Procurement in a nutshell – below threshold procurements revisited

You can remind yourself of our previous Nutshell on the subject here.

What’s New?

Application of the Below-Threshold Regime

In the Public Contract Regulations 2015, under regulation 109, procurements that are, net of VAT:

• above £10,000 (central government authorities); or
• above £25,000 (sub-central contracting authorities or NHS Foundation Trusts)

but below the new threshold amounts are caught by the below threshold regime.

The thresholds for 2016/17 are:

• £4,104,394 for works contracts
• £106,047 for supplies or services contracts sought by central government authorities and NHS trusts; or
• £164,176 for supplies or services contracts sought by sub-central contracting authorities or NHS Foundation Trusts.

Please note that procurements of health services under the NHS (Procurement Patient Choice and Competition) (No 2) Regulations are not covered by these provisions and are covered in our Light Touch Regime Nutshell, available here.

Advertising on Contracts Finder (Regulation 110)

In our previous Nutshell we discussed Regulation 110 and the publication requirement of contract opportunities on Contracts Finder. We have found that this requirement has generated some confusion resulting in inquiries on the definition of advertising.

The requirement to publish information on Contracts Finder only applies where a contracting authority (CA) “advertises a contract award opportunity”. Where there is no advertisement of the opportunity, there is no requirement.

What has caused discussion is the question: ‘What constitutes an advertisement of a contract award opportunity by a CA?’.

Advertisement is determined under the Regulations to be when a CA:

• Puts an opportunity into the public domain; or
• Brings the opportunity to the attention of;
• Economic operators ‘generally’; or
• Any class of description of economic operators which is ‘potentially open-ended’; and
• With an intention to receive responses from economic operators who wish to be considered for the contract.

If the above is satisfied, the opportunity is required to be advertised on Contracts Finder. Many of our clients use standard lists of three or more suppliers for certain goods or services and if they only go to that list for a quote, then this is not an advertisement.

Pre-Qualification Questionnaires (PQQ) – (Regulation 111)

We also received a number of inquiries about the role of PQQs in below threshold procurements.

A pre-qualification stage means a stage in the procurement process during which the CA assesses the suitability of candidates to perform a contract with the intention of reducing the number of candidates eligible to proceed to the later stages of the contract.

There is a prohibition on using a pre-qualification stage for all procurements that are under £106,047 (for central government) and £164,176 (for sub central contracting authorities) for 2016/17.

Questions aimed at determining the qualifications of a supplier and their suitability to perform are allowed if they are relevant and proportionate but they must not be used as a separate stage in the process. CAs need to consider the guidance issues by the Cabinet Office when creating supplier questionnaires.

This is determined on a case-by-case basis and if you have any questions on the suitability of the PQQ for a particular opportunity, you may contact our procurement hotline below for guidance.

Why is it important?

CAs must be aware of the circumstances in which they must advertise an opportunity on Contracts Finder and must stop using a PQQ for low value tenders. Compliance with the above has raised questions from CAs due to their limiting nature in CAs’ procedures and actions.

How can I find out more?
If you have any queries on the issues raised or on any aspect of procurement, please contact us via our procurement hotline on 0191 204 4464.