Public Contracts Regulations 2015 - Regulation 3

Regulation 3 - Subject Matter and Scope of Part 2

Regulation 3 brings us to Part 2 of the Public Contracts Regulations 2015. As the Regulation itself is short, today's commentary will focus first on a general view of this Part 2 and then a couple of quick comments about Regulation 3 itself. Albert's views are mostly coincidental to mine (although more detailed) and can be found here.

General comments on Part 2

Part 2 of the Regulations spans most of the law itself (from Regulation 3 to Regulation 85) and covers what we can consider to be the substantial business of public procurement: scope, general and special rules on procedures for contract award, records and reports. Remedies, rules on contracts not covered by the Directives and others odds and ends can be found on subsequent parts.

As mentioned in previous entries, most of the Regulations follow the Directive 2014/24/EU very closely and none more so than Part 2. In effect, when we think about procurement rules, most of them will be found on this part and more often than not they are quite similar in content (though not in structure or presentation) to the Directive.

So what about Regulation 3 then?

Regulation 3 is mercifully short after yesterday's laundry list of definitions. It contains only two paragraphs, the first on the general subject matter and scope of application and the second on the derogation from Article 346 of the Treaty on the Functioning of the European Union (TFEU in the lingo).

According to Regulation 3(1), Part 2 applies to the contracts (and design contests) with a value identical or higher than the thresholds mentioned on Regulation 5 and if no exception is applicable. Fairly standard scope of application. Regarding the thresholds themselves, however, stay tuned for a Friday rant...

The most interesting bit of Regulation 3 is probably the second paragraph, containing the reference to Article 346 TFEU. This is a Treaty Article providing an exception to the Treaty, whereby Member States are entitled to withhold information that is contrary to its national security interests (Art 346(1)) and - the bit relevant to procurement - allowing Member States to take measures to protect their defence industries. Naturally this includes the procurement of defence material, and an express reference is made to a list drawn up by the Commission in...1958!

In other words, defence benefits from a derogation of the Treaty rules. By definition, that would affect the Directive 2014/24/EU as well, but still the lawmakers involved decided to spell it out, including a provision in Article 1 reinforcing the derogation. True to its copy+paste approach, so did the Regulations law makers. I am not sure the reference to Art 346 was needed as all secondary EU legislation needs to comply with primary legislation like the TFEU and will blame some excessive zeal for its inclusion.

Defence procurement is not really my area, so I defer to the experts on this and have reached out Dr. Aris Georgopoulos (University of Nottingham) and Dr. Baudouin Heuninckx (Belgian Armed Forces) for comment. Will ping a couple others (Prof Martin Trybus from Birmingham and Dr. Luke Butler from Bristol) for added measure.

If you have access to the Public Procurement Law Review, there is an article by Nicolas Pourbaix from Hogan Lovells precisely on Art 346 - PPLR 2011, 20, Issue 1, 1-8. Or, in alternative Chapter 3 of Martin Trybus' Buying Defence and Security in Europe, covers this derogation quite extensively.