Assessing Your Suppliers under the Public Contracts Regulations 2015

Transcription

1 Assessing Your Suppliers under the Public Contracts Regulations May 2016 Leeds Mohamed Hans Solicitor CIPFA Procurement & Commissioning Network

2 cipfa.org Timetable for today : Welcome & Introductions Mohamed Hans CIPFA PCN : Use of Pre-Qualification Questionnaires under the Public Contracts Regulations 2015 (as amended) Jamie Thomas, Corporate Procurement Officer, Durham County Council : Tea/ Coffee & Mobiles : How to use the European Single Procurement Document Mohamed Hans CIPFA PCN : Suitability Assessment Questions Jamie Thomas, Corporate Procurement Officer, Durham County Council : Lunch : The Government s Standard PQQ Jamie Thomas, Corporate Procurement Officer, Durham County Council : How to Undertake Financial Assessment Vlod Barchuk, Manager, Infrastructure Advisory, BDO : Close followed by open surgery

3 Policy Background Directive 71/305 on public works introduced the Open and Restricted procedures. Amended since then, but basic principles well-established. Traditionally seen as the default procurement procedures which member states must always allow their contracting authorities to use. The new Directive 2014/24/EU requires the availability of other procedures but Open and Restricted are likely to remain the most common in practice.

4 Policy Background An Open procedure is a single-stage tender process, in which any interested economic operator may submit a bid. A Restricted procedure is a two-stage process: o The first is an openly-advertised Pre-Qualification Questionnaire (PQQ) stage, used to draw up a shortlist of bidding organisations. o Only the shortlisted bidders then proceed to the Invitation To Tender (ITT) stage. The Directive itself does not use the term PQQ this is the term established through practice. It is UK Government practice to describe the first stage of a Restricted Procedure as the Pre- Qualification stage.

5 Policy Background Regulation 28 of the Public Contracts Regulations 2015, implementing Article 28 of the Directive, sets out the basic rules for the procedure. Also very important to the PQQ are: o Regulation 58 which sets out the principles for selection criteria, o Regulation 65 which establishes the general principles for reducing the number of qualified candidates to be invited to tender. Selection criteria may also be applied in a single-stage tender, such as the Open procedure.

6 Policy Background The Competitive Procedure With Negotiation, the Competitive Dialogue and the Innovation Partnership also allow for a shortlisting process, to reduce the number of qualified candidates who will be invited to tender. That shortlisting process would generally take the form of a PQQ.

7 Lord Young s Reforms In 2010 the Coalition Government appointed Lord Young as the Prime Minister s enterprise advisor with a focus on the relationship between government and SMEs. Lord Young s report, Growing Your Business (2013) proposed several dramatic reforms to public procurement, aimed at opening up contract opportunities to smaller firms and start-ups, and making sure they get fair payment terms.

8 Lord Young s Reforms The key reforms: A ban on using PQQs below the OJEU goods and services threshold implemented into law via Regulation 111 of the Public Contracts Regulations A requirement to publish contract opportunities on the Government s Contracts Finder website. (Regulations 106 and 110). A requirement to pay invoices within 30 days. (Regulation 113).

9 Lord Young s Reforms The key reforms: A ban on using PQQs below the OJEU goods and services threshold implemented into law via Regulation 111 of the Public Contracts Regulations Whether abolishing PQQs in sub-ojeu tenders actually A requirement reduces to the publish amount contract of red opportunities tape for bidders on the is open Government s to Contracts question Finder website. (Regulations 106 and 110). A requirement to pay invoices within 30 days. (Regulation 113).

10 Lord Young s Reforms The key reforms: A ban on using PQQs below the OJEU goods and services threshold implemented into law via Regulation 111 of the Public Contracts Regulations Whether abolishing PQQs in sub-ojeu tenders actually A requirement reduces to the publish amount contract of red opportunities tape for bidders on the is open Government s to Contracts question Finder website. (Regulations 106 and 110). A requirement Before: to pay invoices within 30 days. (Regulation 113).

11 Lord Young s Reforms The key reforms: A ban on using PQQs below the OJEU goods and services threshold implemented into law via Regulation 111 of the Public Contracts Regulations Whether abolishing PQQs in sub-ojeu tenders actually A requirement reduces to the publish amount contract of red opportunities tape for bidders on the is open Government s to Contracts question Finder website. (Regulations 106 and 110). A requirement After: to pay invoices within 30 days. (Regulation 113).

12 Lord Young s Reforms The key reforms: A ban on using PQQs below the OJEU goods and services threshold implemented into law via Regulation 111 of the Public Contracts Regulations A requirement to publish contract opportunities on the Government s Contracts Finder website. (Regulations 106 and 110). A requirement to pay invoices within 30 days. (Regulation 113).

13 Lord Young s Reforms The key reforms: A ban on using PQQs below the OJEU goods and services threshold implemented into law via Regulation 111 of the Public Contracts Regulations A requirement to publish contract opportunities on the Government s Contracts Finder website. (Regulations 106 and 110). All advertised contract opportunities worth over these thresholds A requirement must be advertised to pay invoices on Contracts within Finder: 30 days. (Regulation 113). For central government bodies: 10,000 For sub-central contracting authorities: 25,000*

14 Lord Young s Reforms The key reforms: A ban on using PQQs below the OJEU goods and services threshold implemented into law via Regulation 111 of the Public Contracts Regulations A requirement to publish contract opportunities on the Government s Contracts Finder website. (Regulations 106 and 110). All advertised contract opportunities worth over these thresholds A requirement must be advertised to pay invoices on Contracts within Finder: 30 days. (Regulation 113). For central government bodies: 10,000 For sub-central contracting authorities: 25,000* * Unless you have clear standing orders which set a different threshold (as stated in PPN 03/15)

15 Lord Young s Reforms The key reforms: A ban on using PQQs below the OJEU goods and services threshold implemented into law via Regulation 111 of the Public Contracts Regulations A requirement to publish contract opportunities on the Government s Contracts Finder website. (Regulations 106 and 110). A requirement to pay invoices within 30 days. (Regulation 113).

16 Lord Young s Reforms The key reforms: A ban on using PQQs below the OJEU goods and services threshold implemented into law via Regulation 111 of the Public Contracts Regulations This 30-day payment requirement must be passed down the supply chain through your terms and conditions. A requirement Your contract to terms publish must contract require opportunities lead contractors on the to Government s pay their Contracts sub-contractors Finder website. on 30-day (Regulations (or better) terms. 106 and 110). A requirement to pay invoices within 30 days. (Regulation 113).

17 Lord Young s Reforms The key reforms: A ban on using PQQs below the OJEU goods and services threshold implemented into law via Regulation 111 of the Public Contracts Regulations A requirement to publish contract opportunities on the Government s Contracts Finder website. (Regulations 106 and 110). A requirement to pay invoices within 30 days. (Regulation 113). These Regulations, specifically, do not apply to schools.

18 Thresholds It s important to be aware that the ban on using PQQs applies to procurements below the OJEU goods and services threshold: 106,047 for central government bodies 164,176 for all other contracting authorities

19 Thresholds It s important to be aware that the ban on using PQQs applies to procurements below the OJEU goods and services threshold: 106,047 for central government bodies 164,176 for all other contracting authorities This is the threshold which governs whether a PQQ may be used, even if the contract is for works or for a social or other specific service covered by the light touch regime which have higher thresholds. So, for example, in a works procurement valued at 1,000,000 a PQQ could be used, even though this is well below the OJEU works threshold of 4,104,394.

20 Deciding whether to use a PQQ Even where contracting authorities are allowed to use a PQQ, it is not necessarily required in every tender. Let s look at some points to consider

21 Deciding whether to use a PQQ Level of Competition What does your market knowledge tell you about the likely level of interest? Are you likely to have a large number of bidders, or just a few? If you only anticipate a small number of bids, a PQQ may add little value to the process. Regulation 65 requires a minimum of five bidders to be shortlisted in a Restricted Procedure, or three for a Competitive Dialogue. If you anticipate no more than five bidders, a PQQ is likely to be of limited usefulness.

22 Deciding whether to use a PQQ Complexity / Risk In line with the proportionality principle, consideration should be given to the complexity and risk involved in the procurement. A complex, or high-risk, requirement may justify a detailed appraisal of potential bidders, leading to a shortlist featuring only those most capable of meeting the requirement. On the other hand a straightforward, off-the shelf purchase, easily and clearly specified, capable of being awarded on a price-only basis, may be less likely to require a PQQ (unless there is significant competition).

23 Deciding whether to use a PQQ Social Value and other horizontal policy With care, a PQQ can also assist in addressing social value considerations. There may be an expectation that the contract will support targeted recruitment and training opportunities, or other environmental or social outcomes. Selection criteria covering interested companies track record of delivering these outcomes may form part of the justification for using a PQQ.

24 Selection Criteria in an OJEU PQQ General Principles (Regulation 58) Selection criteria at PQQ stage can include: Suitability to pursue a professional activity Economic and financial standing Technical and professional ability

25 Selection Criteria in an OJEU PQQ General Principles (Regulation 58) Selection criteria at PQQ stage can include: Suitability to pursue a professional activity This criterion considers suitability in a very narrow sense that the Economic bidder and is suitably financial standing registered on any relevant trade or commercial body, which their domestic law requires companies to register Technical with. and professional ability In the UK, for example, firms trading as limited companies must be registered with Companies House. Other EU states have a range of different registration schemes. These are listed in Schedule 5 to the Public Contracts Regulations 2015.

26 Selection Criteria in an OJEU PQQ General Principles (Regulation 58) Selection criteria at PQQ stage can include: Suitability to pursue a professional activity This is not a mandatory requirement of the Directive Article 58 says Economic that contracting and financial authorities standing may require confirmation of such registration (but may choose to omit this check) Technical and professional ability However, the Government Standard PQQ does include a section for this, with the assumption that it will generally be included. Where used, this is a PASS / FAIL criterion organisations not possessing the necessary registration should be excluded from bidding.

27 Selection Criteria in an OJEU PQQ General Principles (Regulation 58) Selection criteria at PQQ stage can include: Suitability to pursue a professional activity This is not a mandatory requirement of the Directive Article 58 says Economic that contracting and financial authorities standing may require confirmation of such registration (but may choose to omit this check) Technical and professional ability However, the Government Standard PQQ does include a section for this, with the assumption that it will generally be included. Where used, this is a PASS / FAIL criterion organisations not possessing the necessary registration should be excluded from bidding.

28 Selection Criteria in an OJEU PQQ General Principles (Regulation 58) Selection criteria at PQQ stage can include: Suitability to pursue a professional activity Economic and financial standing Technical This element and professional supplier selection ability will be discussed in detail later today

29 Selection Criteria in an OJEU PQQ General Principles (Regulation 58) Selection criteria at PQQ stage can include: Suitability to pursue a professional activity Economic and financial standing Technical and professional ability

30 Selection Criteria in an OJEU PQQ An important aspect of supplier selection using a PQQ is assessment of technical and professional ability. The intention is that contracting authorities may assess the human and technical resources and experience of bidders, to ensure they would be able to carry out the contract well. The precise methodology for assessment is left to contracting authorities to determine but clearly any questions must be: Relevant to the subject matter of the contract (reg. 58(4)) Proportionate Transparent and clearly expressed.

31 Selection Criteria in an OJEU PQQ The Regulations do clarify that one particularly suitable means of assessing experience is by requesting references from previous successful contracts. Other common technical questions include: Requests for case studies from previous projects. The bidder s approach to quality management or environmental management. The bidder s track record on relevant social value issues.

32 Selection Criteria in an OJEU PQQ These technical questions may be used purely for in/out selection purposes, where the bidder either meets a required minimum standard, or fails to do so. OR, they can be used to reduce the number of bidders, to form a shortlist, in accordance with Regulation 65.

33 Selection Criteria in an OJEU PQQ These technical questions may be used purely for in/out selection purposes, where the bidder either meets a required minimum standard, or fails to do so. OR, they can be used to reduce the number of bidders, to form a shortlist, in accordance with Regulation 65. We ll look at how to do this in more detail in the session on Suitability Assessment Questions later today.

34 Selection Criteria in an OJEU PQQ Issuing all the Procurement Documents together (Reg. 53) The new Procurement Directive brought about a change to the timing of the release of PQQ and ITT documents which caught many procurers by surprise.

35 Selection Criteria in an OJEU PQQ Issuing all the Procurement Documents together (Reg. 53) The new Procurement Directive brought about a change to the timing of the release of PQQ and ITT documents which caught many procurers by surprise. Previously it had been common practice, for many contracting authorities, to issue the full content of the Invitation To Tender, including the detailed specification, and any questions related to the Award Criteria, only after the PQQ stage (and then, only to the shortlisted bidders). Article 40 of Directive 2004/18/EC, governing Restricted Procedures, made specific reference to the specification and supporting documents only being released to the selected candidates.

36 Selection Criteria in an OJEU PQQ Issuing all the Procurement Documents together (Reg. 53) Article 53 of the new Directive, transposed into Regulation 53(1) of the Public Contracts Regulations 2015, changes this dramatically. The Regulations now require that unrestricted and full access to the procurement documents must be made available from the date of publication in the Official Journal. The Regulations provide a definition of what is meant by the procurement documents which very clearly includes the full PQQ, ITT, specification, and any additional documents which form part of the tender process.

37 Selection Criteria in an OJEU PQQ Issuing all the Procurement Documents together (Reg. 53) Is this a problem? What can procurers do if the final ITT documents cannot be made ready when the contract notice is published? How does this requirement apply in a Competitive Dialogue or Competitive Procedure With Negotiation?

38 Selection Criteria in an OJEU PQQ cipfa.org.uk

39 cipfa.org Towards a simple procurement eligibility assessment European Commission implemented Regulation 2016/7 to adopt the new European Single Procurement Document ( ESPD ) on 5 January 2016 Objective is to make the procurement process efficient by reducing the administrative burden on economic operators and contracting authorities Regulation 59 of the Public Contracts Regulations 2015 ( the 2015 Regulations ) and the accompanying Regulation 2016/7 guidance detail how the 13 page ESPD must be used ESPD is used across all Member States it cannot be amended and new questions cannot be added

40 cipfa.org CCS Guidance! The Policy Team are still discussing the most suitable option for ensuring that government's guidance and standard documents on selection are aligned with the ESPD. A PPN and accompanying guidance will be published shortly. In the interim the advice in PPN03/15, the supplier selection guidance and the standard PQQ template should continue to be used until the policy and guidance on the aligned ESPD/PQQ are published.

41 cipfa.org Supplier s Choice A Supplier has the option to use the ESPD as a formal statement to self-declare: exclusion grounds under Reg. 57 PCR15 do not apply meet the relevant selection criteria set out under Reg. 58 PCR15 where applicable, fulfils the objective rules and criteria set out by the contracting authority to reduce the number of otherwise qualified candidates to be invited to tender Best practice to use the ESPD (Scotland) for all Route 2 procurements which begin on or after 18 April 2016 ESPD can completed, printed and then sent to the contracting authority together with the rest of the tender If the procedure is run electronically, the ESPD can be exported, stored and submitted electronically The ESPD provided in a previous public procurement procedure can be reused as long as the information remains correct

42 ESPD in Action cipfa.org

43 Electronic Portal cipfa.org

44 cipfa.org Key Action Points No option to amend the ESPD OJEU Notice and Procurement Documents key Agree a strategy how to deal with ESPD s Some gaps in the document compared to the PQQ Insurance project specific technical questions Reg 59(8) PCR 15 Contracting authority can require candidates and tenderers at any moment to submit all or any of the supporting documents, where this is necessary to ensure the proper conduct of the procedure No systematic request for documents Reg 65 PCR? Application to below threshold procurements? No time period to provide supporting information on the successful contractor Need to synchronise request with the standstill period

45 cipfa.org Excluding Bidders Where relevant and proportionate to the subject matter of the contract you may consider requesting a separate ESPD response from a sub-contractor, members of a consortia or any other body Bidders may be excluded from the procurement exercise, where: there is serious misrepresentation in filling in the ESPD (Scotland), or there is serious misrepresentation of, or withholding, the information required for: the verification of the absence of grounds for exclusion the fulfilment of the selection criteria, or bidder is unable to submit the supporting documents Sanctions for the bidder misinterpreting or falsely making declaration

46 Summary of the ESPD cipfa.org

47 cipfa.org Scenario Please discuss Vardy Limited submitted a self-declaration that it had met the minimum standards set out by Winningway Council in its OJEU Notice and ESPD for a new Waste Incinerator Contract on 19 th May Vardy Limited were the successful tenderer following the negotiation phase and tender evaluations, completed on 30 th April Your finance team also carried out checks on Vardy Limited based on the supporting information submitted on 10 th April The Council s Chief Executive has received a letter from a rival bidder that it has evidence that Vardy Limited were not in a position to self-declare on the ESPD that it had met all the requirements back in May The Chief Executive has called you into her office to explain what the Council should do next.

48 Supplier selection below threshold As we discussed earlier, Regulation 111 states: A contracting authority shall not include a pre-qualification stage in a procurement if the estimated value of the procurement is less than [the applicable supplies and services threshold]

49 Supplier selection below threshold As we discussed earlier, Regulation 111 states: A contracting authority shall not include a pre-qualification stage in a procurement if the estimated value of the procurement is less than [the applicable supplies and services threshold] The applicable threshold is: For central government bodies: 106,047 For sub-central contracting authorities: 164,176

50 Supplier selection below threshold As we discussed earlier, Regulation 111 states: A contracting authority shall not include a pre-qualification stage in a procurement if the estimated value of the procurement is less In actual than fact, [the when applicable read supplies in conjunction and services with threshold] Regulation 109, the prohibition on PQQs does not The apply applicable below the threshold lower value is: thresholds in Reg. 109(2). For central government bodies: 10,000 to 106,047 For sub-central contracting authorities: 25,000 to 164,176

51 Supplier selection below threshold As we discussed earlier, Regulation 111 states: A contracting authority shall not include a pre-qualification stage in a procurement if the estimated value of the procurement is less In actual than fact, [the when applicable read supplies in conjunction and services with threshold] Regulation 109, the prohibition on PQQs does not The apply applicable below the threshold lower value is: thresholds in Reg. 109(2). For central government bodies: 10,000 to 106,047 For sub-central contracting authorities: 25,000 to 164,176 So technically a sub-central contracting authority is not prohibited from using a PQQ in tenders below 25,000. In practice, however, this would generally be disproportionate.

52 Supplier selection below threshold Central government Goods and Services: Value PQQ allowed? OJEU notice required? Contracts Finder advert required? Up to 10,000 Yes No No Between 10,000 and 106, ,047 and over Not allowed No Yes Yes Yes Yes

53 Supplier selection below threshold Sub-central Authorities Social Services (light touch): Value PQQ allowed? OJEU notice required? Contracts Finder advert required? Up to 25,000 Yes No No Between 25,000 and 164,176 Between 164,176 and 589, ,148 and over Not allowed No Yes Yes No Yes Yes Yes Yes

54 Supplier selection below threshold Sub-central Authorities Social Services (light touch): Value PQQ allowed? OJEU notice required? Contracts Finder advert required? Up to 25,000 Yes No No Between 25,000 and 164,176 Between 164,176 and 589, ,148 and over Not allowed No Yes Yes No Yes Yes Yes Yes

55 Supplier selection below threshold Does this mean that Selection Criteria may not be applied? Must sub-threshold procurements only consider price or relevant M.E.A.T.-based Award Criteria?

56 Supplier selection below threshold Does this mean that Selection Criteria may not be applied? Must sub-threshold procurements only consider price or relevant M.E.A.T.-based Award Criteria? Not necessarily! It is a pre-qualification stage in the process that is explicitly forbidden. Reg. 111(4) states: Pre-qualification stage means a stage in the procurement process during which the contracting authority assesses the suitability of candidates to perform a public contract for the purpose of reducing the number of candidates to a smaller number who are to proceed to a later stage of the process.

57 Supplier selection below threshold Reg. 111(5) goes on to say: In any event, contracting authorities may ask candidates to answer suitability assessment questions

58 Supplier selection below threshold Reg. 111(5) goes on to say: In any event, contracting authorities may ask candidates to answer suitability assessment questions only if each such question is - (a) relevant to the subject-matter of the procurement; and (b) proportionate.

59 Supplier selection below threshold Reg. 111(5) goes on to say: In any event, contracting authorities may ask candidates to answer suitability assessment questions only if each such question is - (a) relevant to the subject-matter of the procurement; and (b) proportionate. This is a direct reference to Reg. 58 (4) which requires that Selection Criteria should meet these standards.

60 Supplier selection below threshold Reg. 111(5) goes on to say: In any event, contracting authorities may ask candidates to answer suitability assessment questions only if each such question is - (a) relevant to the subject-matter of the procurement; and (b) proportionate. This is a direct reference to Reg. 58 (4) which requires that Selection Criteria should meet these standards. So clearly, we can ask questions of a Selection Criteria type they must simply be asked in a single stage, alongside price and any other elements of the tender.

61 What questions can be asked? Regulation 111(6) suggests suitability assessment questions may cover suitability, capability, legal status or financial standing.

62 What questions can be asked? Regulation 111(6) suggests suitability assessment questions may cover suitability, capability, legal status or financial standing. Financial Standing would generally be considered in the same way as in an above-threshold PQQ but with reference to the requirement for proportionality, there would need to be a justification for checking financial standing at all.

63 What questions can be asked? Regulation 111(6) suggests suitability assessment questions may cover suitability, capability, legal status or financial standing. Legal Status may in particular cover the same issues as the mandatory or discretionary grounds for exclusion as provided for in Regulation 57, such as: Fraud Terrorism offences Money laundering Bribery Bankruptcy Breaches of UK or EU environmental, social, or labour laws

64 What questions can be asked? Regulation 111(6) suggests suitability assessment questions may cover suitability, capability, legal status or financial standing. Legal Status may in particular cover the same issues as the mandatory or discretionary grounds for exclusion as provided for in Regulation 57, such as: Fraud Terrorism offences Money laundering Bribery Bankruptcy Breaches of UK or EU environmental, social, or labour laws

65 What questions can be asked? Regulation 111(6) suggests suitability assessment questions may cover suitability, capability, legal status or financial standing. Suitability and capability would seem to be similar, in principle, to the selection criteria for technical and professional ability provided for in Regulation 58. Applying the principles of Regulation 58, therefore (as we saw earlier), suitability assessment questions in this area could cover: References Case studies from previous successful projects Quality Management or Environmental Management Social value

66 What questions can be asked? Regulation 111(6) suggests suitability assessment questions may cover suitability, capability, legal status or financial standing. As a general point, for procurements which are below the relevant OJEU threshold, procurers may have more flexibility, since the full remit of Part 2 does not apply. The main thing to remember is that the Treaty Principles still apply, and that questions must be relevant to the procurement. Any questions you would include in an above-threshold PQQ will usually still be suitable for use as Suitability Assessment Questions as part of a sub-threshold tender. However you may need to revise them to ensure they remain proportionate.

67 Scored questions vs. pass/fail When deciding which Suitability Assessment Questions may be required, it s also important to consider which questions should be scored and which should operate on a pass / fail basis. At Durham we refer to such pass / fail questions as Essential Criteria. Essential Criteria questions are those which are so vital to the contract they are assessed on a PASS / FAIL basis. If a question is made an essential criterion, the bidding organisation must satisfy the requirement or their entire bid is disqualified.

68 Scored questions vs. pass/fail Scored questions are those which are assigned a score depending on the quality of the response. In a PQQ, they are used to select the best potential suppliers to be shortlisted. In a below-threshold procurement, they can be used as part of the overall evaluation of the bidders, in the hope of ensuring that the more suitable the bidding organisation is, the more likely they are to win balanced against price and other award criteria.

69 Scored questions vs. pass/fail Any questions relating to the bidder s legal status or financial standing would generally be assessed on a PASS / FAIL basis. For example, if you intend to check whether bidders satisfy the mandatory or discretionary grounds for exclusion, this should be applied on a PASS / FAIL basis. A bidder who had a recent conviction for bribery, for example, who cannot robustly demonstrate self cleansing following the offence, should be disqualified from bidding altogether not just docked a few marks!

70 Scored questions vs. pass/fail The Government Standard PQQ (which we ll look at later) contains a number of questions which operate as Essential Criteria these cover pass/fail questions on: Grounds for Exclusion Insurance Compliancy with Equalities legislation Basic Health & Safety compliance Environmental Management These may be safely used as suitability assessment questions, where relevant, in a sub-threshold procurement.

71 Scored questions vs. pass/fail The nature of your particular requirement may call for additional Essential Criteria.

72 Scored questions vs. pass/fail The nature of your particular requirement may call for additional Essential Criteria. An example, for a social care service working with vulnerable young people: Essential Criteria 1: Please confirm that all members of staff assigned to deliver these services will have an enhanced Disclosure & Barring Service (DBS) check, and that you have procedures in place to ensure that DBS checks are kept up-to-date. Answer: YES NO

73 Scored questions vs. pass/fail Scored suitability assessment questions may, again, be similar to those you would use in an above-threshold PQQ. However, take care to satisfy yourself they are proportionate. For example, if you frequently ask for three references in your above-threshold PQQ, and you still wish to ask for references in a below-threshold exercise, consider whether it would be proportionate to ask for one or two relevant references, to avoid excluding SMEs. If asking for case studies for example in the case of works contracts make sure the parameters you use are proportionate. This would be a disproportionate request: Provide case studies of at least five 10m+ contracts, where you were the lead contractor, completed in the last five years.

74 Scored questions vs. pass/fail Where questions are to be scored, it is of course important to disclose the weightings of the questions used. The overall balance between price and quality should be very clearly stated but beyond this, where there are multiple scored questions, the weightings for each of these must be clearly set out, for the purposes of transparency.

75 Scored questions vs. pass/fail For example, in the example of a one-stage sub-threshold tender with an overall weighting of 70% price / 30% quality: Question Number Question Subject Percentage Weighting 1. References 15% 2. Supply Chain Management 10% 3. CO2 Reduction 5% Final Weighted Score for Questions: 30%

76 Scored questions vs. pass/fail I recommend going beyond this and providing transparent scoring criteria for each question. Many public sector PQQs and ITTs fail to do this and are at risk of being seen as non-transparent. Let s look at an example

77 Scored questions vs. pass/fail Question 3: Social Value - Creating Opportunities (Weighting: 10%) Provide one example of your experience of creating positive economic and social outcomes through employment and training opportunities, making reference to at least one of the following: Targeting recruitment at those not in employment, education or training Creating apprenticeships and other training opportunities (e.g. NVQs and or work experiences) Targeting opportunities at those in typically disadvantaged employment categories, e.g. the long-term unemployed, people with disabilities Working with relevant public sector bodies and voluntary & community sector organisations (VCOs) to target those most in need of employment and training opportunities within specific communities

78 Scored questions vs. pass/fail Question 3: Social Value - Creating Opportunities (Weighting: 10%) Scoring: This question has a weighting of 10% Please write your response here: maximum of 500 words

79 Scored questions vs. pass/fail Question 3: Social Value - Creating Opportunities (Weighting: 10%) Scoring: This question has a weighting of 10% Please write your response here: maximum of 500 words Is this sufficient? Is it transparent?

80 Scored questions vs. pass/fail Question 3: Social Value - Creating Opportunities (Weighting: 10%) Scoring: This question has a weighting of 10% Please write your response here: maximum of 500 words How can you tell the difference between what is needed to achieve a 10% score, and a score of only 9%??

81 Scored questions vs. pass/fail Question 3: Social Value - Creating Opportunities (Weighting: 10%) Points Criteria Scoring Criteria for Question 3 No response is provided or the response provided is not relevant to the employment and training activities outlined above. The response provided is of little relevance to the employment and training activities outlined above. It may show some knowledge of employment and training issues in general. The response provides one example that is relevant to the employment and training activities outlined above, but is lacking in sufficient detail and / or measurable evidence. The response provides one example that is relevant to the employment and training activities outlined above. This example is supported by measurable evidence. The response provides one example that is relevant to the employment and training activities outlined above. The example is supported by measurable evidence and demonstrates having achieved a significant positive outcome.

82 Publishing on Contracts Finder The Public Contracts Regulations 2015 require that some belowthreshold procurements are published in Contracts Finder in order to make them more widely accessible to potential bidders. We saw earlier that where you advertise a contract opportunity, for example on your own website, or a regional e-tendering portal, you must also advertise it on the Contracts Finder website, if it is above the value threshold in Regulation 110: For central government bodies: 10,000 For sub-central contracting authorities: 25,000* * Unless you have clear standing orders which set a different threshold (as stated in PPN 03/15) The Contracts Finder advertisement must be posted within 24 hours of the advert appearing anywhere else.

83 Publishing on Contracts Finder Once you have awarded a sub-threshold contract, you must publish an award notice on Contracts Finder within a reasonable time (Reg. 112). This requirement applies at the same threshold: For central government bodies: 10,000 For sub-central contracting authorities: 25,000 Unlike the advertising requirement, there is apparently no dispensation for sub-central authorities to alter the 25,000 threshold using their own standing orders. Note that this is likely to apply to contract awards even where the opportunity not been advertised beforehand.

84 Standardising the PQQ In his 2013 report Growing Your Business, Lord Young raised a range of concerns regarding PQQs used in public procurements. Lord Young s report highlighted criticisms from SMEs that they often find public sector procurement exercises over-complex, and inconsistent from one contracting authority to the next. We looked earlier at the abolition of PQQs in below-threshold procurements this aims at reducing complexity. Another key change focuses on the issue of inconsistency.

85 Standardising the PQQ Lord Young was concerned that small businesses trying to win contracts with more than one authority faced considerable inconsistency in the use of procurement procedures, including the PQQ. He was particularly critical of local councils, for using burdensome PQQs gold-plated with a plethora of different locally-determined objectives. The proposed solution? A standardised PQQ template which all public contracting authorities in the UK must use. The first complete edition of the Standard PQQ was issued in February 2015 this is still the current version

86 Who has to use this PQQ? The basis for enforcing a Standard PQQ is in Regulation 107: Contracting authorities shall have regard to any guidance issued by the Minister for the Cabinet office in relation to the qualitative selection of economic operators. It is clear the Cabinet Office intends shall have regard to mean must follow, giving the Standard PQQ, and the guidance accompanying it, the status of statutory guidance.

87 Who has to use this PQQ? The basis for enforcing a Standard PQQ is in Regulation 107: Contracting authorities shall have regard to any guidance issued by the Minister for the Cabinet office in relation to the qualitative selection of economic operators. It is clear the Cabinet Office intends shall have regard to mean must follow, giving the Standard PQQ, and the guidance accompanying it, the status of statutory guidance. Above-threshold, the choice over whether to use a procedure involving a PQQ at all remains yours but if you do choose to use a PQQ, the Government Standard template must form the basis for your PQQ.

88 Who has to use this PQQ? Requiring the use of the Standard PQQ does not mean that you must use the exact typeface, formatting, margins etc. in that template. Rather, it means that you should use the standard set of questions (some of which are optional) and, where using these, you must not deviate from the wording of those questions. So, for example, when asking if suppliers have any convictions which fall foul of the Mandatory Grounds for Exclusion, you should ask using the exact wording in the Government PQQ.

89 Who has to use this PQQ? The Standard PQQ also contains instructions for bidders to accompany each section. These do not have to be copied, word for word (I would suggest) since the statutory guidance only says you must not deviate from the wording of the questions. However in general they are relatively helpful and you may wish to retain them.

90 Who has to use this PQQ? The Government is currently using the Cabinet Office Mystery Shopper as the primary means to ensure compliance with the Government PQQ requirements. In 2015 there was only one Mystery Shopper complaint citing this specific issue.

91 Who has to use this PQQ? The Government is currently using the Cabinet Office Mystery Shopper as the primary means to ensure compliance with the Government PQQ requirements. In 2015 there was only one Mystery Shopper complaint citing this specific issue. Discussion point Have you changed your approach to PQQs since the Regulations changed? Are you using PQQs less often? Are you currently using the Standard PQQ?

92 Who has to use this PQQ? There is one category of contracts where a different PQQ format may be used.

93 Who has to use this PQQ? There is one category of contracts where a different PQQ format may be used. In public works contracts, the construction industry PAS 91 Pre- Qualification questionnaire may be used instead. (We won t be looking at PAS 91 in detail today).

94 Self-Certification One of the key features in the Standard PQQ approach is the reliance on self-certification allowing bidders to certify that they meet certain requirements (or do not fall foul of grounds for exclusion) without asking them for additional certification or evidence. Any evidence or proof (copies of certificates, for example) should only be sought from the winning supplier(s) following the tender stage i.e. after final tenders have been evaluated.

95 Self-Certification One of the key features in the Standard PQQ approach is the reliance on self-certification allowing bidders to certify that they meet certain requirements (or do not fall foul of grounds for exclusion) without asking them for additional certification or evidence. Any evidence or proof (copies of certificates, for example) should only be sought from the winning supplier(s) following the tender stage i.e. after final tenders have been evaluated. Discussion point Is this likely to cause any problems?

96 What s in the Standard PQQ? The Standard PQQ is divided into 8 sections:

97 What s in the Standard PQQ? The Standard PQQ is divided into 8 sections: 1. Supplier information 2. Grounds for Mandatory Exclusion 3. Grounds for Discretionary Exclusion 4. Additional Ground for Discretionary Exclusion tax compliance 5. Economic and Financial Standing 6. Relevant Experience 7. Additional Modules 8. Declaration

98 There are instructions for how various business models in particular consortia or partnership bidders should complete the documents. These are somewhat prescriptive but at least they provide clarity.

99

100 A Mandatory Exclusion ground, not included in this template yet but which should be added to your PQQs: - An offence under section 2 or 4 of the Modern Slavery Act 2015 This was added as a recent amendment to Regulation 57.

101 There are particularly detailed instructions for bidders, in this section, on issues such as conflicts of interest, self-cleansing, and past performance.

102 There are particularly detailed instructions for bidders, in this section, on issues such as conflicts of interest, self-cleansing, and past performance. Remember that in terms of these issues, notwithstanding the principle of self-certification, the Regulations (and the Directive) gives you discretion to exclude where mandatory or discretionary grounds exist. If a supplier answers no to any of these grounds, and you can prove that, in fact, the ground for exclusion does apply, you can still consider excluding them.

103 Part 2 of the Discretionary Exclusions only applies for contracts worth over 5m, and only when the contracting authority is a Central Government department. Sub-central contracting authorities may apply this part for contracts over 5m if they wish. Consult PPN 03/14 for more on this

104 How does the contracting authority respond if a bidder cannot provide references?

105

106 The Standard format of this PQQ template does not mean you cannot include your own questions at all. 7(A) is generally where any questions of your own should be added. These are, in essence, suitability assessment questions. Remember the principles of relevance and proportionality we already discussed. These additional questions may be scored, or may follow a PASS / FAIL approach (as the rest of the Government PQQ does).

107 It is sometimes suggested that any project-specific questions added to the Standard PQQ must be evaluated on a PASS / FAIL basis only.

108 It is sometimes suggested that any project-specific questions added to the Standard PQQ must be evaluated on a PASS / FAIL basis only. This is not the case provided that the scoring methodology is clear, the guidance to Contracting Authorities confirms that scored questions may be used:

109 There are also some additional PASS / FAIL questions (or modules ) which you may wish to include

110 Deviations from the Standard PQQ You may, in some circumstances, feel you need to deviate from the Standard PQQ in one or more ways. Is this permitted?

111 Deviations from the Standard PQQ You may, in some circumstances, feel you need to deviate from the Standard PQQ in one or more ways. Is this permitted? YES but you must be able to provide a clear justification for the deviation. This justification must be related to the nature or requirement of the procurement in question.

112 Deviations from the Standard PQQ You may, in some circumstances, feel you need to deviate from the Standard PQQ in one or more ways. Is this permitted? YES but you must be able to provide a clear justification for the deviation. This justification must be related to the nature or requirement of the procurement in question. Deviations must be reported, within 30 days of the PQQ being issued, to mysteryshopper@crowncommercial.gov.uk Durham County Council has so far notified CCS of one substantial deviation.

113 Suitability Assessment in Open ITT or other procedures without a PQQ The statutory guidance accompanying the PQQ confirms that the questions may also be used as suitability assessment questions in exercises where a separate PQQ stage is not used. CCS and Cabinet Office recommend this approach, for further consistency, but it does not appear to be mandatory at present. You may find that adopting the same approach makes things slightly easier for you, as well as suppliers.

114 Future Developments The Cabinet Office and Crown Commercial Service circulated an updated Standard PQQ in Autumn This has not yet been formally put into effect partly because of the introduction of the ESPD? It is expected in the near future. This will contain any updates prompted by the Public Procurement (Amendments, Repeals and Revocations) Regulations 2016 for example the reference to the Modern Slavery Act It is also likely to attempt to tighten and clarify the procedures for PQQ Financial Assessment, which have been criticised.

115 What can be assessed? PQQ v ESPD ESPDs can assess: a certain minimum yearly turnover, including a certain minimum turnover in the area covered by the contract information on. annual accounts showing the ratios, for example, between assets and liabilities Submission of annual accounts not allowed for ESPDs. No limit to the number of ratios that may be requested. No reference to use of management accounts.

116 What organisation is being assessed? Who is the applicant? Who will be service deliverer? Parent Company Guarantees: Supporting the service provider s financial strength Is the Parent Company relevant to service delivery? Consortia applications: Each consortia members will need to provide a full PQQ response Distinguish between consortia partners, proposed sub contractors, consultants and advisors Are consortia members scores weighted by simple average/consortia shareholding/proportion of work to be delivered? Will a poor performance by one consortia member be sufficient to exclude the whole consortia? Make sure the accounts are for the named applicant!

117 Contracting with a man of straw Farrans (Construction) v Glasgow City Council 2013 Tender for flood protection works PQQ submitted in Farrans claimed to have 100 s of employees, professional memberships, a long track record of successful civil projects in Scotland, and the assets to carry out the job which was a complex multi million pound project. Invited to Tender Tender not successful claimed 2.1M in damages At trial, became evident company was dormant. Parent company Northstone (NI) was going to carry out works Claim rejected as not adjudged to be economic operator

118 Principles of financial health assessment Tests are backward looking (tender responses are forward looking ) Financial health checks form no part of tender assessment (no double jeopardy) Information is from reliable sources ( means of proof ), eg., accounts, bank records Regulation allow contracting authorities to require: Minimum turnover requirements Financial analysis based on annual accounts

119 Acceptable financial information 5 Economic and Financial Standing Financial Information 5.1 Please provide one of the following to demonstrate your economic/financial standing; Please indicate your answer with an X in the relevant box. (a) A copy of the audited accounts for the most recent two years (b) A statement of the turnover, profit & loss account, current liabilities and assets, and cash flow for the most recent year of trading for this organisation (c) (d) A statement of the cash flow forecast for the current year and a bank letter outlining the current cash and credit position Alternative means of demonstrating financial status if any of the above are not available (e.g. Forecast of turnover for the current year and a statement of funding provided by the owners and/or the bank, charity accruals accounts or an alternative means of demonstrating financial status). 5.2 Where the Council has specified a minimum level of economic and financial standing and/or a minimum financial threshold within the evaluation criteria for this questionnaire, please self-certify by answering Yes or No that you meet the requirements set out here. 5.3 (a) Are you are part of a wider group (e.g. a subsidiary of a holding/parent company)? If yes, please provide the name below: Yes No Yes No Name of the organisation Relationship to the Supplier completing the questionnaire If yes, please provide Ultimate / parent company accounts if available. If yes, would the Ultimate / parent willing to provide a guarantee if necessary? Yes No If no, would you be able to obtain a guarantee elsewhere (e.g. from a bank?) Yes No

120 CCS - New Draft cipfa.org.uk