Reviewed by PLC Public Sector in July 2011.
Public procurement in the UK: a quick guide
A quick guide to the obligations imposed on public bodies by the public procurement regime and the remedies available to a supplier of goods or services if a public body fails to comply.
This is one of a series of quick guides, see Quick guides.
What is public procurement and why is it regulated?
Public procurement is the purchase of goods, works or services by Government and other public bodies. In order to ensure the free movement of goods and services, the EU issued a series of public procurement directives to provide that:
- Contracts are awarded fairly and without discrimination on the grounds of nationality.
- All potential bidders are treated equally.
- Suppliers of goods and services have the right to take action against public bodies, if contracts are not advertised or awarded on an open and fair basis.
The EU directives have been implemented in England and Wales by regulations for public contracts (the Regulations) and separate, but similar, regulations for utilities contracts. Scotland has also adopted regulations, which are in much the same form.
In addition, the Government Procurement Agreement (GPA) of the World Trade Organisation (www.practicallaw.com/1-107-7521) gives non-EU suppliers based in GPA signatory countries the right to compete on equal terms for many public contracts awarded within the EU.
Who must comply with the Regulations?
Any public body that is a contracting authority
The definition of contracting authorities includes:
- Certain public bodies (including central Government departments and local authorities) that are listed in the Regulations.
- Other bodies that fall within a general definition set out in the Regulations. This definition is wide and may include some entities that would not ordinarily be considered to be "public bodies" (see Practice note, Public procurement in the UK: Who has to comply with the rules: contracting authorities (www.practicallaw.com/5-383-9734)).
What contracts do the Regulations apply to?
Contracts which are subject to the full procurement regime
- Contracts for the supply of goods (public supply contracts).
- Contracts for carrying out works (public works contracts).
- Contracts for services (public services contracts) that are listed as "Part A" services in the Regulations (see Practice note, Part B, below threshold and other procurements outside the regulations: Procurements for Part B services (www.practicallaw.com/6-384-1798)).
- Specific types of contract defined by the Regulations, for example, framework agreements (see Practice note, Framework agreements (www.practicallaw.com/4-384-9601)).
The Regulations only apply to contracts that are in writing and for consideration (whatever the nature of the consideration). The Regulations may also apply, if an existing contract is renewed or extended on different terms or there are material changes to an existing contract.
Contracts which are subject to less onerous procedural requirements
Contracts for services that are listed as "Part B" services in the Regulations are largely excluded from the procurement regime and only limited rules apply. However, any contract that may interest providers from a different member state will have to comply with EC Treaty (www.practicallaw.com/2-107-6192) principles. Therefore, procurement processes must be transparent. As a minimum, this will mean that contract opportunities will need to be advertised. All procurements will also need to comply with Government requirements to obtain value-for-money.
For more information on what services are classified as Part B, and the obligations that apply when letting a Part B services contract, see Practice note, Part B, below threshold and other procurements outside the regulations (www.practicallaw.com/6-384-1798).
Contracts which fall outside the Regulations
The Regulations do not apply, if a proposed contract:
- Is an in-house arrangement where specified conditions are met, see Practice note, Public procurement in the UK: in-house arrangements (www.practicallaw.com/5-383-9734).
- Falls within one of the exclusions listed in the Regulations, see Practice note, Public procurement in the UK: contract type (www.practicallaw.com/5-383-9734).
- Has an estimated value that (net of VAT (www.practicallaw.com/5-107-7468)) is below the relevant threshold (for the current thresholds, see Practice note, Public procurement in the UK: Thresholds (www.practicallaw.com/5-383-9734)). In most cases, the aggregation rules require that the value of purchases under individual contracts must be added together, although there are exemptions (see Practice note, Part B, below threshold and other procurements outside the regulations (www.practicallaw.com/6-384-1798)).
Even if it falls outside the scope of the Regulations, any contract that may interest providers from a different member state will still have to comply with EC Treaty principles. (see Practice note, Part B, below threshold and other procurements outside the regulations: If there is likely to be a cross-border interest the provisions of the EC Treaty will apply (www.practicallaw.com/6-384-1798)).
What are the obligations if the Regulations apply?
The contract must be advertised at EU level
In most cases, the contracting authority must publish a notice (known as an OJEU or contract notice (www.practicallaw.com/9-385-1432)) in the Official Journal of the European Union (www.practicallaw.com/7-385-1433) (OJEU). The notice must be in a standard form, which is available on the EU's SIMAP website (www.practicallaw.com/3-384-2129).
The contracting authority must follow one of four award procedures
- Open procedure (www.practicallaw.com/6-385-1377).
- Restricted procedure (www.practicallaw.com/8-385-1376).
- Competitive dialogue procedure (www.practicallaw.com/0-385-1375).
- Negotiated procedure (www.practicallaw.com/5-385-1373).
Minimum time limits apply to the various phases of each procedure. The open procedure provides for a one stage procurement, while the other procedures have a short-listing (selection) stage prior to tenders being submitted. Contracting authorities must:
Apply certain selection criteria to choose suppliers to tender.
Apply certain award criteria to assess tenders.
Disclose details of these criteria to the tenderers.
Detailed reporting and debrief requirements
Various reporting and debrief requirements apply to contracts falling within the scope of the Regulations. The most important is that after a contracting authority has made its decision to award a contract, it must send out a notice (known as an Alcatel letter (www.practicallaw.com/4-385-1378)) to everyone involved in the tender process. The contracting authority must then allow a standstill period (www.practicallaw.com/9-385-1366) between the notice being sent out and the contract being entered into. The precise nature of the obligations of the contracting authority will depend on whether the public procurement was commenced before or after 20 December 2009, when a new legislation affecting the debrief requirements came into force. For full details of the applicable obligations, see Practice note, Remedies Directive: the new regime: The standstill period (www.practicallaw.com/0-500-9991).
What are the consequences of failure to comply?
Proceedings may be brought in the High Court
Compliance with the public procurement rules is a duty owed by contracting authorities to suppliers from member states (www.practicallaw.com/1-107-6833). A supplier harmed as a result of a breach may bring proceedings under the Regulations.
Court can suspend a procedure, set aside a decision or award damages
If proceedings are brought, the court can take interim measures to suspend an award procedure. If the court is satisfied that there has been a breach of the Regulations, it can either order a decision to be set aside or award damages for the loss of opportunity. If a procurement was started before 20 December 2009, the court cannot order any remedy other than an award of damages if the contract has already been entered into. However, following the implementation of the a new Remedies Directive, for procurements that started on or after 20 December 2009, courts will be able to declare contracts that do not comply with the Regulations ineffective in certain circumstances. For more information, see Practice note, Remedies Directive: the new regime: Ineffectiveness (www.practicallaw.com/0-500-9991).
European Commission can take action
The European Commission can also take action against the Government for any breach of the procurement regime by a contracting authority in the UK.
The following public procurement resources are available:
- Public procurement in the UK (www.practicallaw.com/5-383-9734).
- Part B, below threshold and other procurements outside the regulations (www.practicallaw.com/6-384-1798).
- Competitive dialogue procedure (www.practicallaw.com/9-385-0442).
- OGC model contracts (www.practicallaw.com/7-384-2132).
- Procuring public concession contracts (www.practicallaw.com/3-384-0917).
- Public procurement of ICT (www.practicallaw.com/3-376-3565).
- Framework agreements let under the public procurement regime (www.practicallaw.com/4-384-9601).
- Evaluation of tenders (www.practicallaw.com/2-386-8761).
- Impact of the public procurement regime on development agreements (www.practicallaw.com/8-500-5625).
- Remedies Directive: the new regime (www.practicallaw.com/0-500-9991).
- Shared services in the public sector: key legal issues (www.practicallaw.com/2-503-5871).
- Ask the team: public procurement FAQs (www.practicallaw.com/6-422-3174).
- Court of Appeal in Northern Ireland dismisses two appeals against setting aside of framework agreements (www.practicallaw.com/1-508-8501).
- Cabinet Office publishes revised guidance on transparency (www.practicallaw.com/7-508-8249).
- Cabinet Office announces decision on revised time limits for bringing public procurement proceedings and publishes amending Regulations (www.practicallaw.com/2-507-7408).
- OGC note on drafting OJEU notices (www.practicallaw.com/7-385-6341).
- OGC note on selection and award stages of a public procurement (www.practicallaw.com/6-386-0032).
- High Court finds that local authority breached procurement rules in application of award criteria (www.practicallaw.com/6-382-5213).
- Public procurement notices (www.practicallaw.com/6-376-9349).
- Invitation to tender (public sector) (www.practicallaw.com/5-503-6789).
- Invitation to tender (public sector): questions for tenderers (www.practicallaw.com/4-506-2694).
- Invitation to participate in a dialogue (www.practicallaw.com/5-383-4406).
- Descriptive document (www.practicallaw.com/4-384-2044).
- Pre-qualification questionnaire (PQQ) (www.practicallaw.com/9-383-4824) and drafting note (www.practicallaw.com/6-383-4825).
- Procurement process correspondence and drafting note (www.practicallaw.com/5-384-2185):
- Letter to successful supplier at PQQ stage (www.practicallaw.com/4-384-2138);
- Letter to unsuccessful supplier at PQQ stage (www.practicallaw.com/0-384-2140);
- Letter to be sent to reject a supplier during the dialogue phase (www.practicallaw.com/5-384-2053);
- Letter to be sent to a supplier inviting final tender following the conclusion of the dialogue phase of a procurement (www.practicallaw.com/6-384-2137);
- Letter to supplier expressing an interest (www.practicallaw.com/2-384-2139);
- New Remedies Directive: Standstill letter to be sent to unsuccessful supplier (for procurements commenced on or after 20 December 2009) (www.practicallaw.com/4-501-0389);
- "Alcatel" letter to unsuccessful supplier offering debrief (for procurements commenced before 20 December 2009) (www.practicallaw.com/0-384-2135); and
- Contract award letter (www.practicallaw.com/8-384-2136).
- Services agreement for use by public sector bodies (www.practicallaw.com/2-501-1525).
- Public Sector Boilerplate Provisions (www.practicallaw.com/8-383-4424).