It was not very long ago that public procurement law was the preserve of a small band of lawyers and practitioners conversant in the peculiar world of EU treaties and directives. The European Commission cast curious and sceptical glances the way of us in the UK because we stood out as having remarkably few challenges to procurement decisions in our courts. The Commission did not think that this was because we were outstandingly good at complying with the rules but because there were serious disincentives to disgruntled bidders making such changes.
Much has changed over the last two or three years. Public procurement law is now a mainstream area of practice (public procurement refers to the procurement in the public sector). We seem to have cast off our reticence and there is a clear increase in the number of cases going through the courts. In 2009 the Procurement Lawyers' Association was launched and boasts over 350 members - no longer a small band on any view (see www.procurementlawyers.org if you would like to add to the number).
The law has moved on too. Cases in the UK courts and in the European Court of Justice have developed and explained aspects of the rules governing public procurement. The rules have changed as well, with the implementation of the Remedies Directive. The UK rules implementing European Law on procurement are to be found in the Public Contracts Regulations 1996. These were amended to implement the Remedies Directive. That directive introduced some very important changes. These included the power to set aside contracts that were made in serious breach of the rules – in particular, where the tender has not been advertised in the Official Journal of the European Union (OJEU) or by not observing the mandatory standstill period (a period of at least 10 days which must elapse between telling bidders who has won and entering into a contract with the winner).
The rules are all about giving effect to some fundamental principles that apply when the public sector is procuring goods, work or services. Those principles include transparency, non-discrimination and equal treatment.
The rules therefore set out procedures requiring: tenders above certain thresholds to be advertised; for the criteria to be used in judging tenders to be appropriate and clear; for the criteria and the marks available in respect of each of them to be notified to all bidders in advance; for the outcome to be publicised and for bidders to obtain certain information about how they fared compared to the winner.
It all sounds very simple and straightforward but it is far from that as the increase in litigation and lawyers in the field bears witness. The new climate of litigation to challenge the award of contracts means that those involved in carrying out procurement and those advising them need to take great care. The Local Government Association carried out some research amongst their members last winter and published their report 'The impact of EU procurement legislation on councils' in December (see www.local.gov.uk for a full copy).
17% of respondents to the survey had been challenged by an unsuccessful bidder in the preceding 12 months and 50% thought that challenges had increased in the past 5 years. Interestingly, it seems that councils do not think the rules have achieved some of their key objectives.
As to opening up cross border competition 89% said they never or rarely received tenders from outside the UK and 91% said that tenders were rarely or never awarded to such bidders. 58% did not think the rules had affected competition between suppliers the same proportion saw them as having no effect on prices. 50% thought the rules had failed to make procurement more efficient and effective.
Respondents were asked to indicate the issues presenting the greatest difficulty to them. Their top 5 were (1) dealing with challenges under the Remedies Directive; (2) legal uncertainty about the need to tender when sharing services with other public sector bodies; (3) legal uncertainty about the need to tender when sharing services with another council; (4) uncertainty created by UK or EU case law from the courts and (5) inclusion of 'social criteria' in public contracts. Also worthy of note is number 8 'determining selection and award criteria'. The difficulties perceived in items 2 and 3 all now have been alleviated somewhat by February's decision in the Supreme Court in Brent London Borough Council and others -v- Risk Management Partners Ltd.
There is insufficient room here to explain the detail of that case but suffice to say, the Supreme Court held that the exception to the EU regime set out in the Teckal case also applies to procurement under our Public Contracts Regulations 1996. This is important for authorities wanting to adopt a shared services model where they wish to procure goods, work or services from another authority or to set up a vehicle through which several authorities can procure jointly, delivering cost and other efficiencies. The Brent case reassures them that they may do so provided the criteria outlined in Teckal are satisfied.
The contents of this brochure are intended as guidelines for clients and other readers. It is not a substitute for considered advice on specific issues. Consequently, we cannot accept any responsibility for this information or for any errors or omissions.
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