In the fourth part of our series on contract management pitfalls, we look at the risks arising out of varying the terms of construction contracts.
Crown Commercial Service (“CCS”) Public Procurement Action Note (“PPN”) 07/16 says that:
"Contracting authorities must ensure that any procurement opportunities and contract awards above certain low value thresholds are published on Contracts Finder."
As regards contract awards, this is entirely correct. However, it is dangerously misleading in suggesting there is a requirement to advertise all contracts valued over £25,000 (or £10,000 for central government).
The obligation to advertise prospective contracts on Contracts Finder is set out in Regulation 110 of the Public Contracts Regulations 2015. This obligation applies only,“where a contracting authority advertises a contract award opportunity”. It does not apply where there is no “public advertisement” of the contract opportunity, such as where a contracting authority approaches a single contractor (for example, the incumbent to extend an existing contract for a short period to cover a delayed procurement), or a “closed list” of contractors invited to tender by the contracting authority.
This is made clear in Regulation 110(5)(b) which states clearly that a contracting authority
“does not advertise an opportunity where it makes the opportunity available only to a number of particular contractors selected for that purpose”.
Surprisingly, there is no mention of this Regulation in the PPN.
There are only two circumstances in which a contracting authority is required to advertise a contract valued below the EU tendering threshold publicly:
- where the contract may be of “cross border” interest to contractors based in other EU member states (which is often relevant for supplies contracts or for contracting authorities based in Northern Ireland, but not usually for contracting authorities seeking contractors or service providers within mainland Britain); or
- where the project is being funded by grant (particularly European Structural Investment Funding such as ERDF or ESF) and the grant conditions require public advertising.
Outside of these two circumstances, there is nothing in the Regulations that requires contracting authorities to advertise “below threshold” tender opportunities publicly.
Of course, a public advertisement may be required by a contracting authority’s own standing orders, although these can usually be waived. It may also be helpful to demonstrate “value for money” or “best value”, although this can also be done through benchmarking.
If a contracting authority chooses to advertise the contract publicly, even where there is no legal requirement to do so, it does need to be advertised also on Contracts Finder. The PPN is correct on this. The issue is where a contracting authority chooses not to advertise because there is no legal obligation to do so.
We have taken up this issue with the Crown Commercial Service and suggested that a correction is made to the PPN to refer to Regulation 110(5)(b). Our query has been referred to their “Policy Unit”.
The willingness (or otherwise) of CCS to issue a correction to the PPN should tell us whether the omission is merely an oversight or a deliberate attempt to mislead contracting authorities into advertising on Contracts Finder contracts that do not need to be advertised at all.
For more information
Please contact Andrew Millross.
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