Public Contracts Regulations 2015 - Regulations 65 and 66

Regulation 65 - Reduction of the number of otherwise qualified candidates to be invited to participate

Regulation 66 - Reduction of the number of tenders and solutions

What do Regulations 65 and 66 brings us? The rules on how qualified candidates (ie candidates that otherwise would be allowed to continue on a procedure) and tenders can be excluded. This is possible in procedures such as the restricted procedure, competitive dialogue, competitive procedure with negotiation or the innovation partnerships, procedures I decided to christen restrictive procedures. Albert's view is here.

Regulation 65

As in the past, the minimum number of qualified candidates a contracting authority may take forward in case of a restricted procedure is 5 and the competitive dialogue 3. The new competitive procedure with negotiation and innovation partnership is also 3. It means that the contracting authority may exclude all other qualified candidates other than the number it said it would take forward. As the reduction should occur based in "objective and non-discriminatory criteria or rules" which by definition will be focused on the qualities of the candidate and not its future bid, this puts SMEs at a big disadvantage position. If only the X best candidates are to be selected and the criteria will reflect financial requirements (including insurance...), experience and more importantly capacity, smaller suppliers will always be at a disavantage. And the more complex we make procurement the worse it will be for them.*

The above does not preclude the contracting authority advancing with a smaller number in case only say 2 candidates are good enough to be qualified (paragraph 7). It is interesting to note that there is no competition protection exception to this rule and I agree with it. Stating the procedure should not go ahead with only one qualified supplier would be the same as making an undertaking's ability for a contract dependent on other people with the right set of qualifications. "Enough participants" would be an added "selection criteria" and one that each economic operator has zero control on. For all the competition risks, contracting authorities can still pull the plug if they so wish but they are not under the obligation of do so. A contrarian argument, however, may be that

* I do not have data at hand to prove my assertion but my view is that in restrictive procedures (all those above) participation and success rate by SMEs is lower than in an open procedure. Feel free to prove me wrong.

Regulation 66

Regulation 66 allows for a reduction of tenders (competitive procedure with negotiation) or solutions (competitive dialogue) in accordance with the award criteria stated in the procurement documents. Paragraph 2 of this regulation includes a competition protection exception by stating that the reduction needs to take into account the number coming to the final stage must guarantee genuine competition, "in so far as there are enough tenders, solutions or qualified candidates". This does not appear to make a lot of sense for three reasons.

First, my reading is that if there are at least 2 qualified tenders or solutions then in consequence they can never be reduced to one during the final stage. Effectively, that may mean (especially in competitive dialogue where it is relatively easy for the contracting authority be smitten by a specific solution) that dead horses will be kept in the running just to function as threat of competition leading to transaction and opportunity costs to be laid at the back of economic operators. It is simply unfair (and illegal in jurisdictions where bona fides counts for something) to keep economic operators in a procedure where they have zero chances to win, as sacrificial lambs in the altar of a semblance of competition. I wrote a whole Ph.D thesis about competitive dialogue if you are so inclined...

The second reason is that this limitation only applies "in the final stage", thus apparently allowing the contracting authority to reduce candidates/solutions/tenders to one in the previous stages.

The third reason is also connected with "in the final stage" part of paragraph 2. I am not aware how "qualified candidates" can be excluded in any procedure "in the final stage". Tenders can be excluded for multiple reasons but candidates? Unless they become unqualified (it may happen) but then this paragraph would not be applicable in the first place.

I suspect that what paragraph 2 wanted to stress is that the reductions should lead to a final stage with only a single economic operator. It could have been drafted so much better.

Finally, take a moment to sink in the fact this Regulation 66 is only applicable to the competitive procedure with negotiation and competitive dialogue. Which procedure is nowhere to be seen? The innovation partnership.