Public Contracts Regulations 2015 - Regulation 56

Regulation 56 - General principles in awarding contracts etc

What can we find on Regulation 56? Regulation 56 establishes the general principles to be followed when awarding contracts, transposing Article 56 of Directive 2014/24/EU into England, Wales and Northern Ireland. I find it particularly interesting the epigraph includes the "etc", which is really helpful for anyone to determine the content of a Regulation, which is a departure from the Directive.

Regulation 56 contains four rules (more so than actual principles). The first is on the cumulative nature of selection and award criteria (56(1)). The second allows contracting authorities to not award contracts to the most economically advantageous tender in case of non-compliance with environmental, social or labour law obligations. The third establishes the possibility of getting rid of the selection stage from open procedures. Finally, the last rule gives contracting authority the possibility (but not the obligation) to request further information from economic operators in certain circumstances.

Albert has provided a lot of insight about these obligations last Friday, so I will focus my comment instead on numbers two and three, as those are the ones closer to my heart.

Refusing to award contracts to the most economically advantageous tender in case of non-compliance with environmental, social or labour law obligations (Regulation 56(2))

At face value, this requirement makes perfect sense. A tender is not the "best" if it includes illegal elements. For example, let's imagine that the winning tender imposes pollution levels above the legal limit or that employees will be paid a wage below the minimum wage legal requirements. So far so good, no qualms about these examples.

The problems start however when we start looking at where these legal obligations can come from. According to Regulation 56(2) they can originate in EU law, national law, collective agreements or international agreements. Now let's imagine that in the wage level scenario, the winning tenderer proposes for its employees affected to the contract and based in Bulgaria a wage below the national legal level in England, Wales and Northern Ireland but above the Bulgarian minimum requirement. Can you imagine contracting authorities using this Regulation to refuse awarding the contract to a foreign economic operator in preference of a national one? I can.

Let's stay in this field for a moment and imagine a scenario where the excluded tenderer is based instead in the UK and with a national workforce, its wage levels are above the (legal) minimum wage but below the living wage the contracting authority has signed up to? Apparently, it would be possible to refuse awarding the contract to said economic operator under social obligations arising from a "collective agreement". Would the answer be different if the contracting authority did or did not disclose the information (that it wanted compliance with living wage standards) at the start of the procedure? If I ever teach procurement in the near future this would make an excellent exam problem question...

I have not even started discussing the possibility of using social policies that are not directly connected with the contract for the same aims, but the examples above should be enough to illustrate the kind of pressure cooker that is being put on the fire for the next decade.

Like Han Solo would say, "I have a bad feeling about this..."

Getting rid of a selection stage in the open procedure (Regulation 56(3))

Personally, I am surprised this change has not gotten more attention in the last 15 months. It effectively allows contracting authorities to run open procedures without a selection stage whatsoever, transforming the open procedure in a single stage procedure. In a country like the UK (where PQQs are prevalent, even in open procedures) this is a sea change which can herald much shorter procedures.

Albert considers this simply to be a switch in the sequence of steps to be taken (award first, then selection) whereas I consider it to be closer to the elimination of the selection stage altogether for all practical purposes. While it is true that the winner has to be checked against the grounds for exclusion that are either mandatory or set at the start of the procedure, the truth is that only the winner is subject to such scrutiny. This saves time to the contracting authority as it will have the documentation with it already and can look into the winner as soon as it wants and connects well with other regulations where the amount of paperwork that needs to be undertaken by economic operators is reduced as well. Portugal has been running open procedures in this way since 2009 or 2010 and no major issues have been reported (although the time savings have not really materialised anyway). For low risk contracts this should be a no-brainer, particularly if the contracting authority invests some of the time savings in designing proper questions for the tender...

It is also not a million miles away from what I designed and implemented as the simplified open procedure for contracts below-thresholds with some Welsh contracting authorities between 2011 and 2013 (more info here). In those however we eliminated the selection stage and only asked the winning economic operator to submit the information after it was selected, saving all other participants the cost of supplying the information in the first place, an issue that may be mitigated above-thresholds somewhat with the European Single Procurement Document if it ever works well. The time savings we achieved were very good: contracts were awarded on average within 38 *calendar* days and total person-hours invested by the contracting authority reduced as well.

PS: Apologies for the delays with the daily postings over the last week or so, but I changed my civil state on Friday and have been travelling a lot. Normal service resumes on Friday and I will catch up Albert by Monday.