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New UK Public Contracts Regulations 2015

Monday February 23rd, 2015

New UK Public Contracts Regulations 2015

Colin  Cram

Colin Cram

The UK Public Contracts Regulations 2015 will become law on 26 February. This will facilitate the increasingly rapid reform of the management of the £200 billion annual procurement expenditure by the public sector. The Regulations enact into UK law the latest version of the EU Procurement Directive that was introduced in 2014 and which was significantly influenced by the UK government. Since the original EU Procurement Directive was introduced in 1983, Procurement Directives have become much more flexible, designed for increasingly complex contracts and to facilitate the pursuit of social, environmental and economic objectives. The new Directive also gives a big emphasis to modernising procurement through electronic means of doing business.

Including social, environmental and economic objectives in procurements has always been possible, but the latest version of the Directive, as enacted by the new Regulations, is the most explicit yet. It is also the most commercial and the big question is whether organisations will have the procurement and commercial expertise to take advantage of the opportunities it presents or whether they might have to rely increasingly on centralised/joint procurement bodies to access this expertise.
The Regulations go further than the EU Directive. They also appear to give the Cabinet Office Minister some scope to introduce clarifications or new rules for UK public procurement in the form of Cabinet Office ‘guidance’.  The regulations also incorporate recommendations from the ‘Young’ report to help Small and Medium-sized Enterprises (SMEs), including:

·    payment of all undisputed invoices within 30 days
·    the abolition of pre-qualification questionnaires below the EU thresholds.
·    all advertised tendering exercises also to be advertised within 24 hours in Contracts Finder.

SMEs are seen, rightly or wrongly (as there seems to be little hard evidence to support this), as the engines of economic growth. The new SME-friendly rules will enable procurement organisations to facilitate the development of local supply chains, though this will be easiest to achieve in big cities. This in turn could give combined authorities a considerable economic boost compared to their neighbours.

The UK has also taken full advantage of the ‘light touch’ regime for social, health and some other services. Tendering exercises over 750,000 Euros must be advertised in the OJEU and a contract award notice placed in it. Otherwise, the contracting authority merely has to comply with fair competition and transparency principles. There are no advertising rules for contracts below 750,000 Euros for these services.

Other significant changes are:

·    Simplified procedure for the Dynamic Purchasing System – which should make it a popular method of securing best value and a great way to engage with SMEs.
·    Reduced contracting time-scales if one takes advantage of the opportunities.
·    New procedures to increase commercial opportunities and encourage innovation.
·    Life-cycle costing is emphasised.
·    Contract award must be based solely on the most economically advantageous tender.
·    Suppliers may be excluded from tendering where there have been significant and persistent performance failures in a contract.
·    Contract award criteria can take into account the capability of the organisation and its staff.
·    For a framework agreement, only those authorities clearly identified in the OJEU notice may use it to award contracts.
·    It is explicit that contracts awarded through a framework may exceed the length of the framework.

There is some ambiguity in the above – for example, what is meant by ‘authorities clearly identified’? So guidance from the Crown Commercial Service will sometimes be advisable.

Centralised procurement has always been possible under the EU procurement Directives. However, the new Directive and UK Regulations protect contracting authorities from any breaches made by a centralised procurement organisation contracting on their behalf (though not from errors by the contracting authority). Why would any government minister, local government or NHS chief executive or senior civil servant wish to retain their own procurement organisation when they can pass such risk to ‘centralised’ procurement organisations such as the CCS, Yorkshire Purchasing Organisation, the Eastern Shires Purchasing Organisation, SCAPE, NHS Shared Business Services, North Western Universities Purchasing Consortium, Crescent Purchasing Organisation or the AGMA Procurement Hub? Such centralised, joint and collaborative procurement organisations will inevitably flourish at the expense of more localised procurement.

The Regulations therefore give a significant boost to the radical shake-up of the management of the £200 billion annual public sector procurement spend that is under way and gathering momentum. It facilitates the Crown Commercial Service (CCS) taking on all procurement and contracting responsibility for central civil government departments –  i.e. one procurement organisation for central civil government – and increasing its influence and responsibility for procurement in the rest of the public sector. Despite some resistance to its taking over procurement for government departments, the drive for efficiency and the need to reduce departmental head count makes this a battle that ultimately the Treasury, Cabinet Office and the CCS will win.

Procurement professionals therefore need to plan their careers in order to benefit from the changes and avoid being left behind.  That is why Procurex North and South Live are so important. For more details, visit www.procurexlive.co.uk/.
©Colin M Cram
15 February 2015

New UK Public Contracts Regulations 2015

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