The Government is undertaking a consultation on the secondary legislation required to implement the new public procurement regime established by the Procurement Bill.
Shoosmiths has recently provided feedback on the first stage of the consultation, relating to a draft of The Procurement Act 2023 (Miscellaneous Provisions) Regulations 2024 (the “Regulations”) intended to support the implementation of parts of the Procurement Bill which require lists, calculations or the use of further definitions.
| Consultation Question Number |
Question | Shoosmiths Response |
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1 |
To what extent do you agree or disagree that CPV codes set out in the draft SI accurately capture those services which can be supplied via a light touch contract under the new regime? | The general approach taken to the specification of services as light touch services is effective, with a list of CPV codes being a practical and flexible means of capturing those services which can be supplied through a light touch contract. However, at a high level, not all of the CPV codes provide sufficient clarity as to the scope of services that are intended to be brought within the scope of the light touch services regime. |
| 2 | If you disagree or strongly disagree, please indicate which services should be included or excluded, or clarify any other perceived issues with the list such as inconsistencies with other areas of the Bill or draft SI. | For example, codes such as 63711000 Support services for railway transport and 75110000 General public services are relatively open to interpretation. It would be preferable for only CPV codes which have a specific and limited interpretation to be used in identifying the services to be considered light touch services, or for further clarification to be provided as to what is included in such codes. |
| 3 | To what extent do you agree or disagree that the draft SI accurately captures those services which should be ‘reservable’ to public service mutuals under the new regime? | The general approach taken to the specification of services as “reservable” to public service mutuals is effective, with a list of CPV codes being a practical and flexible means of capturing those services which can be supplied through a “reservable” light touch contract. |
| 4 | If you disagree or strongly disagree, please indicate which services should be included or excluded, or clarify any other perceived issues with the list such as inconsistencies with other areas of the Bill or draft SI. | N/A |
| 5 | To what extent do you agree or disagree that the methodology of calculating the percentages of the activity thresholds set out in the draft SI is clear and meets the policy intent to exempt horizontal and vertical procurement from the requirements of the Bill? | In general the calculation method is clear, and meets the policy intent to exempt horizontal and vertical procurement requirements of the Bill. However, there are certain elements of the proposed methodology which are not sufficiently clear at present.
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| 6 | If you disagree or strongly disagree, please explain why you believe the calculation is not clear or does not otherwise meet the policy intent. | Paragraph 3 permits figures, supported by “credible business projections” to be used where an entity does not have a three-year turnover amount to provide. No definition is provided for “credible business projections”, meaning that there is a potential lack of clarity as to the determination of control or cooperation for a vertical or horizontal exemption. Paragraph 4 provides an interpretation of the “relevant period” used in determining the period of time applicable to a method of calculation where the “average turnover amount” is not relied upon. There are two options for the “relevant period”, either being the three year period ending on the projected date of contract award, or an alternate three-year period aligning with the accounting periods for the relevant body provided that the three year period does not end earlier than one year before the projected date of award. At present, it is unclear whether the relevant person can determine at their discretion which period to apply to the calculation, or whether the latter option can only be used where data is not available for a complete three year period ending on the projected date of contract award. Paragraph 5(c), which provides for the alternate measures which may be employed by a contracting authority to determine a vertical or horizontal arrangement, permits an alternate calculation to be based on the value of goods, services or works transferred by the controlled person to customers or clients. It is unclear how this valuation should be determined, meaning that there is an enhanced degree of discretion in using this alternate measure. We would recommend clarification as to the basis on which the valuation should be undertaken. |
| 7 | To what extent do you agree that the methodology of calculating the percentages of the affiliated turnover test as set out in the draft SI is clear and meets the policy intent to exempt contracts to affiliates as described in Schedule 2, paragraph 6? | We consider that the policy intent is met here. |
| 8 | If you disagree or strongly disagree, please explain why you do not believe that the calculation will deliver the policy intent. | N/A |
| 9 | To what extent do you agree or disagree that the methodology to make the appropriate calculations for the relevant exemptions in paragraphs 1(2), 2(2) and 3(4) of Schedule 4 is clear and meets the policy intent to exempt the supply of gas, heat, electricity and drinking water where the relevant conditions apply? |
The approach taken is broadly clear and the drafting intent is in keeping with the policy intent, but we note below some concerns regarding the manner of calculation. |
| 10 | If you disagree or strongly disagree, please explain you believe the calculation is not clear or does not otherwise meet the policy intent. | It is presently unclear whether any calculation as to the average turnover or average production is intended to be calculated by reference only to the turnover or production in respect of the by-product gas or heat, excess electricity or excess water, or whether the average amount should be driven by total turnover or production of the relevant utility, whether by-product/excess or otherwise. In common with the approach taken in relation to the test for exempt horizontal and vertical procurement, we consider that the lack of a definition for “credible business projections” provides a degree of uncertainty as to when the exemptions will apply where insufficient data is available for a three-year period. |
| 11 | To what extent do you agree or disagree that the regulation meets the policy intent of permitting Scottish devolved authorities to undertake joint procurement or collaborate with other authorities across the UK under the auspices of the Procurement Bill? |
We note that the policy intent is to enable Scottish devolved authorities to carry out a joint procurement under the new Bill or to make use of commercial tools established under the Bill in circumstances where different UK authorities are governed by different procurement regimes. We are unable to comment on the effective implementation of this policy with regard to the Scottish procurement regime, but the draft Regulations effectively bring Scottish devolved authorities within the scope of the Bill for the purpose of reserved procurement arrangements, devolved Welsh procurement arrangements and transferred Northern Ireland procurement arrangements. |
| 12 | If you disagree or strongly disagree, please explain why you do not think that the regulation will provide Scottish devolved authorities with this opportunity. | N/A |
| 13 | To what extent do you agree or disagree that this approach achieves the policy objective of ensuring a clear, consistent and familiar approach to defining Central Government Authorities and Works? |
We note that the general approach proposed is to define “Central Government Authorities” and “Works” by reference to lists set out in the Regulations rather than within the Bill to enable the definitions to be more easily updated. This approach is an appropriate and effective method of defining these terms, and we consider that it achieves the desired clarity and familiarity. |
| 14 | If you disagree or strongly disagree, please explain why you do not believe that the definitions are clear, consistent and/or familiar. | N/A |
| 15 | To what extent do you agree or disagree that the regulations permit local authorities and other bodies subject to the Local Government Act 1988 to take advantage of policy on reserving below-threshold contracts for suppliers that are UK-based or located in a specific county or borough and (if the contracting authority chooses) are SMEs or VCSEs? |
We consider that the Regulations are generally effective in enabling this policy. However, the language used to determine the types of supplier to which contracts may be reserved would benefit from additional clarification. |
| 16 | If you disagree or strongly disagree please explain why you do not think the regulations will allow the below-threshold policy to be applied by authorities subject to the LGA 1988. |
Regulation 17(3) defines “based within” as being a location where “a supplier has based or established substantive business operations, not taking account of the location of the corporate ownership or control of the supplier”. This approach does not adequately enable a distinction to be drawn between large corporate organisations with a significant footprint both in the relevant area and elsewhere, and those which have a primary business interest only in the relevant area. In order to give full effect to the intention of the policy, the support of local businesses, it would be beneficial to distinguish these types of organisation. |
| 17 | To what extent do you agree or disagree that these regulations effectively disapply the Bill in respect of health care services procured by bodies that are in scope of the forthcoming DHSC/NHSE Provider Selection Regime (PSR) regulations. |
We would agree that the Regulations effectively disapply the Bill in respect of any procurement captured within the scope of the forthcoming PSR Regulations. |
| 18 | If you disagree or strongly disagree, please explain why you do not believe that these regulations effectively disapply those services. |
N/A |
Disclaimer
This information is for general information purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. Please contact us for specific advice on your circumstances. © Shoosmiths LLP 2024.