Public Contracts Regulations 2015 - Regulation 73

Regulation 73 - Termination of contracts

Regulation 73 defines the rules under which contracts can be terminated. Albert considers the transposition as legal, although I am on the fence and accept that view particularly if one considers Member States to have a reasonable margin of discretion to transpose Directives.

For a civil lawyer like myself some of the options there contained are interesting. For example, paragraph 1 mandates the contracting authority to include in every public contract which they award the grounds for termination there mentioned. Would it not be easier if the Regulations just stated the contracting authority may terminate any public contract if one or more of those grounds are present? On the face of it, it would appear that if the contracting authority forgets to include the grounds in the procedure it would appear the contract cannot be terminated at least on these grounds. However, paragraph 3 creates an "implied term" allowing these grounds to operate nonetheless. Why the complexity? Why making life difficult when it could be made easy?!

I find it noteworthy that article 73 of the Directive states that Member States shall ensure the possibility of terminating contracts under any of the circumstances contained in that article, with respect for national law. I think the transposition was crafty (and perhaps just borderline illegal) as it guarantees contracting authorities the possibility of terminating the contracts, but puts the burden squarely in the backs of the contracting authority to include the needed clause.

Speaking of the grounds for termination, paragraph 1 includes three different ones: i) a substantial modification as per Regulation 72(9); ii) contractor falling into the exclusion grounds of Regulation 57(2); iii) contract was awarded under serious breach of the Treaties or Directive 2014/24/EU as declared by the CJEU.

The first and third grounds appear interesting, particularly bearing in mind the comment on my first and second paragraphs. Regarding the first ground, Regulation 73(1)(a) provides a ground for termination only if the contract modification was substantial under Regulation 72(9). This is problematic for two reasons. First, Regulation 72(9) does not refer to substantial modifications, but to a subsidiary ground to consider a modification illegal. Second, Article 73 of Directive 2014/24/EU states in no uncertain terms that any substantial modification under Article 72, gives rise to the possibility of contract termination. Had Article 73 been well transposed, Regulation 73 would have mentioned paragraphs 1(e) and 8 of Regulation 72 in addition to 9. Another example of crafty transposition or just a typo? It might have been that the cross-reference was intended to paragraph 8 instead of 9, which would render the point almost moot.

The final two paragraphs of Regulation 73 do not have parallel in the Directive and are purely national law provisions to enable the application of paragraph 1. For example, paragraph 2 also pushes the burden of how the notice of termination should be given to the contracting authority as well as dealing with "consequential matters that will or might arise from the termination." Again, could the lawmakers not have provided a simple set of rules for these instead of leaving the buck with the contracting authorities?