In recent years there have been a number of public procurement changes in Scotland, most notably the introduction of the Procurement (Reform) Scotland Bill in October 2013 and three new EU Directives in February 2014.?Public procurement in the UK and the rest of the EU is governed by European Directives and Regulations which are then implemented into national law.
The three new EU Procurement Directives, which deal with public contracts, utilities contracts and concessions, will formally come into force on 17 April 2014. Member states will then have two years to implement the directives into national law, including Scotland.
The key changes made by the Directives are as follows:
1. Removal of the distinction between 'Part A' and 'Part B'
All contracts for services will now be subject to the full procurement regime. There will however be a simplified procedure for a number of specific services which will have a higher threshold of £750,000, with obligations only in relation to transparency and publicity. This will include certain legal services which concern exclusively issues of national law and are only offered by operators in the member state concerned.
2. Contracts to "in-house" providers outwith the scope of EU procurement
The new Directives codify that contracts awarded to "in-house" providers fall outwith the scope of EU procurement law (as in Teckal SvL v Commune di Viano & Azienda Gas (1999)). This exemption applies where:
a. There is no private ownership;
b. The subsidiary company carries out 80% of its activities for the contracting authority;
c. The parent company exercises control over the subsidiary company similar to that of its own departments.
3. Amendments to contracts following a change of supplier status
Following the Pressetext judgement (Pressetext v Austria), if the economic balance in favour of the supplier changes (had it been part of the initial tender process) and this would have resulted in the contract being awarded to a different supplier, a new tender process must be entered into.
The Directives also clarify that changes in relation to internal structuring, mergers or the transfer on insolvency will be permitted provided that the new supplier would have passed the original PQQ stage and there has been no intention to avoid procurement rules.
The new Directives also provide that contracts over £500,000 will require an explanation as to why they have not been divided into lots.
The above changes are most welcome as they clarify a number of tests established through case law and simplify many existing procedures. The next stage will be to see how the UK Government adopts these changes into national legislation, and hopefully we won't have too long to wait!
If you would like further information on public procurement changes in Scotland, please contact our experienced team who will be happy to help.
