Utilities Contracts Regulations 2016
The latest enactment of the European Directives revising public procurement has been made in the UK, with the introduction of the Utilities Contracts Regulations 2016 (UCR) coming into force on Monday 18 April 2016. The Concession Contracts Regulations 2016 also became effective on the same day, creating a discrete regime for the operation of concession contracts by public contracting authorities.
The UCR replace the previous regulations of the same name from 2006, and aim to codify recent case law, simplify the procurement procedures, provide additional flexibility and foster the involvement of SMEs and new contractors. Some of the main changes introduced include:
The ability to vary a contract, without having to re-tender, has been clarified, giving clear guidance as to what constitutes a “substantial” variation (which would require an existing contract to be terminated and a new procurement exercise to be carried out). Contracts should now be drafted with these provisions in mind, particularly considering whether sufficient flexibility and clarity have been built in to allow for anticipated amendments to the requirement.
Procurement documentation (which has been drafted widely to oblige disclosure at an early opportunity of all legal, commercial and technical documentation) must now be made available from the date of advertisement of the procurement. This goes beyond the previously held best practice, and requires utilities to carry out what may be significant pre-procurement preparation to avoid commercial disadvantage, or even the risk of challenge.
Utilities will now be able to engage more closely with economic operators through regulated dialogue to reach a solution in highly complex procurements, under the Competitive Dialogue Procedure, and also to enter into a partnership with an operator to conduct research and development activities, under the Innovation Partnership Procedure. These new procedures should give greater flexibility to utilities in the structure of procurement exercises and deliver better results and value for money.
Framework Agreement Limitation
While Framework Agreements can be effectively used to avoid numerous procurement exercises, the UCR have limited the maximum duration of such Framework Agreements to eight years, and now require the method for awarding contracts under such Framework Agreements to be published at the time of appointment to the panel, rather than at the time of call-off.
Based on the changes described here and the other changes implemented by the UCR, it will be particularly important for utilities to consider how they make purchases of goods, services, works and design contracts to avoid falling foul of the new regulations and to reduce the risk of challenge.
If you would like to discuss any of the above, or how the UCR impact your organisation, please contact Patrick Brown, Tughans’ Managing Partner, at Patrick.Brown@tughans.com, or Paul Eastwood, Associate Solicitor, at Paul.Eastwood@tughans.com