Three key danger zones of new public procurement rules

Public sector organisations have been under greater scrutiny in recent years with continuing stringent savings strategies and demanding cost reduction initiatives.

But life will get more difficult if they are not implementing the new requirements for procurement in the Public Contract Regulations, which came into force in February 2015.

On the one hand, these regulations provide new routes to contract including the ‘innovation partnership’ rule and also greater clarity and certainty on some issues for local authorities, social landlords and other public sector agencies. The EU’s overall intention is to modernise and streamline public procurement – but the unprepared could fall foul of the new regulations.

There are some key danger zones that public bodies such as social landlords need to be aware of if they want to avoid supplier challenges, something I’ll be discussing at procurement event PfH Live tomorrow on 23 June.

The first relates to making amendments to contracts after they have been agreed. Changes can be made if they are not deemed ‘substantial’ or fall into one of the new exemptions. But if this is not the case, organisations will leave themselves open to challenge if they do not embark on a full procurement process again.

Second, more contracts must now be formally procured. Whereas previously only certain services were required to go through formal EU tenders, this process now covers all service contracts - the old ‘part A’ and ‘part B’ distinction has gone, although for some services a new ‘light touch’ regime has been introduced.

As mentioned above, the new rules do bring some benefits for local government, the NHS and social landlords. The light touch regime can be used in health and social care and certain other specified contracts. For these there is a higher threshold of £625,000 and they are not quite as regulated in terms of tender procedures. Although they must be advertised, contracting authorities can set their own process and even alter this process while it is underway, taking into account the changing needs of a service user – genuine flexibility that will be welcomed by the public sector.

On top of that, new rules introduced by the Cabinet Office require contracts that fall between £25,000 (£10,000 for central government) and EU thresholds to be formally advertised on contracts finder.

A further addition to the new rules is that all documentation must be published in full at the beginning of the process, for full transparency.

Another danger zone relates to changes around the exclusion of suppliers. Alternations to the short-listing process mean public bodies can no longer exclude bidders on the basis of the old rules and tighter grounds have been introduced. For example, circumstances giving rise to mandatory or discretionary exclusion, such as convictions, are now time limited and bidders are also allowed to establish eligibility by ‘self–cleansing’. The rules also permit self-certification by bidders to reduce the burden on suppliers pitching for work.

Although new EU procurement rules are an evolution and not a revolution, social landlords and other public contracting authorities must be proactive in their approach to revising their procurement process in relation to updating existing contracting processes and paper work. If they rely on previous tender documents and procurement systems they might just find themselves faced with a challenge, and their processes could be halted or ultimately collapse.

Richard Auton is a public sector lawyer and director at Walker Morris. He will be leading a session on important changes to EU procurement regulations and how to avoid ‘danger zones’ at PfH Live on 23 June.

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