Threshold amounts under Reg.5 Public Contracts Regulations 2015

I know that Pedro will feast (*) on the rules applicable to Threshold amounts under reg.5 of the Public Contracts Regulations 2015 (PCR2015), as he has been working on the issue of value thresholds and cross-border interest for quite a while now [see his "The Good, the Bad and the Ugly: EU's Internal Market, Public Procurement Thresholds and Cross-Border Interest" (2013) 43 Public Contract Law Journal 3-25, with an interesting Editor's Note by Prof Schooner, one of our commonly admired procurement gurus]. 

Also, we are due to have an in person face-off about this in the coming Public Procurement: Global Revolution VII Conference in Nottingham in June (workshop A7). Hence, I will restrict my comments to the transposition of the regulation itself and a criticism of the continued disconnect that they create with the case law of the CJEU, at least as a matter of tendency. This is something I already criticised in relation with the concessions Directive 2014/23 here, so I will try to avoid repetition.

As far as reg.5 PCR2015 goes, there is not much to say really. Reg.5(1) simply creates a system of referrals to the thresholds set by Art 4 of Directive 2014/24. On its part, reg.5(2) refers to the conversion of those amounts into pounds sterling according to the rules of Art 6 Dir 2014/24. Hence, the transposition is rather automatic and ensures that it can be applied in a dynamic way without need for reform each time the European Commission reviews the applicable value thresholds.

However, reg.5 may be more important for what it does not do. It does not clarify what rules are applicable below the relevant value thresholds and perpetuates a situation whereby the 
"United Kingdom had not adopted specific legislation regulating low value public procurement ... Consistent with an historical reluctance to regulate low value public procurement, the United Kingdom legislator has not extended the application of the Directives to contracts below EU thresholds ... Instead, this field of activity is governed primarily by general policy guidance promulgated at the national level as well as individual rules adopted by procuring authorities" [L Butler,"Below threshold and Annex II B service contracts in the United Kingdom: A common law approach", in R Caranta and D Dragos (eds) Outside the EU Procurement Directives—Inside the Treaties?, vol. 4 European Procurement Law Series (Copenhagen, DJØF, 2012) 283, 285].
Interestingly, then, and as already pointed out during the drafting of the PCR2015,
Contracts worth less than the threshold figures would not, generally, be subject to the new public procurement rules, although a number of Lord Young's recommendations on opening up public sector procurement opportunities and removing barriers to SME participation are set to be implemented in the new legislation and would apply to 'below threshold' contracts that are above certain minimum levels – £10,000 for central government contracts and £25,000 for any other public sector contract [Out-law, 24.09.14, Public bodies can deviate from procurement process under reforms outlined by Cabinet Office, emphasis added].
Of course, this is a legitimate regulatory strategy. However, it is also one that significantly increases risks of non-compliance in case threshold values are improperly calculated (on that, see comment to reg.6 PCR2015) and, more generally, leaves UK (England & Wales) contracting authorities open to legal challenge on the basis of the general principles of EU public procurement law (now in reg.18 PCR2015, also to be commented), at least where cross-border interest can be found. 

Now that significant (excessive?) flexibility has been introduced in Dir 2014/24, particularly as the use of procedures involving negotiations are concerned, it seems that the UK has lost an opportunity to re-imagine its procurement rules and create a system applicable to contracts of all values. However, this is a project that would take too long to explain here, and one in which I am planning to work in the coming months.


(*) Pedro's contribution to the debate came on the same day as the comment above. He takes issue with the cross-reference of values that reg.5 PCR2015 makes to art 4 Dir 2014/24 and considers that "It seems we moved from a system controlled by Central Government to a casuistic approach where for every procurement with a value close to the thresholds, contracting authorities will have to calculate the conversion in the days before launching the procedure to assess what if the value is above or below the thresholds."I disagree with this reading, given that reg.5(4) PCR2015 indicates that "The value in pounds sterling of any amount expressed in euro in any of the provisions of the Public Contracts Directive mentioned in this regulation shall be taken to be the value for the time being determined by the Commission for the purpose of that provision and published from time to time in the Official Journal in accordance with Article 6 of the Public Contracts Directive.

Art 6(3) Dir 2014/24 indeed authorises the Commission to "determine the values, in the national currencies of the Member States, whose currency is not the euro, of the thresholds referred to in" Art 4. Hence the European Commission will continue publishing instruments such as Communication of 14.12.2013 on corresponding values of the thresholds of Directives 2004/17/EC, 2004/18/EC and 2009/81/EC of the European Parliament and of the Council [OJ C366/1], which avoids any issues of thresholds as financial "moving targets" due to fluctuations in currency exchange. I agree with Pedro on the (implicit) criticism that, in terms of currency volatility, the economic value of the contracts deemed to be of cross-border interest is altered, but I disagree with the point on legal uncertainty derived from the cross-reference in reg.5 PCR2015.