The In-House Lawyer

Public procurement: getting back to basics

Hardly a week goes by now when there is not a new development in public procurement. The once staid regime has had a new lease of life and there have been several contributory factors. More challenges to award decisions mean there is less stigma attached to bringing a challenge. The current economic climate has also meant that some bidders no longer have the luxury of thinking twice before doing so. The effects of a lost contract are now more immediate. Add into the mix the new procurement remedies regime, which kicked in on 20 December 2009, and it is easy to see why contracting authorities and bidders alike have their work cut out keeping pace with the latest developments.¹

At times like these, however, it is important not to forget the basics. Getting the foundations of the tender process right helps make for a robust transaction. On that note, this article provides an overview of the public procurement regime and highlights changes that have impacted on its fundamental aspects.

regime in brief

Public procurement law regulates the purchase of contracts for goods, works or services by contracting authorities and certain utilities where the value of those contracts are above specified financial thresholds. The purpose of the regime is to open up public procurement to EC-wide competition and to ensure the free movement of supplies, services and works within the EU.

The regime is set out in two EU directives that have been implemented into UK law by the Public Contracts Regulations 2006 and the Utilities Contracts Regulations 2006.² The rules (ie the EU directives and implementing UK regulations) applicable to public sector procurement are generally stricter than those relevant to the utilities sector. This article focuses on public sector procurement.

The rules set out the principles and procedures that must be followed for the award of contracts that fall within their scope. In addition, contracting authorities should have regard to the general EC Treaty principles, including non-discrimination, equal treatment, transparency, mutual recognition and proportionality.

When do the rules apply?

The rules apply when four main conditions are met:

1. the procuring body is a ‘contracting authority’ as defined in the rules;
2. the contract is a public works, services or supplies contract;
3. the estimated value of the contract equals or exceeds the relevant financial threshold; and
4. no relevant exclusions apply.

1) Contracting authority?

Whether a body is a contracting authority is, in most cases, a straightforward question. The definition of a ‘contracting authority’ is broad and captures central government, local authorities, and police and fire authorities.

A further category of ‘bodies governed by public law’ seeks to bring within the scope of the rules bodies that carry out some public interest function and that are closely linked (by control, management or financing structures) to the state or other government bodies. It can be more difficult to tell whether a body falls within this ‘sweep up’ category, although the rules contain a three-part test for this purpose. Registered social landlords fall within this category. Certain ...