Immediate changes to UK procurement regulations arising from International Trade Agreements

Procurement Policy Note 05/23 sets out the changes to public procurement obligations which arise out of the UK’s new Free Trade Agreements (the ‘FTAs’) with Australia and New Zealand. Juli Lau and Shyann Sheehy look at its contents.

PPN 05/23 applies to all procurements commenced after the 25^th of May not just those involving Australian and New Zealand suppliers. The Public Procurement (International Trade Agreements) (Amendment) Regulations 2023 (the ‘Regulations’) amend the UK’s public procurement regulations to implement new obligations contained in the FTAs. The Regulations do not apply to devolved Welsh authorities, instead Welsh Ministers will make their own statutory instruments to implement the FTAs as they apply to their authorities.

The Regulations makes amendments to the Public Contract Regulations 2015 (the ‘PCR 2015’), the Concession Contracts Regulations 2016 and the Utilities Contracts Regulations 2016 (the ‘UCR 2016’) (together, the ‘Procurement Regulations’). This article will look at the changes made to the PCR 2015 and UCR 2016 specifically.

The Regulations came into force on the 25^th of May, but they do not apply to procurements which had already commenced by this date. A procurement is deemed to have commenced in accordance with the applicable Procurement Regulations before the amendments came into force if the following applied:

1. a notice has been submitted to the UK e-notification service in order to—

A. invite offers or requests to be selected to tender for or to negotiate in respect of a proposed contract, framework agreement or dynamic purchasing system; or

B. publicise an intention to hold a design contest;

2. the contracting authority or utility has had published any form of advertisement seeking offers or expressions of interest in a proposed contract, framework agreement or dynamic purchasing system; or

3. the contracting authority or utility has contacted any economic operator in order to—

A. seek expressions of interest or offers in respect of a proposed contract, framework agreement or dynamic purchasing system; or

B. respond to an unsolicited expression of interest or offer received from that economic operator in relation to a proposed contract, framework agreement or dynamic purchasing system. (Section 5: Transitional Provisions, Amendment Regulations)

A procurement covers the whole of the procedure which stems from that commencement. Modification of a contract or framework agreement is not regarded as stemming from the commencement of the procurement from which the award of that contract/framework agreement itself has stemmed.

What has changed?

1) Contract value

One key change to the PCR 2015 and UCR 2016 relates to the valuation of contracts. The Regulations create special provisions for circumstances where the value of one or more lots in which proposed work, acquisition of suppliers, provision of services which has been divided cannot be estimated. In these situations, the aggregate value of the lots awarded are not allowed to exceed 20% of the aggregate value of all the lots that can be estimated. It also provides that where the contract is unable to be valued then it will be deemed to be valued at the relevant threshold for compliance.

2) Contract termination

Additionally, the Regulations also provide that contracts must not be terminated in a way which would circumvent the procurement rules or obligations in the FTAs. When aiming to terminate a contract authorities must ensure they are compliant with the relevant procurement rules.

3) Removal of PIN as call for competition

Lastly, these Regulations removal of the option of using a prior information notice or periodic indicative notice (‘PIN’) as the call for competition, for any procurement that commenced or commences after 25 May 2023. Planned procurements can continue to be made known through the publication of a PIN.

Key takeaways

Authorities must ensure they understand their obligations under the Regulations and free-trade agreements. It would be best practice for these authorities to have effective record keeping processes in place to help ensure that all estimates provided in relation to the value of contracts are as accurate as possible. Where necessary a review of current termination practices will need to be undertaken to ensure they accurately reflect these amendments and do not circumvent the procurement rules. Authorities who have historically used PINs to call for competition should also ensure they update their procurement plans in light of the removal of this route, and to reflect the use of contract notices under the PCR and UCR to call for competition.

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