Procurement in a nutshell – recap on 2016
18th January, 2017
To mark the beginning of a new year, this update provides a review of the significant procurement law developments of 2016.
Legislation
Utilities Contracts Regulations 2016 (UCR 2016)
2016 saw the final part of the implementation of the EU procurement Directives. The UCR 2016 came into force on 18 April 2016, replacing the Utilities Contracts Regulations 2006. The regulations cover the procurement of goods, services and works above EU thresholds by utilities operating in the water, energy, transport and postal services sectors.
Concessions Contracts Regulations 2016 (CCR 2016)
The CCR 2016 came into force on the same day as the UCR 2016. These provisions regulate public works and public services concession contracts valued at over the threshold of £4,104,394. To view our previous update with more information on both the UCR 2016 and the CCR 2016, please click here.
Public Procurement (Amendments, Repeals and Revocations) Regulations 2016 (PPR 2016)
Also coming into force on 18 April 2016, the PPR 2016 make various amendments to several pieces of information but particularly to the PCR 2015. A significant amendment is that made to regulation 72(1)(b) which is likely to have the effect of making modifications to contracts during their term less accessible.
To view our previous post where we explained the effect of this amendment, please click here.
Transitional period for the light touch regime
18 April 2016 marked the expiry of the temporary exemption for Clinical Commissioning Groups and NHS England from the PCR 2015 when procuring healthcare services.
Healthcare services contracts are now fully subject to the PCR 2015. In October 2016, the Department of Health published a guidance note summarising the requirements for NHS Commissioners.
To view our previous update highlighting the key elements of the regime for Commissioners, please click here.
Case law
The following are our top three case law highlights from the year:
EnergySolutions EU Limited v Nuclear Decommissioning Authority
An unequivocal note of caution was issued by the High Court regarding the need for contracting authorities (CAs) to keep a full and accurate record of documentation in relation to all procurement exercises.
A number of lessons from this case emphasise the importance of CAs ensuring that their internal processes – procedures, practices and training of evaluators – are in keeping with the principles of being transparent and non-discriminatory. To view our previous outline of the case, please click here.
R (Faraday Development Ltd) v West Berkshire Council and another
Another case from the High Court provided a reminder of a fundamental element under both EU and UK procurement law regimes – the classification of “public contracts”.
The case stresses the importance of clarity in the development of procurements, to avoid the improper application of the procurement rules and therefore avoid unwarranted claims. To view our previous summary and explanation of the case, please click here.
Finn Frogne A/S v Rigspolitiet ved Center for Beredskabskommunikation
In a preliminary ruling which might have been unsettling for CAs and commercial dispute lawyers, the Court of Justice of the European Union (CJEU) held that it is possible for the terms of a settlement agreement to constitute an illegal modification to a public contract.
This ruling has particular relevance in the current climate of Brexit uncertainty and will require CAs to think carefully about their approach to resolving disputes. To view our previous update on the case, please click here.
Practices and procedures
A total of eleven procurement policy notes were issued by the Crown Commercial Service (CCS) in 2016. We have selected three of the notes which have a message which impacts most significantly on the day to day procurement practices of CAs.
PPN 01/16
The first policy note published in 2016 detailed how CAs can ensure compliance with wider international obligations when awarding public contracts. A crucial point reiterated in the guidance was that while suppliers from “third countries” (which are neither part of the EU, nor party to an international free-trade agreement giving access to the EU procurement market) do not enjoy access to the EU procurement remedies system, they could potentially offer the best value for money outcome.
The UK Government therefore expects that CAs will deal with bids from such countries in a non-discriminatory manner.
Our previous update on the policy note can be viewed here.
PPN 07/16
PPN 07/16 was a reminder on the legal requirement to publish on Contracts Finder. The requirement formerly did not include contracts for which OJEU notices were required. Its scope has now been extended to include such contracts.
We previously provided an update explaining the rules for publication on Contracts Finder and the importance of compliance by CAs, which can be viewed here.
PPN 08/16
In September 2016, the CCS published PPN 08/16 which introduced the new mandatory Selection Questionnaire (SQ). The update brings supplier selection in line with the requirements of the European Single Procurement Document.
In a previous update we outlined the form of the SQ and various practical points of action for CAs when employing the new form, which can be viewed here.
Brexit
Following the referendum decision for the UK to leave the EU, the question on every procurement practitioner’s mind was – what about procurement law?
The long-term outlook is filled with uncertainty. The ability to reform the regime may or may not be available to the Government following the UK’s withdrawal from the EU and will depend on the outcome of political and economic factors and the deal that will ultimately be struck between the EU27 and the UK.
Nevertheless, throughout the year we sought to keep our readers as informed as possible in order to be prepared for potential future developments. In July our first Brexit post gave an outline of some of the possible forecasts of the landscape of procurement law according to the different trading relationships that the UK might establish with the EU. To view this update on “the law post-Brexit”, please click here.
Negotiations between the UK and the EU will take at least two years and during this time it is business as usual. In a previous update we explored the possible legal implications arising from the need to reshape projects, such as scaling back scope or duration, in an attempt to manage risks in uncertain times. To view this update on “contract review and risk management”, please click here.
As events surrounding Brexit became ever more shrouded in doubt, we considered the possibility of CAs engaging with the trend towards “multi-sourcing” as a tool for tackling the Brexit uncertainty. To view our update on “multi-source contracting”, please click here.
Finally, in November 2016, we considered the results of a survey by SPS Consultancy Services which investigated the opinions of procurement professionals as to what should be the way forward for the public procurement regulations within the UK following the UK’s departure from the EU.
We considered the extent to which the hopes for reform can be met by the Government. To view this update on “procurement law in the post-Brexit era”, please click here.
For more information on Brexit, head to our comprehensive and regularly updated guide by clicking here.
Why is this important?
The developments from 2016 have further shaped the landscape for the changes which lie ahead. Pending the UK’s withdrawal from the EU, the judgments of the CJEU will continue to apply to UK procurement.
At the EU level it is also possible that, following consultations by the Commission in 2015 and 2016, there may be further developments expected in relation to Directive 2007/66 on public procurement remedies and a proposal for a new regulation on giving third-country goods and services access to the EU’s internal market for public procurement and procedures.
A growing priority for contracting authorities throughout 2017 will be the need to work towards implementing fully electronic systems covering all documents and communications in their procurement processes.
Under the PCR 2015 and UCR 2015, central purchasing bodies have until 18 April 2017 to implement fully electronic systems. Following this, CAs and utilities have until 18 October 2018 to move towards fully electronic procurement. CAs should consider using the year ahead to plan and progress the steps which will be needed to advance their electronic procurement systems.
The current economic and political climate underscores the importance of CAs getting procurement law right. While we cannot predict completely what’s on the horizon, you can be sure that, throughout 2017, we will be here to provide observations, guidance and clarity as any new developments unfold.
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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