© 2016 Achilles Information Limited | Confidential
Public Contract Regulations 2015 – Contract Management
Debbie Metcalfe LLM MSc MCIPS
26th April, 2016
© 2016 Achilles Information Limited | Confidential
Who is Achilles?
• Global leader in procurement and supply chain risk management
• We identify, qualify, evaluate and monitor suppliers on behalf of some
of the world’s largest corporations and carry out thorough verification
of data through assessments and audits across multiple market
sectors
• More than 80,000 pre-qualification questionnaire validations and over
10,000 on-site audits every year
• Core services related to utilities governed by EU procurement
legislation
• Over 25 years provision of training and consultancy services to utility
and public sector clients
© 2016 Achilles Information Limited | Confidential
Achilles Consultancy and Training
• Provide EU Services
• Open/In-house courses
• Achilles EU Academy
• Email and telephone support via THEMiS
• EU Consultancy
• Development of bespoke procurement training
© 2016 Achilles Information Limited | Confidential
Today’s agenda
• Regulatory Framework of Rules
- How this may benefit the private sector.
• Pre-procurement engagement.
• What is contract management and why is it necessary?
• Specifications and criteria
• Performance management
• Material Change
• Reflect some of the main changes under the UCR 2016
• Recent case law
- Lightways (Contractors) Limited v Inverclyde Council
New 2015 Procurement Contract Regulations
4
© 2016 Achilles Information Limited | Confidential
Timetable
• 28 March 2014
• EU Directives – Public/Utilities/Concessions published in OJEU
• 26 February 2015
• The Public Contracts Regulations 2015 (PCR 2015)
• PPN & CCS guidance continues to be issued
• 18 April 2016
• The Utilities Contracts Regulations 2016
• The Concessions Contract Regulations 2016
5
© 2016 Achilles Information Limited | Confidential
'EU' Rules
Principles and detailed procedures to be applied by ‘contracting authorities’ (e.g. local government)
Reflecting the risk that such bodies might favor national or local suppliers in their procurement
Such preference breaches the EU Treaty obligations of free movement of goods, services, people and capital (‘the four freedoms’)
EU Directives set out the procedures, secondary legislation (the UK Regulations) implement them in the UK
© 2016 Achilles Information Limited | Confidential
Treaty Principles
• 5 Treaty Principle
• Equal treatment
• Non-discrimination
• Mutual recognition
• Proportionality
• Transparency
© 2016 Achilles Information Limited | Confidential
Hierarchy
Treaty principles
EU Directives
UK Legislation • Courts will review cases
under the UK legislation
© 2016 Achilles Information Limited | Confidential
How may the Objectives of Public Procurement
benefit the Private Sector?
Objectives
Value for Money
Accurate Specifications
Integrity
Negate conflicts of
interest
Accountability
Confidence
Equal Treatment /Fairness
Encourages Competition
Effective Procurement
Process
Methodical Approach
9
© 2016 Achilles Information Limited | Confidential
Procurement Cycle
10
© 2016 Achilles Information Limited | Confidential
Three Stages of the Procurement Cycle
© 2016 Achilles Information Limited | Confidential
Pre-Procurement Engagement
12
© 2016 Achilles Information Limited | Confidential
Pre-Procurement Engagement Regulation 40
• Expressly provided for
• Indicates best practice
• Communication is key to management
• Concern with ensuring competition is not distorted
• PIN often seen as a suitable non-discriminatory means of sourcing potential suppliers (although not stated in Directive)
Pre-market/
Pre-procurement engagement
13
© 2016 Achilles Information Limited | Confidential
Contract Management
14
© 2016 Achilles Information Limited | Confidential
What is Contract Management ?
Contract management is the phase of the Procurement Cycle in which a contractor delivers the required goods,
services or works in accordance with the
Specification and Terms and Conditions of Contract.
Do we do this well ? Do we consider it part of the
Procurement Cycle ?
© 2016 Achilles Information Limited | Confidential
SMART Specifications for Contract Management
Specific
Measurable
Achievable
Results-Oriented
Target Date
16
© 2016 Achilles Information Limited | Confidential
Assessment of Award Criteria
Most Economically Advantageous Tender
evaluated using
Price
Cost – using
cost
effectiveness
approach
Best
Price/
Quality
Ratio OR OR
Diagram – Bevan Brittan
17
© 2016 Achilles Information Limited | Confidential
Performance Monitoring System
The key components required to develop a contract performance
monitoring system are:
Formal Procurement Records/ Service Level Agreements
Key Performance Indicators.
18
© 2016 Achilles Information Limited | Confidential
Key Performance Indicators (KPIs)
• Key performance indicators may form part of the Service Level
Agreement (SLA) are used to track and evaluate the supplier’s
performance in complying with the contract requirements. For
performance indicators to be effective, they need to be SMART:
• Specific
• Measurable
• Achievable
• Relevant
• Time based
• The KPIs will vary according to the subject matter of the contract, the
level of risk, complexity and value of the contract.
19
© 2016 Achilles Information Limited | Confidential
Changes, variations and extensions
Material Change Regulation 72
20
© 2016 Achilles Information Limited | Confidential
Material Change to Contract
Material change defined
• Admission of different candidates/different award decision
• Changes economic balance in favour of supplier
• Extends scope considerably
• Change of supplier not provided for
Material change requires new award procedure
Regulation 72
21
© 2016 Achilles Information Limited | Confidential
Material Change
• 1 Change is provided for in review clauses
• 2 Change of Contractor cannot be made for economic or technical
reasons and could cause significant duplication of cost (50% Cap)
• 3 Change is due to unforeseen circumstances (50% Cap)
• 4 Replacement of new contractor provided for
• 5 Modifications that are not substantial
• 6 Low value modifications – less than 10% of the current threshold for
supplies and services and 15% for works
Note for permitted changes 2 and 3 a Modifications Notice must be published in OJEU
6 Safe Harbours – Permitted Changes
22
© 2016 Achilles Information Limited | Confidential
Ineffectiveness – Case Law
23
© 2016 Achilles Information Limited | Confidential
Ineffectiveness
• Provides for termination of a contract or framework on application by
a supplier
• Applies only to 3 certain type of breaches
• Illegal direct award of a contract (‘single tender’)
• Failure to observe stand-still requirements (if accompanied by a
breach of other rules that might damage suppliers’ rights)
• Breach of rules for calling off from frameworks
© 2016 Achilles Information Limited | Confidential
Recent Case Law
• Lightways (Contractors) Limited v Inverclyde Council
• Remedy of Ineffectiveness
• Supplier Standing
25
© 2016 Achilles Information Limited | Confidential
Utility Contract Regulations 2016
26
© 2016 Achilles Information Limited | Confidential
Main changes
• Abolition of part A/B Services
• Now have Light Touch Regime (LTR) for services above
• Schedule 2 – Social and Other Specific Services (CPV)
• Threshold £785,530.
• Selection Criteria
• Poor past performance /Self-cleaning
• Framework Agreements
• Duration will be limited to 8 years
• Call-offs awarded on the basis of objective rules and criteria
27
© 2016 Achilles Information Limited | Confidential
Main changes
• Material change defined
• Award Criteria - Most Economically Advantageous Tender
• Life-cycle costing.
• Price / Quality Ratio
• Lowest price.
• Experience of supplier personnel (i.e. CVs) can be used at award stage
• Abnormally low tenders Must be investigated
• Availability of Procurement Documents -
• Offer unrestricted and full direct access free of charge to the procurement
documents from the date of publication of the contract notice or the date
on which an invitation to confirm interest is sent.
28
© 2016 Achilles Information Limited | Confidential
Questions
29
© 2016 Achilles Information Limited | Confidential
Achilles Consultancy & Training
Fareita Udoh Head of Achilles Consultancy & Training
Daniel Bremner Associate Account Manager
Jayne Wellman Administrator
Trainers
Liz Wilson-Lamb Senior Training Consultant
Debbie Metcalfe EU Procurement Advisor and Trainer
Kate Pucci EU Procurement Advisor and Trainer
Steve Kay EU Procurement Advisor and Trainer
Associates
Professor Sue Arrowsmith Legal Expert
The Team
30
© 2016 Achilles Information Limited | Confidential
Materials Disclaimer
The information in this presentation, which does not purport to be
comprehensive, is provided by Achilles Information Limited and has not
been independently verified.
While this presentation has been prepared in good faith, it is not, and
does not purport to, offer the recipient legal advice. No representation,
warranty, assurance or undertaking (express or implied) is or will be
made, and no responsibility or liability is or will be accepted by Achilles
Information Limited or its subsidiaries and affiliates or by its officers,
employees or agents in relation to the adequacy, accuracy,
completeness or reasonableness of the presentation or any other
information (whether written or oral), notice or document supplied or
otherwise made available to the recipient or any interested party in
connection with THEMiS services provided by Achilles Information
Limited or its subsidiaries and affiliates.
All and any such responsibility and liability is expressly disclaimed.
31
Achilles.com/linkedin
Twitter.com/Achillesltd
Facebook.com/AchillesLtd
plus.google.com/+AchillesGroupLtd
Thank you page
Contact details:
T: +44 (0)1235 838115
Achilles Information Limited