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This guide is based on UK law and focuses on the current public, and not utilities,
procurement rules. The law stated is up to date as at 6 February 2013.
Public procurement law regulates the purchasing by public sector bodies and certain utility
sector bodies of contracts for goods, works or services. The law is designed to open up the
EU's public procurement market to competition, to prevent "buy national" policies and to
promote the free movement of goods and services.
In the UK there are two sets of Regulations, depending on where the contracting authority is
based:
Where the following pre-conditions are met a contracting authority must normally advertise
the contract in the EU's Official Journal and follow the procedural rules set down in the
Regulations:
The Regulations currently divide services into so called "Part A" (or "priority") services and
"Part B" (or "residual") services. Only Part A services are fully caught by the Regulations.
Part B services are caught by a lesser regime, with only a few of the detailed rules of the
Regulations applying.
Generally, Part B services are those that the EU considered would largely be of interest only
to bidders located in the Member State where the contract was to be performed, and include:-
Health services
Education services
Recreational, cultural and sporting services
The Regulations themselves do not require any form of prior advertising or competitive
tendering of Part B services. However, they are still caught by the general obligations of
transparency, equal treatment, non discrimination and proportionality that derive directly
from the Treaty on the Functioning of the European Union (TFEU) when the contract is of
'certain cross border interest'. What this means in practical terms is explained under
"Contracts below the financial threshold", set out below.
Below-threshold contracts are not caught by the Regulations, but case law says that where the
contract is of 'certain cross border interest' ie of interest to suppliers located in other EU
Members States, they should be tendered in line with the general principles of non-
discrimination, equal treatment and transparency. The same applies to contracts for Part B
services (see section above: "Are all types of services caught?").
What these principles imply in practice, is that the contract has to be "adequately" advertised
and some form of fair competition run thereafter. The scope and nature of the advertisement
will depend on the nature of the contract in question and who is going to be interested in it.
Contracts caught by the Regulations must be advertised by way of an OJEU notice i.e. a
standard form notice placed in the EU's Official Journal. Use of the standard form notices is
mandatory, and they are available on the EU's SIMAP web site.
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A supplier may be excluded from the tender process, without any assessment of their
qualifications or experience etc, where certain grounds concerning the supplier's personal
position are met (e.g. bankruptcy or professional misconduct).
Suppliers can also be assessed and excluded on the basis of their economic and financial
capacity (e.g. if they don't meet a minimum annual turnover threshold set by the authority) or
technical capacity (e.g. if they don't have the required experience of similar contracts over the
past 3 years).
Lowest price: The lowest priced tender wins. No other element of the tender may be
taken into account; or
The most economically advantageous tender (MEAT): Factors other than or in
addition to price, like quality, technical merit and running costs can be taken into
account.
If MEAT is used:
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the contract award criteria (e.g. "price, quality of services, risk to contracting
authority etc.") and any sub-criteria must be set out either in the OJEU notice or the
tender documents; and
the weighting of each criterion (and sub-criterion, if weighted) must also normally be
given, either as an exact number or as a meaningful range (e.g. 'price: 30%-40%'.).
Electronic communication (e-mail etc) is possible at all stages of the procedure including the
transmission of notices to the Official Journal, the receipt of requests to participate and the
receipt of tenders. In certain circumstances it may be possible to shorten the minimum
statutory timescales where e-communication has been used. For example the standard period
for receipt of expressions of interest from candidates is reduced from 37 days to 30 days
where the notice has been sent electronically to the Official Journal.
For all contracts caught fully by the Regulations (so not sub-threshold contracts or contracts
for Part B services) contracting authorities must notify all tenderers (and any candidate who
has not already been informed that they have been unsuccessful at the earlier selection
stage) of their decision on contract award in writing, allowing a standstill period of either a
minimum of 10 or 15 clear calendar days between the date the notification is sent to
candidates and the date of entry of the contract.
Frameworks
A framework is basically an umbrella agreement which sets out all or some of the terms on
which the parties to the agreement will enter into contracts ("call-offs") in the future.
Frameworks come with certain restrictive rules as to their use, for example:-
When the time comes for "calling-off" a contract from the framework there are two
alternative means of choosing suppliers:-
If a candidate, or disgruntled third party contractor, thinks that its rights under the
Regulations have been infringed, it has two main courses of action open to it. It may pursue a
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legal action in the High Court (or the Court of Session in Scotland) against the contracting
authority concerned. It may also make a complaint to the European Commission in the hope
of persuading it to intervene. However, injunctions, orders to set aside a contracting
authority's decision, damages, and the new remedy of contract ineffectiveness are only
available to the tenderer or contractor under the legal action route.
Conclusion
Whilst the public procurement rules may seem daunting in their detail, a contracting authority
will be off to a good start if it remembers certain key principles:
Be open and transparent – allow tenderers to understand what you are going to do and
how you are going to do it;
Be objective and ensure equal treatment of tenderers – allow all tenderers a fair and
equal chance of winning the contract;
Be consistent – do what you said you were going to do.
For contractors and tenderers, it stands to reason that if contracting authorities are better
aware of their obligations, contractors and tenderers should benefit from this. Contractors
and tenderers must also ensure that they understand the tender process, and their rights under
that process. If in doubt, seek clarification from the contracting authority.