The Bill streamlines the current six procedures which may be used to award contracts into one "competitive tendering procedure" which may be either:
- a single-stage tendering procedure without restriction on who may submit a tender (known as the "open procedure"), or
- another competitive tendering procedure that the contracting authority considers appropriate, having regard to the nature, complexity and cost of the contract (the "competitive flexible procedure").
Where an authority chooses the competitive flexible procedure, it may limit the number of tendering suppliers and refine the award criteria, but may not permit suppliers to bid who were not in the first tendering round, or were excluded in an earlier round. The Bill prescribes minimum waiting periods for requests to participate and submission of tenders which are similar to, or slightly shorter than, those that currently apply. Beyond that, the Bill moves away from the approach of the current regulations of prescribing a menagerie of competitive procedures for different purposes (open, restricted, competitive negotiated, competitive dialogue etc), leaving it to authorities to design the procedure that best suits their needs.
Although the Government's aim is to create more flexible and simpler procedures, it may be questioned how much difference this will end up making in practice. The present procurement rules say rather little about how a procurement procedure must be run, and a great deal of procurement practice derives from a combination of the practical application of the principles of equal treatment and transparency and commercial experience on the part of procurement professionals. The continued requirement for contracting authorities to maintain equal treatment and have regard to the principle of transparency should mean that procurement disciplines that have been developed over the years will need to be carried forward into the new regime.
Reliance on those disciplines may in fact become even more important as the trade-off for flexibility in designing procurement procedures is reduced certainty around key aspects of how procurements should be run. An example is the use of calls for final tenders in competitive procedures involving some level of negotiation with bidders. Under the Public Contracts Regulations 2015, for example, a final tender stage is an express requirement of both the competitive negotiated and the competitive dialogue procedures. This is reflective of the fact that in procedures involving negotiation or dialogue with bidders, bids are by definition liable to change during the course of the procedure. In that context, and for reasons of transparency and equal treatment, it is important to require public authorities, at the end of the dialogue/negotiation phase, to invite all remaining bidders to submit a final tender (sometimes called a best and final offer or BAFO) which will be used at the basis for evaluation against the award criteria. By contrast, under the Utilities Contracts Regulations 2016 there is no requirement for a final tender stage in competitive procedures with negotiation, reflecting the generally more permissive approach applicable to utilities under the present rules.
Under the Bill, there is no express requirement for there to be a final tender stage in a competitive flexible procedure where negotiation or dialogue has been used to refine bids, irrespective of whether the contracting authority is a public body or a utility. On this point, therefore, the public sector rules have been aligned with the current rules for utilities.
It may be questioned whether this is a helpful approach. On the face of it, it appears to be beneficial for public authorities to be able to dispense with final tenders following negotiation in cases where they believe that they can identify the most advantageous tender based on initial tenders as refined during a period of negotiations. However, the provisions of the Bill around award criteria and assessment of tenders refer throughout to the assessment of tenders by reference to the award and an assessment methodology, which implies that there must be a tender to assess. If suppliers' initial submissions or proposals have shifted in the course of a negotiation phase, then it would seem necessary that updated versions of tenders be submitted before final evaluation to reflect suppliers' final positions. A final tender stage may also be necessary in order to maintain equal treatment between bidders. But, if that is the case, then why not say so when describing the competitive flexible procedure? The position is unclear. A well-advised (public sector) contracting authority will almost certainly, in most complex procurements, want to carry on inviting final tenders at the end of any period of negotiation in order to be able to maintain equal treatment and ensure that it complies with its obligations regarding assessment of tenders.
As for utilities, the intention of the Bill is clearly to preserve current flexibilities with regard to the design of competitive negotiated procedures. However, we should query whether the requirement to assess tenders by reference to the award criteria and assessment methodology might in fact drive utilities to use final tenders in a wider set of circumstances than are used at present.
As currently, a procurement will have to be commenced by the publication of a notice, to be called a "tender notice", rather than a "contract notice". The tender notice or associated tender document will have to detail the goods, services or works required by the contracting authority and any information specified in regulations to be made by the Government.
Contracting authorities may set conditions of participation in relation to the award of a public contract but only if they are satisfied that the conditions are a proportionate means of ensuring that suppliers have the legal and financial capacity and/or the technical ability to perform the contract. These are broadly similar to the headline criteria for supplier selection that apply under the current rules. The Bill, however, omits the current lengthy list of the specific factors and types of evidence that may be relied on to assess economic and financial standing and technical/professional ability, which is a welcome simplification.
Award criteria and technical specifications
Under the Bill, public contracts may be awarded to the supplier that submits the "most advantageous tender" by reference to the award criteria and assessment methodology determined by the contracting authority. The subtle shift from "most economically advantageous tender" in the current rules to "most advantageous tender" is an indication of the Government's desire to move away from procurement being focusing solely on price and a recognition that other non-economic factors such as social value may (and in some cases must) now be taken into account. This desire is also reflected in the fact that the procurement principles mentioned above require contracting authorities to have regard, among other things, to "public benefit". Those principles still, however, require "value for money" to be taken into account.
Award criteria will in addition have to (in similar fashion to the current rules):
- relate to the subject matter of the contract;
- be sufficiently clear, measurable and specific;
- not break the rules on technical specification; and
- be proportionate.
So, the need for a link between the award criteria and the subject matter of the contract, which is a core feature of the present regime, remains. This has been, depending on your perspective, an important brake on contracting authorities using procurement to pursue objectives that may be extraneous to the contract being awarded, or a hindrance to the use of procurement (and public money) for the pursuit of wider public benefits. The Bill maintains this tension, but with perhaps a slight tilt towards the use of procurement to pursue non-economic aims.
A further subtle change is the removal of the requirement in the current rules that evaluation of the most advantageous tender must be made solely from the point of view of the contracting authority. This is similarly intended to reinforce the emphasis on social value in procurements and allow a greater focus on outcomes and solutions for communities. Whilst the Government has indicated that it will publish guidance on how to implement this approach, it will be interesting to see whether this change has any impact in practice. Ultimately public bodies can only act within the scope of their own powers. To the extent that pursuit of such wider benefits falls within a body's remit (e.g. a local authority) then the change was probably unnecessary. For bodies with more limited powers and duties, query whether it would be open to them in any event to pursue wider goals in their procurement practices.
A somewhat curious feature of the Bill is that it does not require contracting authorities to publish or disclose to bidders the award criteria for a procurement, although such disclosure is implied: for example, the Bill provides that where an authority refines award criteria during a procurement procedure it must modify and republish the tender notice and associated tender documents. We hope that this will be clarified in regulations setting out what needs to be included in a tender notice and associated tender documents.
The rules on technical specifications are radically slimmed down and simplified but the basic rule that performance or functional requirements are to be preferred over references to a design or a description of characteristics is retained.
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