EU procurement regime: Change on the horizon

While the political debate about whether UK should stay in or leave Europe continues to rage, there is one certainty: the public procurement regime is being reformed anyway and for the foreseeable future that reformed regime will influence how goods, works and services are bought by the public sector.

Earlier this year the European Parliament adopted a number of directives to reform how public procurement activity is conducted, covering the utilities sector, concession arrangements and public sector purchasing. In response the Cabinet Office, on behalf of HM Government, published a draft set of regulations – the public contracts regulations 2015– and began a consultation process in September seeking views from the market about how to transpose into UK law the Public Sector Directive. Consultations about how to bring in force the Directives on utilities and on concession arrangements will follow.

The Cabinet Office has said it is hopeful of having the public contracts regulations fully in force in the UK by “early 2015”. Given the consultation on the draft Public Sector Regulations closed in the middle of October, that would seem feasible because the Cabinet Office limited the number of topics on which it sought views, opting generally for a like-for-like transfer from the EU Public Sector Directive as published, rather than for “gold plating”.

Earlier this year the European Parliament adopted a number of directives to reform how public procurement activity is conducted

But the Cabinet Office has chosen to do more, seizing the opportunity also to embed into the published draft Regulations some of the recommendations made by Lord Young in his report “Growing Your Business” in May 2013.

Is any of this good news for the construction sector? Well, yes. The Lord Young recommendations were all to do with simple steps which could be taken to increase SME engagement in buying from the public sector. Given the size of purse which that sector controls (even during the tightened financial constraints of the last few years), that can only help the sector’s SME bedrock. So, for example, requiring contract opportunities to be published in “ContractsFinder”, reducing the occasions when the PQQ documents are needed, and mandating a (hopefully simpler) form of PQQ for public sector purchasing is a good start.

What about the new regulations themselves? Well, once in force look out for some relaxations around timescale for certain procedures, the introduction of new procedures (particularly the “innovation partnership” procedure and the “competitive procedure with negotiation”), the ability for public authorities to consult the market earlier with a view to preparing a procurement and informing the market of its plans and requirements; additionally, the “most economically advantageous tender” will be the basis for any contract award in the future. Recognition is also to be given to using “lifecycle costing” as a sub-criteria. These changes will all benefit the construction sector in due course by introducing greater flexibility into the process. There is also a big drive towards electronic communication and e procurement tools which, whilst on the face of it daunting, will help to quicken the pace of and ease procurement activity into the 21st century.

The Cabinet Office view is that early transposition of the EU Public Sector Directive will be beneficial (as the directive deregulates and simplifies the rules in the arena where the vast majority of procurement money is spent and activity takes place). Early implementation – after all, HM Government has until April 2016 before it must implement the Public Sector Directive – is to be welcomed because it will help to promote certainty and therefore stability in the construction industry many of whose members, both large and small, provide works services and supplies to the public sector. Of course the outcome of the consultation will shape the final version of the public contracts regulations but when they do arrive let’s get on and make the most of the opportunities presented.

Stephanie Canham is national head of projects and construction at law firm Trowers & Hamlins