Public Contracts Regulations 2015 - Regulation 70

Regulation 70 - Conditions for performance of contracts

Regulation 70 allows contracting authorities to establish specific conditions for the performance of contracts. This is a short regulation with two simple paragraphs but full of implications for public procurement.  You can find Albert's entry here. Unsurprisingly, he is much a fan of these clauses as I am...

The general rule is that said contract performance clauses need to be connected to the subject matter of the contract and indicated in the procurement documents. Furthermore, said contract performance clauses may have economic, innovation, employment, social or environmental nature. An example of a perfectly reasonable contract performance clauses: i) obtaining a recycling rate over x% of materials disposed during building works; ii) powering a festival only with renewable energy; iii) releasing in open source whatever intellectual property was developed in the contract development.

Although the subject-matter link is still present, I suspect the next few years will be fundamental in establishing exactly what constitutes a contract performance clause that is linked to the subject matter (hint, hint CJEU...). These clauses have been used in parts of the UK (mostly Scotland and Wales as far as I know) under the guise of Community Benefits clauses. An example of a community benefit clause is the need for the contractor to take on apprenticeships on a construction contract. Is this performance clause linked to the subject matter of the contract? I will go out in a limb and say no. This is a mixed contract composed of works and services parts. The apprenticeship part is a separate part (contract) and one that should be analysed separately with its own set of award criteria. Otherwise the contracting authority may be taken for a ride as it is not assessing how good the contractor is in delivering that part of the contract. Furthermore, companies that specialise in training are out in the cold: they cannot bid for the contract and there is no incentive for a construction company to get them in a consortia as that costs money and the training element is not being measured at the award stage. Finally: some apprenticeships have to last for longer than the main contract duration, ie electrical services: would they still pass the subject-matter link test? Again I do not think so.

I see another big, big problem with this idea of contract performance obligations: the fact that they are to be disclosed at the start of the procedure albeit not being part of the award criteria. Why is this a problem? Because suppliers will have an incentive of coming with ever more outrageous ways of complying with those contract performance clauses in an attempt to influence the contracting authority during the award stage. "But, but that would be illegal!" Of course it would, but as any trial lawyer knows even mentioning an illegal piece of evidence has an influence in the decision-makers, irrespective of all rational attempts to purge said piece of evidence from the actual decision-making process. But that's me being a cynic.

Another issue for me is where the boundary lies once more for requirements such as paying a living wage instead of the minimum wage. I suspect that imposing as a contract performance condition the UK's living wage as a minimum would be illegal by contravening the Posted Workers Directive, however I do not see a problem if the contracting authority stated that it wants workers to be paid say at least 10% more than the applicable minimum wage, wherever the workers are coming from. Albert?

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