Procurement in a nutshell – the Edenred case
10th July, 2015
In this Procurement in a Nutshell, we will be looking at the impact of the Supreme Court decision in the Edenred case and its impact on the interpretation of regulations 72 and 118 of the Public Contracts Regulations 2015.
Please click here for the Edenred judgement in full.
The regulations are available in full here.
What’s new?
The background
As we reported in our earlier Nutshell, regulation 72 of the 2015 regulations now sets out permissible modifications to existing contracts i.e. what changes can be made without triggering the need for a Contracting Authority (CA) to run a new procurement process.
Regulation 118(5) of the 2015 regulations states that nothing in those regulations affects a contract awarded before 26 February 2015.
The effect of regulation 118 therefore seemed to be that a modification to an existing contract which was procured before 26 February 2015 (and in accordance with the Public Contracts Regulations 2006) would be outside the scope of the 2015 regulations.
However, the Crown Commercial Service’s approach in its guidance was that it is the date of the amendment that is relevant i.e. if the modification were to be made after 26 February 2015, regulation 72 of the 2015 regulations would apply. This made the whole position uncertain.
The case
On 1 July 2015, the Supreme Court dismissed an appeal by childcare providers, Edenred, considering whether the government’s decision to deliver its programme for Tax Free Childcare through NS&I (through its outsourcing contract with Atos) is lawful.
The appeal focused on whether the required changes to the outsourcing contract with Atos amounted to a substantial modification.
As part of the case, the court considered what rules would apply. The court decided to apply regulation 72, because, notwithstanding that the contract was procured prior to 26 February 2015 and therefore the 2015 regulations did not apply generally, the amendment would occur after that date.
Why is it important?
The case provides helpful clarity on the approach to be taken to modifications to be made to existing contracts and the rules that will apply, although it is difficult to square this approach with the explicit drafting in regulation 118(5).
Contracting Authorities should always consider very carefully whether a new procurement will be triggered by modifying existing contracts and such an analysis requires a clear understanding of the rules.
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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