Public Contracts Regulations 2015 - Regulation 111

Regulation 111 - Assessing suitability etc

A contracting authority shall not include a pre-qualification stage in a procurement.

Regulation 111 bars contracting authorities from using pre-qualification stages in the procurement of some contracts covered by Chapter 8. This constitutes a remarkable change in practice as many contracting authorities routinely use detailed pre-qualification questionnaires (and stages) to weed out candidates before tenders are submitted. It is no coincidence the UK is the Member State where the restricted procedure is used more often in Europe in relative, if not absolute terms. Paragraph 4 defines pre-qualification stage as (i) the assessment of candidates suitability to perform the contract or (i) process of reducing the number of candidates in the procedure.

This Regulation makes do with the different thresholds for different types of contract (works, goods/services and social) as it is applicable to any contract with a value below the current financial thresholds for goods and services. Therefore it is applicable only in contracts with a value under £111,676 (central government contracting authority) or £172,514 (sub-central contracting authority), irrespective of its nature (paragraphs 2 and 3). In consequence, for works and social contracts between the aforementioned values and their respective thresholds  (£4,322,012 and £625,050 respectively) contracting authorities are free to use pre-qualification stages and associated questionnaires.

Even without a pre-qualification stage, suitability questions may be asked if relevant to the subject-matter of the procurement and proportionate (paragraph 5). Without two stages in the procedure this implies that said questions are going to be answered by all economic operators at what constitutes the tendering stage.

As with some previous regulations, contracting authorities shall "have regard" for all guidance produced by the Minister for the Cabinet Office. In case the contracting authority does not do so, that may constitute a "reportable deviation", a concept the Regulation leaves unexplained. Any "reportable deviations" are to be reported to the Cabinet Office. Once more, there appears to be no consequences if the contracting authority does not report said deviation to the Cabinet Office. All bark and no teeth.

There are rumours flying around that contracting authorities are not taking the opportunity to revise and update their practices accordingly and are just taking the same questions that would go into the pre-qualification questionnaire and calling it a day. Naturally that this goes against the Regulation objective as well as the proportionality principle. For contracting authorities wishing to know how they can improve their below threshold practices and get rid of the pre-qualification stage, check the work I have done with the Simplified Open Procedure on the Publications tab.

Personally, I am not surprised by how contracting authorities reacted to these new rules (carrying on as normal, that is) and it shows the limitations of legal mechanisms not backed up by clear guidance and, crucially, good review mechanisms. There is some guidance out already, but very basic. And as for review mechanisms, the use of judicial review in the UK is still the exception more than the rule, and looking to how Regulation 89 is drafted it appears that the whole of Chapter 6 only applies to contracts covered by Part 2. In consequence, what remedies are available for aggrieved bidders for contracts below thresholds?

The practical reaction to this Regulation also highlights how the law maker does not understand the "job to be done" of pre-qualification stages in the UK: they exist to filter/weed out candidates at the start as a means to reduce the workload further down the procurement procedure. They are also a risk management - nay, reduction - exercise by getting rid of economic operators as soon as possible before they become too involved in a procedure. That is why contracting authorities are still including the same suitability questions in the tender stage.

Although I usually prefer legislation to guidance, this is an area where more detailed guidance would actually be helpful for contracting authorities. Furthermore, this chapter should have been more ambitious and have a similar Regulation for the tender stage, imposing at least similar obligations in terms of proportionality between questions asked and the contract. It is not rocket science to simplify procurement procedures and tender stages (fewer questions, clearly worded questions, reasonable word limits, proper contract summary with the information suppliers need for a go/no go decision), but the Regulations should have given a nudge in that area as well. Missed opportunity.