Dynamic purchasing systems under Reg. 34 Public Contracts Regulations 2015

Reg.34 of the Public Contracts Regulations 2015 (PCR2015) establishes rules for dynamic purchasing systems in transposition of those in Art 34 of Directive 2014/24. Dynamic purchasing systems are a type of two-tier multi-year scheme designed to simplify and reduce the administrative burden associated with the repeated procurement of standardised goods, works or services. The following comments are based on A Sanchez Graells, Public Procurement and the EU Competition Rules, 2nd ed (Oxford, Hart, 2015) 363-66]. Pedro's views are here.

Dynamic purchasing systems are governed by rules analogous to those applicable to framework agreements, albeit somewhat more stringent and always relying on the use of a restricted procedure. They shall be operated as a completely electronic processes [reg.34(2) PCR2015] an
d all communications in the context of a dynamic purchasing system shall only be made by electronic means [reg.34(13) PCR2015]. The setting up of dynamic purchasing systems by contracting authorities for commonly used purchases the characteristics of which, as generally available on the market, meet the requirements of the contracting authorities generates competition issues similar to the ones just analysed in relation to framework agreements [see comment to reg.33 PCR2015]. These and the remaining aspects of dynamic purchasing systems are discussed in the recent Crown Commercial Service Guidance document.

The general logic of this dynamic system is to allow contracting authorities to progressively include all interested economic operators that meet the established selection criteria and that have shown interest [reg.34(2) PCR2015], given that ‘the number of candidates to be admitted to the system shall not be limited in accordance with regulations 28(4) and 65’ [reg.34(6) PCR2015]. When a need arises, then, the contracting authority can invite all operators already included in the system—plus those that show last-minute interest in participating in the tender [see reg.34(15) PCR2015]—to submit a binding tender for the specific contract, which will generally be awarded according to the criteria set out generally for the dynamic purchasing system, unless adjusted or formulated more precisely for the specific contract [regs.34(23) & (24) PCR2015].

Hence, it is a system mainly oriented towards speeding up the procurement process and reducing the administrative burden in cases of repeated procurement of goods, works and services that can be specified in sufficient detail upfront and for which participating operators can easily submit a tender for each specific procurement. This can be further simplified by dividing the system into categories of products, works or services that are objectively defined on the basis of characteristics of the procurement to be undertaken under the category concerned. 
In order to set up a dynamic purchasing system, a contracting authority should issue a contract notice making it clear that it refers to a dynamic purchasing system and specify, amongst other matters, the nature of the purchases envisaged under the system and the basic information concerning the purchasing system itself, as well as indicate any division into categories of products, works or services and the characteristics defining them and offer unrestricted and full direct access, as long as the system is valid, to the procurement documents [reg.34(14) PCR2015]. As mentioned, the setting up of the dynamic purchasing system should follow the rules of the restricted procedure in all its phases up to the award of the contracts to be concluded under the system [reg.34(5) PCR2015].

However, the contracting authority has no possibility of restricting the maximum number of operators included in the system [reg.34(6) PCR2015]. Indeed, interested operators that meet the selection criteria set by the contracting authority can, at any point in time, request admission to the dynamic purchasing system by expressing interest in participating; they should, then, be admitted to the system without being subject to any further requirements. The contracting authority must review the request of participation and decide on the admission or rejection of the operator to the system within a maximum of 10 working days following its receipt. That deadline may be prolonged to 15 working days in individual cases where justified, in particular because of the need to examine additional documentation or to otherwise verify whether the selection criteria are met (which can only be extended if no invitation to tender is issued in the meantime). Contracting authorities shall inform the economic operator concerned at the earliest possible opportunity of whether or not it has been admitted to the dynamic purchasing system. Contracting authorities may not proceed with the tendering until they have completed the evaluation of all the indicative tenders received within the 10 working day (or extended) deadline [reg.34(15) to (20) PCCR2015]. 

Contracting authorities should then invite all tenderers admitted to the system to submit a tender for each specific contract to be awarded under the system within a specified time limit [For clarification regarding limitation periods, see Uniplex, C-406/08, EU:C:2010:45]. The award of the contract should then be made according to the award criteria set in general for the dynamic purchasing system, unless they have been formulated more precisely in the invitation to tender for the specific contract [reg.34(21) to (24) PCCR2015].

As general limitations to the setting up and running of these dynamic purchasing systems, they may not last for an indefinite period of time, and contracting authorities shall indicate the period of validity of the dynamic purchasing system in the call for competition [reg.34(27) PCR2015]. However, there is no need to cancel and restart dynamic purchasing systems if the contracting authority wishes to extend their initial validity. In that case, where the period of validity is changed without terminating the system, the authority must publish again the form used initially for the call for competition for the dynamic purchasing system [reg.34(28)(a) PCR2015]. Moreover, contracting authorities must run them for free—ie, no charges may be billed prior to or during the period of validity of the dynamic purchasing system to the economic operators interested in or party to the dynamic purchasing system [reg.34(29) PCR2015].

Again, as happened with framework agreements, under the 2004 rules, it was explicit that contracting authorities may not resort to this system to prevent, restrict or distort competition [art 33(7) dir 2004/18]. This latter restriction—which, as has already been argued in relation with equivalent clauses, is a specification or emphasis of the more general principle of competition [S Arrowsmith, ‘Dynamic Purchasing Systems under the New EC Procurement Directives—a Not So Dynamic Concept?’ (2006) 15 Public Procurement Law Review 16, 25] and continues to be relevant as an implicit requirement of reg.18(1) PCR2015—justifies the specific need to analyse the competition distortions that could arise from these dynamic purchasing systems, and also to assess the way in which their rules can be applied in a pro-competitive way, in order to avoid distortions of competition by the contracting authorities. In this regard, it should be stressed that certain of the specific, and arguably more stringent, rules that regulate dynamic purchasing systems make the probability of their having an anti-competitive impact lower than is the case with framework agreements. As emphasised in recital (63) of Dir 2014/24, indeed, dynamic purchasing systems allow the contracting authority to have access to a ‘particularly broad range of tenders and hence to ensure optimum use of public funds through broad competition in respect of commonly used or off-the-shelf products, works or services which are generally available on the market’.

Given that it should be conducted at all stages by the rules of the restricted procedure, but there is no possibility of limiting the number of participating economic operators, there does not seem to be scope for distortions concerning a limitation of the maximum number of participating tenderers [Arrowsmith (2006) 22]. Similarly, given its dynamic nature, neither the duration of the system nor any of the time limits involved seem to be a source of competition distortions. For the same reason, there is no danger of a system being set in excess of actual or reasonably estimated demands of the contracting authority or authorities. Also, the specifications and general terms of the system must be defined upfront, so there does not seem to be room for chilling effects or excesses of discretion associated with an excessive vagueness of the specification or terms that rule the dynamic purchasing system.

Therefore, the competition distortions that could be anticipated seem to refer, primarily, to issues that are not specific to this type of scheme, but to general issues, such as the grounds for the exclusion of tenderers, the qualitative selection requirements, the use of technical specifications, aggregation of contracts, etc. As regards the likelihood of collusion between tenderers, it seems initially reduced by the fact that a relatively large—in principle, unlimited—number of tenderers can take part in the bid for a given contract. Also, given that these schemes are to be run exclusively through electronic systems, contracting authorities might be in a better position to adopt measures that hinder and deter collusion, particularly through technical means or the adoption of relatively different rules for each of the specific contracts to be awarded [see OECD, Guidelines for Fighting Bid Rigging in Public Procurement. Helping Governments to Obtain Best Value for Money (2009) 7].