Contract-making suspended by challenge to award decision under reg.95 Public Contracts Regulations 2015

As Pedro briefly discussed earlier today here, reg.95 of the Public Contracts Regulations 2015 (PCR2015) sets up the conditions under which a challenge to an award decision suspends any contract-making possibilities for the contracting authority--ie triggers a litigation-related stand-still obligation.  It is important to stress that reg.95(3) PCR2015 clarifies that this litigation-related stand-still obligation does not affect any of the obligations eventually imposed by reg.87 PCR2015 (ie the Alcatel or non-litigation related stand-still obligation). Therefore, a stand-still obligation derived from reg.95 can arise even if the Alcatel stand-still period was not applicable to the specific award decision or, if applicable, has elapsed; provided the conditions set out in reg.95(1) PCR2015 are met.

In that regard, under reg.95(1) PCR2015, such litigation-related stand-still obligation applies, and the contracting authority is required to refrain from entering into the contract, where a claim form has been issued in respect of a contracting authority’s decision to award the contract, the contracting authority has become aware that the claim form has been issued and that it relates to that decision, and the contract has not been entered into. 

Hence, this is an obligation that the contracting authority needs to comply with in good faith and in order to preempt the possibility of a successful challenge beyond the minimum Alcatel period (if any), should the contracting authority still not had taken the necessary steps to conclude the contract and get its performance started. It is, in my view, a sort of estoppel that prevents the contracting authority to rush to conclude a contract only after having become aware of a challenge of the previous award decision.

Reg.95(2) PCR2015 determines that such litigation-related stand-still obligation will remain until either the Court brings the requirement to an end by interim order under reg.96(1)(a) PCR2015 (discussed tomorrow); or the proceedings at first instance are determined, discontinued or otherwise disposed of and no order has been made continuing the requirement (for example in connection with an appeal or the possibility of an appeal).

In my view, this is an important procedural mechanism and imposes clear incentives on contracting authorities to enter into contracts promptly after the expiry of the Alcatel stand-still obligation, where it applies [see reg.86 PCR2015] and, generally, once it is clear that there is no need to wait any further before proceeding to conclusion and performance.

Starting proceedings under reg.94 Public Contracts Regulations 2015

Reg.94 of the Public Contracts Regulations 2015 (PCR2015) establishes rules for starting proceedings under Chapter 6 PCR2015. Generally, the economic operator must serve the claim form on the contracting authority within 7 days after the date of issue where proceedings are started [reg.94(1)]. For these purposes, “serve” means serve in accordance with rules of court, and for the purposes of this regulation a claim form is deemed to be served on the day on which it is deemed by rules of court to be served [reg.94(5)].
 

However, there is a requirement for speedier service of the claim where ineffectiveness or a prohibition on concluding a not yet performed contract are involved. This covers cases where proceedings are started (i) seeking a declaration of ineffectiveness, or (ii) alleging a breach of (a) the standstill period imposed in reg.87 PCR2015, (b) suspension derived from a challenge to the award decision as per reg.95 PCR2015, or (c) an obligation derived from an interim measure restoring or modifying the requirement to suspend as per reg.96(1)(b) PCR2015, where the contract has not been fully performed [reg.94(2) PCR2015].

In those cases, the economic operator must, as soon as practicable, send a copy of the claim form to each person, other than the contracting authority, who is a party to the contract in question [reg.94(3) PCR2015]. In that regard, the contracting authority must, as soon as practicable, comply with any request from the economic operator for any information it may reasonably require for the purpose of complying such a duty to send a copy of the claim form to each person, other than the contracting authority, who is a party to the contract in question [reg.94(4) PCR2015].

These requirements make sense, given the relevance of ensuring that contracts are not executed when they are affected by a significant risk of ineffectiveness.

Special time limits for seeking a declaration of ineffectiveness under Reg. 93 Public Contracts Regulations 2015

Reg.93 of the Public Contracts Regulations 2015 (PCR2015) establishes special time limits for seeking a declaration of ineffectiveness. In this case, proceedings still need to be started within 30 days [reg.93(2)(a)], but the relevant time when the clock starts ticking changes (see below). In any event, though, proceedings must be started within 6 months beginning with the day after the date on which the contract was entered into [reg.93(2)(b)]. For these purposes, proceedings are to be regarded as started when the claim form is issued [reg.93(7) PCR2015].

Therefore, the general rule is that ineffectiveness can be sought up to 6 months after the contract was entered into, except in two specific cases in which potential claimants can be seen as possessing specific information that triggers their duty to start procedures within 30 days from the relevant fact.

The first case concerns procedures where a relevant contract award notice has been published in the Official Journal of the European Union, in which case the relevant date is the day after the date on which the notice was published [reg.93(3)]. For that purpose, a contract award notice is relevant if, and only if the contract was awarded without prior publication of a contract notice; and the contract award notice includes justification of the decision of the contracting authority to award the contract without prior publication of a contract notice [reg.93(4) PCR2015]. 

The second case concerns procedures where the contracting authority has informed the economic operator of the conclusion of the contract, and a summary of the relevant reasons, in which case the relevant date is the day after the date on which the economic operator was informed of the conclusion or, if later, was informed of a summary of the relevant reasons [reg.93(5)].  Such “relevant reasons” means the reasons which the economic operator would have been entitled to receive in response to a request under reg.55(2) PCR2015 [reg.93(6)].

General time limits for starting proceedings under reg.92 Public Contracts Regulations 2015

Reg.92 of the Public Contracts Regulations 2015 (PCR2015) establishes the general time limits for starting proceedings to seek remedies other than ineffectiveness derived from breaches of Part 2 PCR2015 or EU actionable procurement rules [time limits for proceedings seeking ineffectiveness are established in reg.93 PCR2015]. 

In general, and in a simplified manner, proceedings must be started within 30 days beginning with the date when the economic operator first knew or ought to have known that grounds for starting the proceedings had arisen [reg.92(2)]. However, the Court may extend the time limits imposed where it considers that there is a good reason for doing so [reg.92(4)], but it must not exercise that power under so as to permit proceedings to be started more than 3 months after the date when the economic operator first knew or ought to have known that grounds for starting the proceedings had arisen [reg.92(5) PCR2015].

For discussion on the calculation of these time limits, see R Ashmore "Curing the "incurable"? The possibility of serving a technically defective claim form "out of time" as recognised in Heron Bros Limited v Central Bedfordshire Council" (2014) 23(4) Public Procurement Law Review NA134-NA139. Even if the case discussed was Irish (and hence subjected to different rules), the issue of knowledge in relation to time limits for bringing proceedings is addressed in an interesting way by P McGovern, "Application of the principle of transparency in stating criteria, and application of the concept of knowledge in relation to time limits for bringing proceedings: the case of Gaswise Limited v Dublin City Council" (2014) 23(5) Public Procurement Law Review NA145-NA148.

Enforcement of duties through the Court under Reg. 91 Public Contracts Regulations 2015

Reg.91 of the Public Contracts Regulations 2015 (PCR2015) determines that economic operators can enforce the duties owed to them under regs.89 and 90 through the Court and, in particular, reg.91(2) assigns competence for such proceedings to the High Court. 

Reg.91(1) PCR2015 determines that breach of the duty owed in accordance with reg.89 or 90 is actionable by any economic operator which, in consequence, suffers, or risks suffering, loss or damage. This is not necessarily limited to those that actually participated in the tender procedure and other economic operators can claim if they believe that the breach of the PCR2015 prevented them from participating [see P Craig and M Trybus, "England and Wales", in R Noguellou & U Stelkens, Comparative law on public contracts (Brussels, Bruylant, 2010) 339, 360].

Duty owed to economic operators from certain other (non-EEA) states under Reg. 90 Public Contracts Regulations 2015

Similarly to reg.89, reg.90 of the Public Contracts Regulations 2015 (PCR2015) creates a duty owed to economic operators from certain other (non-EEA) states whereby contracting authorities must comply with the provisions of Part 2 PCR2015; and any enforceable EU obligation in the field of public procurement in respect of a contract or design contest falling within the scope of Part 2 PCR2015.

Under reg.90(1) PCR2015, this duty is owed also to an economic operator from a GPA state, but only where the GPA applies to the procurement concerned; and to an economic operator which is not from an EEA state or a GPA state, but only if a relevant bilateral agreement applies. This comes to specify the duty of equal treatment and non-discrimination that the GPA and bilateral international trade agreements can create.

For the purposes of duties owed to economic operators from GPA state (ie any country, other than an EEA state, which at the relevant time is a signatory to the GPA), the GPA applies to a procurement if the procurement may result in the award of a contract of any description; and at the relevant time a GPA State has agreed with the EU that the GPA shall apply to a contract of that description, and the economic operator is from that GPA state [reg.90(2)]. This could have been expressed simply and more directly by reference to the schedules of coverage of the GPA (available here) as amended from time to time.

For the purposes of duties owed to third country economic operators, a relevant bilateral agreement applies if there is an international agreement, other than the GPA, by which the EU is bound; and in accordance with that agreement, the economic operator is, in respect of the procurement concerned, to be accorded remedies no less favourable than those accorded to economic operators from the EU in respect of matters falling within the scope of the duty owed in accordance with reg.89 PCR2015 [reg.90(3)]. 

In my view, reg.90(3) PCR2015 could have been expanded to bilateral agreements that may bind the UK without necessarily binding the EU (either currently or in the future, which is at least theoretically are possible, depending on how the EU exercises its trade competences in the future; for discussion, see Y Devuyst "European Union trade policy after the Lisbon Treaty: the Community method at work" in N Witzleb, A Martinez Arranz & P Winand (eds), The European Union and Global Engagement: Institutions, Policies and Challenges (Cheltenham, Edward Elgar, 2015) 138-158].

More generally, the normative question of whether all candidates and tenderers should be afforded the same protection regardless of their nationality remains open and is a complex issue in trade regulation. At the EU level, the proposal of the European Commission to potentially limit access to procurement markets (and hence, the available remedies) by third country economic operators has not gained as much traction as could have been expected when it was first proposed [for discussion, see K Dawar, "The Proposed ‘Buy European’ Procurement Regulation: An Analysis" (2012) 11 Global Trade Alert 89-97].

In my view, opting for universal protection of tenderers could incentivise participation by economic operators from jurisdictions without strong (legal) trade links with the UK and the EU and, more generally, it is hard to understand why contracting authorities would be allowed to disregard the legitimate expectations of economic operators genuinely interested in a public tender--which could strengthen competition and challenge incumbents in cosy relationships with the public sector. However, this is clearly a normative point and, as mentioned regarding reg.89 PCR2015, it is clearly not the UK (English) tradition to give extensive rights of claim against the public sector. Hence, the scope of protection devised in reg.90 PCR2105 needs to be interpreted in strict terms

Duty owed to economic operators from EEA states under Reg. 89 Public Contracts Regulations 2015

Reg.89 of the Public Contracts Regulations 2015 (PCR2015) sets the duty owed to economic operators from EEA states, whereby contracting authorities are required to comply with the provisions of Part 2 PCR2015; and any enforceable EU obligation in the field of public procurement in respect of a contract or design contest falling within the scope of Part 2 PCR2015. Reg89(2) PCR2015 explicitly states that such obligation is a duty owed to an economic operator from the United Kingdom or from another EEA state. 

For a continental lawyer, this is a regulation that does not make much sense and that seems superfluous. Under general conceptions of public law (at least in Spain and in other countries based on the French system of public law and public administration), public bodies (and other contracting entities governed by public law) must abide by the law and any infringement can result in individual rights to claim for any negative consequences of such a procedural or substantive breach. 

On the contrary, as far as I understand it, under English (and Welsh?) public/administrative law, individuals and undertakings only have a claim against the public sector if it breaches a duty owed to them. This has been made quite clear in a recent opinion of Lord Reed, in a recent Supreme Court decision where he stressed that:

A public authority can violate the rule of law without infringing the rights of any individual: if, for example, the duty which it fails to perform is not owed to any specific person, or the powers which it exceeds do not trespass upon property or other private rights. A rights-based approach to standing is therefore incompatible with the performance of the courts’ function [on review] of preserving the rule of law ... [AXA General Insurance Ltd. v HMAdvocate [2011] UKSC 46, [2012] 1 A.C. 868 at [169]–[170]; apud JNE Varuhas, “The Reformation of English Administrative Law? “Rights”, Rhetoric and Reality” (2013) 72 Cambridge Law Journal 369-413, 382; emphasis added].

Consequently, reg.89 PCR2015 is the cornerstone of the system of remedies envisaged in Chapter 6 PCR2015, as it creates the rights to claim on the basis of a breach of such duty for economic operators from EEA states. The extension of such duty (and ensuing right to claim) to economic operators from certain other states is established in reg.90 PCR2015, which will be discussed tomorrow.

The existence of broader possibilities to challenge procurement-related decisions without the coverage of a duty owed under regs.89 and 90 PCR2015 is a contentious issue under English law. For discussion, see SH Bailey, "Reflections on standing for judicial review in procurement cases" (2015) 24(4) Public Procurement Law Review 122-132. See also P Henty, "Can a trade union judicially review a breach of the PCRs?: R. (on the application of Unison) v NHS Wiltshire Primary Care Trust and others" (2012) 21(4) Public Procurement Law Review NA203-207; and SH Bailey, "Contracting and judicial review: R. (on the application of A) v Chief Constable of B Constabulary" (2013) 22(4) Public Procurement Law Review NA106-108.

Applications to the Court and their interpretation under reg.88 Public Contracts Regulations 2015

Reg.88 of the Public Contracts Regulations 2015 (PCR2015) establishes some rules for the interpretation of Chapter 6, which concerns applications to the Court on the basis of the facilitation of remedies derived from the notification obligations and standstill period of regs.86 and 87 PCR2015. The content of reg.88 PCR2015 does not deserve independent comments (cfr Pedro's views), as it simply introduces some precisions and cross-references that need to be taken into account when interpreting the rules of regs.89 to 104 PCR2015. Hence, those precisions will be taken into account and highlighted were relevant.

Facilitation of remedies under regs.85 to 87 Public Contracts Regulations 2015

Regs.85 to 87 of the Public Contracts Regulations 2015 (PCR2015) establish rules for the facilitation of remedies. They create both an obligation to issue notices of decisions to award a contract or conclude a framework agreement [reg.86] and to comply with a standstill period prior to entering into the contract or concluding the framework agreement [reg.87]. 

These regulations are not a result of the transposition of Directive 2014/24, but rather of Directive 89/665 as amended by Directive 2007/66 [for discussion, see the contributions to S Treumer & F Lichere (eds), Enforcement of the EU public procurement rules (Copenhagen, DJØF, 2011)]. Indeed, as stressed in the Explanatory Memorandum of the PCR2015, "[t]hese Regulations also re-enact the relevant provisions of the Remedies Directives (Directive 89/665/EEC as amended by Directive 2007/66/EC), on remedies and review procedures for public procurement, as implemented by the UK in the Public Contracts Regulations 2009" (para 2.1). 

In that regard, the Explanatory Memorandum also clarifies that "[t]he general approach has been to move the existing remedies rules from the 2006 Regulations into this instrument, with only comparatively minor amendments, including adjustments necessary to mesh with the new Regulations overall and some minor drafting improvements. However, we have taken the opportunity to provide for the remedies to be available not only to economic operators from non-EEA countries where covered by the WTO Agreement on Government Procurement (which the 2006 Regulations did) but also to those from other third countries where required by any other international agreement by which the EU is bound" (para 7.3). Consequently, there are no significant changes resulting from regs.85 to 87 PCR2015.

Reg.85 PCR2015 simply determines that the remedies regulated in Part 3 PCR2015 only apply to contracts covered by Part 2, ie contracts with a value above the EU thresholds [see regs. 3 and 5 PCR2015].

Notices under reg.86 PCR2015

Reg.86 PCR2015 creates an obligation for contracting authorities to send to each candidate and tenderer [as defined in reg.86(7) and (8)] a notice communicating its decision to award the contract or conclude the framework agreement [reg.86(1)]. The content of those notices is detailed in reg.86(2) to (5) PCR2015. This is the set of requirements that aim to provide the candidate or tenderer with sufficient information for it to assess whether to challenge the award decision, ultimately as a guarantee of their right effective judicial protection under Article 47 of the Charter of Fundamental Rights of the European Union (see here). 

In my view, they are the crux of the problem of excessive disclosure of information in the public procurement setting, particularly in view of the obligation to disclose the name of the tenderer to be awarded the contract, or to become a party to the framework agreement [reg.86(2)(c) PCR2015; see discussion in A Sanchez-Graells, The Difficult Balance between Transparency and Competition in Public Procurement: Some Recent Trends in the Case Law of the European Courts and a Look at the New Directives (University of Leicester School of Law Research Paper No. 13-11, 2013) and here]. 

In that regard, it is important to stress that reg.86(6) PCR2015 creates a straightforward exception to disclosure of certain information whereby a contracting authority may withhold any information where the release of such information (a) would impede law enforcement or would otherwise be contrary to the public interest; (b) would prejudice the legitimate commercial interests of a particular economic operator, whether public or private; or (c) might prejudice fair competition between economic operators. This is coincidental with the same exception in reg.55(3) PCR2015 (see my comments on the use of such exception here). Pedro has a very different view and considers that "price disclosure should be part of the cost ... for suppliers to work in public procurement". I strongly disagree with him on this point, not least, because the actual cost of excessive transparency is unavoidably borne by contracting authorities and, ultimately, tax payers.

In my view, a proper understanding of the exception in reg.86(6) PCR2015 and the way it should be interpreted and applied, in conjunction with reg.18(2) and (3) PCR2015 establishing the principle of competition, is fundamental to avoid the current excess of transparency in public procurement and its knock-on effect on the ease of cartelisation of public procurement markets. Hence, contracting authorities will be well-advised to adopt strategies that minimise disclosure of information where possible and proportionate, so that competition is not damaged and incentives to collusion and bid rigging are not exacerbated [for background, see A Sanchez-Graells, “Prevention and Deterrence of Bid Rigging: A Look from the New EU Directive on Public Procurement”, in G Racca & C Yukins (eds), Integrity and Efficiency in Sustainable Public Contracts (Brussels, Bruylant, 2014) 171-198].

Reg.86(5) PCR2015 sets more limited exceptions whereby contracting authorities need not comply with reg.86(1) in any of the following cases: (a) where the contract or framework agreement is permitted by Part 2 to be awarded or concluded without prior publication of a contract notice; (b) where the only tenderer is the one who is to be awarded the contract or who is to become a party to the framework agreement, and there are no candidates; (c) where the contracting authority awards a contract under a framework agreement or a dynamic purchasing system. Regarding the latter exception, it is worth stressing that the opacity it creates regarding the working of framework agreements and dynamic purchasing systems may be excessive and that a system of quarterly reporting would be preferable (see here and, in relation to reg.50 PCR2015, here).

Standstill under reg.87 PCR2015

Reg.87 PCR2015 establishes the so called Alcatel standstill obligation for contracting authorities not to enter into the contract or framework agreement subjected to a reg.86 notice until a period of 10 or 15 days has elapsed, depending on the means of communication used to send the notices to the interested candidates and tenderers. 

For discussion of the specific rules on calculation of those time and the UK (Eng & W) case law on this topic, see M Trybus, "An Overview of the United Kingdom Pubic Procurement Review and Remedies System with an Emphasis on England and Wales", in S Treumer & F Lichere (eds), Enforcement of the EU public procurement rules (Copenhagen, DJØF, 2011) 201, 216-17; and  LRA Butler, "Below Threshold and Annex IIB Service Contracts in the United Kingdom: A Common Law Approach", in D Dragos & R Caranta (eds), Outside the EU procurement directives - Inside the Treaty? (Copenhagen, DJØF, 2012) 283, 326-29].

Reporting and documentation requirements under Reg. 84 Public Contracts Regulations 2015

Reg.84 of the Public Contracts Regulations 2015 (PCR2015) transposes the reporting and documentation requirements established by Art 84 of Directive 2014/24. This is an area where Dir 2014/24 ended up loosing much of the bite initially included in the 2011 Commission's Proposal, which would have set a requirement for the creation of a national oversight body and triggered significant interest from practitioners [remarkably, see the UK's Procurement Lawyers' Association working group on Art 84 of the proposal].

Indeed, the oversight and monitoring obligations that Member States need to discharge were limited to the requirements of Art 83 Dir 2014/24 whereby, in order to effectively ensure correct and efficient implementation, they need to guarantee that the tasks set out in that article are performed by one or more authorities, bodies or structures. Those tasks include: i) recurrent monitoring obligations, ii) public disclosure of the results of such monitoring [art 83(2) dir 2014/24], and iii) period reporting to the European Commission by 18 April 2017 and every three years thereafter [art 83(3) dir 2014/24]. The Commission will then use such country reports to update its implementation reports (see here).

Moreover, Member States shall ensure that information and guidance on the interpretation and application of EU public procurement law is available free of charge to assist contracting authorities and economic operators, in particular SMEs, in correctly applying the Union public procurement rules; and that support is available to contracting authorities with regard to planning and carrying out procurement procedures [art 83(4) dir 2014/24]. Member States shall also designate a point of reference for cooperation with the Commission as regards the application of public procurement legislation [art 83(5) dir 2014/24]. In England, this is fundamentally done by the Crown Commercial Service (CCS).

In order to enable the Member State to discharge such obligations, Dir 2014/24 imposes documentary obligations that trickle down to contracting authorities and that the PCR2015 replicate. Additionally to the obligations on retention of contractual documents [reg.83 PCR2015], reg.84 creates  reporting obligations for contracting authorities.

Under reg.84(1) PCR2015, contracting authorities need to draw up a written individual report for every contract or framework agreement covered by Part 2 PCR2015, and every time a dynamic purchasing system is established [for a practical guide to the content of such report's, see Bevan Brittan's byte size procurement update 19 here]. Such a report is however not required in respect of contracts based on framework agreements where these are concluded in accordance with regulation 33(7) or (8)(a) PCR2015 [reg.84(2)].

The report needs to have specific contents depending on the type of contract awarded [reg.84(1)], but contracting authorities can avoid repetition and refer to the contract award notice to the extent that such notice contains the required information [reg.84(3)]. These reports need to be made available to the European Commission upon request [reg.84(4)], as well as to the to the Cabinet Office or to such other body as the Cabinet Office may direct in connection with any functions which that body exercises for the purposes of Article 83 of Dir 2014/24 [reg.84(5) and see above]. 

Moreover, reg.84(6) PCR2015 imposes additional reporting obligations to the Cabinet Office, for the purpose of enabling the Cabinet Office to provide the Commission with information. Hence, beyond the contents of the report as per reg.84(1) PCR2015, contracting authorities need to be able to provide "such other information as the Cabinet Office may from time to time request" [reg.84(6)], which potentially creates a heavier reporting burden than that strictly derived from the rules in Dir 2014/24.

In that regard, though, it is important to stress that reg.84(7) to (9) PCR2015 transpose the general documentary requirements foreseen in Art 84(2) Dir 2014/24, whereby contracting authorities shall document the progress of all procurement procedures, whether or not those are conducted by electronic means. To that end, they shall ensure that they keep sufficient documentation to justify decisions taken in all stages of the procurement procedure, such as documentation on communications with economic operators and internal deliberations, preparation of the procurement documents, dialogue or negotiation if any, selection and award of the contract. The documentation shall be kept for a period of at least three years from the date of award of the contract. Consequently, diligent contracting authorities should not have difficulties in providing detailed reports on any matters arising from a well-documented procurement procedure.

It may be worth stressing that contracting authorities will need to protect confidential information as per reg.21 PCR2015, which will probably solely require them to make sure that the Cabinet Office, any other other body as the Cabinet Office may direct in connection with any functions which that body exercises for the purposes of Article 83 of Dir 2014/24 [and the European Commission] have procedures in place to guarantee the confidentiality of the sensitive parts of the reports.

Retention of contract copies under Reg. 83 Public Contracts Regulations 2015

Reg.83 of the Public Contracts Regulations 2015 (PCR2015) establishes rules on retention of contract copies aimed at complying with the documentary requirements of Article 83(6) of Directive 2014/24. According to these rules, contracting authorities shall, at least for the duration of the contract, keep copies of all concluded contracts with a value equal to or greater than 1,000,000 EUR in the case of public supply contracts or public service contracts; and 10,000,000 EUR in the case of public works contracts [reg.83(1)]. 

 

It is important to point out that the counter-value of those thresholds should be determined according to the Communication from the Commission on corresponding values of the thresholds of Directives 2004/17/EC, 2004/18/EC and 2009/81/EC of the European Parliament and of the Council [2013] OJ C 366/1, which sets them at £833,400 and £8,334,000 respectively.Given the great divergence in current value, it would probably be a good idea for the Commission to update its Communication sooner rather than later. 

 

In any case, the rule in reg.83(1) PCR2015 could have clarified that the relevant value for these purposes is to be determined, for example, at the moment of signature. However, given that the contract can be modified and that the value at signature rule is by mo means the only option, it may be a good idea for contracting authorities to retain copies of all concluded contracts in any case.

Reg.83(2) PCR2015 determines that contracting authorities shall grant access to those contracts, but access to specific documents or items of information may be denied to the extent and on the conditions provided for in the applicable EU or national rules on access to documents and data protection. This opens a can of worms regarding the obligations to disclose concluded contracts under freedom of information requests or any other transparency rules. 

 

My personal opinion has always been that disclosing concluded contracts in full is a bad idea due to the transparency it creates (see here for discussion). Hence, I would promote a careful assessment of the effects of disclosing this information and would strengthen the obligation of contracting authorities to comply by analogy with their duty to protect confidential and competition sensitive information under regs.21 and 86 PCR2015.

Decisions of the jury in design contests under Reg. 82 Public Contracts Regulations 2015

Reg.82 of the Public Contracts Regulations 2015 (PCR2015) transposes Art 82 of Directive 2014/24 concerning decisions of the jury in design contests. These rules aim to ensure the independence that reg.81(1) PCR2015 facilitates through the avoidance of conflicts of interest, as well as to make sure that deliberations and exchanges of information are recorded in an accurate manner (but this may not have been needed, as reg.22(10) PCR2015 and 84(7) to (9) also impose similar documentary obligations for oral exchanges of information).

Under reg.82 PCR2015, it is clear that the jury shall be autonomous in its decisions and opinions [reg.82(1)], that it shall examine the plans and projects submitted by the candidates anonymously and solely on the basis of the criteria indicated in the contest notice [reg.82(2)] and that anonymity shall be observed until the jury has reached its opinion or decision [reg.82(4)].

Moreover, the jury shall record its ranking of projects in a report, signed by its members, made according to the merits of each project, together with its remarks and any points that may need clarification [reg.82(3)]. In that regard, candidates may be invited, if need be, to answer questions that the jury has recorded in the minutes to clarify any aspect of the projects [reg.82(5)]. And, in such case, complete minutes shall be drawn up of the dialogue between jury members and candidates [reg.82(6)].

Once more, the trouble with reg.82 PCR2015 is not so much about what it regulates, but for what it fails to address. It is not clear how the jury needs to conduct its deliberations, or how should it adopt its decisions (consensus, open voting, secret voting, role of the president, etc). These are not issues for the Directive to regulate, but the PCR2015 could have made the lives of contracting authorities easier by providing a default procedure that avoided them having to reinvent the wheel every time they decide to run a design contest. Luckily, maybe, that is not a very frequent occurrence.

Composition of the jury for design contests under Reg. 81 Public Contracts Regulations 2015

Reg.81 of the Public Contracts Regulations 2015 (PCR2015) transposes Art 81 of Directive 2014/24 and imposes two straightforward and minimal rules controlling the composition of the jury for design contests. See Pedro's remarks here.

Firstly, it is clear that the jury shall be composed exclusively of natural persons who are independent of participants in the contest [reg.81(1) PCR2015]. Secondly, where a particular professional qualification is required from participants in a contest, at least a third of the members of the jury shall have that qualification or an equivalent qualification [reg.81(2) PCR2015].

Regarding the first requirement of independence of the members of the jury, it seems quite natural that the absence of conflicts of interest will need to meet the requirements of reg.24 PCR2015 and that, in the case of unavoidable/unavoided conflicts of interest, the conflicted participant should be excluded from the design contest as per reg.57(8)(e) PCR2015 (although, once more, the fact that such ground for exclusion is discretionary does not really help much).

Regarding the second requirement, from a technical perspective, it makes sense to require that a significant part of the jury holds qualifications needed to assess the project from a technical point of view. Of course, the requirement for participants and members of the jury to hold such qualification needs to be justified and proportionate. And the general rules of the Services Directive and, generally, on professional regulation and free movement need to be respected. 

Those issues are not specific to design contests and would require comments beyond the scope of our procurement tennis. Suffice it to raise here that unreasonable or disproportionate requirements regarding (unjustified) professional restrictions could fall afoul of Art 101 TFEU as either a concerted practice or a recommendation of an association of undertakings [for an introduction to this general discussion, see IE Wendt, EU Competition Law and Liberal Professions: an Uneasy Relationship?, Nijhoff Studies in European Union Law vol. 2 (Leiden, Martinus Nijhoff, 2013)]. Hence, contracting authorities will be well advised to seek competition clearance where there are risks of illegitimate or unjustified foreclosure of non-qualified participants.

Rules on organisation of design contests and the selection of participants under Reg. 80 Public Contracts Regulations 2015

Reg.80 of the Public Contracts Regulations 2015 (PCR2015) transposes Art 80 of Directive 2014/24 regarding rules on the organisation of design contests and the selection of participants. However, as Pedro has already pointed out, reg.80 PCR2015 does not contain rules, but rather some relatively broad principles to be followed in the adaptation of the general rules to the running of design contests. As he rightly stresses, reg.80 PCR2015 does not add much to the need to comply with the general principles of non-discrimination, transparency and competition when running design contests. Not much more to comment.

Notices for design contests under Reg. 79 Public Contracts Regulations 2015

Reg.79 of the Public Contracts Regulations 2015 (PCR2015) transposes Art 79 of Directive 2014/24 regarding transparency obligations through notices connected to design contests. The rules fundamentally repeat the general obligations on the publication of notices, as well as the general possibility for contracting authorities to withhold information which disclosure would impede law enforcement, would be contrary to the public interest or would prejudice the legitimate commercial interests of a particular enterprise, whether public or private, or might prejudice fair competition between service providers. In my view, the provision does not deserve much comment.

Scope of rules on design contests under Reg. 78 Public Contracts Regulations 2015

Changing tack and moving on from the regulation of contracts for public and other specific services that we discussed last week, reg.78 of the Public Contracts Regulations 2015 (PCR2015) defines the scope of application of the rules governing design contests, and transposes Article 78 of Directive 2014/24 word by word.

It may be worth reminding that design contests are defined in reg.2(1) PCR2015 as those procedures which enable a contracting authority to acquire, mainly in the fields of town and country planning, architecture and engineering or data processing, a plan or design selected by a jury after being put out to competition with or without the award of prizes.

According to reg.78(1) PCR2015, the rules on design contests apply to two types of contests: (a) design contests organised as part of a procedure leading to the award of a public service contract [ie design contests leading to an award]; and (b) design contests with prizes or payments to participants [ie self-standing design contests or design contests leading to negotiations].

The regulation then goes on to establish the method for the calculation of the value of these contests for the purposes of determining the obligation to comply with EU rules for their tender. 

Regarding design contests leading to an award of a public service contract [reg.78(1)(a)], the value threshold mentioned in reg.5 PCR2015 shall be calculated on the basis of the estimated value net of VAT of the public service contract, including any possible prizes or payments to participants [reg.78(2)]. 

In turn, the case of self-standing design contests [reg.78(1)(b)], the threshold mentioned in reg.5 PCR2015 shall be calculated on the basis of the total amount of the prizes and payments [reg.78(2)].

However, where the design contest can be used for the award of a subsequent public services contract on the basis of negotiations entered into with the winner(s) of the design contest because the contracting authority has announced its intention to award such a contract in the contest notice in accordance with regs.32(7) and (8) PCR2015, its estimated value shall be calculated including the estimated value net of VAT of the public services contract which might subsequently be concluded following a negotiated procedure without prior publication.

The general criterion is, quite clearly, that the estimated value of the design contest must include the estimated value of any follow-up public services contracts derived from the contest. One may wonder why a design contest cannot be used to award public works contracts (Pedro does), but that is sorted out by the definition of public works contracts, which covers both design and execution phases. Consequently, where the potential follow up of a design contest is a public works contract, the contracting authority needs to either tender it as a public works contract or decouple the design contest from the award of the public works contract for its execution, and subject each to their own rules--which may trigger particular instances of application of reg.41 PCR2015 if the original "designer" bids for the construction of the public works, either directly or through undertakings related to them. 

The rest of the rules in reg.78 PCR2015 are pretty straightforward and, in my view, do not require much more comment.

Reserved contracts for certain services under Reg. 77 Public Contracts Regulations 2015

Reg.77 of the Public Contracts Regulations 2015 (PCR2015) establishes rules concerning the possibility to reserve contracts for certain services to specific categories of providers, in line with Article 77 of Directive 2014/24. In short, this is fundamentally an anti-competitive legally-tolerated way of advantaging certain service providers in the award of public contracts and I cannot but repeat that I think it is a very bad idea in the long run. Pedro concurs.

As I already discussed (here), this is probably the novelty within the light touch regime applicable to the award of contracts for social and other specific services that better suits the regulatory needs implicit in the UK public sector reform strategy, since Art 77 Dir 2014/24 allows contracting authorities to reserve for the participation of given types of organisations (such as ‘public sector mutuals’, for instance) the award of contracts for certain services in the areas of health, social and cultural services, which basically comprise all, or the most relevant, medical services, personal services, educational and training services (including eLearning), sports and cultural services.

In terms of reg.77(1) PCR2015, contracting authorities may reserve to "qualifying organisations" (below) the right to participate in procedures for the award of reservable public contracts, which are those comprised in the categories listed in reg.77(2) PCR2015, which include 75121000-0 (Administrative educational services), 75122000-7 (Administrative healthcare services), 75123000-4 (Administrative housing services), 79622000-0 (Supply services of domestic help personnel), 79624000-4 (Supply services of nursing personnel), 79625000-1 (Supply services of medical personnel), 80110000-8 (Pre-school education services), 80300000-7 (Higher education services), 80420000-4 (E-learning services), 80430000-7 (Adult-education services at university level), 80511000-9 (Staff training services), 80520000-5 (Training facilities), 80590000-6 (Tutorial services), from 85000000-9 to 85323000-9 (fundamentally, all types of medical services), 92500000-6 (Library, archives, museums and other cultural services), 92600000-7 (Sporting services), 98133000-4 (Services furnished by social membership organisations), and 98133110-8 (Services provided by youth associations).

However, reg.77(6) PCR2015 determines that this does not apply in relation to the procurement of health care services for the purposes of the NHS within the meaning and scope of the National Health Service (Procurement, Patient Choice and Competition) (No. 2) Regulations 2013. This exclusion and its meaning is very unclear to me, particularly in view of the coverage given in reg.77(2) PCR2015, which includes a significant volume of services that can be procured for the NHS (should those not have been excluded, then?). Furthermore, in view of the special rules applicable to NHS procurement, it seems odd that no attempt to reconcile all these bodies of exceptional, sector-based procurement regimes is attempted [for discussion of the rules applicable to NHS procurement, see A Sanchez-Graells, “New Rules for Health Care Procurement in the UK. A Critical Assessment from the Perspective of EU Economic Law” (2015) 24(1) Public Procurement Law Review 16-30].

The guidance offered by CCS in this regard does not sort out the issue, but seems to defer resolving the need for harmonisation of these competing regimes until after ongoing consultations: "At present, it is not possible to use the reserved contracts provision for healthcare commissioning by NHS England or Clinical Commissioning Groups in England. This is to ensure consistency with the general requirements in regulation 3 of the existing NHS (Procurement, Patient Choice and Competition Regulations) (No. 2) 2013 Regulations, in particular the prohibition on favouring types of provider. This position is subject to further consultation with the sector. Part of the role of the Mutuals in Health: Pathfinder Programme is to consider any potential legislative hurdles to the further development of health mutual in clinical services" (Guidance on the light touch regime, 14). We shall wait for further developments.

In the cases where reserving contracts under reg.77 PCR2015 is possible, the contracting authority will need to make sure that the (type of) organisation chosen to be awarded the contract--ie the "qualifying organisation" meets all of the following requirements [reg.77(3)]: (a) its objective is the pursuit of a public service mission linked to the delivery of the services to be contracted; (b) its profits are reinvested with a view to achieving the organisation’s objective (and where profits are distributed or redistributed, this should be based on participatory considerations); (c) the structures of management or ownership of the organisation performing the contract shall be based on employee ownership or participatory principles, or shall require the active participation of employees, users or stakeholders; and (d) the organisation shall not have been awarded a contract for the services concerned by the contracting authority concerned pursuant to this special rules within the past three years.

The main (only) deviation between reg.77 PCR2015 and Art 77 Dir 2014/24 concerns the requirement for  structures of management or ownership of the organisation performing the contract to be based on employee ownership or participatory principles, or require the active participation of employees, users or stakeholders. Whereas Art 77(2)(c) Dir 2014/24 requires this without any qualifiers, reg.77(3)(c) PCR2015 includes the following possibility: "the structures of management or ownership of the organisation are (or will be, if and when it performs the contract) based on ...". 

This seems to aim to allow for entities in the process of becoming "qualifying organisations" to already tender for these reserved contracts, maybe also enabling for brake provisions (of the mutualisation process) linked to an eventual lack of success in being awarded the contract--ie, the government seems to be aiming to be in a position to ensure that mutuals are only created and go ahead if contracts are awarded to them, which would certainly make the mutualisation option much more attractive by reducing the risk undertaken by public officials seeking to spin-off from the public sector.

However, in my view, this is not necessarily in line with EU law, particularly because it refers to a future-looking contract compliance clause that triggers access to the competition for the reserved contract--which, in my opinion, is not compatible with the exceptional nature of this set of special provisions [for discussion of this type of requirements, A Sanchez-Graells, Public Procurement and the EU Competition Rules, 2nd edn (Oxford, Hart, 2015) 390].

On top of complying with the above requirements (of the Directive), the maximum duration of the contract shall not be longer than three years [reg.77(4)] and the call for competition shall make reference to  Art 77 Dir 2014/24, so that there is sufficient transparency on the use of this set of special rules [reg.77(5) PCR2015].

General comments

Under these special rules within the light-touch regime, contracting authorities seem almost completely free to decide to award the contracts to public service mutuals (and, most likely, to a specific public sector mutual, given their initial lack of capacity to tender for contracts to be awarded by contracting authorities other than the one they have just “spun-off”).

This creates a significant risk of ‘sweet deals’ aimed at supporting, fostering and consolidating public sector mutuals, which may well end up resulting in (3-year long, local) monopolies for the provision of those services in the hands of the newly spun-off public sector mutuals, which may extend their dominance beyond that point in time as incumbency advantages pile up. That would result in distortions of competition similar to those just identified by the UK’s Competition and Markets Authority (CMA) in the market enquiry on private health care services (final report here) and, as such, it is an undesirable prospect.

Generally speaking, it is worth stressing that public procurement rules and the general principles of public procurement can be applicable beyond the regulated cases, as the CJEU has been expanding the coverage of the procurement regime and systematically imposed certain obligations to the tendering of contracts not, or not-fully, covered by the Directives. Hence, the possibility for the CJEU to significantly restrict the discretion to resort to reg.77 PCR2015 / Art 77 Dir 2014/21 cannot be totally excluded. 

However, in recent cases such as Libert and Others (C-197/11 & C-203/11, EU:C:2013:288; see here) and Azienda sanitaria locale n. 5 «Spezzino» and Others (C-113/13, EU:C:2014:2440; see here), the CJEU appears to show very significant (and I would claim ‘excessive’) deference towards social and special services. Consequently, it may be unlikely to extend obligations to the award of contracts under reg.77 PCR2015. And, ultimately, I would think that this will be a provision mostly litigated at domestic level on grounds of judicial review due to deviations of power or excess of competences.

Principles of awarding contracts for social and other specific services under Reg. 76 Public Contracts Regulations 2015

Reg.76 of the Public Contracts Regulations 2015 (PCR2015) sets out the principles of awarding contracts for social and other specific services and transposes Article 76 of Directive 2014/24. It does so in a way that deviates from the general copy-out approach and, in my view, incurs in potential instances of defective transposition that are very likely to result in infringements of the rules of the Directive. Pedro shares similar concerns (here).

Where the transposition keeps the defects of the the Directive
The only part where reg.76 PCR2015 follows Art 76(2) Dir 2014/24 is reg.76(8) PCR2015 where it is set out that, in the award of contracts for social and other specific services covered by reg.74 PCR2015, contracting authorities may take into account any relevant considerations, including the need to ensure quality, continuity, accessibility, affordability, availability and comprehensiveness of the services, the specific needs of different categories of users, including disadvantaged and vulnerable groups, the involvement and empowerment of users and innovation. However, reg.76 PCR2015 has not transposed the possibility given by Art 76(2) in fine Dir 201/24 whereby Member States may also provide that the choice of the service provider shall be made on the basis of the tender presenting the best price-quality ratio, taking into account quality and sustainability criteria for social services.

These provisions are not free from interpretive difficulties, particularly when it comes to their coordination with general principles for the award of contracts. Briefly, my general views are as follows [extracted, but updated, from A Sanchez-Graells and E Szyszczak, “Modernising Social Services in the Single Market: Putting the Market into the Social”, in JM Beneyto and J Maillo (eds), Fostering Growth: Reinforcing the Internal Market (Madrid, CEU Ediciones, 2014) 61-88].

Article 76 sets out the principles for the award of these contracts, although their regulation is left to the Member States (see below) provided that they take measures ‘to ensure contracting authorities comply with the principles of transparency and equal treatment of economic operators. Member States are free to determine the procedural rules applicable as long as such rules allow contracting authorities to take into account the specificities of the services in question’. The general requirement for contracting authorities to make sure that those procedures shall be at least sufficient to ensure compliance with the principles of transparency and equal treatment of economic operators is encapsulated in reg.76(2) PCR2015, whereas reg.76(1) in fine stresses that contracting authorities may take into account the specificities of the services in question.

A key element to take into consideration will be the need to further comply with the (more) general principles of procurement set out in Article 18, which requires that procurement also complies with the principles of competition and proportionality, and that economic operators participating in public procurement comply with applicable obligations in the fields of environmental, social and labour law. Given that Article 18 is nested in Title I and that the procurement of social and other specific services is regulated in Title III, Article 76(1) may be seen as a lex specialis that would de-activate the requirements for proportionality and undistorted competition in their procurement. However, such interpretation may not be welcome by the CJEU and it is my personal view that this is not the best approach.

With a permissive tone, Article 76(2) continues to regulate that: ‘contracting authorities may take into account the need to ensure quality, continuity, accessibility, affordability, availability and comprehensiveness of the services, the specific needs of different categories of users, including disadvantaged and vulnerable groups, the involvement and empowerment of users and innovation. Member States may also provide that the choice of the service provider shall be made on the basis of the most economically advantageous tender, taking into account quality and sustainability criteria for social services’. The drafting of the last sentences leaves an open question as to the obligation to choose the awardee of the contract on the basis of the most economically advantageous tender (MEAT), although (functionally) it seems to be out of the question, and the provision should simply be seen as allowing for the introduction of ‘specific’ criteria in the determination of the MEAT, such as quality and sustainability.

By not going beyond the wording of the Directive and, in particular, not offering guidance on how to interpret the elements of reg.76(8) PCR2015 when it comes to determining the MEAT, the PCR2015 do not provide any workable clarification and do not resolve difficult issues that were already present in sectoral procurement regimes, such as that applicable to healthcare [see A Sanchez-Graells, “New Rules for Health Care Procurement in the UK. A Critical Assessment from the Perspective of EU Economic Law” (2015) 24(1) Public Procurement Law Review 16-30]. 

Where the transposition seems defective and in breach of EU law

One of the initial difficulties in assessing the appropriateness of the transposition of Art 76 Dir 2014/24 by means of reg.76 PCR2015 derives from the opening clause of the EU provision, whereby "Member States shall put in place national rules for the award of contracts" for social and other specific services (emphasis added). In a literal reading, this may be seen as requiring the creation of a general (national) procedural framework for the award of these contracts or, in other words, a set of common, generally applicable rules. If that was the proper interpretation, then reg.76(1) PCR2015 may have failed to properly create those "national rules for the award of contracts" by determining that "[c]ontracting authorities shall determine the procedures that are to be applied in connection with the award of contracts" or social and other specific services.

By granting contracting authorities (almost) unfettered discretion to determine the applicable procedures--whether they correspond (with or without variations) to procedures, techniques or other features provided for in Part 2 PCR2015, or not--the PCR2015 may have failed to set any sort of specific "national rules for the award of contracts". However, such a literal reading of the requirement in Art 76(1) ab initio Dir 2014/24 may be opposed on the basis of the principles of procedural autonomy and subsidiarity, so this may not carry as much weight as one may initially have thought. In any case, it is also possible to read national as domestic, in which case this discussion would be moot.

Be it as it may, however, looking at the details of the very light touch approach adopted by reg.76 PCR2015, the defects seems even more apparent. Reg.76(3) PCR2015 sets out bare minimum requirements for procedures initiated by one of the notices mentioned in reg.75 PCR2015, whereby the contracting authority shall conduct the procurement, and award any resulting contract, in conformity with the information contained in the notice about conditions for participation, time limits for contacting the contracting authority, and the award procedure to be applied. Reg.76(6) PCR2015 adds that all time limits imposed on economic operators, whether for responding to a contract notice or taking any other steps in the relevant procedure, shall be reasonable and proportionate. Taken together, this barely creates any specific rule other than implicitly following the case law preventing substantial modifications of tender procedures without cancellation and readvertisement.

The big problem comes, in my view, with reg.76(4) PCR2015 whereby contracting authority may, however, deviate from the content of the previous notice and conduct the procurement, and award any resulting contract, in a way which is not in conformity with that information. It is true that reg.76(4) PCR2015 imposes a relatively stringent set of conditions, so that disregard for the (procedural) information disclosed in the previous notice can take place only if all the following conditions are met: (a) the failure to conform does not, in the particular circumstances, amount to a breach of the principles of transparency and equal treatment of economic operators; and (b) the contracting authority has, before proceeding to deviate from the published information, (i) given due consideration to the matter, (ii) concluded that there is no breach of the principles of transparency and equal treatment, (iii) documented that conclusion and the reasons for it in accordance with regs.84(7) and (8) PCR2015, and (iv) informed the participants of the respects in which the contracting authority intends to proceed in a way which is not in conformity with the information contained in the notice. For these purposes, "participants" means any economic operators which have responded to the notice and have not been informed by the contracting authority that they are no longer under consideration for the award of a contract within the scope of the procurement concerned [reg.76(5) PCR2015].

In my view, there are two main difficulties. First, it adopts a very narrow interpretation of the principle of equal treatment that falls into a participation trap that will result in de facto discrimination and an unavoidable infringement of the principle of transparency. And, second, this is very likely to trigger infringements on the rules applicable to cancellation and retendering of public tenders.

As to the participation trap or ‘trap of tender-specific reasoning’, by designing a system that allows contracting authorities to (1) disclose information that preselects a subset of potential suppliers and (2) later on, alter the rules of the procedure in a way that potential suppliers not included in that subset cannot challenge (because they are not informed and, seemingly, there is no further transparency/publication requirement), reg.76(4) PCR2015 fails to ensure actual compliance with the principle of non-discrimination [by analogy, see the reasoning of the EGC regarding the need for clarity of tender specifications in Commission v Cyprus, C-251/09, EU:C:2011:84 35-51 (not available in English)].

As to the infringement of the requirements for cancellation and retendering of procedures that would otherwise be substantially amended, it seems clear to me that the case law applicable to changes of disclosed contractual conditions applies (if nothing else, by analogy). In that regard, the CJEU has been clear that "where the amended condition, had it been part of the initial award procedure, would have allowed tenders submitted in the procedure with a prior call for competition to be considered suitable or would have allowed tenderers other than those who participated in the initial procedure to submit a tender" (emphasis added) are to be deemed substantial modifications of the tender conditions and, consequently, not acceptable [Case C-250/07 Commission v Greece [2009] ECR I-4369 52. See also, by analogy, Case C-454/06 Pressetext Nachrichtenagentur [2008] ECR I-4401 35]. Thus, unless contracting authorities could clearly prove that no other tenderers would have participated had the modified (procedural) conditions been disclosed from the beginning, reliance on reg.76(4) PCR2015 is bound to trigger an infringement of EU law.

For all of the above, I consider reg.76 PCR2015 a very clear instance of defective (if not outright improper) transposition of the requirements in Art 76 Dir 2014/24 and, consequently, I think that it should be modified as soon as possible and substituted by a sensible, fully-developed set of procedural rules applicable to the award of contracts for social and other specific services.

Publication of notices under Reg. 75 Public Contracts Regulations 2015

Reg.75 of the Public Contracts Regulations 2015 (PCR2015) establishes requirements for the publication of notices linked to the award of public contracts for social and other special services, in line with Article 75 of Directive 2014/24. As part of the light touch regime applicable to the procurement of these services, the transparency obligations that contracting authorities need to comply with are reduced and made more flexible under reg.75 PCR2015, both at pre-award and post-award phase. See Pedro's remarks here.

When it comes to pre-award transparency, reg.75(1) PCR2015 gives contracting authorities a choice to advertise their intention to award a contract by means of either (a) a simplified contract notice, which shall contain the information referred to in part H of Annex V to Dir 2014/24; or (b) an enhanced prior information notice, which shall be published continuously (ie be made available throughout the period covered by the notice?), contain the information set out in part I of Annex V to Dir 2014/24, refer specifically to the types of services that will be the subject-matter of the contracts to be awarded, and indicate that the contracts will be awarded without further publication and invite interested economic operators to express their interest in writing. 

Of course, as recognised by reg.75(2) PCR2015, contracting authorities can dispense with these requirements where a negotiated procedure without prior publication could have been used in accordance with reg.32 PCR2015. In my view, the two cases that are more likely to trigger controversy are the use of reg.32(2)(b) PCR2015 whereby contracting authorities may be tempted to argue that particular social or special services can be provided "only by a particular economic operator" particularly under reg.32(2)(b)(iii) PCR2015 on the basis of "the protection of exclusive rights", such as an act of entrustment, licence or authorisation to provide certain services; as well as reg.32(9) PCR2015 for the award of new services which repeat similar ones, which would try to cover a clear renewal of an expiring contract as an extension of the previous contract.

The first argument could be devised in situations where (local) contracting authorities intend to keep the provision on social or other special services local/in hands of the incumbent. In that regard, the authorities could be tempted to argue that the existence of a de facto local monopoly requires them to award the contract directly and without publicity because there is no alternative provider in the market. This would simply be a misunderstanding of the applicable rules and cannot be accepted. It is worth stressing that the CJEU has permanently stressed the strict requirements that control decisions to proceed to the direct award of contracts under this ‘non-procedure’, which are subject to a strict assessment of whether the contracting authority "acted diligently and whether it could legitimately hold that the conditions [for recourse to this procedure] were in fact satisfied" [Fastweb, C-19/13, EU:C:2014:2194 50]. Consequently, there is no doubt that this procedure must be understood as exceptional [C-292/07 Commission v Belgium [2009] I-59 106].

In a refined form, the (local) contracting authority may try to justify the direct award on the basis of any sort of "exclusive right" they can see as being held by the local provider. In that regard, the case law of the CJEU as to what constitutes an exclusive or special right will gain significant prominence [for discussion in relation to utilities rules under Directive 2014/25, see T Kotsonis, "The 2014 Utilities Directive of the EU: codification, flexibilisation and other misdemeanours" (2014) 23 (4) Public Procurement Law Review 169-187], and will likely result in the conclusion that the local provider does not hold an exclusive right that merits protection for the purposes of excluding competition in the award of the contract. 

It is also worth stressing that the granting of such exclusive or special rights should have complied with fundamentally the same requirements in their award, which may make reliance on the apparent exclusivity equally illegal under EU law [see GS Ølykke, "Is the granting of special and exclusive rights subject to the principles applicable to the award of concessions? Recent developments in case law and their implications for one of the last sanctuaries for protectionism" (2014) 23 (1) Public Procurement Law Review 1-20]. Moreover, contracting authorities need to keep in mind the very high threshold imposed by the last caveat of reg.32(2)(b), which stresses that recourse to direct award under the argument of protection of exclusive rights can only take place "where no reasonable alternative or substitute exists and the absence of competition is not the result of an artificial narrowing down of the parameters of the procurement".

The second argument, based on the direct award of a contract for new services which repeat similar ones under reg.32(9) PCR2015 could be particularly tempting on a "second round" of award initially based on the reservation allowed for under reg.77 PCR2015 (commented in due course). The scenario would be as follows: a (local) contracting authority awards a "reserved contract" to a preferred non-profit qualifying organisation under reg.77 PCR2015. The contract is for 3 years [reg.77(4)] and foresees the possibility to resort to the additional services clause under reg.32(9) PCR2015--which in itself, and strictly speaking, may not be a breach of reg.77(4) PCR2015, but this promises to be highly contentious due to the exceptional nature of the reservation rules (and, in my personal view, should not be allowed to begin with). 

When the first 3-year period is over, the contracting authority effectively resorts to the possibility to directly award a contract for the same/similar services for another 3 years [or three times, consecutively, for 1 year, or any other combination of contract durations up to the 3 year limit established in reg.32(12) PCR2015]. In my view, this would be a circumvention of the exceptional circumstances that are covered by reg.77 PCR2015 and would amount to an infringement of reg.18(2) PCR2015 / Art 18(1) Dir 2014/24.

Consequently, overall, I would stress that the reference to reg.32 PCR2015 and the possibility to enter into directly-awarded contracts for social and special services should fundamentally be disregarded by contracting authorities if they want to avoid risks of legal challenge, unless very clear grounds exist and they can make sure that the lack of competition in the market / existence of exclusive rights is not a situation they created themselves (in contravention of EU law).

Post-award transparency is also flexibilised. Generally speaking, the award of a contract for services covered by reg.74 PCR triggers the obligation to make known the results of the procurement procedure by means of a contract award notice, which shall contain the information referred to in part J of Annex V to Dir 2014/24 [reg.75(3)] and be sent for publication in compliance with reg.51 PCR2015 [reg.75(5) PCR2015]. Contracting authorities may, however, group such notices on a quarterly basis, in which case they shall send the grouped notices within 30 days of the end of each quarter [reg.75(4) PCR2015]. My hunch is that quarterly publication will become the norm, which is not a bad thing.

Award of contracts for social and other specific services under Reg. 74 Public Contracts Regulations 2015

Reg.74 of the Public Contracts Regulations 2015 (PCR2015) transposes Art 74 of Directive 2014/24 and simply opens the section on the procurement of social and special services by indicating that public contracts for social and other specific services listed in Schedule 3 (which replicates Annex XIV of Dir 2014/24) shall be awarded in accordance with the rules in regs.75 to 77 PCFR2015.

Other than creating this "light touch regime" for social and special services, reg.74 PCR2015 does not have much substantive content of its own. For discussion of the light touch regime, which we will be commenting during the rest of the week, see the Crown Commercial Services Guidance here and S Smith, "Articles 74 to 76 of the 2014 Public Procurement Directive: the new "light regime" for social, health and other services and a new category of reserved contracts for certain social, health and cultural services contracts" (2014) 23(4) Public Procurement Law Review 159-168.

For some background discussion on the role of the light touch regime in enabling Member States to reform their public sector and, in the specific case of the UK (England), to deepen the mutualisation strategy supported by the current Tory government and the previous Coalition government, see A Sanchez-Graells & E Szyszczak, 'Modernising Social Services in the Single Market: Putting the Market into the Social' (2013), as well as shorter comments here and here.

It may be worth pointing out that reg.74 PCR2015 deviates from Art 74 Dir 2014/24 in that it does not reiterate the value threshold above which those contracts are covered--which, however, is to be found in reg.5(1)(d) PCR2015 as a mere referral to the value determined in the Directive (see here and here). Ultimately, it is worth remembering that such value is of €750,000, which is converted into £625,050 for OJEC advertisement purposes (cfr with about £540,000 at today's exchange rate).

After having heard Pedro's presentation at Global Revolution last week (available here), where he criticised with good arguments the arbitrariness of EU thresholds in general, I am quite sure that he will have some specific issues concerning the threshold for social and special services, not least due to the unavolidable exchange risk fluctuation that imposed a strong de facto variation in coverage. Pedro?