CIPS South Yorkshire branch Procurement Law Update
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1 CIPS South Yorkshire branch Procurement Law Update Mary Mundy and Tim Dennis 21 May 2015
2 Legal background EU directives Concession Directive 2014/23/EC Public directive 2014/24/EC Utilities Directive 2014/25/EC English law covers Wales and NI (separate Scottish Regs) Public Contracts Regulations 2015 (PCR) Public Contracts Regulations 2006 (as amended) still valid for health service purchasing under NHS (Procurement, Patient Choice and Competition) (No 2) Regulations 2013 health service purchasing by NHS England and CCGs and concessions Case law Guidance and PPNs
3 Concessions Directive Works/ services concessions over threshold ( 4,322,012) Must include transfer of operating risk covering demand/ supply or both All public, some utility provisions and defence For social/ other services contract notice and award notice only Time limited - recoup investment and a return on capital General process subject to Treaty principles Minimum period for tenders 17 days Award criteria in descending order of importance and potential to reorder where an unforeseen innovative solution with exceptional functional performance arises
4 PCR 2015 In force 26 February 2015 Procurements with contract notice on/after that date Works, supplies, non light touch services Existing thresholds apply Light touch regime for social and other specific services - replaces Part B
5 Social and other Specific Services Replaces Part B Schedule 3 exclusive list of services by CPV code 625,050 threshold OJEU advertising: contract notice or PIN published continuously Treaty principles apply - equal treatment and transparency Significant flexibility in process, time limits to be reasonable, no standstill required (?) Contract award notice (can be published quarterly)
6 New obligations SME friendly? Contracts Finder notices (above and below threshold) All procurement documents must be available via the internet from date of OJEU publication Standard CCS PQQ mandated - England No PQQ below goods & services threshold Contracts Finder award notice (above and below threshold) Contracts Finder notices for framework call-offs (any value) Justification for not subdividing into lots 30 day payment terms throughout supply chain and annual reporting on compliance
7 Available procedures Procedure Open Restricted Innovation partnerships Competitive dialogue Competitive procedure with negotiation Negotiated procedure without prior publication When? Freely available Where innovative need not freely available on the market Where needs: - adaptation of readily available solutions - design or innovative solutions - prior negotiation of contract needed - technical specification cannot be established Very limited grounds Utilities free choice except negotiated without publication
8 Tendering processes Pre market engagement Open Restricted Negotiated Comp dialogue Contract notice PQQ x ITT Negotiation X X Tender Post selection negotiation X X X Award Innovation partnership
9 Comp negotiation vs Comp dialogue Competitive negotiation Know needs and characteristics Negotiate with all on basis of initial and subsequent tenders, but not final tenders (runs like restricted) Competitive dialogue Know needs and requirements Dialogue with all to identify solutions and means best suited to satisfying needs, final tenders Clarify, specify and optimise all tenders Final negotiations to confirm commitments/ terms but not on essential elements or to distort competition
10 Innovation Partnerships Must be able to identify a need for an innovative product, service or works that cannot be met by the current market Innovation new or significantly improved including production, building or construction processes, a new marketing method, or a new organisational method in business practices, workplace organisation or external relations including helping to solve societal challenges or support the Europe 2012 [2020] strategy for smart, sustainable and inclusive growth One partner or several partners each conducting separate R&D Negotiation permitted and must structure in successive phases: eg R&D, prototype, manufacture, delivery Must establish IP rights base to go to market Value of delivery not disproportionate to value of investment for development
11 Pre Market Engagement Expressly permitted (and encouraged by Cabinet Office) To prepare the procurement and inform the market of procurement plans and requirements Authority must take appropriate measures to ensure that competition is not distorted Can only exclude where there are no other means to ensure nondistortion of competition Must provide the tenderer with an opportunity to prove distortion of competition will not result
12 CCS Standard PQQ Must use for all procurements (including light touch) if over threshold Core questions and additional modules Must add your own evaluation methodology Reportable Deviations cannot deviate from questions or question wording unless justified and then must report to CCS within 30 days of making PQQ available to candidates from 1 September 2015 Cannot use PQQ stage below goods & services threshold Will be replaced by ESPD - European Single Procurement Document
13 PQQ grounds Mandatory exclusion criteria (5 years) Discretionary exclusion criteria (3 years) Significant or persistent deficiencies under a prior public contract which led to early termination, damages or comparable sanctions Economic and financial standing Minimum turnover (max 2x contract value unless exceptional) Information on accounts (must state how scored) Any minimum hurdles must be in contract notice or ITCI Self cleansing/ declaration permissible Continuing obligation throughout process
14 Contract award criteria Must award to most economically advantageous tender On basis of price or cost so can be price only Or can include the best price/quality ratio Price can include life cycle costing looking at acquisition, maintenance, end of life costs, usage eg energy consumption Quality criteria can take into account e.g. Technical merit, social, environmental and innovative characteristics Qualifications and experience where significant impact on contract performance After sales service
15 Frameworks Methods of call off: Single supplier framework direct call off Multi supplier framework direct call off or mini-competition OR mini-comp only Must set out in framework agreement: Objective criteria for deciding between direct call-off or mini competition How decision will be made if direct call off; and Mini-competition award criteria Must publish contract award information on Contracts Finder for each call off contract
16 Awards to mutual or social entities Contracts for limited range of social/ other specific services including surgical and medical hospital services, education Can restrict award to types of organisation where its objective is a public service mission profits are reinvested or distributed to participants management/ ownership is based on employee ownership/ participatory principles haven t awarded a contract for those services by that authority in past 3 years Limit of 3 years duration on the awarded contract Competition amongst reserved bodies
17 In house awards Structural (Teckal) - award to a legal person governed by private or public law Control test - decisive influence over strategic objectives and significant decisions (can be jointly exercised) Activity test - 80% of the activities must be carried out for the controlling authority Capital no direct private capital participation except required non-controlling, non-blocking without decisive influence Public to public co-operation (Hamburg) Co-operate to deliver public services driven by goal of achieving common objectives Governed solely by public interest considerations Perform on the open market less than 20% of activities
18 Modification of contracts - allowed Modification can occur without a new procurement arising where: Contract clearly and unequivocally provides for the change and it doesn t affect overall nature Additional provision not envisaged but a change of contractor can t be made due to interchangeability or interoperability issues or significant inconvenience/ substantial cost duplication and not >50% of contract value Couldn t be foreseen, doesn t affect overall nature and not >50% of contract value Change of contractor due to merger, insolvency, acquisition etc Change value doesn t exceed the relevant threshold AND is less than 10% of the original contract value (services) or 15% of the contract value (works) net cumulative value of changes Not substantial
19 What is substantial modification Changes are substantial, and therefore give rise to a new procurement, where it: Renders the contract materially different in character to that originally concluded Introduces conditions which if included originally would have brought other bidders/ different winner Changes the economic balance of the contract in favour of the contractor in a manner not provided for initially Extends the scope of the contract considerably or A new contractor replaces the original contractor (except insolvency, acquisition, re-organisation)
20 Reporting Information on every contract/ framework agreement/ DPS Authority details, the subject matter and value of the contract Details of any shortlisting or de-selection and reasons; Reasons for rejection of any abnormally low tenders Winning bidder identity and reasons and if known any subcontracting levels and main sub-contractor identities Justification for the choice of procedure negotiated/ dialogue Reasons for any decision not to make an award Reasons why any non-electronic communication has been used for tender submission Any conflicts of interest detected and subsequent measures taken Send to Commission or Cabinet Office on request
21 Documentation retention Keep documentation for at least 3 years to "justify decisions taken in all stages of the procurement procedure" such as on Communications with bidders and potential bidders and internal deliberations Preparation of procurement documents Any dialogue or negotiation Selection and award of the contract
22 Claims/ remedies Breach of duty Ineffectiveness - illegal direct award - breach duty & standstill - incorrect over threshold framework call off Pre contract award Automatic suspension Damages Automatic Suspension Voiding of contract Damages Civil financial penalties Contract cancellation Post contract award Damages Voiding of contract Damages Civil financial penalties Contract cancellation
23 Issues relevant to litigation Reporting requirements and record keeping Document Retention Discretionary exclusion criteria persistent deficiencies under a prior public contract may result in more disputes between parties during contracts Revised definition of Economic Operator wider group of potential claimants under PCR 2015?
24 What we tell bidders Go fishing Time is of the essence - act quickly Use your contacts - off the record isn t off the record! Press the procuring body - debriefs No stigma to challenging Reasons/ issues can leak out more as you push to keep going Get legal advice ASAP don t prejudice claim
25 Current trends Increasingly litigious area Public Sector challenging Public Sector Increasing claims in SOS services areas stopping awards Economics often driving challenges
26 Phone a friend Mary Mundy Associate Tim Dennis Associate T: M: E: mmundy@dacbeachcroft.com T: M: E: tdennis@dacbeachcroft.com
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