Procurement in a nutshell – new subcontracting provisions
22nd January, 2016
In this Procurement in a Nutshell, we will be looking at the new subcontracting provisions guidance released by the Crown Commercial Service (CCS).
The guidance can be found here.
The Public Contracts Regulations 2015 (PCRs) impose some additional obligations and allowances to enable further transparency and oversight of the subcontracting chain. There are now new obligations on contracting authorities to require main contractors to provide subcontractors’ details as far as they know them at the time (Regulation 71(3) PCRs).
This new obligation has two flexibilities:
- a provision giving contracting authorities the right to check the credentials of subcontractors to evaluate if there are grounds for exclusion, and if there are grounds, then the PCRs provide for the action that should be taken (Regulation 71(8) PCRs); and
- the contracting authority has the option to ask the main contractor to provide basic contact details of their subcontractors and supply chain (Regulation 71(7) PCRs).
In addition to the above introduction of obligations and flexibilities, the PCRs require contracting authorities to ensure prompt payment of valid and undisputed invoices for the entire supply chain (Regulation 113(2)(c) PCRs).
Why is it important?
The guidance also includes answers to frequently asked questions on the application of these provisions of the PCRs.
Where it is verified that a subcontractor has breached one of the mandatory exclusion conditions in Regulation 57, the contracting authority must require the main contractor to substitute a new subcontractor.
If a contracting authority has verified that a subcontractor has violated an obligation in the field of environmental, social or labour law then that falls within the discretionary exclusions section of Regulation 57 (8)(a). If satisfied, the contracting authority may require the main contractor to substitute a new subcontractor.
The guidance also contains drafts of suggested clauses for both social and environmental compliance failure and mandatory and discretionary exclusion clauses discussed above.
According to the CCS “It is best practice to have a good understanding of your supply chain and to analyse and then manage key members of that chain. However, it is the contracting authority’s choice how far down the supply chain they may want to verify grounds for exclusions”.
How can I find out more?
If you have any queries on the issues raised or on any aspect of procurement, please contact us via our procurement hotline on 0191 204 4464.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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