HM Insights

Different strokes? Room for manoeuvre in EU directives implementation

The new EU public procurement directives came into force on 17 April 2014, and must be transposed into national law within two years.

Both the Scottish and UK Governments have stated that they intend to implement the directives more quickly, however, with Nicola Sturgeon, the Cabinet Secretary for Infrastructure, Investment and Cities, announcing that the Scottish Government would consult on implementing regulations this summer with a view to the new Scottish regulations being introduced in 2015. In order to allow businesses to take advantage of the more flexible regime which the directives introduce, the UK Government has indicated it may look at introducing new regulations as early as October this year.

The new regulations (whether those for Scotland or those for other parts of the UK) will significantly change the obligations on public bodies in a number of ways, not least the abolition of the Part A/ Part B services distinction. Although much of what the new regime will look like can be gleaned from the directive itself, in some important areas the directive leaves wide scope to member states to decide how the directive is implemented into national law.

Considering past performance of suppliers

One such area is in relation to the consideration by public bodies of the past performance of suppliers. The UK Government issued an Action Note in late 2012 setting out how public bodies should factor past performance into the selection of suppliers to tender; this was in the wake of various high-profile failures in contract performance. The Action Note has limited formal application, however, being limited to contracts over £20 million in ICT and related areas. The directive envisages past performance being considered more widely, although not in all circumstances. To constitute a ground for excluding a supplier from a procurement process, the deficiencies in past performance will require to be significant or persistent, relate to a substantive requirement of the previous contract, the exclusion must be time-limited and the supplier must be given the opportunity to demonstrate that it has adopted measures to remedy previous failure.

The implementing regulations will require to address many practical issues such as whether there will be a central registry (at Scotland, UK, EU or other level) of organisations which fall within the scope of the exclusion ground; whether exclusion on this ground will be mandatory or discretionary; and whether individual public bodies will be able to decide whether to exclude based on the relevance of previous failure to the particular proposed contract in question.

Don't be exposed as directives are transposed

This issue of past performance of suppliers is just one example of the many areas where the directive sets out overarching principles but where the practical consequences for public bodies will depend very much on the national implementing regulations. Particularly in view of the very tight timescale for implementation of national regulations, public bodies should pay careful attention to the various consultations to obtain some early indication of how this, and other aspects of the directives, will be transposed into national law.

Jill Fryer is an associate with Harper Macleod LLP and can be contacted at jill.fryer@harpermacleod.co.uk.