Tender Process for Public Work Contracts

As a contractor I wish to apply to contract work from a local authority or another public body. How do I go about getting this work?

With the current financial climate concerning the private sector much of the construction industry has turned to the public sector to be provided with enough income to carry on their business.

This area of the law is detailed public procurement law and is concerned with public sector bodies contracting out for goods, work or services.

In the UK there used to be thee separate regulations which were depending on whether the contract was for the procurement of goods, works or services. These have now been brought under one piece of legislation which came into force on 31 January 2006 – the Public Contracts Regulations 2006.

Public Contracts Regulations 2006

Application of the Regulations

The Public Contracts Regulations will apply when the following three conditions are met:

  • The procuring body must be a contracting authority
  • The contract must be for public works, services of supplies
  • The estimated value of the contract must meet the relevant financial threshold

Contracting Authority

The definition of a contracting authority includes the following:

  • Central government
  • Local authorities
  • Associations formed by one or more contracting authorities
  • Bodies governed by public law – i.e. landlords and fire authorities

Public Works, Services or Supplies

The contract must be for public works, services or supplies meaning that where a contract may be mixed between private and public the contracting authority must determine the predominant element of the contract stating whether the Public Contracts Regulations will apply to the contract.

Relevant Financial Threshold

In order for the contract to fall within the scope of the Public Contracts Regulations the estimated value (net of VAT) must equal or exceed the following relevant financial thresholds:

  • £,927,260 for the procurement of works
  • £101,323 for the procurement of supplies and Part A Services by Central Government Bodies
  • £156,442 for the procurement of supplies and Part A Services by other public sector bodies

What happens if the contract that I apply for falls below the financial threshold?

Contracts which fall below the above thresholds are not caught by the Regulations as such but there are suggestions that where they are of a certain interest to suppliers located in other European Union Member States contracting authorities must procure them in line with the general European Union principles of non-discrimination, equal treatment, transparency, proportionality and mutual recognition. What this means in effect is that the contract must have been adequately advertised.

The same will apply to contracts which fall within the definition of Part B services.

What is meant by Part A and Part B Services?

The Public Contracts Regulations make a differentiation between Part A (Priority) Services and Part B (Residual) Services. Part A contracts which meet the above thresholds are covered by the Regulations. Certain aspects of Part B services are caught by a less stringent regime under the Regulations.

Part A services cover the following things:

  • Computer and related services

  • Accounting services

  • Architectural and consultancy services

Contracts which are for the provision of building services will therefore fall within the definition of Part A services.

Part B Services are said to be those that would only be of consideration for those companies located within the same European Union Member State and are taken to include the following things:

  • Health services

  • Education services

  • Recreational, cultural and sporting services

What procedures may be put in place in order to enable my company to win a contract from a public body?

A public body will set up an application process through the use of tenders using one of the following processes of discussion:

  • Open processes

  • Restricted processes

  • Negotiated processes

  • Competitive dialogue

Open

This is in relation to products which are not complex where there will be no discussions in the tender process.  In an open tender process all interested parties may submit a tender for the work

Restricted

In this case any party may express an interest in the tender process but only those parties meeting the contracting authorities specific criteria will be invited to tender. There will be an initial selection state where hopeful candidates will be required to submit specific information. Candidates who are successful in the initial selection stage will then be invited to tender by the contracting party.

There will be no negotiation with the company advertising the work.  

Negotiated

Again any party may express an interest in the tender process but only those parties meeting the contracting authorities specific criteria will be invited to tender. There will be an initial selection state where hopeful candidates will be required to submit specific information. Candidates who are successful in the initial selection stage will then be invited to tender by the contracting party.

Those who submit tenders are then able to negotiate the terms of the advertised job with the contracting party.

Competitive Dialogue

As is the case with the above two those meeting the selection criteria will be invited to tender for the contract. Those parties who are invited to tender are then able to discuss any part of the tender process with the contracting party.

How will I know if I am successful or not in being awarded the contract?

Under the Regulations the contracting authority must notify, in writing, each party who has submitted a tender of their decision to award the contract. There must be a standstill period of either 10 or 15 days between the date which notification is sent to the candidates and the date that the contract is proposed to be entered into.

If I am successful are there any standard terms which I may be subjected to?

As is often the case during the tender period there will be certain standard terms that the party who is successful in obtaining the contract will adhere to. Often these terms and no negotiable and are termed framework agreements by the Regulations as they provide the basis or framework for which the contract will be established.

The Public Contracts Regulations have introduced certain restrictions in relation to the use of frameworks which are as follows:

  • The framework must not exceed four years

  • Substantial changes must not be made at a later date to any terms of a framework agreement