The Changing Face of
Public Procurement
The new DNA for public sector
commercial activity
£
High
Time
spent on
value
added
activity
Before going
to market
Developing
requirements that
shape markets and the
supply base to
Government
Procurement
Process
Simplifying process and
reducing turnaround
times & supplier bid
costs
Contract and
supplier
management
Improving contract and
supplier management
capability through
application of new
standards
Low
Before
Goal
The EU Procurement Regulations (I
know it’s early in the morning, stick with me here)
Transparency - contract procedures must be
transparent and contract opportunities should
generally be publicised
Equal treatment and non-discrimination - potential
suppliers must be treated equally
Proportionality - procurement procedures and
decisions must be proportionate
Mutual recognition - giving equal validity to
qualifications and standards from other Member
States, where appropriate
What‘s changing?
Awaiting adoption – expected in Jan 2015
None of the following altered:
– “Contracting Authorities”
– Thresholds (apart from “Part B”)
• £172,514 (Goods and Services)
• £4,322,012 (Works)
– Remedies Directive, i.e. potential legal and
financial penalties remain in place as before
Exemptions! (1)
Local Authority trading companies (“Teckal”)
– where the authority exerts on the ‘supplying
authority’ a control similar to that which it
exercises over its own departments and
– where 80% of the activities of the ‘supplying
authority’ are for the ‘buying authority’ or
other bodies controlled by it and
– where there is no direct private capital
participation in the ‘supplying authority’
Exemptions! (2)
Inter-municipal Co-operation (“Hamburg”)
– the participating authorities co-operate to
perform public services they must provide,
meeting common objectives and
– the co-operation is for public interest
reasons only and
– the participating authorities perform less
than 20% of the activities on the open
market
Reservation of certain contracts for
mutuals and social enterprises
objective of a public service mission linked to the delivery of these
services
reinvest profits to meet this objective (where profits are distributed this
should be based on participatory considerations)
owned/managed on the basis of employee ownership/participatory
principles or the active participation of employees, users or stakeholders
not have been awarded a contract for the services concerned by the
contracting authority concerned pursuant to this reservation within the
past three years
The duration of the contract to be reserved must not exceed 3 years
Such ‘reserved’ contracts must be open to all relevant suppliers with rights
under the directive and must be awarded using the procedures in the
directive, including a call for competition in OJEU
Light Touch Regime
These contracts will only be covered by the
directive if their value exceeds Eu750,000
Mainly former “Part B” services, now referred to
as “Annex XIV” (some cultural services included,
mainly around events and festivals)
Still require “Call for Competition” and “Contract
Award” but discretion over process outside of
that – UK govt has promised lots of flexibility
Treaty principles must be applied
Innovation Partnerships
New procedure allowing authorities to encourage suppliers
to develop works, supplies or services not currently
available on the market through long term partnerships
Awarded to one or more suppliers using the competitive
procedure with negotiation
Procedure may be constructed in phases to match the
research/innovation process – authority could reserve right
to terminate process or reduce the number of partners
Authority must make clear the position on property rights
and must not disclose suppliers’ confidential information
without agreement
Shorter Timescales!
Open: 35 days (30 electronic, 56 current)
Restricted: 60 days (40 electronic, 77 current)
Competitive Negotiated (CN) and Innovation
Partnerships (IP): 60 days (40 electronic, no current
equivalent)
Competitive Dialogue: 30 days to participate, no
explicit time limits beyond that, no acceleration
Restricted, CN and IP can all be reduced by a further
5 days using a Prior Information Notice (PIN) as a
“Call for Competition”
Exclusion of poorly performing
suppliers from re-tendering
A supplier may be excluded where
– there are ‘significant or persistent’
deficiencies in performance of a
contract or concession for an authority
or utility body that led to early
termination of the contract or other
sanctions
Plus Other Useful Clarity
Market Consultation explicitly permitted
Need to be able to justify “Lotting” strategy
Environmental / Social labels can be must be linked
to the subject matter of the contract (challengeable)
Encourages use of:
– Life Cycle Costing
• Including costs incurred or saved through the adoption
of a specific supplier or solution (“Outcomes Based”)
– Most Economically Advantageous Tender (MEAT)
– Challenging “Abnormally Low Tenders”
The Small Business, Enterprise and
Employment Bill
Para 37: Regulations about procurement
(1) The Minister for the Cabinet Office or the Secretary of State may by
regulations impose on a contracting authority duties in respect of the
exercise of its functions relating to procurement
(2) For the purposes of this section “the exercise of functions relating to
procurement” includes the exercise of functions in preparation for
entering into contracts and in the management of contracts …(& follows)
Para 38 Investigation of procurement functions
(1) In this section “a Minister” means the Minister for the Cabinet Office
or the Secretary of State
(2) A Minister may investigate the exercise by a contracting authority of
relevant functions relating to procurement.
Lord Young’s Proposed Reforms
Abolition of the PQQ for sub-threshold
procurement
Mandating of a standard “Suitability Check” to
replace the PQQ in above threshold procurement
Mandating 30 day payments terms for subcontractors by your main or Tier 1 contractor
Advertising all contract opportunities above a
certain value (mooted as £25K) on the national
portal, Contracts Finder
Social Value Act
Underused legislation to date
Consider economic, environmental and social
benefits WITHIN your geographic area only as part of
the tender evaluation
Only applies to Service contracts above threshold
Review is under-way to consider extending scope
Could form part of the powers referred to in the new
UK Government procurement legislation
Contact details
Eddie Gibson
East of England LGA
eddie.gibson@eelga.gov.uk
01284 758300
www.eelga.gov.uk