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  • Overview

    On 26 February 2015, the Public Contracts Regulations 2015 came into force (the Regulations).

    The Regulations will replace the Public Contracts Regulations 2006 and are also designed to facilitate access to public sector contracts by small and medium-sized enterprises (SMEs) by introducing the following measures in favour of SMEs:

    • All contracts must be advertised on the government’s Contracts Finder website where the value of the contract is £25,000 or more (£10,000 or more for central government contracts);
    • Contracting authorities are prohibited from using a pre qualification stage for contracts with a value below £172,514 (£111,676 for central government contracts) but can ask candidates to answer suitability assessment questions if the question is relevant to the subject matter of the procurement and proportionate.
    • Such suitability questions are likely to relate to capability, legal status or financial standing of the contractor. The Regulations stipulate that contracting authorities should not be allowed to require the contractor to have a minimum turnover exceeding two times the estimated contract value;
    • Contracts must contain a term to pay undisputed invoices within 30 days and this term will be implied into the contract in any case, which will protect contracting authorities from abusing their bargaining power against SMEs; and
    • Contracting authorities have the discretion to divide public contracts into lots to make them more accessible for SMEs. They may also limit the number of lots for which a company may tender.

    In addition to keeping the existing public procurement procedures, the Regulations also introduce a number of new procedures, most notably the Innovation Partnership procedure, which essentially allows a contractor to tender at a much earlier point than they previously could where they believe they can develop an innovative product or service to fulfil the contract. The contracting authority will then purchase the product or service once it is developed, provided it corresponds to agreed performance levels and costs.

    The regime no longer distinguishes between Part A and Part B services as set out in the 2006 Regulations and so the above procedures will apply to all contracts over the thresholds in bullet point two above. However, a new “light touch” regime for social and other services including certain health, educational, community and cultural services has been set up. The light touch regime only applies to contracts valued over £625,000 and gives the contracting authority freedom to set out its procedure for awarding contracts, ensuring there is a focus on best price-quality ratio but also giving freedom to factor in more diverse considerations, such as innovation and the involvement and empowerment of users.

    The remainder of the Regulations focus on simplifying the current procedural regime and making it more flexible, such as moving towards a standardised document for proof of fulfilment of the conditions for participation in the tendering process. The measures to simplify and open up the procedure, coupled with the specific steps to accommodate SMEs in the process should provide good opportunities for companies to get involved with public contracts.

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