UK: RSLs & Public Procurement

Last Updated: 10 January 2008
Article by Clare Reddy

Introduction

This guide is a brief explanation of what the Public Contracts Regulations 2006 mean for RSLs.

The Regulations usefully consolidate the previously separate Regulations for supplies, works and services. They also deal with developments in procurement and best practice. Procurement processes must be nondiscriminatory, fair and transparent. In many respects, the principles are similar to an equal opportunities approach to recruitment: well-trodden ground for RSLs. However, though there are similarities, the procurement regime is much more prescriptive.

In brief, the regime works as follows:

  • Contracts for works, services and supplies over particular financial thresholds must be advertised within the EU's Official Journal, the OJ. Our client guide,"RSLs and the public procurement regime: which contracts are covered?", discusses which contracts are covered and the financial thresholds.
  • RSLs must select a contractor using one of five available procurement procedures (the open, restricted, negotiated and competitive dialogue procedures and the dynamic purchasing system).
  • Selection of a contractor typically involves a two stage process, first short-listing (or pre-qualifying) candidates using criteria relating to matters such as financial and technical capacity and then awarding the contract to tenderers based either on price or value for money.

Preparations Before Initiating The Procurement Process

The procurement process is initiated by the RSL putting a contract notice in the OJ. Before doing that an RSL should:

  • consider whether it is required to give advance notice in the OJ;
  • decide which procedure to use;
  • decide on pre-qualification selection criteria and what information to ask candidates to supply;
  • decide on the award criteria;
  • draw up contract documentation; and
  • prepare a contract notice to send to the OJ.
Advance Notice Of Procurement Plans


RSLs may have to give advance notice of procurement plans. A PIN (prior information notice) is published in the OJ as soon as possible after the beginning of the financial year (for supplies and services) or the decision authorising the programme of contracts (for public works).

An RSL does not have to publish a PIN notice:

  • if the consideration payable under the contracts or framework agreement is less than £513,166 in relation to supply contracts for the purchase or hire of goods within the same product area and Part A services for services within the same category, or less than £3,611,319 in the case of works contracts;
  • if the RSL does not wish to shorten the timeframes for receipt of tenders following publication of a PIN under the open and restricted procedures; or
  • where the negotiated procedure without a contract notice is to be used.

Choice Of Procedures

Before starting the tender process, an RSL must decide which of the five procurement procedures to follow:

  • the open procedure under which all potential candidates may tender;
  • the restricted procedure under which only pre-qualifying candidates may tender;
  • the negotiated procedure (with or without a contract notice) under which the RSL negotiates with one or more candidates;
  • the competitive dialogue procedure which permits negotiation preaward; or
  • a dynamic purchasing system.

RSLs have a free choice between using the open and restricted procedure. Use of the negotiated procedure is subject to conditions intended to reduce risks of unfairness but, if available, offers an RSL most flexibility. Following the introduction of the competitive dialogue procedure from 31 January 2006, it is thought that use of the negotiated procedure will be even more difficult to justify. The open procedure involves all candidates submitting a tender and is unusual. The most common procedure is the restricted procedure. We have set out below a typical process under the restricted procedure (see final page).

Whichever procedure is adopted, the RSL should be prepared for a lengthy and prescriptive process. Unfortunately, the fact that the RSL wants to start on site quickly will not generally allow the periods to be shortened.

When Can The Negotiated Procedure Be Used?

The negotiated procedure can be used only in limited circumstances which vary between works, services and supplies contracts. The procedure can be used where the nature of the work, supplies or services or risks involved do not permit prior overall pricing or, in certain circumstances, where an open, restricted or competitive dialogue procedure has been discontinued. In certain circumstances, an RSL may negotiate with only one candidate – without any competition. For example, where for technical reasons or protection of exclusive rights, only one person can do the job. The availability of the negotiated procedure is strictly interpreted and you should only use this procedure in special circumstances.

The Competitive Dialogue

This procedure is available for "particularly complex contract[s]" where the RSL believes the open and restricted procedures would not allow its award. The definition of what this includes is not clear. It arises when the RSL is not able to define the technical means to satisfy its objectives or specify the legal and/or financial make up of the project. The RSL selects no less than 3 participants using the permitted criteria. The RSL discusses the contract and possible solution with the participants and there is a provision for participants to be cast aside in stages until the RSL identifies one or more solutions that meets its needs. Once the RSL declares the dialogue to be concluded, the remaining participants submit their tenders. The RSL then awards the contract to the participant submitting the most economically advantageous tender.

A Dynamic Purchasing System

A dynamic purchasing system is akin to a two stage open procedure, conducted entirely electronically. Following publication of a contract notice in the OJ, the RSL offers unrestricted electronic access to the specification setting out its requirements and information on the purchasing system. All qualified providers are admitted to the system and, during its operation, any additional qualified providers must be admitted. As an RSL must issue a simplified contract notice each time it wishes to award a contract under the system and all those on the system must be invited to submit a tender, its use may be limited to simple bulk purchases.

Pre-Qualification Selection Criteria

In the lead up to the procurement process, the RSL will need to decide on financial and non-financial selection criteria to use in determining who proceeds to the tender or negotiation stage. These must relate to economic and financial standing, track record, capacity and capability. The RSL must assess these criteria using information which is largely prescribed. For example, economic and financial standing may be assessed by reference to information such as accounts or a statement of turnover over the previous three years.

It is common to prepare a prequalification questionnaire to simplify analysis of responses.

Award Criteria

Before starting the procurement process, the RSL will also need to decide what award criteria it will use in assessing tenders. Two criteria are permitted:

  • the lowest price; and
  • the most economically advantageous tender (in effect, value for money),

save in relation to the competitive dialogue procedure which permits only the latter.

Unless the contract is for simple commodities, it is unusual to award based on price alone. In determining the most economically advantageous tender, the criteria may include matters such as quality, technical support and timescale for completion. The RSL must specify the weighting it gives to these criteria in the contract notice and contract documents. Where in the RSL's opinion it cannot provide the weightings, it must indicate the criteria in descending order of importance.

Drawing Up Contract Documentation

Once the pre-qualification stage has been completed, the RSL will need to send out contract documentation to candidates. Typically, the contract documentation would include an invitation to tender, proposed conditions of contract and any specification of the works, services or supplies required. Specifications must be expressed by reference to the relevant European specification if appropriate and must not require particular product brands.

Preparing The Contract Notice

Once the RSL has decided which procedure to use and its selection and award criteria, it will need to prepare a contract notice to send to the OJ. These notices are in a prescribed form and include information such as the duration of the contract, the number of candidates to be asked to tender and pre-qualification and award criteria. This may be posted to the OJ electronically through websites such as simap.eu.int or mytenders.org.

Advertising In The OJ And Timescales

Once an RSL is ready to embark on the procurement process, it must send a contract notice to the OJ.

In general, RSLs should allow at least 3 months to complete the procurement process and longer for complex arrangements.

If the RSL is using the open procedure, the date for receipt of tenders must be at least 52 days (36 days if a PIN has been issued) from the date the notice was sent to the OJ.

If the RSL is using the restricted procedure, it sends a notice to the OJ inviting candidates to ask to be selected to tender. The date for receipt of these requests must be at least 37 days after the notice was sent. When invitations to tender are sent out, the deadline for receipt of tenders must be at least 40 days (26 days if a PIN has been issued) later.

Under the negotiated procedure (with a notice), the RSL must give candidates at least 37 days to ask to be selected to negotiate.

The timescales above may be shortened if the RSL has issued the contract notice electronically and shortened timescales may be available in other circumstances.

There is no objection to the RSL also advertising the process in, say, journals in the UK. It must however make sure that it does not provide more information in the journal than the OJ or place the adverts prior to dispatch of the contract notice to the OJ.

Selection And Award Process

Once the contract notice has been published, the RSL will receive submissions from candidates.

If the restricted procedure is used, a typical process might be as follows:

  • candidates contact the RSL and are sent a pre-qualification pack including general information and questionnaire;
  • candidates complete the prequalification questionnaire and return it to the RSL ;
  • the RSL assesses responses against the criteria and decides who to ask to tender;
  • the RSL simultaneously sends out the tender invitation; and
  • the RSL receives the tenders and decides who wins using the award criteria.

Obviously the procedure may vary and there may be site visits or presentations by candidates. The RSL must make sure to apply the principles of fairness, transparency and nondiscrimination.

Contract Award Notice And Notification Of Unsuccessful Tenderers

An RSL must tell any candidate who was rejected at the award stage as soon as possible after its decision.

An unsuccessful candidate may require the RSL to tell it why it was unsuccessful. If the candidate lost out at the award stage, the RSL must (subject to commercial confidentiality) tell it who won and why.

The RSL must send a prescribed contract award notice to the OJ within 48 days of the award, and prepare a record of decisions during the procurement process.

The RSL must allow at least 10 days between the despatch of the contract award notice and entering into the contract (or framework agreement). This is to allow unsuccessful tenderers to challenge the award and have the decision set aside.

Challenging The Process

Legal challenges to procurement processes are unusual. However, an RSL owes both candidates and potential candidates a statutory duty to comply with the procurement rules. If the RSL does not comply with the rules candidates may claim damages or an injunction.

Before the contract is entered, a court can stop a procurement process or set aside decisions. Once a contract has been entered, the only remedy is financial.

There is a maximum time limit of 3 months for taking proceedings under the procurement rules. In practice, an aggrieved candidate may have to take proceedings more quickly as its duty is to act "promptly". However, other remedies may be available after this period.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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