Public Contracts Regulations 2015 - Regulation 19

Regulation 19 - Economic operators

Regulation 19 transposes Article 19 of Directive 2014/24/EU on rules applicable to economic operators. This Regulation and the original Article ensure that economic operators based in other Member States can participate in equal footing in public procurements in England, Wales and Northern Ireland and that contracting authorities have certain rights and obligations regarding how economic operators are to be treated.

Regulation 19(1) is particularly important as it mandates contracting authorities in England, Wales and Northern Ireland to accept economic operators legally constituted in other Member States. Without this rule it would be easy for Member States to raise a trade barrier by simply stating economic operators from other States had to be incorporated in similar fashion to their own - which in some cases could prove simply impossible due to incompatible legal regimes. After all, legal regimes are harmonised, but not completely integrated.

Contracting authorities are entitled to ask economic operators to identify in the tender or request to participate what are the key staff that will be involved in the contract performance. This is valid for works, services and some supply contracts and can easily be explained with the traditional confusion regarding asking information about staff that will perform the contract and the need to separate selection and award stages. Contracting authorities can ask for that information and now this is entirely clear. As a bonus, identifying the key staff for contract performance may restrict economic operator's ability to "bait and switch" staff between the procedure and performance. Consultancies anyone?

The second half of Regulation 19 is dedicated to groupings of economic operators and how issues surrounding them are to be dealt with. Paragraphs 3 and 6 allow economic operators to organise in any form desired for tendering, leaving to contracting authorities the possibility of demanding a specific legal form if the grouping is successful but only to the extent necessary to perform the contract. The contracting authority's discretion is limited by this necessity test, part of the proportionality principle. What does it mean then? Well, the contracting authority needs to prove the legal form it is requiring is needed for performing the contract satisfactorily. It is not simply convenient or good to have a specific legal form, there must be a need to justify the requirement.

The remaining paragraphs (4 and 5) allow contracting authorities to impose different requirements for groupings in what relates to technical and financial requirements for bidding or contract performance conditions. As with paragraphs 3 and 6 this is not an unchecked power: the contracting authority will have to provide i) objective reasons; ii) and the requirements need to pass the proportionality test. I would add this is a more stringent test than the one for paragraphs 3 and 6 as the necessity test is part of the proportionality principle.