Next in our series of ebriefings on the Government’s Green Paper: Transforming public procurement; looking at the Chapter 4 proposal to change the basis of contract awards.
Underpinning it all are the “Treaty of Rome” fundamental principles of transparency, equal treatment and non-discrimination, proportionality and mutual recognition. These principles underscore all the detail now developed in relation to the evaluation of bids and tenders.
Getting to the MEAT of it all
One example of furniture re-arranging is the fact that contracting authorities no longer have a choice between selecting most economically advantageous tender (MEAT) or lowest price as the basis for awarding contracts. Now it is only MEAT “assessed from the point of view of the contracting authority”, although price can be the only factor considered in evaluating MEAT (!). Regulation 67(2) is at the heart of MEAT: “That tender shall be identified on the basis of the price or cost, using a cost-effectiveness approach, such as life-cycle costing in accordance with regulation 67, and may include the best price-quality ratio, which shall be assessed on the basis of criteria, such as qualitative, environmental and/or social aspects, linked to the subject-matter of the public contract in question.”
The rest of Regulation 67 expands upon this by:
- giving examples of criteria – including organisation, qualification and experience of staff assigned to performing the contract (thereby addressing confusing case law);
- explaining that fixed price contracts can be evaluated on the basis of quality;
- stating that award criteria shall be considered to be linked to the subject-matter even where such factors do not form part of their material substance; and
- repeating case law that award criteria should not have the effect of conferring an unrestricted freedom of choice on the contracting authority.
Helpfully, Regulation 67(7) makes the point that evaluation criteria need to relate the specification for the contract in question; this is critical to getting the subject matter of the contract right. The more that a specification covers the broader the evaluation criteria can be in scope. No procurement should reflect the rhyme: “my eyes are dim, I cannot see, I have not got my specs with me”.
The 2015 Regulations take a slight nuanced approach to the weighting of evaluation criteria, building on the new articulation of MEAT. Accordingly, purchasers should specify, in the procurement documents, the relative weighting which they give to each of the criteria chosen to determine the most economically advantageous tender, except where this is identified on the basis of price alone. Those weightings may be expressed by providing for a range with an appropriate maximum spread. Where weighting is not possible for objective reasons, the purchaser shall indicate the criteria in decreasing order of importance (in this sense the 2015 Regulations do not differ from the 2006 Regulations).
The concept of life-cycle costing is now embedded in much procurement, but now has statutory expression through Regulation 68. Under the 2015 Regulations this is pretty prescriptive. The starting point is the definition of “life cycle” in Regulation 2(1): “all stages which are consecutive or interlinked, including research and development to be carried out, production, trading and its conditions, transport, use and maintenance, throughout the existence of the product or the works or the provision of the service, from raw material acquisition or generation of resources to disposal, clearance and end of service or utilisation”.
As set out in Regulation 68(1) and (2), life-cycle costing “shall, to the extent relevant, cover part or all of the following costs over the life cycle of a product, service or works”:
- costs, borne by the contracting authority or other users, such as costs relating to acquisition, costs of use, such as consumption of energy and other resources, maintenance costs, end of life costs, such as collection and recycling costs;
- costs imputed to environmental externalities linked to the product, service or works during its life cycle, provided their monetary value can be determined and verified. These costs may include the cost of emissions of greenhouse gases and of other pollutant emissions and other climate change mitigation costs.
Under Regulation 68(3) the method used for the assessment of costs imputed to environmental externalities should fulfil all of the following conditions:
- it is based on objectively verifiable and non-discriminatory criteria and, in particular, where it has not been established for repeated or continuous application, it shall not unduly favour or disadvantage certain economic operators;
- it is accessible to all interested parties;
- the data required can be provided with reasonable effort by normally diligent economic operators, including economic operators from third countries party to the GPA or other international agreements by which the EU is bound.
Purchasers using a life-cycle costing approach must indicate in the procurement documents:
- the data to be provided by the bidders, and
- the method which the purchaser will use to determine the life-cycle costs on the basis of those data.
Whenever a common method for the calculation of life-cycle costs has been made mandatory by a legislative act of the EU, that common method shall be applied for the assessment of life-cycle costs. So far, there is only one such act, the Clean and Efficient Vehicles Directive (2009/33/EU).
All of this requires particular expertise, but provides an opportunity to pursue sustainable procurement, using common standards.
Changes to the rules on abnormally low tenders
Both the 2006 and 2015 Regulations contain provisions requiring purchasers to seek explanations from bidders about abnormally low tenders, before taking action to reject the bidder.
The new provisions are listed in Regulation 69, which place a duty on the contracting authority to investigate tenders it considers abnormally low. The main change is a new requirement to disregard tenders that are abnormally low because they are in breach of international environmental, social or labour law provisions (Regulation 69(5), which refers to Regulation 56(2)).
The “light touch” regime
The UK Government has heralded the advent of the new “light touch” regime relating to health and social care, plus a limited number of other services, with a degree of excitement that is not contagious. Crown Commercial Service guidance reflects this tone, leading one to ask “How many procurement experts does it take to invent a light touch process?” Nevertheless the relevant provisions do list some good relevant considerations that can be used for such services, including:
- the need to ensure quality, continuity, accessibility, affordability, availability and comprehensiveness of the services;
- the specific needs of different categories of users, including disadvantaged and vulnerable groups;
- the involvement and empowerment of users; and
There is no reason why such considerations should not be reflected in the specifications and therefore the evaluation criteria used in procurements of all services and works, irrespective of their categorisation.
Yes, but, what else?
Not to be forgotten is the developing case law around the methods used for evaluating tenders, and what constitutes treating bidders on a level playing field. The new detail on evaluation criteria is to be welcomed, but the application of common sense should not be lost. Above all, we should all continue to apply with revolutionary zeal: “transparency, equal treatment and non-discrimination, proportionality and mutual recognition!”
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For further information, please contact Mark Cook.
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