OPINION REGULATIONS TENDER CARE A new EU Directive aims to simplify and modernise public procurement. Hywel Davies explains the most significant changes to the Public Contracts Regulations 2015 Hywel Davies, technical director of CIBSE www.cibse.org EU Directive 2014/24/EU aims to simplify and modernise public procurement. The Cabinet Office consulted on draft Public Contracts Regulations 2015 (PCR2015) in the autumn of 2014, and the new regulations, which will comply with the directive, are expected to come into force in the first half of this year. In 2011, the European Commission issued a consultative Green Paper on modernisation of EU public procurement policy. Although the 2004 directives covering public sector and utilities contracts introduced new approaches attempting to modernise the rules at that time in practice, they added complexity, uncertainty, and regulatory burdens. Based on the consultation responses, the commission recognised the urgent need for a streamlined, flexible set of procurement rules to enable member states to deliver value for taxpayers money, and obtain high-quality goods and services. Draft proposals were issued in late 2011, and these were followed by two years of intensive scrutiny, negotiation and debate. Three new directives for public sector contracts, utilities contracts, and concessions contracts were adopted on 26 February 2014, published in the Ofcial Journal of the European Union on 28 March 2014, and came into force on 17 April 2014. The UK and other EU member states have until 17 April 2016 to implement the new directives in national legislation. The recent consultation focuses primarily on the new Public Sector Directive and the draft PCR2015. There will be further consultation on draft implementing regulations for the new Utilities Directive and the new Concessions Directive. However, as many of the provisions in the Public Sector Directive are analogous to provisions in the other two directives, the PCR2015 consultation covered matters common to all three. The draft PCR2015 has been prepared in light of the UKs policy position of maximising flexibility in the rules, deregulating where possible, and using copy out of the wording in the directive. The latter is to avoid going beyond the requirements of directives known as gold plating. PCR2015 does not just refresh the Public Contracts Regulations 2006, which may be familiar. However, although the UK has until April 2016 to implement the directives, it is pressing ahead early because the new flexibilities in the directive are seen as deregulatory, so early implementation is acceptable under UK policy. New rules will change the way the public sector procures The draft regulations introduce measures to increase the participation of SMEs in public procurement Help for SMEs The draft regulations also introduce measures to increase the participation of small and medium-size enterprises (SMEs) in public procurement, as recommended by Lord Young of Graffham, enterprise adviser to the Prime Minister. These are based on the conclusions of a 2013 consultation, and aim to give small businesses better access to public sector contracts by simplifying public procurement, increasing transparency, cutting bidding costs and enabling better value outcomes. The main recommendations being implemented are: abolishing prequalification questionnaires (PQQs) for contracts below the EU Threshold; 30-day payment terms to be passed down the supply chain through a standard clause; a requirement to report on late payment of invoices; and making all public sector contracts accessible on Contracts Finder. The main changes There are a number of significant changes, as follows: l Public bodies can use Central Purchasing Bodies in their own, or another, member state l There are rules for the awarding of contracts directly by one contracting authority to another without an advertised and competitive tender. These set out the extent to which a public contract may be changed before it becomes a new or materially different contract that must be put out for a fresh tender l Contracting authorities must include a condition in all contracts allowing termination if the contract has been subject to a substantial modification l While the procedures for all procurement routes have been modified, a new procedure called Innovation Partnerships has been added. However, government guidance suggests that, where possible, the open or restricted procedures should still be used l A new light touch procurement regime applies for social and other specific services, such as health, including nurses, home help, education, and training services l A self-cleaning provision will apply to organisations where a relevant ground for exclusion exists l Contracting authorities can engage in market consultations with suppliers before procurement, subject to rules to ensure that competition is not distorted by subsequent participation l Government has taken the option not to require that contracts should be divided into lots, although authorities must explain such a decision in the procurement documents l If a procurement is run with lots, contracting authorities can award a single contract to cover several lots, but only if it is clear in the procurement documents that lots might be combined l For each tender process leading to the award of a public contract or framework, the contracting authority must produce a report detailing the process and decisions, and why the successful tenderer was chosen l Documents relating to all procurement procedures must be kept for three years. PCR will only apply to new procurement processes beginning on or after 2015 it takes effect, and there have been no changes to the remedies section of the regulations. It is anticipated that the regulations will be published before the end of March 2015. The new regulations will change the way the public sector procures, so CIBSE Journal readers may want to be prepared. CJ FURTHER READING The new directives are: Directive 2014/24/EU on public procurement, replacing the 2004 Directive for Public Sector Contracts Directive 2014/25/EU on procurement by entities operating in the water, energy, transport and postal services sectors, replacing the 2004 Directive for Utilities Contracts Directive 2014/23/EU on the award of concession contracts, which does not directly replace any previous directive To see the full Cabinet Office consultation, draft UK regulations and the technical guidance note, go to http://bit.ly/1zVoug4