As I already discussed (here), this is probably the novelty within the light touch regime applicable to the award of contracts for social and other specific services that better suits the regulatory needs implicit in the UK public sector reform strategy, since Art 77 Dir 2014/24 allows contracting authorities to reserve for the participation of given types of organisations (such as ‘public sector mutuals’, for instance) the award of contracts for certain services in the areas of health, social and cultural services, which basically comprise all, or the most relevant, medical services, personal services, educational and training services (including eLearning), sports and cultural services.
However, reg.77(6) PCR2015 determines that this does not apply in relation to the procurement of health care services for the purposes of the NHS within the meaning and scope of the National Health Service (Procurement, Patient Choice and Competition) (No. 2) Regulations 2013. This exclusion and its meaning is very unclear to me, particularly in view of the coverage given in reg.77(2) PCR2015, which includes a significant volume of services that can be procured for the NHS (should those not have been excluded, then?). Furthermore, in view of the special rules applicable to NHS procurement, it seems odd that no attempt to reconcile all these bodies of exceptional, sector-based procurement regimes is attempted [for discussion of the rules applicable to NHS procurement, see A Sanchez-Graells, “New Rules for Health Care Procurement in the UK. A Critical Assessment from the Perspective of EU Economic Law” (2015) 24(1) Public Procurement Law Review 16-30].
The guidance offered by CCS in this regard does not sort out the issue, but seems to defer resolving the need for harmonisation of these competing regimes until after ongoing consultations: "At present, it is not possible to use the reserved contracts provision for healthcare commissioning by NHS England or Clinical Commissioning Groups in England. This is to ensure consistency with the general requirements in regulation 3 of the existing NHS (Procurement, Patient Choice and Competition Regulations) (No. 2) 2013 Regulations, in particular the prohibition on favouring types of provider. This position is subject to further consultation with the sector. Part of the role of the Mutuals in Health: Pathfinder Programme is to consider any potential legislative hurdles to the further development of health mutual in clinical services" (Guidance on the light touch regime, 14). We shall wait for further developments.
In the cases where reserving contracts under reg.77 PCR2015 is possible, the contracting authority will need to make sure that the (type of) organisation chosen to be awarded the contract--ie the "qualifying organisation" meets all of the following requirements [reg.77(3)]: (a) its objective is the pursuit of a public service mission linked to the delivery of the services to be contracted; (b) its profits are reinvested with a view to achieving the organisation’s objective (and where profits are distributed or redistributed, this should be based on participatory considerations); (c) the structures of management or ownership of the organisation performing the contract shall be based on employee ownership or participatory principles, or shall require the active participation of employees, users or stakeholders; and (d) the organisation shall not have been awarded a contract for the services concerned by the contracting authority concerned pursuant to this special rules within the past three years.
The main (only) deviation between reg.77 PCR2015 and Art 77 Dir 2014/24 concerns the requirement for structures of management or ownership of the organisation performing the contract to be based on employee ownership or participatory principles, or require the active participation of employees, users or stakeholders. Whereas Art 77(2)(c) Dir 2014/24 requires this without any qualifiers, reg.77(3)(c) PCR2015 includes the following possibility: "the structures of management or ownership of the organisation are (or will be, if and when it performs the contract) based on ...".
However, in my view, this is not necessarily in line with EU law, particularly because it refers to a future-looking contract compliance clause that triggers access to the competition for the reserved contract--which, in my opinion, is not compatible with the exceptional nature of this set of special provisions [for discussion of this type of requirements, A Sanchez-Graells, Public Procurement and the EU Competition Rules, 2nd edn (Oxford, Hart, 2015) 390].
On top of complying with the above requirements (of the Directive), the maximum duration of the contract shall not be longer than three years [reg.77(4)] and the call for competition shall make reference to Art 77 Dir 2014/24, so that there is sufficient transparency on the use of this set of special rules [reg.77(5) PCR2015].
Generally speaking, it is worth stressing that public procurement rules and the general principles of public procurement can be applicable beyond the regulated cases, as the CJEU has been expanding the coverage of the procurement regime and systematically imposed certain obligations to the tendering of contracts not, or not-fully, covered by the Directives. Hence, the possibility for the CJEU to significantly restrict the discretion to resort to reg.77 PCR2015 / Art 77 Dir 2014/21 cannot be totally excluded.