Introduction
Back in January, I wrote a quick update on the revised thresholds for public sector procurements to determine whether a regulated process is needed, what used to be referred to by the shorthand of OJEU procurement levels.
Recently someone I was helping with a procurement questioned: “whether we still need to bother with all that stuff” after Brexit because surely that was just the sort of thing we were promised would be changed. On the face of it, this seems a sensible question so I thought I’d try and explain why in fact nothing has so far changed.
Where we are
To take a step back, what we are really talking about when we get into this topic relates to legislation enacted back in 2015, notably the Public Contracts Regulations 2015 which implemented the EU directive on public sector procurements for England and Wales (Scotland has its own version, as does NI).
PCR2015 sets out for public sector bodies what goods and services need to follow the rules, what the thresholds are for various public sector entities (amended annually hence the earlier update) and then describes a number of routes that can be taken to procure goods and services such as Open or Restricted procedures, each with defined minimum timescales and steps within the process.
The regulations also determine what factors can be used to evaluate bids, what has to be done to inform successful and unsuccessful bidders and codifies the standstill period after an award and the remedies should a bidder wish to challenge an award.
As with a lot of legislation that came on the books pre-Brexit it was simply left as-is until such time as a new legislative framework can be developed and navigated through parliament. So, until that takes place the exact same rules continue to apply.
A common mistake made by people undertaking procurements is that they miss whether their procurement is or is not bound by the rules. The thresholds would seem to make this a simple determination but there are two areas that often get either overlooked or sometimes ignored.
The first is that any contract has to be considered for the full duration of the contract including options to extend. For example, if you are looking to take on a managed ICT service and plan for a 3-year initial term then all three years’ costs must be considered, however, if you have a contract clause for say a 2-year potential extension (which is a common approach for such a contract) you have to consider all 5 years worth of costs when evaluating against the threshold values. This can get quite complex when you have something that is a mix of goods and services such as a network replacement, the hardware and initial services to implement are fairly straightforward but what about that 3-year maintenance agreement that got added in?
The second is that the overriding principle of the legislation is that when calculating the value, nothing should be done with the intention of avoiding the rules. Most commonly this would involve breaking up contracts to avoid reaching the threshold and there are specific provisions to prevent artificial contract splitting.
For those reasons, and indeed sometimes a lack of awareness of the law, a number of organisations get caught out not following the correct processes,
New Landscape?
In December 2020 the government published a Green Paper, Transforming public procurement, that set out its thinking in terms of how a post-Brexit procurement system should work. This was accompanied by public consultation on the contents of the paper.
Over 600 responses were received to the consultation which raised a number of quite technical points and perhaps explains why it took until the following December for the process to move forward. The government then published its responses and notes that any change is unlikely to be enacted until 2023 at the earliest.
A new procurement bill was introduced in the House of Lords earlier this year and was at the committee stage as parliament recessed with further hearings planned for September 2022. This means that there is still a way to go before any new legislation will be on the books, not least because it still needs time for all stages in the commons later in the year and with a new leader for the government in the offing there are likely to be other priorities.
How the final legislation will develop is still a little unclear. One thing to note though is that, whatever its intentions, the government is restricted in what it can do by one important facet of the original EU directive, namely that it was developed to bring the EU into alignment with the World Trade Organisation Government Procurement Agreement, something that the UK became a member to in its own right at the start of 2021. This means any future decisions will have to retain alignment with the GPA.
Can we help?
Hopefully, this short summary is of use. We can of course help with any procurement-related issues whether that be understanding an appropriate route to market for a given project through fully managing your procurement process from requirements gathering through to contract award.
We specialise in ICT-related activities and projects but have close links to specialists in other areas that we are happy to recommend. Please get in touch.
