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Public Contract Regulations 2015 – Contract Management

Debbie Metcalfe LLM MSc MCIPS

26th April, 2016


Who is Achilles?

• Global leader in procurement and supply chain risk management

• We identify, qualify, evaluate and monitor suppliers on behalf of some

of the world’s largest corporations and carry out thorough verification

of data through assessments and audits across multiple market

sectors

• More than 80,000 pre-qualification questionnaire validations and over

10,000 on-site audits every year

• Core services related to utilities governed by EU procurement

legislation

• Over 25 years provision of training and consultancy services to utility

and public sector clients


Achilles Consultancy and Training

• Provide EU Services

• Open/In-house courses

• Achilles EU Academy

• Email and telephone support via THEMiS

• EU Consultancy

• Development of bespoke procurement training


Today’s agenda

• Regulatory Framework of Rules

- How this may benefit the private sector.

• Pre-procurement engagement.

• What is contract management and why is it necessary?

• Specifications and criteria

• Performance management

• Material Change

• Reflect some of the main changes under the UCR 2016

• Recent case law

- Lightways (Contractors) Limited v Inverclyde Council

New 2015 Procurement Contract Regulations

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Timetable

• 28 March 2014

• EU Directives – Public/Utilities/Concessions published in OJEU

• 26 February 2015

• The Public Contracts Regulations 2015 (PCR 2015)

• PPN & CCS guidance continues to be issued

• 18 April 2016

• The Utilities Contracts Regulations 2016

• The Concessions Contract Regulations 2016

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'EU' Rules

Principles and detailed procedures to be applied by ‘contracting authorities’ (e.g. local government)

Reflecting the risk that such bodies might favor national or local suppliers in their procurement

Such preference breaches the EU Treaty obligations of free movement of goods, services, people and capital (‘the four freedoms’)

EU Directives set out the procedures, secondary legislation (the UK Regulations) implement them in the UK


Treaty Principles

• 5 Treaty Principle

• Equal treatment

• Non-discrimination

• Mutual recognition

• Proportionality

• Transparency


Hierarchy

Treaty principles

EU Directives

UK Legislation • Courts will review cases

under the UK legislation


How may the Objectives of Public Procurement

benefit the Private Sector?

Objectives

Value for Money

Accurate Specifications

Integrity

Negate conflicts of

interest

Accountability

Confidence

Equal Treatment /Fairness

Encourages Competition

Effective Procurement

Process

Methodical Approach

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Procurement Cycle

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Three Stages of the Procurement Cycle


Pre-Procurement Engagement

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Pre-Procurement Engagement Regulation 40

• Expressly provided for

• Indicates best practice

• Communication is key to management

• Concern with ensuring competition is not distorted

• PIN often seen as a suitable non-discriminatory means of sourcing potential suppliers (although not stated in Directive)

Pre-market/

Pre-procurement engagement

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Contract Management

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What is Contract Management ?

Contract management is the phase of the Procurement Cycle in which a contractor delivers the required goods,

services or works in accordance with the

Specification and Terms and Conditions of Contract.

Do we do this well ? Do we consider it part of the

Procurement Cycle ?


SMART Specifications for Contract Management

Specific

Measurable

Achievable

Results-Oriented

Target Date

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Assessment of Award Criteria

Most Economically Advantageous Tender

evaluated using

Price

Cost – using

cost

effectiveness

approach

Best

Price/

Quality

Ratio OR OR

Diagram – Bevan Brittan

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Performance Monitoring System

The key components required to develop a contract performance

monitoring system are:

Formal Procurement Records/ Service Level Agreements

Key Performance Indicators.

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Key Performance Indicators (KPIs)

• Key performance indicators may form part of the Service Level

Agreement (SLA) are used to track and evaluate the supplier’s

performance in complying with the contract requirements. For

performance indicators to be effective, they need to be SMART:

• Specific

• Measurable

• Achievable

• Relevant

• Time based

• The KPIs will vary according to the subject matter of the contract, the

level of risk, complexity and value of the contract.

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Changes, variations and extensions

Material Change Regulation 72

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Material Change to Contract

Material change defined

• Admission of different candidates/different award decision

• Changes economic balance in favour of supplier

• Extends scope considerably

• Change of supplier not provided for

Material change requires new award procedure

Regulation 72

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Material Change

• 1 Change is provided for in review clauses

• 2 Change of Contractor cannot be made for economic or technical

reasons and could cause significant duplication of cost (50% Cap)

• 3 Change is due to unforeseen circumstances (50% Cap)

• 4 Replacement of new contractor provided for

• 5 Modifications that are not substantial

• 6 Low value modifications – less than 10% of the current threshold for

supplies and services and 15% for works

Note for permitted changes 2 and 3 a Modifications Notice must be published in OJEU

6 Safe Harbours – Permitted Changes

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Ineffectiveness – Case Law

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Ineffectiveness

• Provides for termination of a contract or framework on application by

a supplier

• Applies only to 3 certain type of breaches

• Illegal direct award of a contract (‘single tender’)

• Failure to observe stand-still requirements (if accompanied by a

breach of other rules that might damage suppliers’ rights)

• Breach of rules for calling off from frameworks


Recent Case Law

• Lightways (Contractors) Limited v Inverclyde Council

• Remedy of Ineffectiveness

• Supplier Standing

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Utility Contract Regulations 2016

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Main changes

• Abolition of part A/B Services

• Now have Light Touch Regime (LTR) for services above

• Schedule 2 – Social and Other Specific Services (CPV)

• Threshold £785,530.

• Selection Criteria

• Poor past performance /Self-cleaning

• Framework Agreements

• Duration will be limited to 8 years

• Call-offs awarded on the basis of objective rules and criteria

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Main changes

• Material change defined

• Award Criteria - Most Economically Advantageous Tender

• Life-cycle costing.

• Price / Quality Ratio

• Lowest price.

• Experience of supplier personnel (i.e. CVs) can be used at award stage

• Abnormally low tenders Must be investigated

• Availability of Procurement Documents -

• Offer unrestricted and full direct access free of charge to the procurement

documents from the date of publication of the contract notice or the date

on which an invitation to confirm interest is sent.

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Questions

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Achilles Consultancy & Training

Fareita Udoh Head of Achilles Consultancy & Training

Daniel Bremner Associate Account Manager

Jayne Wellman Administrator

Trainers

Liz Wilson-Lamb Senior Training Consultant

Debbie Metcalfe EU Procurement Advisor and Trainer

Kate Pucci EU Procurement Advisor and Trainer

Steve Kay EU Procurement Advisor and Trainer

Associates

Professor Sue Arrowsmith Legal Expert

The Team

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