New public procurement rules for utilities come into force

18 April 2016

A raft of new public procurement rules based on the 2014 EU directives come into effect in the UK today.

The rules cover contracts around utilities and concessions and they follow regulations covering public contracts that came into force in February 2015.

The Utilities Contracts Regulations 2016 and the Concessions Contracts Regulations 2016 are now in force in England, Wales and Northern Ireland. In Scotland the Public Contracts (Scotland) Regulations 2015 and the Utilities Contracts (Scotland) Regulations 2016 now apply, along with the Concession Contracts (Scotland) Regulations 2016.

Paul Henty, a partner at law firm Charles Russell Speechlys, said one of the main changes of the utilities regulations was that where a utility specifies that a bidding contractor must have a minimum turnover, this can no longer exceed twice the value of the contract. The idea behind the change was to boost participation by SMEs in competitive tenders.

“In an effort to bolster opportunities for SMEs, utilities are encouraged to break up larger contracts into smaller ones,” Henty added. “Where they opt not to disaggregate larger packages in this way, utilities will need to provide reasons for their decision.” 

Utilities are now generally forced to limit framework agreements to eight years’ duration, whereas before there was no restriction. 

Stuart Cairns, of Pinsent Masons, said one of the major changes that will be introduced would be a new “competitive dialogue regime”, which allows contracting bodies to run their procurement in stages.

He said that the competitive dialogue procedure could be useful where utilities are unable to define the precise solution they need or to access what solutions the market can offer.

Under the process contracting utilities can encourage a wide-range of bids from utilities suppliers initially but can whittle down the number of options at successive stages until a preferred bidder is found.

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