Public Contracts Regulations 2015 - Regulation 17

Regulation 17 - Public contracts and design contests involving defence or security aspects which are awarded or organised pursuant to international rules

Albert drew first blood today. Is entry is here.

Regulation 17 establishes what sets of rules are applicable to a public contract or design contest which involve defence or security and have an international component of sorts. As with yesterday's Regulation 16 which contained rules similar to Regulation 4 but for the defence sector, today's regulation creates a specific regime for the defence and security sector that derogates the general rules contained in Regulation 9.

Regulation 17 excludes the application of Part 2 rules in four scenarios and the need for the parties to achieve an agreement regarding procurement rules in another one. Regulation 17 does not mention expressly its scope of application other than saying that  it applies on "defence and security matters". As a number of contracts in those field are already excluded from Part 2 rules by force of Regulations 15 and 3(2), then one must conclude that for Regulation 17 to have any useful meaning it needs to apply to contracts that were not already excluded, so the "defence and security matters" threshold will certainly be lower.

It should be said as well that these exclusions presuppose the existence of an alternative procurement regime that can be relied upon instead of the Public Contracts Regulations. In consequence, if there is no fallback procurement regime at the end of exception, for example if an international funding organisation (Regulation 17(2))  does not have procurement rules, my interpretation is that Part 2 would still be applicable.

Exclusion of Part 2 rules

Paragraphs 1 - 2 of Regulation 17 establish the four different scenarios that lead to the non-application of Part 2 rules, as long as other procurement procedures are established. The first exception is a legal international agreement that creates obligations for a Member State and third countries related with defence and security matters. Interestingly enough, this Regulations refers to not only third countries but also "subdivisions of such countries". I am no international law expert but wonder what is the international standing of such internal "subdivisions". By definition, if "subdivisions" they are not a country in their own accord and have not been recognised as such. Having said that, this is not an international law blog, so let's keep focused on the procurement side of things.

International agreements or "arrangements" related to the "stationing of troops and concerning the undertakings of a Member State or third country" provide a second exception to Part 2 rules. I am not entirely sure what is meant by "arrangements" as it seems a much lower threshold to aim for than a proper international agreement. Furthermore, the way I read this specific exception is that it is only applicable to troop deployments to protect undertakings. For example, if the Government decided to deploy troops to protect oil wells explored by a British company say in Africa (was about to say the Falklands, but that would be an incredible faux pas...). Please let me know in the comments if I got it completely wrong.

The third exception is related to international organisations, presumably in the field of defence and security. My suspicion here is that this exception is NATO shaped.

The final exclusion to Part 2 rules applies to contracts/design contests in the field of defence and security which are wholly financed by an international organisation or international financing institution. I am not sure why there was a need to refer to international financing institutions specifically as I would argue all international financing institutions constitute (or are part of) international organisations.

Agreement needed

Paragraph 3 of Regulation 17 states that in case a contract or design contest is only funded in the most part by an international organisation or international financing institution, then their procurement rules do not apply automatically and the parties will still have to reach an agreement. Naturally the agreement can be for those other procurement rules to apply instead of Part 2.

It is interesting to note that in case the contract or design contest is not funded in the most part (ie, only 50% or less) by the international organisation or international financing institution, then Part 2 is still applicable and will have to be complied with. This may lead to some rough edges as said international organisations may have internal rules stating they can only disburse funds in case their own public procurement rules are followed. As we are talking about defence and security contracts and design contests, I suspect this will be a minor issue.