What does 1st January 2021 mean for regulated procurement?
11 December 2020
With the end of the transition period in sight, the impact for procurement is yet another area that all contracting authorities, utilities and businesses engaged in regulated tendering need to be prepared for.
Whilst procurement law will not change substantively overnight, come 11pm 31 December 2020 (IP completion day), there are some significant practical changes that will happen, as well as some legislative ones, to ensure that regulated procurement continues to function effectively from 1 January 2021.
This note provides a brief overview update on those legislative changes, following the recent approval of the Public Procurement (Amendments etc.) (EU Exit) Regulations 2020 (Amendment Regulations) as well as a reminder on the requirement to use the Find a Tender Service in place of OJEU, from IP Completion Day, following publication of recent Cabinet Office guidance on this issue.
Find a Tender
With effect from IP Completion Day, notices for all new UK procurements (contract notices, PINs, VEAT notices, modification notices etc) will need be dispatched to the new UK e-notification service – “Find a Tender” service (FTS), in place of OJEU. The same financial thresholds and timescales as before will apply and the notices to be submitted to the FTS service will be largely the same.
The Cabinet Office has recently published Procurement Policy Note (PPN) 08/20 – Introduction to Find a Tender (see Procurement Policy Note 08/20 - Introduction of Find a Tender - GOV.UK) which includes helpful FAQs, a flowchart and guidance on registration for / use of the FTS. This includes in particular clarification on those third party senders that will be capable of publishing notices on FTS from 1 January 2021. Note that those contracting authorities and utilities that currently publish their own notices directly in OJEU need to register directly with FTS (instructions for doing so are set out in the PPN).
Note however that for any procurements launched, but not finalised, before IP Completion Day (i.e. where the contract notice has not been published / contract signed or for awards made under existing framework agreements / dynamic purchasing systems established prior to switch over), notices will still have to be published in OJEU. This means that there will be a transitional period whereby both purchasers and suppliers will likely be using both OJEU and FTS platforms.
Whilst not a strict legal requirement, the PPN requests that notices sent to OJEU should also be sent to FTS after they have been sent to OJEU (if legally required to publish in OJEU you must publish there first), so that suppliers only have to look in one place for contract opportunities available within the UK. Indeed PPN 08/20 requests that to the extent contracting authorities have not already done so, they make their suppliers aware that they will need to access FTS to search for opportunities in the UK launched after 31 December.
The Amendment Regulations will (in the main) come into force on IP Completion Day. These Amendment Regulations have been made partly in exercise of the various powers granted under the European Union (Withdrawal) Act 2018, and largely seek to address failures or deficiencies in retained EU law that may arise as a result of the UK’s withdrawal from the EU.
The most significant changes for procurement are set out in Part 3 of the Amendment Regulations, which amends the Public Contracts Regulations 2015 (PCR), the Utilities Contracts Regulations 2016 (UCR) and the Concession Contracts Regulations 2016 (CCR) (together, the Regulations). Whilst most of these changes are expected and fairly minor to address mechanical, or terminology issues, some of the more notable changes (by reference to the PCR – similar changes have been introduced in respect of the UCR and CCR), include:
- Thresholds – the financial thresholds are now set out in pounds sterling and the Minister for the Cabinet Office, rather than the European Commission, will review these every 2 years to verify whether they correspond with the GPA thresholds.
- Electronic Communication – the Minister for the Cabinet Office has new powers to allow exceptions to the obligation to use electronic means of communication.
- Reporting - reports must be submitted to the Cabinet Office (or relevant N.I. department) instead of the European Commission, if so requested.
- Dynamic Purchasing Systems – rather than notifying the European Commission of any change in, or termination of, the period of validity of a dynamic purchasing system, appropriate specified notices should be sent to FTS.
- eCertis (the online repository established by the European Commission) – the requirement to have recourse to eCertis has been removed.
- Exclusion / selection grounds – minor wording amendments have been made to the mandatory exclusion grounds, quality assurance standards and environmental management standards and the “ESPD” has essentially been renamed as “SPD”.
- Abnormally low tenders – the possibility of the tenderer receiving state aid has been removed from the specific list of explanations a tenderer may give to explain the cost proposed.
- Trade registers – Schedule 5 which dealt with trade registers, most of which did not relate to the UK, has been removed.
- Economic operators in other member states – certain transitional changes have been made to provide that the obligation on contracting authorities to: ensure no less favourable treatment than for UK operators; and the duty to comply with the rules within the Regulations in respect of UK operators; will extend to operators in GPA (an agreement between WTO member states to open up their markets for procurement) member states / certain other states, subject to certain conditions being met. However, note that further changes to this position will be made 12 months later (i.e. with effect from 1 January 2022), at which point Regulation 25 (conditions relating to the GPA) and Regulation 90 (duty owed to economic operators from certain other states) will be removed. The UK will accede to the GPA in its own right on 1 January 2021. The GPA will, until something else replaces it (i.e. a trade agreement), form the (very basic) basis of the UK’s procurement relationship with the EU.
In a similar vein to the approach to be taken to publishing notices on the FTS, where a procurement has already been launched, but not finalised by IP Completion Day, the current Regulations essentially continue to apply as is. Similarly the current Regulations will continue to apply to award of contracts under framework agreements that have been put in place before IP Completion Day and not expired, or where the procurement for that framework was not finalised by IP Completion Day.
As noted above, the changes made thus far are largely mechanical and are designed to preserve the current procurement rules as the transition period draws to a close. This is perhaps not surprising given that, at the time of writing, a trade agreement has not yet been agreed with the EU. Overall then, the Regulations aim to ensure a smooth transition and ‘steady state’ for the time being.
However, this does not mean that the changes will stop here. The Cabinet Office has been consulting with stakeholders on future potential changes to the rules including in relation to evaluation and award criterion, remedies and procedures and a Green Paper is expected before the end of the year / early next year (it is presently in draft form and not available to the public). This paper is expected to reflect Government ambitions of simplifying procurement and, particularly given the recent changes in England and Wales (via Cabinet Office PPN 06/20 explicitly requiring certain contracting authorities to evaluate social criterion in procurements ‘where the requirements are related and proportionate to the subject matter of the contract’ and attributing a minimum 10% of the total score to social value), one might also reasonably expect further changes to social value obligations.
With the recent announcement more locally of restructuring of the Procurement Board in Northern Ireland (due to sit for the first time on 16 December, with security of supply and social value being first on the list of priorities), and Procurement Guidance Notes in future going to the Executive for approval, it is clear that further change is on its way.
For further information please contact the Procurement team at Carson McDowell.
*This information is for guidance purposes only and does not constitute, nor should be regarded, as a substitute for taking legal advice that is tailored to your circumstances.