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Public Procurement and Council Contracts

The Public Contracts Regulations 2015 have changed the world of public procurement, not least for some contracts let by Parish and Town Councils. In the second part of this website article, I will run through the necessary steps required to let a public sector contract under EU rules. But the Public Contracts Regulations 2015 made two changes which affect a great many more parish, town and community councils than the previous Regulations did.

Parish Council Contracts: the new £25,000 Contracts Rule

If you are a local authority and your proposed contract is worth more than £25,000 (excluding VAT):

  • If you advertise an Invitation to Tender ("ITT") for such a contract anywhere at all, you must (within 24 hours) also advertise it on the Government's Contracts Finder Website and you must then have the contract details available on the internet AND
  • You cannot have a Pre-qualification stage in such a contract.
  • After you have awarded the contract, whether or not you advertised it on Contracts Finder at the Invitation To Tender stage, you must publish on the UK Government's Contracts Finder Website:
    • the name of the contractor;
    • the date on which the contract was entered into;
    • the value of the contract; and
    • whether the contractor is an SME or a VCSE

Parish Council Contracts: the new 30-Day Payment Rule:

Every public contract which a local council awards must contain the following 'suitable provisions':

  • The authority must pay the contractor within 30 days of getting a valid and undisputed invoice. (And undue delay in considering and verifying an invoice is not to be regarded as sufficient justification for failing to regard an invoice as valid and undisputed.)
  • Every contract which permits sub-contracting must contain similar 30-day-payment provisions - and the same for sub-sub-contracts.

The process of public procurement

Here is a very brief, step-by-step guide to the processes of public procurement:

  • Make an estimate of the total cost of the procurement (excluding VAT)
  • Work out what category the procurement is in (Works, Supplies, Services or perhaps a mixture of them.
  • Work out whether your proposed procurement is above any of the relevant thresholds. The thresholds are fixed by the EU in Euros, but the UK government translates those values into Pounds Sterling or GBP every two years. You can find them on the Cabinet Office website. From 1 January 2014 until 31 December 2015, the UK thresholds are:
    • For Supplies Contracts: £172,514
    • For Community services, social services and cultural services Contracts: £625,050
    • For Other Services Contracts: £172,514
    • For Works Contracts: £4,322,012
  • If your Council's contract is over the relevant threshold (£172,514, £625,050 or £4,332,012), you have to follow the Rules for the Category. Broadly, the Rules are:
    • You must advertise the proposed procurement (a) in the Official Journal of the EU (OJEU) and (b) on the UK Government's "Contracts Finder" website.
    • You must publish all of the contract documents (notably the specification of the works, the duration etc) on your own website.
    • You must use the Timetable set out in the Public Contracts Regulations 2015.
    • You must invite tenders without any pre-qualification test.
    • You must choose the successful contractor by applying fair assessment procedures and (usually) award it to one who offers the lowest or the highest price or use a MEAT (Most Economically Advantageous Tender) analysis.
    • You must publish the name and (usually) the accepted price of the successful contractor and lots of other details, sometimes in the OJEU and always on the UK Government's Contracts Finder website.
    • You must keep records of what you did.