointingly the reservation for mutuals will not apply to any contract which is covered by the Patient Choice Regulations.

Draft regulations 105 to 109 seek to implement Lord Young’s reforms standing from his report, Growing Your Business (published May 2013). These reforms are designed to open up access to SME’s who have expressed concern about barriers to public procurement. In outline, these reforms provide for:

  • abolishing pre-qualification questionnaires for contracts below the EU threshold, standardised PQQ to be used for contracts above the EU threshold,
  • a requirement for 30 day payment terms are passed down the supply chain through a standard clause brought on late payment to invoices; and
  • mandating that all public sector contract opportunities are accessible on contracts finder.

These reforms have already been subject to consultation following Lord Young’s initial report and therefore disappointingly the principles were not something that was subject to this consultation exercise. I think for local government, in particular, it is going to be very important to consider the impact that these reforms will have on its purchasing procedures. The drafting in draft regulation 106 in particular does require some redrafting as at the moment I am not clear that it works.

This consultation has now closed and I await the reworked regulations with interest. We will be running some training sessions in all of our offices in the New Year so please let me know if you would like to attend one of these sessions and we can send you details.