Procurement Policy Note on EU Directives

The Cabinet Office has issued a Procurement Policy Note (“PPN”) which summarises the main outcomes of the new EU Directives relating to public procurement, utilities procurement and service concessions. The PPN also outlines the next steps in finalising and implementing the Directives.

Implications:

• The new Directives, which are expected to be implemented by the end of 2015, make changes to the procurement regime which will affect the way that bid teams approach public sector, utilities and service concessions tenders.

• Overall, the changes are designed to make the procurement process quicker and more straightforward, with more freedom on both sides to negotiate.

• Key differences include: a reduction in time limits for simpler procurement procedures by as much as a third; greater use of self-certification; mandatory e-procurement and a new ‘innovative partnership’ procedure.

• From a legal perspective, there is now clarity that buyers can take into account the relevant skills and experience of individuals at the award stage rather than at selection, and an express validation of electronic marketplaces for public procurement.

The PPN explains that the Directives are expected to be finalised in the autumn of this year, with a new procurement regime to be in place in less than two years. The new regime will only apply to procurements commenced after the Directives are implemented. The PPN notes that there is limited scope for amendments to the current text, as it is mostly prescribed by the EU. Annex A of the PPN sets out the main changes. A link to the full text can be found here.

The new regime is expected to simplify current procurement practice, which may mean tighter timescales but less red tape for bid teams going forward. For example, there will be a greater use of self-declarations, with only the winning bidder having to submit documents to prove its status. Buyers will be permitted to take into account relevant skills and experience at the award stage.

In addition, the new regime includes a reduction in time limits for more straightforward procurement procedures by as much as a third and an e-procurement system which is expected to be made mandatory by 2020. The new rules also include the removal of any distinction between Part A and Part B Services and a new ‘light-touch regime’ with a higher threshold (£750,000) for social and health services.

Positively, bidders are being given more freedom to negotiate for contracts which are not ‘off the shelf’, although poor performance under previous contracts is expressly permitted as a ground for exclusion from the process altogether.

There is a focus on SME involvement, with a new turnover cap (buyers are unable to set company turnover requirements at more than twice the contract value) and encouragement being given to buyers to break contracts into lots where appropriate. At the other end of the scale, concessions contracts (works and services) in excess of EUR 5mn will be advertised in OJEU and procured in compliance with a new regime for concessions.

Finally, a new procedure has been introduced, dubbed the “Innovative Partnership” procedure. This is intended to encourage innovation and allows a supplier to bid to enter into a partnership with an authority to develop a new product or service.