31/10/2013
This Update contains brief details of recent key developments relevant to those involved in procurement work.
If you have been forwarded this update by a colleague and would like to receive it direct please email Claire Booth.
All links are correct at the date of publication.
In this update:
Policy and guidance
Cabinet Office: Procurement Policy Note 05/13 – Further progress update on the modernisation of the EU Procurement Rules
This PPN summarises the main changes in the provisional agreement on the revised EU Procurement Rules and outlines the next steps in the process to finalise the EU rules and then implement them in the UK. (25 July 2013)
Cabinet Office: Procurement Policy Note – Measures to promote tax compliance: Action Note 06/13
This PPN sets out the scope and background of the new policy on the use of the procurement process to promote tax compliance that applies with effect from 1 April 2013 to all central government contracts over £5m. Suppliers bidding for these contracts must self-certify their tax compliance. It advises on how to take account of the policy in procurement documentation and provides further detailed guidance on how Government Departments should assess suppliers’ responses and the inclusion of new clauses in contract terms. It replaces Action Note 04/13. (25 July 2013)
DEFRA: London 2012 Olympic and Paralympic Games – The legacy: Sustainable procurement for construction projects – A guide
This quick reference guide shares lessons learnt on sustainable procurement of construction projects from the London 2012 Games. The guide aims to assist procurers in central government and the wider public sector to manage large or smaller procurement exercises that relate to construction in a way that achieves sustainability objectives. (18 July 2013)
BPF: When is an OJEU or other competition required for a land deal?
This guide is designed to provide high-level guidance to both contracting authorities and developers on the strategic choices open to them. The chart identifies the most common structures used in land developments and, through a combination of colour coding and key questions, is designed to help users identify factors which indicate OJEU tenders will normally be required, situations where some lesser form of competition may be required and circumstances where the EU procurement rules are unlikely to apply. Additional “notes” boxes provide more detailed explanations of key legal concepts. (16 July 2013)
Welsh Government: Blacklisting in the construction industry – Policy Advice Note (PAN) for the public sector in Wales
Outlines the necessary steps that can be taken through procurement to help eradicate blacklisting. The guidance makes clear those circumstances where Welsh public sector bodies can exclude blacklisters from bidding for a public contract. (10 September 2013)
HC Public Administration Select Committee: Government procurement
This report sets out the Committee's concerns about the systemic weaknesses in government procurement and commissioning. The Committee found that despite Government steps to improve the efficiency and effectiveness of Government procurement , the stream of procurement and contract management failures has continued unabated. The Committee is concerned that the EU Procurement Directives reinforce a process-oriented, risk-averse culture in procurement, which in the UK results in delay, increased cost and a failure to focus on outcome. It welcomes reform proposals that will allow criteria such as wider social and environmental impact, and maximising the positive impact of public spending for the UK economy overall, be considered in tendering processes. The Committee found there were clear shortcomings in the ability of the Civil Service to run effective and efficient procurement. The Civil Service shows a consistent lack of understanding about how to gather requirements, evaluate supplier capabilities, develop relationships or specify outcomes. Initiatives to improve capability and skills were welcomed but a more fundamental shift is required. (19 July 2013)
Legislation – EU
New Procurement Directives
The latest agreed texts of the three new draft Procurement Directives – Public Procurement, Utilities and the new Concession Contracts – have now been published on the Council of the European Union's Consilium website. The final plenary vote for the three Directives is scheduled for December 2013.
Key provisions which may have implications for your organisation are:
- abolition of distinction between Part A and Part B services – some services which currently fall under Part B will become fully regulated;
- special "light touch" regime for contracts for social, health and other specified services over €750,000 – take note: even though there will be a lighter touch regime for these contracts, you will be required to publish an OJEU contract notice advertising the opportunity;
- annual procurement notices and possible option for flexibility on tender timescales for some contracting authorities – includes local authorities;
- preliminary market consultations – new provisions permitting pre-OJEU notice market engagement;
- revised competitive dialogue and negotiated procedures and a new innovation partnerships procedure;
- evaluation criteria – all contracts to be awarded on most economically advantageous tender basis;
- new mandatory grounds for exclusion at selection stage and self-cleaning provisions;
- mandatory use of electronic procurement with timetable for implementation;
• shorter timescales for expressions of interest and tender submissions; - incorporation of in-house (Teckal) and inter-authority cooperation (Hamburg) exemptions;
- new type of reserved contract limiting participation to organisations with employee involvement;
- provisions (incorporating pressetext decision) for modifications of contracts during their term and for changes to contracting parties.
We have published a detailed analysis of these proposals for new Procurement Directives that discusses a number of the key areas of change and highlights what some of the key provisions will mean for your organisation, whether as a contracting authority or as an organisation bidding for public contracts.
Please click here to email a request and we will send a copy of the detailed analysis.
Consultations
Cabinet Office: Making public sector procurement more accessible to SMEs
Seeks views on proposed changes, in particular to the selection/pre-qualification process, aimed at making public sector procurement more accessible to SMEs. Proposals include the introduction of legislation applying to all contracting authorities which will eliminate the use of PQQs for low value contracts and strictly limit the questions which may be asked in most PQQs for high value contracts. There is also discussion of proposals for on-line advertising of all contracts of £10,00 or more, requirements relating to the reporting and publication of data relating to SME spend and the possibility of a central repository of PQQ data as well as prompt payment requirements. The consultation closed on 16 October 2013. (19 September 2013)
Cases – UK
R (Nash) v Barnet LBC [2013] EWCA Civ 1004 (CA) (2 August 2013)
Proceedings out of time
We first referred to this case in our July 2013 Procurement Update. Mrs Nash, a Barnet resident of B Council, appealed against the refusal of permission to apply for judicial review of the Council's decision to outsource to private sector organisations a high proportion of its functions and services under its One Barnet programme. The contested decisions related to the award of the outsourcing contract and were taken (or were to be taken) in December 2012 and January 2013. In 2010/11 the Council had taken decisions that marked the formal beginning of the procurement process leading to the contract award decision. N claimed that the Council had not complied with its consultation obligations relating to the decisions and had failed to have due regard to its Public Sector Equality Duty (PSED) under s.149 of the Equality Act 2010. She also contended that if the Council entered into the proposed contracts it would be in breach of its fiduciary duty to council taxpayers. The High Court held that N's claim was out of time.
The Court of Appeal held, dismissing N's appeal, that the proceedings had been properly assessed as out of time. When identifying the relevant decision, the question to be asked was not when the decision was finally or irrevocably made but when a decision was taken in respect of which the statutory duty to consult under s.3 LGA 1999 first arose. The duty under s.3 was framed in broad terms and was concerned with "questions of policy and approach", not specific operational matters. N's complaint was not about the alleged failure to consult about entering into a particular contract or about the terms of any such contract but was about the alleged failure to consult about the whole proposal to outsource in principle. Statutory consultation was ordinarily designed to be needed, and was required, at the formative stage of the relevant process. The decisions in 2010/11 were the relevant ones for when the statutory duty to consult arose. Considerations of fairness and certainty all weighed strongly in favour of the Council. It was inconceivable that the Council (or the potential tenderers) would have gone down the very costly and time-consuming process of procurement and competitive dialogue had it been envisaged that a challenge on the grounds of lack of consultation on the whole strategy of outsourcing might at the very end of the day be made. That was quite different from the inherent and understood risk that the procurement process might not ultimately result in any concluded procurement contract.
Corelogic Ltd v Bristol City Council [2013] EWHC 2088 (TCC) (18 July 2013)
Amendment of pleadings
C was an unsuccessful tenderer in the Council's procurement of an adult social care management system. It was dissatisfied with the Council's responses to questions relating to its price evaluation of C's tender and it issued proceedings within the standstill period, alleging that the Council was in breach of the 2006 Regulations as it had failed to give adequate reasons. 10 weeks after issuing proceedings, C served its particulars of claim and applied to amend its pleadings to add two claims, which add breaches for manifest error in the assessment of the C's tender price and for the non-disclosure of formulae for translating prices into scores and for applying an undisclosed award criterion to the assessment of prices for the provision of upgrades. The Council contended that these amendments raised new causes of action. C submitted that the amendments were a clarification of the existing pleadings, a conclusion that could be drawn in light of the prior correspondence read with the particulars of claim.
The court held, refusing C's application, that the claim form as originally drafted related only to the alleged breaches for failure to provide post-contract award relevant or adequate information. That is a perfectly comprehensible cause of action which might well lead, if established, to some damages or other relief; it was not obviously some hopelessly lightweight complaint as it was drafted. The amendments raised new claims which did not arise out of the same or substantially the same facts and so were time-barred. The court would not grant an extension to the time as no reason, let alone a good reason, had been proffered by C for the delay. Delay resulting from solicitors' professional negligence or some deliberate tactical decision could not amount to a good reason.
Covanta Energy Ltd v Merseyside Waste Disposal Authority [2013] EWHC 2922 (TCC) (26 September 2013)
Transitional remedies provisions
C was an unsuccessful tenderer in the WDA's procurement of a proposed Resource Recovery Contract that was conducted using the Competitive Dialogue procedure under the Public Contracts Regulations 2006. C was involved in the procedure from 2007 and the deadline for the final tenders was 22 June 2012. In April 2013, the WDA announced its intention to award the contract to the only other tenderer, S. C applied for orders setting aside the WDA's decision not to award them the contract and to restrain the WDA from entering into the contract with S. C contended that there were manifest errors in the WDA's evaluation process. It submitted that Reg.47G of the Public Contracts Regulations 2006 applied to this procurement and so there was an automatic suspension requiring the WDA to refrain from entering into the proposed contract with S. The WDA said that Reg.47G did not apply because the procurement process began before it came into force.
The court held that Reg. 47.G did not apply; it was very important that the regulations governing the procurement process itself, and its aftermath, should be clear and certain. The general rule was that decisions made pursuant to a procedure properly launched need follow only the legal rules in force at the time the procedure is launched. The transitional provisions in the 2009 amendment regulations were clear that the position in this present case was governed by the original, unamended Public Contracts Regulations, which excluded the remedy of automatic suspension. The court then considered, applying the American Cyanamid principles, whether it should grant C's request for an interim injunction. It held that, on the balance of convenience, it would award C an interim injunction.
Nationwide Gritting Services Ltd v Scottish Ministers [2013] CSOH 119 (Outer Hse) (11 July 2013)
Proceedings out of time
This case relates to the purchase of de-icing salt for the gritting of trunk roads by Transport Scotland, which is an agency of the Scottish Ministers. On three occasions during 2010 and 2011, purchases were made from several different suppliers without any call for tenders. Nationwide Gritting claimed that the purchases without a call for tenders in the OJEU were in breach of the Public Contracts (Scotland) Regulations 2006. Transport Scotland claimed that the purchase without a call for tenders was justified on the basis of extreme urgency that was unforeseeable.
The judgment addressed the issue of whether the claim was made out of time. The issue that arose for the court in this respect was at what date Nationwide Gritting could be considered to know – or should have known – of the alleged violation. The court was of the view that the claim was made in time. On the facts, the judge found that Nationwide Gritting had for some time had suspicions, but no hard information, of a breach. The court held that mere suspicion of breach of the rules because of knowledge that supplies had been purchased elsewhere did not constitute relevant knowledge of the absence of competition and thus of the alleged violation. The court also indicated that publication of a contract award notice (not something which was done in this case) would constitute sufficient knowledge.
Resource (NI) Ltd v University of Ulster [2013] NIQB 64 (NI QB) (7 June 2013)
Lifting of automatic suspension granted
This case related to the procurement by the University of Ulster of a range of facilities management services. The Public Contracts Regulations 2006 applied and the restricted procedure was used. Resource, which was the incumbent contractor for a number of the services which were the subject of this tender, was the second placed tenderer. Resource challenged the decision to appoint another company, Noonan as the preferred bidder. Resource argued that Noonan did not meet the minimum requirements in relation to financial turnover and that Noonan's tender price was abnormally low and so the tender should have been rejected.
At the hearing the judge considered and granted the University's application to lift the automatic suspension. The judge was of the view that there was an arguable case in relation to the assessment of the minimum requirements but not in relation to rejection of an abnormally low tender. The judge applied the American Cyanamid principles, and concluded that the balance of interests favoured lifting the suspension. Key factors were the fact that damages would, in the judge's view, be an adequate remedy for Resource should it succeed at trial and that practical problems would arise from delay if the suspension continued, such as difficulty in putting the services in place in time for the academic year, and human and personnel issues.
News
Common Select Committee inquiry into Local Government Procurement
The Commons CLG Committee has decided to carry out an inquiry into local government procurement, to assess the extent to which it is delivering good value for money and meeting the objectives of local authorities. The inquiry will highlight and examine good practice and initiatives within local authority procurement and elsewhere and explore how and to what extent local authorities can adopt and take advantage of them. The deadline for written submissions was 6 September 2013. The Committee has now started taking oral evidence.
SOLACE has published its submission to the Committee, which states that the basic procurement decisions that face local authorities are ever more complex, given the increasing range and variety of options available and the potential for the growth of community budgeting. Such complexity means that the process of ‘procurement’ is increasingly confronted by barriers, both real and perceived, that hinder its efficient and effective operation. It highlights current EU procurement rules that it considers have presented a number of key problems to authorities and businesses bidding for work.
Cabinet Office: Mystery Shopper service "has shown that it works"
Highlights positive feedback received on the Mystery Shopper service, which provides a route for suppliers to raise concerns about public procurement practice. The total number of Mystery Shopper cases reported since February 2011 is 463, with 392 resolved as at the end of June 2013. There was an 80% positive outcome overall. (12 August 2013)
Bevan Brittan’s Procurement Telephone Advice Service
Our Procurement Telephone Advice Service allows local authority and public sector clients telephone access to specialist legal support on all procurement related issues. This service was initially made available to some of the firm’s existing clients and is now being more widely launched to all public bodies.
Our Procurement Telephone Advice Service aims to provide you with an easy and accessible single point of contact for practical and essential procurement advice. You may make use of this service between 9am – 6pm Monday to Friday (excluding bank holidays) in a way which best suit your needs as and when you require our support, whether it is to address a procurement query or to clarify a point of law.
We have two service packages:
- Option 1 Pay as You Go: designed to offer you essential procurement advice as and when you need it whilst giving you full control over your legal spend.
- Option 2 Annual retainer: provides your business with the procurement advice and support you require at a fixed annual cost over a 12 month period.
For more information, or to sign up to one of our service packages please do not hesitate to email Nina Beasley.
The Government Procurement Services legal services framework agreement allows customers throughout the public sector to place orders with Bevan Brittan LLP under standard terms and conditions of the agreement. We are appointed to Lot 7: General Litigation and Legal Support Services and Lot 8: Major or Complex Projects.
