The relevant domestic legislation is as follows:
With the exception of DSPCR 2011, which applies on a UK-wide basis, the above procurement legislation applies only to England, Wales and Northern Ireland. Scotland has its own procurement legislation which is, nonetheless, substantively similar to the procurement rules which apply to the rest of the UK.
Unless otherwise specified, the responses below relate to the application of the PCR 2015, on the basis of which the majority of regulated contracts are awarded. Accordingly, any reference in this chapter to “the legislation” should be construed as a reference to the PCR 2015, whilst any reference to “the Regulations” should be construed as a collective reference to the procurement legislation listed above.
The Regulations (as well as Scottish procurement legislation) domestically implement EU procurement directives which regulate the award of certain contracts by public bodies and certain utility companies. Please refer to the EU chapter for more detail on the EU procurement directives.
Although the UK ceased being a member of the EU on 31 January 2020, under the Withdrawal Agreement which sets out the terms of the UK’s exit from the EU, EU law will continue to apply to, and in, the UK at least until 31 December 2020 (the “transition period”). In principle, this period may be extended, by agreement, by a further one or two years.
The question as to whether the Regulations might be amended after the end of the transition period is discussed in 5.4 Legislative Amendments Under Consideration.
The reference to “economic operators” in this chapter should be construed as a general reference to an entity providing goods or services (including works) on the market and includes an applicant, which is an entity that has sought or is seeking an invitation to participate in a contract award process, and a bidder, which is an entity that has been invited to participate in a contract award process and has submitted or intends to submit a tender.
The Regulations apply primarily to the award of certain contracts by “contracting authorities”, a term which is broadly defined and captures the overwhelming majority of public bodies. The term applies, for example, to government departments, local authorities, National Health Service trusts and police authorities.
In addition, a smaller group of entities which are not “contracting authorities” may, nonetheless, be subject to procurement regulation, if they operate in the water, energy, transport and postal services sectors and carry out a regulated utility activity on the basis of “special or exclusive rights” or under the “dominant influence” of a contracting authority. This type of regulated bodies includes private sector water utility companies, electricity network and distribution operators and ports.
In the interest of simplicity, this chapter will use the term “contracting authority” to refer to any entity that has an obligation to carry out a procurement process under the Regulations.
In principle, the Regulations apply to the award of contracts for pecuniary interest which are concluded in writing between one or more contracting authorities and one or more economic operators, and which have as their object the execution of works, the supply of goods or the provision of services.
The term “pecuniary interest” means broadly consideration (whatever its nature). Judicial authorities have clarified that, the provision of goods, works or services in exchange for the full, or even partial, reimbursement of costs can be sufficient for pecuniary interest to arise.
The award of works and services concession contracts is also subject to regulation. Concession contracts involve consideration that consists, either solely or partly, in the right to exploit the works or services that are the subject of the contract and the transfer to the concessionaire of the operating risk that this exploitation entails.
The Regulations apply only where the estimated value of regulated contracts meets or exceeds certain thresholds. Under current rules (see 5.4 Legislative Amendments Under Consideration), these thresholds are reviewed every two years by the European Commission to ensure that they align with the thresholds established in the context of the World Trade Organization’s (WTO) plurilateral Agreement on Government Procurement (the “GPA”).
The value thresholds under the PCR 2015 are:
The value thresholds under the UCR 2016 are:
The value threshold for concession contracts under the CCR 2016 is GBP4,733,252.
The value thresholds under the DSPCR 2011 are:
All of the above figures are exclusive of value added tax.
Under the legislation access to contract award procedures is guaranteed, and remedies for breaches of the legislation are available, to economic operators from:
While, in practice, most regulated contract award procedures in the UK are open to all economic operators, there is no obligation on a contracting authority to consider the application or the tender of an economic operator from a country that is not covered under one of the categories identified above (a “third-country economic operator”). In addition, in the event that there is a breach of the legislation, a third-country economic operator would not be afforded protection (including access to remedies) under the legislation.
Where the legislation applies, contracting authorities must in general meet their contractual requirements for goods, works or services by means of an advertised competitive contract award process that is based on objective, relevant and proportionate criteria. Underlying the legislation are the key obligations to treat economic operators equally and without discrimination, and to act in a transparent and proportionate manner. These obligations are relevant even before the procurement process has commenced, for example, the carrying out of a preliminary market consultation or the design of the procurement process must be consistent with these obligations. Equally, even after the procurement process has concluded with the signing of a contract, there is a prohibition on making substantive modifications to contracts, so as not to breach the above obligations.
In terms of the steps that a contracting authority must take in carrying out an advertised competitive contract award process, these would depend on the procurement procedure used, but generally would include:
Finally, contracting authorities are subject to an express obligation not to design procurements with the intention of excluding economic operators from the scope of the legislation or of artificially narrowing competition.
Contract award procedures must be advertised in the OJEU using the online Tenders Electronic Daily (TED) and on the national online portal Contracts Finder. National publication can only take place following publication of a contract notice in the OJEU. However, if 48 hours elapse after confirmation of the receipt of the notice by the EU Publications Office and the notice has not yet been published, contracting authorities are entitled to publish at a national level. Contracting authorities must publish a notice on Contracts Finder within 24 hours of the time when they become entitled to do so.
The advertisement of a contract must be made using standard online forms. These generally require the publication of the following information:
The standard form used for the advertisement of a PCR 2015 regulated contract in the OJEU may be found on the Tenders Electronic Daily (TED) website.
The legislation expressly permits contracting authorities to carry out preliminary market consultations with a view to preparing the procurement and informing the market of their procurement plans and requirements. In carrying out such consultations, contracting authorities are permitted to seek or accept advice from independent experts or authorities, or from market participants. Such advice may be used in the planning and conduct of the procurement procedure, provided this does not have the effect of distorting competition and does not violate the principles of non-discrimination and transparency.
Where an economic operator has advised or has been involved in some other way in the preparation of the procurement process, the contracting authority is obliged to take appropriate measures to ensure that competition is not distorted as a result of the participation of that economic operator in the subsequent process. Such measures must include communicating to all other participants in the competition any relevant information exchanged with that economic operator in the context of preparing the procurement process and the fixing of adequate time limits for the receipt of tenders.
Where there are no means of ensuring the equal treatment of all economic operators, the economic operator who had been involved in the preparation of the process must be excluded from the procedure (but only after the economic operator in question has been given the opportunity to prove that its prior involvement is not capable of distorting competition).
The legislation provides for six different procedures which may be used for the award of a contract, as follows:
In line with all other aspects of a procurement process, the conduct of negotiations is subject to the obligation to treat economic operators equally and without discrimination. Among other things, this means that the contracting authority cannot disclose the confidential information of one bidder to the other bidders without the former’s agreement. Such agreement cannot take the form of a general waiver. Instead, consent may only be granted with reference to the intended disclosure of specific information.
Where the competitive procedure with negotiation is used, negotiations are not permitted once final tenders have been submitted. However, where the competitive dialogue procedure is used, final tenders may be clarified, specified and optimised at the request of the contracting authority. Limited (non-substantive) negotiations may also take place after the identification of the most economically advantageous tender, with a view to finalising the terms of the contract.
The legislation permits the conduct of an open or restricted procedure at the option of the contracting authority. The use of the other procedures outlined in 2.3 Tender Procedure for Award of Contract is only permissible where specific conditions are met.
The competitive procedure with negotiation and the competitive dialogue can be used only where one of the conditions below applies:
As noted earlier, the innovation partnership, which also involves negotiations, may be used where there is a need for the development of new products, services or works whilst the use of the negotiated procedure without prior publication is considered an exceptional procedure that can only be used in limited and narrowly construed circumstances (see 5.2 Direct Contract Awards).
The legislation generally requires contracting authorities to offer online unrestricted and full direct access to the procurement documents from the date of the publication of the contract notice in the OJEU (although certain exemptions apply).
The definition of the “procurement documents” in the legislation is broad and essentially captures all documents that are relevant to the carrying out of a procurement process, including the contract notice, the technical specifications, an invitation to tender or negotiate, any document that describes the requirements or the rules of the competition and the proposed conditions of contract.
Although the wording of the legislation does not clarify this issue, it is arguable that this obligation applies only in relation to documents that are capable of publication at the start of the process. However, this interpretation has yet to be confirmed by the courts. In view of the uncertainty over this issue, it is not unusual for contracting authorities to issue some of the procurement documents as drafts at the start of the process and reissue these in a final form at a later stage of the process.
The legislation sets certain minimum time limits but these vary depending on which procedure is used and whether certain conditions are met.
Irrespective of any minimum time limits permitted by the legislation, contracting authorities have an obligation to take into account the complexity of the contract and the time required for drawing up tenders when fixing the time limits for the receipt of tenders and requests to participate.
In determining whether interested parties might be eligible for participation in a procurement process, contracting authorities may only take into account a candidate’s suitability to pursue a professional activity, its economic and financial standing, and its technical and professional ability.
The legislation sets out detailed rules as to how these criteria may be taken into consideration at the selection stage of a procurement process and the type of evidence that contracting authorities may ask applicants to provide to prove compliance with specific requirements in this regard. In this context, contracting authorities have an obligation to ensure that any selection requirements they impose are related and proportionate to the subject matter of the contract.
Separately, the legislation requires contracting authorities to consider whether applicants have committed certain offences that would normally require their exclusion from the competition (the "mandatory exclusions"). Contracting authorities may also exclude from the competition interested parties that find themselves in certain situations (the "discretionary exclusions").
The exclusion period is five years from the date of the economic operator’s conviction, in relation to mandatory exclusions, and three years from the date of the relevant event (a reference that case law has interpreted as the date when the wrongful conduct was established), in relation to discretionary exclusions.
An economic operator who finds itself in one of the circumstances that require or permit disqualification may avoid this if it can demonstrate to the satisfaction of the contracting authority that it has taken appropriate "self-cleaning" measures.
When using one of the competitive procedures other than the open procedure, contracting authorities may restrict participation in a competition to only a small number of qualified applicants. The legislation requires that the decision as to which applicants should be shortlisted must be made on the basis of objective and non-discriminatory criteria or rules that must be disclosed at the start of the process.
The legislation requires the shortlisting of a minimum of five applicants when using the restricted procedure and a minimum of three when using the competitive process with negotiations, the competitive dialogue and the innovation partnership.
However, where the number of applicants meeting the relevant requirements is below the minimum number set in the legislation, the contracting authority may continue with the procedure by inviting the applicants that meet the minimum conditions for participation, provided that there is a sufficient number of qualifying applicants to ensure genuine competition.
A contracting authority must award the contract to the bidder with the most economically advantageous tender, from the point of view of the contracting authority. The tender which is the most economically advantageous must be determined by reference to price or cost alone, or the best price-quality ratio, which must be assessed on the basis of criteria that are linked to the subject matter of the contract.
These may include qualitative, environmental or social aspects. The cost element may also take the form of a fixed price or cost on the basis of which bidders then compete on quality criteria only.
The criteria must not have the effect of conferring an unrestricted freedom of choice on the contracting authority (which would be the case if, for example, the criteria are not clearly defined). The criteria must also ensure the possibility of effective competition, enabling an objective comparison of the relative merits of the tenders. They must also be accompanied by specifications that allow the information provided by the tenderers to be effectively verified in order to assess how well the tenders meet the award criteria.
The selection criteria, including the grounds for exclusion as well the objective and non-discriminatory criteria or rules on the basis of which the contracting authority will determine the qualified applicants that will be invited to participate in the competition, must be disclosed at the start of the process. Equally, the award criteria and their weightings must be disclosed in the procurement documents that are published at the start of the process.
Over and above the specific obligations in the legislation that relate to the disclosure of selection and award criteria, the case law of the CJEU has clarified that a contracting authority must disclose all elements to be taken into account in the evaluation (which are likely to affect the preparation of tenders), including sub-criteria and their weightings.
In practice, and so as to limit the risk of non-compliance in this context, contracting authorities tend to disclose the full evaluation methodology at the start of the procurement process, or at the very least, well in advance of the submission of tenders allowing a reasonable opportunity for bidders to take account of the methodology when preparing their submissions.
The legislation does not create an explicit obligation on contracting authorities to inform unsuccessful applicants of the decision to reject their application to participate in a competition and the reason for that decision in a timely manner. Instead, the legislation provides that where the contracting authority has not informed an applicant of its decision to reject its application and the reasons for that decision at an earlier stage in the process, the contracting authority must do so before commencing the standstill period that must proceed the award of the contract (see 3.4 Requirement For Standstill Period).
In practice, contracting authorities choose to inform unsuccessful applicants of their rejection and the reasons for this, without undue delay not least so as to limit the risk of a challenge against that decision at a later stage in the process.
Separately, the legislation provides that where an unsuccessful applicant requests in writing information about the reasons for the rejection of its request to participate in the competition, the contracting authority is required to provide this information as quickly as possible and in any event within 15 days from receipt of the written request.
Bidders must be informed about the contract award decision as soon as possible after that decision has been made. In notifying bidders of that decision, the contracting authority must specify:
The notice communicating the contract award decision is normally sent electronically, although facsimile and “other means” are, in principle, also permissible.
In certain circumstances, the contracting authority has an obligation to notify the contract award decision also to rejected applicants as well as bidders that might have been eliminated at earlier stages of the competition.
The legislation requires the contracting authority not to conclude the contract before the expiry of a standstill period following the notification of the contract award decision to bidders. The length of that period depends on the means of communication used to notify the contract award decision. Where all bidders have been notified of that decision electronically, the standstill period must be a minimum of ten clear calendar days.
Review applications are heard by the national courts of the United Kingdom, for example the High Court in England and Wales. Decisions of the first instance review body may be appealed to the relevant appellate court, for example, in England and Wales this would be the Court of Appeal. In matters of public interest or matters involving a point of law of general importance, a further appeal may be permitted to the Supreme Court of the United Kingdom.
Complaints may also be made directly to the European Commission in relation to alleged breaches which occur before the end of the transition period. The European Commission is not obliged to pursue the complaint but if it does, this may ultimately lead to an action against the UK government in the Court of Justice of the EU. Under the terms of the Withdrawal Agreement, the European Commission may take such action within four years following the end of the transition period.
Economic operators who have suffered loss or damage as a consequence of a breach of the Regulations may be awarded damages to compensate them for such loss. In order to recover damages, the relevant economic operator must establish that there has been a breach of the Regulations and that the breach has caused the economic operator to suffer loss or damage.
The Supreme Court decision in Nuclear Decommissioning Authority v Energy Solutions EU Ltd clarifies that damages will only be available if the relevant breach of the Regulations is "sufficiently serious". For these purposes, a breach will be sufficiently serious if it has an impact on the outcome of the procurement process.
Separately, issuing a claim in the courts against the contracting authority’s award decision has the effect of automatically suspending the procurement process, preventing the conclusion of the contract, provided the contracting authority has become aware that a claim has been issued against its award decision before the contract’s conclusion (see 4.3 Interim Measures).
Without prejudice to any other powers of the court, the legislation provides that where the contract has not been concluded, the court may also order the setting aside of the unlawful decision or action or order the contracting authority to amend any document.
Where the contract has been concluded, the Court may award damages to an economic operator which has suffered loss or damage as a consequence of the breach. In addition, the court must make a declaration of “ineffectiveness” (unless there are general interest reasons for not doing so) in certain limited circumstances, including where:
Where a declaration of ineffectiveness is granted, the contract is prospectively ineffective as from the time when the declaration is made, so that any outstanding contractual obligations must not be performed. In such circumstances, the court must also impose a civil financial penalty on the contracting authority of an amount which it considers to be "effective, proportionate and dissuasive".
Declarations of ineffectiveness are rare, with only two examples of such a declaration being granted in the UK at the time of writing, the most recent being by the English Court of Appeal in the case of Faraday Development Ltd v West Berkshire Council  EWCA Civ 2532.
As noted in 4.2 Remedies Available for Breach of Procurement Legislation, issuing a claim against a contracting authority’s award decision has the effect of automatically suspending the procurement process and preventing the conclusion of the contract, provided that the contracting authority has become aware that the claim has been issued before the contract’s conclusion.
In response, the contracting authority can apply to the court for an order to "lift" the automatic suspension, so that it may conclude the contract, despite the outstanding claim. When considering whether to lift an automatic suspension, the court will consider whether the claim raises a serious issue to be tried, whether damages would be an adequate remedy for the claimant if the suspension remained in place but the claim succeeded at trial (if not, would damages be an adequate remedy for the contracting authority), and whether the balance of convenience favours maintaining or lifting the suspension.
In essence, the court will consider whether it is just in all the circumstances to confine a claimant to a remedy of damages and, to the extent there is any doubt as to the adequacy of damages for either party, it will decide where the balance of convenience lies in the circumstances. As a condition of maintaining the suspension the court will normally require the claimant to give a cross-undertaking in damages (essentially a promise to pay the contracting authority damages for any loss it may suffer as a result of the suspension being maintained, in the event that the claim is unsuccessful).
Separately, an economic operator may seek a court order to suspend the procurement process in relation to which it alleges that there has been a breach, or the implementation of any decision or action taken by the contracting authority in the course of such process. In determining whether or not to grant such interim order, the court will consider the issues set out in the previous paragraph.
A breach of the legislation is actionable by any economic operator that is owed a duty under the legislation and, in consequence of the alleged breach, suffers, or risks suffering, loss or damage. As noted elsewhere in this chapter, a contracting authority owes a duty of compliance with the legislation to economic operators from the UK or the EEA, a GPA state (other than an EEA state), or a country with which the EU has a bilateral agreement.
However, in relation to operators from a GPA state(other than an EEA state) or countries with which the EU has bilateral agreements, only to the extent that the procurement in question is covered by the GPA or that agreement, respectively.
This will depend on the type of remedy being sought. The Regulations require a claim seeking the remedy of “ineffectiveness” to be made within a period of six months starting from the day following the date of the conclusion of the contact. Where the contracting authority has published a contract award notice in the OJEU, or has informed the relevant economic operator of the conclusion of the contract and provided a summary of the reasons leading to the award of that contract, the period for bringing a claim is shortened to 30 days from the date of publication of the contract award notice, or the date on which notice of the conclusion of the contract (together with a statement of reasons) was provided to the relevant economic operator.
Claims seeking a remedy other than “ineffectiveness” must be brought within 30 days beginning with the date on which the claimant first knew or ought to have known that grounds for starting the proceedings had arisen. The Court has the power to extend this period to up to three months where it considers that there is a good reason for doing so.
The time taken for the proceedings to come to a full hearing will vary significantly depending on the circumstances, including the complexity of the case. It would not be unusual for a claim to take between nine to 12 months to reach full hearing. In urgent cases, the Court may order that the claim be expedited, in which case the period from issuing a claim to judgment may be around three months.
The number of procurement law cases with reported UK court judgements is low when compared with most other EU jurisdictions (very broadly around ten reported cases per year). It is often said that the comparatively low number of cases does not reveal the true level of challenges to UK contract award procedures, with a larger number of claims settled out of court before judgment.
For a claim that includes a claim for damages over GBP200,000, the cost of issuing proceedings is GBP10,000. An additional fee of GBP528 will be payable if the claim includes a claim for non-monetary relief, such as a declaration of ineffectiveness or an order setting aside a decision to award a contract.
Additional fees will be payable at various stages of the claim, such as if an application is made for an interim order for specific disclosure or the matter proceeds to a hearing. Total fees, including legal fees, will vary depending on the nature and complexity of the issues in dispute. Fees ranging from tens to hundreds of thousands of pounds are not uncommon.
To the extent that a claimant is successful, it may be able to recover a proportion of its fees from the contracting authority. Typically, a successful claimant would hope to recover in the region of 65% of its total costs from the defendant. If the claimant is unsuccessful, it would usually expect to pay a similar proportion of the defendant’s total costs.
The Regulations (other than DSPCR 2011) incorporate provisions that regulate the modification of contracts following their award. These prohibit substantial modifications. In brief, a modification will be deemed substantial when it:
At the same time, the Regulations (other than DSPCR 2011) incorporate certain provisions that specify the conditions that, if met, a modification would not be deemed to constitute a substantive modification and, as such, it would be permissible (generally referred to as the "safe harbour" provisions).
These rules differ in certain respects, depending on whether the contract is subject to the PCR 2015 or the UCR 2016 or whether a concession contract is awarded by a contracting authority in the exercise of an activity that is not regulated under the UCR 2016. Briefly, modifications would not be deemed to be substantive where they:
The second and third safe harbour provisions also require the publication of a “modification of contract” notice in the OJEU.
As noted earlier in this chapter, the legislation permits a contracting authority to award a contract without having to advertise the requirement in the OJEU and conduct a competitive tender process, in certain limited circumstances including where:
In Ocean Outdoor UK Limited v London Borough of Hammersmith and Fulham  EWCA Civ 1642, the Court of Appeal concluded that agreements for leasing land which contained structures supporting large advertising screens did not constitute service concession contracts. According to the Court, service concession contracts involve the provision of services to or for the public which the contracting authority would otherwise have to provide itself. In this case, the contracting authority did not have an obligation to provide advertising services. Therefore, the arrangements in question could not be deemed to amount to the award of service concession contracts.
The Court also rejected (obiter) the proposition that in the event that the CCR 2016 applied, any breach of the CCR 2016 (in not advertising the contracts and carrying out a regulated tender process) would have been sufficiently serious to give rise to damages. Instead, the Court accepted the High Court’s conclusion that, among other things, even if the arrangements were subject to the CCR 2016, on the facts, failure to have complied with relevant requirements, would not have affected the outcome of the competition that had actually taken place. Accordingly, any breach of the CCR 2016 would not have been sufficiently serious.
In Amey Highways Ltd v West Sussex CC  EWHC 1291 (TCC), the High Court concluded that the cancellation of a flawed procurement process, even if legally permissible, may lead to a contracting authority being liable for damages to a party which has suffered loss or damage as a result of a breach which occurred before the (lawful) cancellation of that process. In other words, the cancellation of a procurement process does not extinguish automatically a cause of action that might have accrued before that point.
In AEW Europe LLP v Basingstoke and Deane BC  EWHC 2050 (TCC), the High Court considered as a preliminary issue the question of whether the remedy of ineffectiveness was available to the claimant. The claimant’s case was that the contract which the contracting authority had awarded was substantively different from the contract which the contracting authority had advertised in the OJEU contract notice. On that basis, it claimed that the requirements of the first ground of ineffectiveness (the award of a regulated contract without the publication of an OJEU contract notice) had been met.
The Court rejected this argument. In doing so, it referred with approval to previous case law, according to which, in determining the availability of the first ground of ineffectiveness, it was necessary to consider whether an effective notice had been published which was capable of being related to the procedure that had been carried out and the contract that had been awarded. The existence or absence of an OJEU contract notice in this context, had to be construed as a “mechanistic test” if the remedy of ineffectiveness was to operate sensibly in a commercial context.
Reaching a view on this point, therefore, required a broad-brush approach rather than a detailed analysis of the concluded contract. On that basis, the Court concluded that the contract that had been awarded fell within the scope of the OJEU contract notice that had been published and, therefore, the remedy of ineffectiveness was unavailable. According to the Court, the first ground of ineffectiveness would be available in cases where the concluded contract went “so far beyond what was covered by the original notice that it bore no relation to it at all”. However, that was not the case here.
As noted at the start of this chapter, although the UK ceased being a member of the EU on 31 January 2020, EU law will continue to apply to, and in, the UK during the transition period. Accordingly, UK procurement law will remain substantively the same at least until the end of 2020.
However, the UK intends to amend its procurement legislation, including so as simplify it and allow for greater flexibility where deemed appropriate, after the end of the transition period. Public consultation on new procurement rules is expected to take place in 2020 with a view to drafting and finalising the new legislation in time for it to be implemented at the start of 2021 (and assuming that the transition period is not extended).
Any new legislation will have to be compliant with the WTO’s plurilateral Agreement on Government Procurement, to which the UK will accede in its own right following the end of the transition period. Equally, the new rules will also have to be consistent with any bilateral agreements that incorporate public procurement obligations, such as in the context of a free trade agreement with the EU.