We will track here amendments to this resource that reflect changes in law and practice.
A series of frequently asked questions on public procurement, with answers and suggestions for further reading.
Please note that references in this note to the Regulations are references to the Public Contracts Regulations 2006 (SI 2006/5).
There are a series of thresholds that differ according to:
The type of contract being procured (whether it is for goods, services or works).
The identity of the contracting authority. Authorities in central government generally have a lower threshold than other public sector organisations such as local authorities. However, NHS Trusts are subject to the lower central government threshold.
For details of the current thresholds applicable, see Practice note, Public Procurement in the UK: Thresholds (www.practicallaw.com/5-383-9734). If a contract exceeds the relevant threshold, it is subject to the full public procurement regime set out in the Regulations, unless it is fully or partially exempt for another reason. For more information on contracts exempt from the full procurement regime, see Practice note, Public procurement in the UK: Contract type (www.practicallaw.com/5-383-9734).
There are various rules that apply when calculating the expected value of a contract:
If it is known, the relevant figure is the value of the total consideration (net of value added tax (www.practicallaw.com/5-107-7468) (VAT)) that the contracting authority expects to be payable under the contract.
If there is no fixed price and:
the contract term is for 48 months or less, the contracting authority should estimate the amount of consideration it expects to pay over the contract and use this figure; or
the contract term is more than 48 months, the contracting authority should estimate how much it expects to pay for each month and multiply this figure by 48 and use this figure.
Where a contracting authority intends to let more than one contract to fulfil a single requirement, the value of these contracts should be added together. The aggregate figure is then used to calculate if the threshold was exceeded. For more information on which contracts need to be aggregated, see Practice note, Part B, below threshold and other procurements outside the regulations: Aggregation (www.practicallaw.com/6-384-1798).
The Regulations divide services into "Part A" services and "Part B" services. For details of which services fall into which category, see Practice note, Part B, below threshold and other procurements outside the regulations: Part B services (www.practicallaw.com/6-384-1798).
If the services are:
Part A services. The full public procurement regime applies (subject to no other specific exclusion applying and the relevant threshold being met).
Part B services. Only certain limited aspects of the formal procurement regime apply. However, contracting authorities are still required to comply with the Treaty on the Functioning of the European Union (www.practicallaw.com/2-107-6192) (TFEU) (formerly the EC Treaty) principles (see What are the Treaty principles?) in the way they carry out the procurement and also to obtain value for money.
The "Treaty" principles (derived from the TFEU and the fundamental freedoms of the EU) are:
These principles apply to all procurements with a "cross-border interest", whether or not the full procurement regime (and, therefore, the Regulations) applies.
For more information on what constitutes a cross-border interest and for information on the application of the Treaty principles, see Practice note, Part B, below threshold and other procurements outside the regulations (www.practicallaw.com/6-384-1798).
Unconditional grants are unlikely to meet the definition of a contract set out in the Regulations (see Practice note, Public procurement in the UK: There must be a contract in writing for consideration (www.practicallaw.com/5-383-9734)). However, where grants are used with strict qualification criteria and an obligation to pay back money if certain targets are not reached, the position is less straightforward. It is possible that an arrangement referred to as a grant could actually meet the definition of a contract set out in the Regulations and, if it does, the Regulations may apply.
Grants are often made by local authorities in the context of major development projects. When deciding if a grant is subject to the procurement regime, it is necessary to consider the project as a whole. For more information on the impact of the public procurement regime on development agreements, see Practice note, Impact of the public procurement regime on development agreements (www.practicallaw.com/8-500-5625).
Whatever the nature of the grant, legal advice should always be sought when a contracting authority is considering making a grant to determine whether it is in fact a contract.
This depends on the basis on which the contract was originally let. It is likely the contract may be extended if it was subject to the full procurement regime and:
The OJEU notice (www.practicallaw.com/9-385-1432) provided that a contract may be let for a period of the original contract term plus the proposed extension (for example, if the original contract term was three years and the proposed extension is two years, the OJEU notice must have stated a contract term of at least five years).
The contract itself provides for the proposed extension.
However, if the proposed extension exceeds the period stated in the OJEU notice or is not provided for in the contract, it is likely a new contract is being let and it is necessary to determine if the Regulations apply. If they do, it is necessary to carry out a new procurement exercise.
You should only use their contract for your requirements if the original procurement was undertaken on the basis the contract would be available to your authority. Most obviously, the relevant OJEU notice should have referenced your authority by name or type (for example, other local authorities in the [Yorkshire] region). Other details in the OJEU notice (such as estimated contract value) should have also taken account of your potential involvement.
It is important that the necessary due diligence is carried out to check these issues were addressed, as your authority will breach the legal requirements if they were not.
Aside from the legalities, the following also need consideration:
The practicalities. How will the relationship work with the contractor and other authorities?
How will the contract be structured? Will you have a direct contract with the contractor or sub-contract by the lead authority? Whatever the structure, you must use the contract terms and specification set by the lead authority. This lack of flexibility may offset the benefit of saving on the procurement costs.
Will you be able to demonstrate you are getting value for money?
A framework agreement can be let for a maximum of four years, unless exceptional circumstances apply, in which case it may be longer. However, exceptional circumstances are unlikely to apply often.
Call-off contracts (contracts for specific goods, services or work let under the framework agreement) may be let for a period exceeding four years in certain circumstances, but not in a manner which "restricts or distorts competition" (regulation 19(12)). This means that call-off contracts exceeding four years should only be let if it is normal practice to let the contract as a result of, for example, the level of capital investment required by the provider. The Office of Government Commerce stated that, in any event, a call-off contract should not be let for more than seven years.
For more information on framework agreements, see Practice note, Framework agreements let under the public procurement regime (www.practicallaw.com/4-384-9601).
Before considering the advantages and disadvantages of allowing an in-house bid, you should first note it is unlikely to be technically possible for an in-house team to submit a formal bid as part of a tender process because:
An in-house team will not have separate personality from the authority. Full involvement in a tender process is only possible where the in-house team has formed a company or other legal entity that could submit a tender and contract with the authority.
The in-house team's bid would not be comparable to the bids from external organisations because it would be relying on authority premises, assets, employees and so on.
However, it is possible for an in-house team to submit a proposal that could be considered alongside the tender process. If the authority decides the in-house option will provide best value (www.practicallaw.com/0-385-1436), it could abandon the tender process and retain the service in-house, providing the tender documents make it clear that it could do this.
The advantages are likely to be:
Improved workforce relations.
A possibility the contracting authority's personnel are best placed to deliver a value for money solution.
The disadvantages are that:
The message sent to the market may be that the authority is not serious about outsourcing its requirement.
If the market perceives the authority as not being serious about the outsourcing, this could lead to providers not tendering and the authority receiving an inferior solution.
Evaluating an in-house bid that makes use of authority premises, assets and employees against tenders submitted from external organisations is extremely difficult and any attempt to do so risks being challenged by an unsuccessful provider.
A practical solution is for authorities to investigate the practicalities of in-house provision fully before going out to tender and, if appropriate, discount it. Since the abolition of compulsory competitive tendering (CCT), an authority is not obliged to expose internal services to competition, unless it decided to do so based on the principles of best value. Therefore, if the investigation reveals in-house provision provides best value, there is no need for a tender process at all.
It may be possible to refine your procurement. The questions to ask are:
Would a provider who elected not to submit a tender or expression of interest have been interested in this procurement, had this change been in place from the start? If the answer is yes, you are likely to have to start again.
Would a provider excluded from the process by the authority (for example, at pre-qualification) have passed the relevant stage had this change been in place at the time? If the answer is yes, it may be necessary to restart the procurement or at least "un-pick" it back to the relevant stage.
If the answer to both questions is no, you may be able to make the change and carry on with the procurement. However, specific legal advice should be sought if your authority is proposing to do this, as there may be a risk of a challenge to the procurement process.
The Public Contracts (Amendments) Regulations 2009 (SI 2009/2992) (Amendment Regulations 2009) came into force on 20 December 2009. The Amendment Regulations 2009 implement the new Remedies Directive in England and Wales. The changes introduced will be significant. They include:
A requirement for full debrief information to accompany all "Alcatel" standstill letters sent (not just to be provided to those bidders that request it) within 48 hours of receiving the letter.
A suspension of any contract award procedure when legal proceedings are issued against the contracting authority. At present, bidders claiming a tender process is flawed must apply to the court for an injunction, this will no longer be necessary.
The introduction of the concept of ineffectiveness. This will mean that, in certain circumstances, a court will be able to declare a contract is ineffective (that is, void) as a result of flaws in the procurement process. Courts will also be entitled to shorten the term of a contract where they think it is appropriate. Previously, once a contract was executed, the only remedy available to aggrieved bidders was damages.
The introduction of financial penalties for contracting authorities for operating flawed procurement processes.
However, the Amendment Regulations 2009 will only apply to procurements first advertised after 20 December 2009. Procurements advertised before 20 December 2009 will continue to be subject to the existing standstill, debrief and remedies requirements.
For more information on the Amendment Regulations 2009, see Practice note, Remedies Directive: the new regime (www.practicallaw.com/0-500-9991).
There are two ways issues relating to a tenderer's previous compliance with equality legislation and current equality policies can validly be included by a contracting authority at the pre-qualification questionnaire stage and used as selection criteria:
Under the discretionary disqualification criteria set out in regulation 23(4)(e) of the Regulations. This regulation allows public authorities to exclude potential suppliers from the procurement process if found guilty of "grave professional misconduct". Government guidance confirmed this misconduct could include a breach of equality legislation, providing the example of a breach of the Sex Discrimination Act 1975 in the context of a contract for recruitment services aimed at helping to get parents of young children back into work.
However, any contracting authority considering exercising its discretion to exclude a tenderer should:
assess the seriousness of these offences;
give the tenderer the opportunity to demonstrate any action it has since taken to rectify any breaches or to address these issues; and
be able to demonstrate any decision to exclude is proportionate to the seriousness of the offence.
If there is any doubt about whether it is appropriate to exercise the contracting authority's discretion, legal advice on the specific circumstances should be taken.
When assessing the minimum standards of technical or professional ability required under regulation 25(2) of the Regulations. The following information can be used in determining the technical ability of tenderers:
the tenderer's skills, efficiency, experience and reliability (regulation 25(2)(a));
details of the services provided by the tenderer in the previous three years (regulation 25(2)(c)); and
the tenderer's educational and professional qualifications (regulation 25(2)(g)).
In the event they are related closely enough to the subject matter of the contract, a contracting authority may be entitled to take account of the equality issues under one of these criteria, when looking at a tenderer's technical ability to perform a contract.
Government guidance gives the following examples of compliant approaches:
a local authority in an ethnically diverse area, wanting to ensure information about its services is accessible to the whole community, seeking evidence from tenderers wanting to run the authority's service helpdesk about their ability to respond to questions from people unable to speak English; and
a local authority setting up a community centre to encourage greater social inclusion among its diverse community, seeking evidence about tenderers' equality and diversity policies to ensure they are aware of and able to handle and respect the cultural differences and needs of the community.
Any contracting authority seeking to structure a public procurement to ensure equality issues are taken account of should review:
The guidance published by the Office of Government Commerce (for more information, see Legal update, OGC guidance: Make equality count in procurement (www.practicallaw.com/9-384-4088)).
The guidance published by the Improvement and Development Agency for Local Government (IDEA) (for more information, see Legal update, IDEA publishes equality guidance for public procurement (www.practicallaw.com/6-422-4381)).
If it is appropriate to include equality criteria at the selection stage, the pre-qualification questionnaire published by the OGC includes examples of the type of question it may be appropriate to ask. For more information, see Standard document, Pre-qualification questionnaire (www.practicallaw.com/9-383-4824).
While continuity of service provision is likely to be the authority's primary concern, an existing supplier experiencing financial difficulties does not provide scope for a contracting authority to ignore the potential application of the public procurement regime.
If the contract is terminated and a new contract is let, a new contract is being awarded to which the public procurement regime applies. It does not matter if the preceding contract was terminated early due to the financial circumstances of the existing supplier and that the term of the new contract falls within the time period set out in the published OJEU notice advertising the original contract.
The situation is a little more complex if the contract is novated. In these circumstances, applying general contract law principles, there is no new contract. However, public procurement law takes a wider view of what constitutes a contract. The leading case on this subject is the decision in Pressetext Nachrichtenagentur GmbH v Republik Österreich (Case C-454/06), where, among other things, the EU Court of Justice (ECJ) considered the legality of a transfer of a contract by a contractor to its subsidiary company. While the ECJ held that the transfer of responsibility for services in this instance did not amount to the award of a new contract (as in the specific circumstances in reality there was no change of contract partner), the ECJ made it clear that:
"As a rule, the substitution of a new contractual partner for the one to which the contracting authority had initially awarded the contract must be regarded as constituting a change to one of the essential terms of the public contract in question, unless that substitution was provided for in the terms of the initial contract, such as, by way of example, provision for sub-contracting ...
"Such an occurrence would be liable to constitute a new award of contract."
Therefore, it appears likely the ECJ would hold that novating a contract to an entirely new contractual partner following the insolvency of the original contractor (even if the new contractor accepted the same terms) would constitute awarding a new contract. As a result, this process must comply with the public procurement rules, including (if applicable) the obligation to advertise the opportunity and hold an open competition.
For more information on:
The public procurement regime, see Practice note, Public procurement in the UK (www.practicallaw.com/5-383-9734).
The decision in Pressetext, see Legal update, ECJ ruling on variation of contracts and whether this amounts to the award of a new contract under the public procurement rules (www.practicallaw.com/2-382-2221).
The Amendment Regulations 2009 came into force on 20 December 2009. The Amendment Regulations 2009 implement the new Remedies Directive in England and Wales. One of the most significant changes introduced by the Amendment Regulations 2009 is the concept of ineffectiveness (regulation 47J). This means that, in certain circumstances, a court can declare a contract is ineffective (that is, void) as a result of flaws in the procurement process (most obviously if it is awarded directly without advertisement or competition). Courts will also be entitled to shorten the term of a contract where they think it is appropriate. Previously, once a contract was executed, damages were the only remedy available to aggrieved bidders.
A public authority found to have breached the public procurement regime could also be the subject of a fine under regulation 47N of the Amendment Regulations 2009 and, as was the case before the Amendment Regulations 2009 came into force:
Sued for damages by other potential suppliers.
The subject of an investigation by the European Commission.
For more information on the remedies available for a breach of the public procurement regime, see Practice note, Remedies Directive: the new regime (www.practicallaw.com/0-500-9991).
A court would probably view any actions taken by a contracting authority facing this situation with sympathy and, appreciating the need to ensure service continuity, give some leeway concerning:
Interim measures taken by the authority to make sure services or works carry on during any period of re-procurement (for example, the award of a short-term contract).
Any decision to take advantage of the provisions of the public procurement framework that allow authorities to proceed on an urgent basis (for example, by accelerating timeframes (see Practice note, Public procurement in the UK: Minimum time limits in award procedures (www.practicallaw.com/5-383-9734)) or using the negotiated procedure under regulation 14(1)(a)(iv) of the Regulations).
If the authority considers the public procurement regime does not require it to publish an OJEU notice and wants to remove the risk of any new contract (or contract novation) being declared ineffective under regulation 47J of the Amendment Regulations 2009, it could publish a voluntary transparency notice in the Official Journal of the European Union setting out the authority's intention to enter into the contract or novation (regulation 47K). If the authority then allows a standstill period of ten days, the remedy of ineffectiveness will is no longer available should another potential supplier subsequently take legal action over the award. For more information, see Practice note, Remedies Directive: the new regime: Derogations from ineffectiveness (www.practicallaw.com/0-500-9991).
The application of the public procurement regime to reference site visits depends on the manner they are being used. The visits can be used:
To evaluate criteria in their own right, with specific scores awarded on the basis of the visit.
As a moderation exercise for written scores already awarded as part of the evaluation process.
Where a reference site visit is necessary for tenderers to score marks for one or more of the criterion, all tenderers submitting bids must have this opportunity.
If they do not:
Their tender will be incomplete.
The relevant public authority would breach the requirements of the procurement regime.
A disgruntled tenderer would have a clear ground of challenge.
However, it is important to ensure that, when the reference site visit takes place at the tender stage, you do not score the bidder on the basis of the service it is delivering to another customer, as "past experience" is a selection criterion, not an evaluation criterion. The reference site visit is used as evidence of what the bidder will do for your authority. For example, during a reference site visit, the bidder may demonstrate a system in operation which it intends to use on your service. The criterion that is being evaluated could relate to usability or look and feel.
A contracting authority could not, for example, interview the bidders' customers at the reference site to assess their relationship management, unless it is assessing a particular model of relationship management which the bidder proposes to use on the tendered service, rather than how they interact with that specific customer. Although it is tempting to ask the customer what they think of the bidder in general, issues around how the bidders perform or have performed on other contracts are selection criteria and should, therefore, be assessed at the pre-qualification questionnaire stage.
For more information on selection and award, see Practice note, Evaluation of tenders: Selection and evaluation (www.practicallaw.com/2-386-8761).
The situation is less clear when the visits are only used for moderation purposes. The risk-free approach would be to include all tenderers submitting bids. However, site visits can be time-consuming and difficult to arrange. To keep the practicalities as simple as possible, the public authority could moderate, for example, the top three scorers only through reference site visits. However, the authority would need to clearly set out how this will be done to ensure no bidder is disadvantaged.
For example, if:
Visits to the top three suppliers result in their scores being reduced so the bidder in fourth place is now in contention, the fourth-placed bidder should also be subject to a site visit in case their score:
increases and means they are now the highest scoring tenderer; or
also decreases and so, again, removes them from contention.
The gap between third and fourth bidders is negligible, the right to visit more than the top three should be reserved.
If any bidder could potentially be disadvantaged by exclusion from the moderation exercise, that bidder's score must be moderated. Clearly, if all or the majority of scores are capable of moderation, the risk increases.
It is, therefore, more practical to confine the moderation to certain targeted evaluation criteria so:
The potential movement in scores is easily determined.
The bidders whose sites should be visited are quickly identified.
For more information on the issues that need to be considered when treating high scoring tenderers differently, see Ask the team: Can a contracting authority invite only the top scoring bidders in a tender process to interview or must it invite all bidders? (www.practicallaw.com/5-503-8953).
Regulation 32 of the Regulations requires the standstill notice to include details of:
The successful tenderer.
The relative characteristics of the successful tenderer's bid compared with the bid submitted by the unsuccessful tenderer receiving the notice.
For more information on the requirements of regulation 32, see Practice note, Remedies Directive: the new regime: The standstill period (www.practicallaw.com/0-500-9991).
The information concerning the second-placed tenderer will be different to that of the original successful tenderer. This means a new standstill notice must be issued and another standstill period observed. This view is supported by the fact that a tenderer who, for example, finished third may not have been interested in challenging the original decision, but may feel they should have come above the tenderer that finished second, so would now mount a challenge. While the risk of a challenge decreases if there is a considerable gap between the tenderers that finished second and third, there is no exclusion from observing the provisions of regulation 32 when there is a clear winner and so the obligation remains.
The Regulations do not provide for the treatment of tenderers (successful or otherwise) that notified the authority they no longer want to be considered to provide services to the authority. Therefore, to fully comply with the requirements of the Regulations, the new standstill notice should also be sent to the tenderer that originally finished first (as they submitted an offer). However, it is difficult to imagine what challenge the first-placed tenderer would bring if they were not sent the notice, so there is probably no substantive risk in failing to doing so.
One final point authorities should consider is that it is possible the original procurement process could be deemed to have been completed and a new public procurement could now be required. If the first-placed tenderer pulled out soon after the expiry of the original standstill period and the authority acted quickly in looking to award the contract to the second-placed tenderer, this risk is small. However if issues have been dragged out over a longer period and the evaluation of bids took place some time ago, awarding to the second-placed tenderer may be more susceptible to challenge, particularly from potential tenderers who may have recently entered the market.
No, this is not possible. Transparency notices or "voluntary ex ante transparency notices" to give them their full name, were introduced by the new Remedies Directive, implemented in England and Wales by amendments to the Regulations made by the Amendment Regulations 2009. They relate specifically to a new remedy introduced by the Directive known as ineffectiveness, under which contracts can be declared void in certain circumstances.
A contracting authority can remove the risk of having a contract declared ineffective if all of the following apply:
The authority considers the award of a contract without an OJEU notice is permitted by the public procurement regime.
A voluntary transparency notice is published expressing the authority's intention to enter into the contract.
The authority does not enter a contract before the end of a standstill period of at least ten days, beginning with the day after the date the voluntary transparency notice is published.
There are two key points to note:
The transparency notice is only relevant to the remedy of ineffectiveness in respect of direct contract awards, it will not prevent legal challenges requesting other remedies (including damages and injunctions against the award of a contract) and ineffectiveness will still be available in certain circumstances.
The transparency notice is only effective if the authority considers that the public procurement regime allows it to award a contract in the manner it proposes. It cannot rectify a situation where the authority is aware it is breaching the requirements of the regime.
For more information on ineffectiveness and the use of transparency notices, see Practice note, Remedies Directive: the new regime: Ineffectiveness (www.practicallaw.com/0-500-9991).
The answer depends on the specific circumstances. It is usual for public sector tender documentation to make it clear that:
Deadlines are strict and no submissions will be accepted after the applicable deadline.
Tenders may be rejected if they do not provide complete response to all questions.
If these statements have been included in the tender documents in this case and the error in submitting the tender was solely the fault of the bidder, there should be no obligation for you to extend the deadline. This was confirmed in J B Leadbitter & Co Ltd v Devon County Council  EWHC 930 (Ch), in which the High Court accepted a contracting authority's decision to rigidly apply a tender deadline (see Legal update, High Court dismisses claim that tenderer wrongly excluded from procurement process (www.practicallaw.com/2-386-0411)).
The following points may also be of interest:
Just because an authority is not obliged to accept a late tender, does not mean that it does not have the discretion to do so (for example, the authority in Leadbitter had already extended the submission deadline on one occasion). However, if an authority chooses to extend a deadline, it is important that all bidders are treated equally and are aware of and given the extension.
If the authority was at fault for a bidder being unable to comply with a tender submission deadline (for example, there was a failure of authority software), the principle of proportionality would likely require the authority to exercise its discretion and extend the deadline.
The most difficult circumstances on which to advise is where a tender is not submitted on time due to the fault of a third party. The Leadbitter case again provides guidance on this issue, as the extension already provided by the authority was due to a bidder experiencing a power failure. As the authority exercised its discretion to extend the deadline, the court was not required to decide whether it was under a legal requirement to do so. Despite this, the court noted the bidder was partly culpable for not meeting the deadline by leaving the completion of the tender requirements to the last day, suggesting there would have been arguable grounds for the authority to refuse to extend the deadline. This argument would be supported if an authority advised bidders in the tender documents not to leave it until the last day to upload tender documents in case of technical difficulties.
However, arguments for extending the deadline based on the principle of proportionality are also likely to be stronger than where a bidder was solely at fault. Taking a common sense approach, there should, generally, be strong practical reasons for any refusal to consider a request for a reasonable extension in these circumstances.
However, if the procurement is of cross-border interest, the Treaty principles derived from the TFEU will apply to the procurement. The ECJ has held that the Treaty principles of equal treatment and non-discrimination require transparency in the procurement process (Telaustria Verlags GmbH v Telecom Austria (Case C-324/98)). The first and most high profile impact of this decision is the necessity for a "degree of advertising sufficient to enable the market to be opened up to competition".
Additionally, the Commission, has stated that the decision in Telaustria means the grounds for the decisions taken during a procurement should be made available to bidders. Therefore, a debrief must still be provided for participants in procurements for Part B services, if requested. However, the authority will have much greater flexibility to run the debrief process as it sees fit, than it would for a procurement subject to the requirements of regulations 32 and 32A.
Disclosure in the context of a procurement challenge is a complex area, with three regimes potentially applying to the disclosure of information:
The Public Contracts Regulations (as amended in 2009). Under the Regulations, the debrief information provided must include:
the award criteria;
the reasons for the decision (including the characteristics and relative advantages of the successful tender);
the scores obtained by the recipient and the operator to be awarded the contract. Office of Government Commerce (OGC) guidance indicates that a full breakdown of scores against each criterion and sub-criterion, supported with narrative, is required;
the successful operator's name; and
a precise statement of when the standstill period is expected to end.
For more information on the debrief process, see Practice note, Remedies Directive: the new regime: The standstill period.
However, the Regulations do not provide tenderers with a right to see particular documents. Therefore, someone wanting to access a particular document that an authority did not want to disclose would have to resort to one of the two remaining options.
Freedom of Information Act 2000 (FOIA). The FOIA will provide access to some documents generated by an authority during the procurement process. However, a 20 day time limit applies to public authorities for responding to requests for information made under FOIA and this will not be of much use to a tenderer trying to assess whether to bring a claim within the ten day standstill period.
In assessing whether one of the exemptions to disclosure included in FOIA applies to any document, the OGC guidance on the relationship between FOIA and the procurement process should assist (see OGC: FOI (Civil Procurement) Policy and Guidance Version 2.0 (November 2008)). Sections 3 and 4 of Annex A will be of particular relevance.
For more information on FOIA, see Quick guide, Freedom of Information.
The Civil Procedure Rules (CPR). If a challenge goes as far as formal litigation, the CPR on disclosure will apply. For more information on the disclosure rules, see Practice note, Disclosure: an overview (www.practicallaw.com/5-203-8758).
Recently, there have been two cases on the level of disclosure required under the CPR in comparison to the Public Contracts Regulations, which give an indication of the approach a court is likely to take (see Legal updates, High Court ruling on disclosure in public procurement claim (www.practicallaw.com/0-502-1337) and High Court ruling on disclosure and time limits in public procurement proceedings (www.practicallaw.com/1-504-5489)).
Unfortunately, there is no power in the Public Contracts Regulations to exclude a tenderer from future public procurements by imposing a fixed term ban due to the tenderer's conduct in a prior procurement and doing so would also breach the EC Treaty principle of equal treatment.
However, the circumstances you describe are relevant to the potential reliability of the tenderer, at selection stage a contracting authority can take into account a bidder's:
"technical ability, taking into account in particular that economic operator's skills, efficiency, experience and reliability (emphasis added)" (regulation 25(2)(a),Public Contracts Regulations).
To make sure an authority can always take all relevant information into account when assessing these matters, it is sensible to always reserve the right to take references from any party that the tenderer has previously contracted with or tendered to provide services to (including the authority itself) in procurement documentation and not be left to rely on the referees that the tenderer provides.
For more guidance on the use of selection criteria including on the use of "pass or fail" tests, see Practice note, Evaluation of Tenders (www.practicallaw.com/2-386-8761).
Finally, the authority should also consider whether the tenderer meets any of the mandatory or discretionary exclusion criteria set out in regulation 23 of the Public Contracts Regulations, for more information, see Practice note, Debarment from public contracts and the Bribery Act 2010 (www.practicallaw.com/1-505-6883).
The first step that needs to be taken is to review the procurement process that your proposed partner undertook when it let its IT support contract. If the OJEU notice and contract terms did not provide for the possibility that your authority may also purchase under the contract (whether directly with the supplier or through your partner authority by a variation to the specification or volumes), it appears highly likely that varying the contract to incorporate your requirements will constitute a material variation to the contract. This would make it the award of a new contract for the purposes of the public procurement regime (see Practice note, Public procurement in the UK: Renewals, extensions and material changes to an existing contract (www.practicallaw.com/5-383-9734)).
It is, therefore, necessary to consider whether your authority is able to award the contract directly without relying on your partner's procurement process, but without breaching the requirements of the Public Contracts Regulations. The potentially relevant exclusion is likely to be found in regulation 14(1)(a)(iii), which states that contracts can be let under the negotiated procedure without the prior publication of an OJEU notice:
"when, for technical or artistic reasons, or for reasons connected with the protection of exclusive rights, the public contract may be awarded only to a particular economic operator."
If the system requirements of your partner authority limit the options available to you if you are to pursue a partnership, regulation 14(1)(a)(iii) could possibly apply. However, it is important to note that there is little case law on the exclusions in regulation 14 and, therefore, it is difficult to second guess the attitude that may be taken by the courts to the claim. Set against the backdrop that the EC strongly believes that any exclusions from the procurement regime must be interpreted narrowly, any arguments made in favour of regulation 14(1)(a)(iii) applying will need to be strong and legal advice will need to be taken on the specific circumstances.
You should also note that the provisions of regulation 14 do not provide an outright exclusion of the Public Contracts Regulations, but rather permission to engage with a single tenderer and this process will still be subject to some of the provisions of the Regulations.
While they are not necessarily acting in compliance with the public procurement regime, authorities often see the risk of challenge in these circumstances as one worth taking. However, if your authority is reluctant to take on this risk, this appears to be a situation where it may be sensible for the authority to consider publishing a voluntary transparency notice. Not only would this remove the possibility of the new contract being declared ineffective in the future, it would also flush out any other organisations that would be likely to bring a challenge against the award. If the notice does not provoke any complaints, the risk of a challenge to the award of the variation would appear to be lower. For more information, see Practice note, Remedies Directive: the new regime: Ineffectiveness (www.practicallaw.com/0-500-9991).
Before answering this question it is important to emphasise the importance of a contracting authority ensuring that it effectively monitors contract spend. This allows the risk of an estimate being exceeded to be accurately assessed and addressed early enough to prevent it happening (for example, by procuring a replacement agreement before the estimate has been exceeded).
However, the estimate of the value of the contract included in the OJEU notice does not provide a strict cap that cannot be exceeded. The question that an authority needs to consider is whether the actual amount of spending constitutes a material change to the contract that was awarded. For example, if the actual spend is only likely to exceed the initial estimate by a small amount, it is unlikely that anyone would consider the extra spending to be a material change. However, if the proposed spending is likely to be several million pounds over the estimate (that is, a significant percentage of the original estimated maximum spend), the change is likely to be considered material. Any agreement to pay additional sums for services would then risk being declared a new contract awarded directly to contractor. For more information on the implications of this, see Practice note, Remedies Directive: the new regime (www.practicallaw.com/0-500-9991).
Another way that can assist in determining whether a proposed change in spending is material is to ask the questions:
Would a provider who elected not to submit a tender or expression of interest have been interested in this procurement had the increased valuation been made from the start?
Would the outcome of the procurement process have been different if the authority had envisaged this level of spending?
If the answer to either of these questions is yes, a material change is likely to have occurred (and there are also likely to be providers who may seek to challenge on the basis that the authority's original estimation was invalid).
The main ECJ case on changes to contracts is the decision in Pressetext (see Legal update, ECJ ruling on variation of contracts and whether this amounts to the award of a new contract under the public procurement rules (www.practicallaw.com/2-382-2221)). While on the issue of a formal variation and not on the value of the contract, the same principles apply to any change of contract.
The rules on standstill and debrief set out in regulation 32 of the Public Contracts Regulations do not apply to call-off contracts made under a framework agreement (regulation 32(7)). Therefore, there is no formal obligation to debrief unsuccessful providers or observe a standstill period before entering into a call-off contract with the successful framework participant.
However, a call-off contract can be declared ineffective (that is, void) if it is not let in accordance with the requirements of the Regulations (for example, there was a defective mini-competition) (regulation 47K(6)).
A defective call-off contract will not be declared ineffective if the authority:
Considered that the rules on frameworks and dynamic purchasing systems had been followed.
Voluntarily complied with the standstill obligations set out in regulations 32(1) to 32(2A).
Did not enter into the contract before the end of the standstill period.
Therefore, contracting authorities may want to consider voluntarily complying with the full requirements of regulation 32, particularly if the mini-competition:
Was for a high value contract.
Produced a close result.
However, this advantage is not relevant to contracts for part B services, for which the remedy of ineffectiveness is not available.
Contracting authorities should also note that, irrespective of the legal position, debriefing unsuccessful applicants generally represents good practice and should improve the quality of tenders received in response to future tender exercises.
For more information on:
The standstill requirements and ineffectiveness, see Practice note, Remedies Directive: the new regime (www.practicallaw.com/0-500-9991).
There are two keys dates to note:
20 December 2009, which governs which remedies are available in any challenge made.
1 October 2011, which decides the relevant limitation period within which a claim must be brought.
As the changes introduced by the Amendment Regulations 2009 and Public Procurement (Miscellaneous Amendments) Regulations 2011 (SI 2011/2053) were phased in, there are four possible variations of the remedies regime that may apply to a public procurement as set out below.
Public procurement commenced
Before 20 December 2009
On or after 20 December 2009
Date claimant first knew or ought to have known that grounds for starting the proceedings had arisen.
Before 1 October 2011
Old remedies apply
Limitation period at least three months
New remedies apply
Limitation period at least three months
On or after 1 October 2011
Old remedies apply
Basic limitation period 30 days
New remedies apply
Basic limitation period 30 days
For details of:
The differences between the old and new remedies available, see Practice note, Remedies Directive: the new regime: Key changes under the new regime (www.practicallaw.com/0-500-9991).
The date on which a public procurement is deemed to have been commenced, see Practice note, Remedies Directive: the new regime: Transitional provisions: which procurements will the new rules apply to? (www.practicallaw.com/0-500-9991).
Please also note that:
The 30 day basic limitation period may be extended by a court up to a maximum period of three months.
Whichever regime applies, the limitation period starts on the date claimant first knew or ought to have known that grounds for starting the proceedings had arisen. The Court of Appeal has considered when a claimant will be deemed to have this knowledge (see Legal update, Court of Appeal confirms that procurement challenge was brought out of time (www.practicallaw.com/2-504-9364)).
Where the remedy of ineffectiveness is being sought, a different limitation period applies. This is only applicable to procurements that are subject to the new remedies (that is, those commenced on or after 20 December 2009). For more information, see Practice note, Remedies Directive: the new regime: Time limits and ineffectiveness (www.practicallaw.com/0-500-9991).
Regulation 29A of the Public Contracts Regulations states that:
"Where a contracting authority decides, prior to the stage at which it makes a decision to which regulation 32(1) applies, to exclude an applicant, the contracting authority shall notify the applicant of that exclusion."
This obligation only extends to informing an applicant that they have not been successful and does not require any sort of formal debrief. However, contracting authorities should take this opportunity to provide unsuccessful applicants with the reason for their failure for the following reasons:
It would be extremely difficult for an authority to refuse to disclose this information should it be asked for it.
Front-loading the process should:
help to ensure that all tenderers are treated equally;
mean that requests from tenderers are not overlooked by the authority; and
actually reduce the administrative burden on the authority.
All applicants will ultimately have a right to be debriefed. Applicants that are unsuccessful at selection stage (or subsequently but before the award decision is made) will also qualify as "candidates" for the purposes of regulation 32(17)(a) unless they have been "informed of the rejection of [their] application, and the reasons for it". Therefore, not providing an applicant with the reasons for its rejection at the time it is excluded from the procurement process would bring them within the scope of the full debrief provisions at the conclusion of the procurement.
For more information on the debrief provisions, see Practice note, Remedies Directive: the new regime: The standstill period (www.practicallaw.com/0-500-9991).