Following the introduction of the Public Contracts Regulations 2015 which were in force from 26 February 2015, the UK Government is issuing a series of guidance notes. Key points from the recent guidance include:
Guidance on awarding contracts
- Most Economically Advantageous Tenderer (MEAT): Contracts can now only be awarded on the basis of the MEAT. MEAT includes both the lowest price (which in contrast to the 2006 regulations is no longer described as a different basis for award) and the best price-quality ratio (using a ‘life-cycle costing’ analysis). However, in both the Competitive Dialogue Procedure and the newly introduced Innovation Partnership the contract must be awarded on the sole basis of the best price-quality ratio.
- Life-cycle costing: This has been introduced as an example of a cost-effectiveness approach, that can be followed when cost is the basis of the award criterion. A life-cycle approach is intended to take into account all costs incurred over the life cycle of works, supplies or services.
- Wider range of characteristics as award criteria: Best price-quality ratio incorporates price or cost plus other criteria to be considered. The regulations now allow contracting authorities to take into account new criteria which the UK Government supports such as any social aspects linked to the subject matter of the contract and the experience of staff assigned to performing the contract. UK Government also confirms that fair trade can be an aspect of the evaluation.
- Abnormally low tenders: The duty on contracting authorities to seek explanations from bidders about abnormally low tenders remains, and there is a new requirement for contracting authorities to disregard tenders that are abnormally low because they are in breach of international environmental, social or labour law provisions.
Guidance on amendments to contracts during their term
- Codification and evolution of the law relating to material change: UK Government describes the new safe harbours for amendments to public contracts after award and during the award process and expresses the view that they are more than simple codification of existing law (from the Pressetext case). For more information on the material variation provisions under the PCR, please see our briefing ‘Contract change under the Public Contracts Regulations 2015’ which can be found here.
- Which contracts do the changes apply to and when do they come into force?: the guidance confirms that the rules apply to contracts awarded before the 2015 Regulations if the relevant amendment is made to that contract on or after 26 February 2015.
- Changes contrary to the Regulations: All new contracts must have a clause allowing the authority to terminate in the event that a change is material. If a change is made contrary to the regulations, a contracting authority can either:
- not agree to the change; or
- exercise its right to terminate (regulation 73(1)(a)).
If any change is found to be in breach of the Regulations, the court can either declare the contract ineffective or make other orders at its discretion.
Dynamic Purchasing System
- Indicative tender: Suppliers no longer have to submit an indicative tender with their request to join the Dynamic Purchasing System.
- Award of a new contract under a DPS: The Regulations remove the previous requirement that obliged authorities to publish a further simplified advertisement in the OJEU each time they intended to award a contract under a DPS.
- Time period of DPS: The previous default four year time limit on the duration for a DPS has been removed.
Guidance on the standstill period
- Contracts subject to the new Light Touch Regime and procurements commenced by sub-central authorities which are commenced by PIN as a call for competition: Previously, “Part B” Service contracts did not need a standstill period. Under the new regime, it is less clear whether a standstill period is required for contracts subject to the new Light Touch Regime. In the absence of clear instruction, the CCS suggests contracting authorities should send a standstill notice and observe the standstill period. This will alleviate the risk of authorities being subject to the ineffectiveness remedy if these standstill requirements are subsequently held to apply to such contracts.
Other guidance previously issued includes:
The guidance papers can be found here.
If you would like any further information, please contact John Houlden, Stephanie Rickard or Patrick Parkin.