The Public Procurement Regulations of 2006: an
introduction
This article has been superseded. Instead, please see our
guide on Public procurement law: the
basics.
The guide below is out of date and no longer
updated.
Introduction
The rules affecting procurement of contracts for works, services
and supplies were brought together in one piece of consolidated
legislation for England, Wales and Northern Ireland, the Public
Contracts Regulations 2006 (which came into force on 31st January
2006) and one piece of consolidated legislation for Scotland, the
Public Contracts (Scotland) Regulations 2006 (which also came into
force on 31st January 2006). These Regulations implement the
European Commission's Consolidated Directive, adopted in March
2004, into UK law.
What changes have been made?
Consolidation
One of the aims of the European Commission's Consolidated
Directive was to bring together the three old Directives covering
works, supplies and services into a new single consolidated text.
This change should make it easier for contracting authorities to
follow the public procurement rules as they can now all be found in
one place, within the Regulations.
Clarification of the rules on selection and contract award
It had also become clear over the years that important aspects
of the rules set out in the various directives were unclear and, as
a result, had to be clarified by the European Court of Justice in a
number of cases. The new Consolidated Directive, and therefore the
Regulations, both provide a clearer statement of the law, bringing
it into line with the ECJ's judgments. The Commission has also
simplified the financial thresholds under the public procurement
rules. This should make it easier for contracting authorities to
understand when the rules apply to them.
The combination of consolidation and clarification means that
the Regulations are a clearer, more user-friendly statement of the
law. It stands to reason that if contracting authorities are better
aware of their obligations contractors should benefit from
this.
Debriefing and the Alcatel case
Contractors are also given a key window to challenge wrongful
award decisions in the Regulations.
In 1998, the European Court of Justice issued a landmark ruling,
known as the Alcatel case. It said that national courts in EU
Member States must, in all cases, be able to review and set aside
award decisions on procurement contracts subject to EU procurement
Directives.
Following that decision, contracting authorities are now obliged
to allow a standstill period of at least 10 calendar days between
the date of notifying tenderers of their contract award decision
(which must be in writing) and the date they propose to enter into
the contract (in the case of contracts subject to the full regime).
If a tenderer makes a request for a debriefing by the end of the
second working day of the 10 day period, authorities must debrief
the tenderer during the standstill period. In any event, there must
be three working days between the debriefing and the end of
the standstill period. The purpose of this change is to allow
aggrieved bidders a reasonable chance to consider their situation,
and to bring an action before the contract is concluded if they
think they have a case (see below).
Frameworks
A commonly used procurement tool is the multi-supplier framework
agreement. Under the Regulations, strict rules now apply to
frameworks. For example, they must not generally exceed a term of
four years and the terms of any framework must be determined at the
outset. The Regulations also provide for a "mini-competition" to be
used as an alternative way of making call-offs under the framework
contract (the other being by applying the prescribed terms of the
framework contract itself).
Competitive dialogue
The Regulations also introduce a new procedure known as the
"competitive dialogue", alongside the existing open, restricted and
negotiated procedures (with/without advertisement). Although it is
only available in limited circumstances for the procurement of
"particularly complex" contracts, this procedure has the advantage
of allowing the input of those participating in the tender
process.
During the "dialogue", bidders are able to discuss all the
aspects of the contract individually with the contracting
authority. Once the dialogue has generated solutions to the agreed
requirements, tenders are invited based on each tenderer's
individual solution. The best tender can then be selected.
The chief advantage of the competitive dialogue procedure from
the contractor's point of view is that it should be lawful in more
situations than the negotiated procedure without advertisement.
Hence there is less risk of a contract awarded under the
competitive dialogue procedure having to be set aside, a scenario
that every contractor would want to avoid.
E-procurement
Apart from clarifying and simplifying the rules on public
procurement, the Regulations also aim to modernise procurement
practices by placing more emphasis on the use of e-procurement. For
example, shorter minimum time-scales can apply when contract
notices are sent electronically. Authorities may also detail their
own procurement activities on a website known as a "buyer profile".
The publication of scheduled purchases and PINs (Prior Information
Notices) on a buyer profile should give potential tenderers plenty
of time to prepare in advance of contracts being formally
publicised.
The Regulations also introduce two new electronic purchasing
tools: dynamic purchasing systems (DPS) and electronic auctions.
DPS allow an electronic mechanism for multiple purchases under
successive contracts to be set up from a list of pre-qualified
tenderers. As the name suggests, the "dynamic" nature of the DPS
means that there will be continual competition between tenderers,
who are able to update their indicative tenders throughout the life
of the DPS. However there are disadvantages to the DPS from the
contracting authority's point of view, not least the need to place
an OJEU advertisement prior to every contract awarded under it. So
it remains to be seen how popular it will be in practice. Detailed
rules have also been introduced on the use of electronic
auctions.
How can contractors challenge authorities who do not comply
with the public procurement rules?
Contracting authorities are under a duty to comply with the
public procurement rules (where applicable). If they do not comply,
contractors have two avenues of redress. Firstly, aggrieved
contractors may bring actions in the UK courts for damages and/or
for the award decision to be set aside (subject to strict time
limits).
Alternatively, a contractor may bring the breach to the
attention of the European Commission by lodging a complaint with
it. If the Commission were to launch an investigation, this could
ultimately lead to the UK facing formal legal proceedings in the
European Court of Justice (as the Member State where the alleged
breach took place). Although damages could not be awarded to the
aggrieved contractor, the Commission could insist that the UK take
action against the authority in order to ensure that it complies
with any judgment. This could mean that a concluded contract
awarded in breach of the Regulations might have to be set aside.
The contracting authority might then re-tender its requirements
lawfully under the Regulations.
Contacts
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