Reg. 16 of the Public Contracts Regulations 2015 (PCR2015) is concerned with mixed procurement involving defence or security aspects. As Pedro has pointed out, it raises again issues concerning the divisibility or indivisibility of mixed contracts (see comments to reg.4 PCR2015 here and here), as well as some interpretative difficulties derived from the change in drafting adopted in the transposition--as compared to the technically not much better Art 16 of Directive 2014/24.
One of the points to note is that reg.4(3) PCR2015 expressly excluded the application of the rules in that regulation "where part of a given contract is covered by Article 346 of TFEU or the Defence and Security Regulations", in which case reg. 16 PCR2015 applies instead. The justification for that exclusion is that, despite the fact that the criteria on how to determine the subjection of mixed contracts to a specific set of rules are broadly common under both regs.4 and 16 PCR2015 (ie both are based on whether the different elements of a procurement are separable), reg.16 PCR2015 (and art 16 Dir 2014/24) are apparently more permissive in excluding the applicability of the general rules to the entirety of the procurement.
As a reminder, for not defence and security related mixed contracts, reg.4 PCR2015 established two basic or main groups of rules. Firstly, if the several parts of a contract were separable, contracting authorities were allowed to tender each part separately under the specific rules applicable to that part (provided there was no avoidance of the applicable rules due to the separation of the different parts of the contract into different procurements). This was not particularly clear were all parts of the contract are covered by Part 2 PCR2015, but it was submitted that this was the best interpretation of the rules, in view of their EU origin.
Secondly, reg. 4 PCR2015 established different rules when the several parts of a contract were not separable. On the one hand, where a contract had elements covered by different rules under Part 2 of the PCR2015, the contract had to be tendered "in
accordance with the provisions applicable to the type of procurement
that characterises the main subject-matter of the contract in question", if necessary, calculated "in accordance with which of the estimated values of the respective services, or of the respective services and supplies, is the highest". On the other hand, where some parts were covered by Part 2 PCR2015 and other parts were not covered, "the applicable legal regime shall be determined on the basis of the main subject-matter of that contract".
Consequently, as general principles, reg. 4 PCR2015 established, first, that divisible contracts could be either tendered as a single contract (implicitly) under the rules of Part 2 PCR2015 or as separate discrete contracts, each under its rules. And, second, that indivisible contracts had to be tendered under the rules corresponding to the main subject-matter of that contract. This later part is the one that reg.16 PCR2015 deviates from.
At a first level, reg.16(2) and (3) PCR2015 repeat the general rule that where the different parts of a given public contract are objectively separable, contracting authorities may choose to award separate contracts for the separate parts or to award a single contract, always provided that decision is not taken for the purpose of excluding contracts from the application of the relevant rules. In that case, each contract is to be procured under the rules applicable to that specific part [reg.16(4) PCR2015]. So far, the rule is fundamentally the same as under reg.4 PCR2015.
At a second level, reg.16(5) to (7) PCR2015 impose less stringent rules for contracts not necessarily indivisible, but where "the award of a single contract is justified by objective reasons", in which case they can be excluded from compliance with Part 2 PCR2015 if one of their parts is covered by either Art 346 TFEU or the special defence and security procurement rules, regardless of "the applicable legal regime ... on the basis of the main subject-matter of that contract".
At a third level, reg.16(8) PCR2015 also establishes that "where the different parts of a given contract are objectively not separable, the contract may be awarded without applying this Part where it includes elements to which Article 346 of TFEU applies; otherwise it may be awarded in accordance with the Defence and Security Regulations."
All in all, then, and regardless of the specific anti-circumvention rule in reg.16(3) PCR2015 ("The decision to award a single contract shall not ... be taken for the purpose of excluding contracts from the application of either this Part or the Defence and Security Regulations"), it does set up a system where there is no vis attractiva for Part 2 PCR2015 rules, and contracting authorities are able to exclude its application not only when the contract is indivisible and the main subject-matter of that contract is not covered by those rules (which would be the result under reg.4 PCR2015), but a) when that contract is indivisible and includes elements covered by Art 346 TFEU or defence and procurement rules, or b) is divisible but there is an objective reason for the award of a single contract under rules other than those of Part 2 PCR2015.
Consequently, it is a regime clearly geared towards facilitating the exclusion of compliance with general procurement rules in the case of mixed contracts. Nonetheless, in my view, the key to its interpretation and practice will hinge on the constraints that the CJEU (or domestic courts?) consider that reg.16(3) PCR2015 effectively creates. Once more, I would consider reg.18 PCR2015 (Art 18(1) Dir 2014/24) essential in that determination, as the principles of proportionality and competition should become regulatory devices of the exercise of this sort of discretion.