Reg.114(2) PCR2015 establishes that nothing in Part 4 requires a contracting authority to disclose any information if it considers that the disclosure would be contrary to the security interests of the United Kingdom. There is not much to say about this, other than stressing the need to interpret this provision in very narrow terms and subject it to a strict proportionality analysis--ultimately based on the case law concerned with Art 36 TFEU and its functional equivalents when it comes to derogating from internal market freedoms on the basis of public interest and security concerns.
(b) that any invoices for payment submitted by the contractor are considered and verified by the contracting authority in a timely fashion and that undue delay in doing so is not to be sufficient justification for failing to regard an invoice as valid and undisputed; and
(c) that any subcontract awarded by the contractor contains suitable provisions to impose, as between the parties to the subcontract (i)requirements to the same effect as those which sub-paragraphs (a) and (b) require to be imposed as between the parties to the public contract; and a requirement for the subcontractor to include in any subcontract which it in turn awards suitable provisions to impose, as between the parties to that subcontract, requirements to the same effect as those required by this sub-paragraph (c).
Reg.113(7) PCR2015 requires contracting authorities to publish on the internet each year how they have performed on this including the proportion of invoices paid on time to their first tier suppliers /prime contractors.
There are several issues regarding reg.113 that deserve detailed comments (Pedro has focused on the impact of this rules on highly-complex contracts here).
1. Where the Contractor submits an invoice to the Authority [in accordance with paragraph [•]], the Authority will consider and verify that invoice in a timely fashion.
2. The Authority shall pay the Contractor any sums due under such an invoice no later than a period of 30 days from the date on which the Authority has determined that the invoice is valid and undisputed.
3. Where the Authority fails to comply with paragraph 1 and there is an undue delay in considering and verifying the invoice, the invoice shall be regarded as valid and undisputed for the purposes of paragraph (2) after a reasonable time has passed.
For these purposes, “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 [reg.111(4)]--ie, no PQQs or, as the Crown Commercial Service has summarised it, 'in practical terms ... PQQs used as part of a pre-qualification stage are not permitted' (which goes well beyond the use of a standardised PQQ for above threshold procurement under reg.107 PCR2015).
This creates significant legal uncertainty in contracting authorities tendering relatively small contracts, which are now left with the problem of ensuring that their contractors are qualified without knowing exactly how to go about it [see Pedro's views on this here]. And the main effect of such uncertainty is that they will have a very strong incentive to rely on contractors they know and have dealt with in the past, so that they are not negatively affected by the prohibition on the use of PQQs. The end result may well be to significantly close local markets to entry by SMEs and larger companies without a previous track record with a given contracting authority. Consequently, this provision needs to be strongly criticised.
Thus, the puzzle is served and the practical discussion of whether (small, tiny) PQQs can be used but they need to be labelled SAQs keeps most procurement practitioners on the edge. Unfortunately, the guidance published by the Cabinet Office does not solve this practical problem. And this is particularly troublesome because the Mistery Shopper scheme applies to reportable deviations from the prohibition of using PQQs or the eventual disproportionate use of SAQs. The comments made in relation to reg.107 PCR2015 apply.
In my view, this may fall short from ensuring that procurement is truly competitive and that SMEs actually have access to public contracts, and the system should be refined to determine when the contracting authority can avoid the obligation to publish a contract opportunity. Moreover, in case a specific procurement is of cross-border interest, and despite the fact that it remains below EU thresholds, an absolute absence of ex ante transparency could result in an infringement of EU law (as discussed in more detail regarding reg.114 PCR2015).
As required by reg.106(3) PCR2015, in complying with this publication requirement, contracting authorities shall have regard to any guidance issued by the Minister for the Cabinet Office in relation to the form and manner in which information is to be published on Contracts Finder. Such guidance is available here.
Reg.106(4) and (5) PCR2015 create space for future developments whereby contracting authorities would comply automatically with the requirements to publish in Contracts Finder if the Cabinet Office makes arrangements whereby the information referred in reg.106(2) would, without further action by contracting authorities, be extracted and published on Contracts Finder following the publication of contract notices by the EU Publications Office. In those circumstances, contracting authorities would be deemed to have complied with reg.106(1) by virtue of sending the contract notice to the EU Publications Office for publication in accordance with reg.51.
In that case, a compensation for loss or damage would be the only available remedy, which would infringe EU law (and, in particular, Directive 89/665, as amended by Directive 2007/66, available here). Consequently, in order to comply with the obligation to provide all remedies foreseen in EU procurement rules, reg.104 PCR2015 reduces the immunity of the Crown in these proceedings.
(*) I am thankful to my colleague Prof Cosmo Graham for the clarification and for discussion on what is and is not part of the Crown, which is not susceptible of an easy answer... I am also thankful to him for pointing me in the direction of Part 25 of the CPR Rules and Practice Directions and discussing the implications of the different types of interim orders.
Reg.103(9) foresees that, where the Court refrains from making a declaration of ineffectiveness which would otherwise have been required on the basis of general interest grounds, the Court must order that the duration of the contract be shortened to the extent specified in the order. The extent by which the duration of the contract is to be shortened is the maximum extent, if any, which the Court considers to be possible having regard to what is required by the overriding reasons of general interest [reg.103(10)]. For these purposes, “duration of the contract” refers only to its prospective duration as from the time when the Court makes the order [reg.103(11) PCR2015].
Reg.102(14) foresees the possibility for the parties to have previously regulated contractually the consequences of an order shortening the contract and, consequently, reg.102(15) determines that, in those circumstances, the Court must not exercise its power to regulate the shortening of the contract in any way which is inconsistent with those provisions, unless and to the extent that the Court considers them incompatible with the primary order to shorten the contract. The same issue of (in)existence of compensation for loss or damage resulting from the shortening of the contract arises as in relation to effectiveness, so the comments made in relation to reg.101 PCR2015 to the effect of excluding any such compensation apply here as well.
Given that such decision can be appealed and, consequently, the declaration of ineffectiveness can be stayed, reg.101(2) PCR2015 clarifies that, in case of exercise of any power under which the orders or decisions of the Court may be stayed, at the end of any period during which a declaration of ineffectiveness is stayed, the contract is to be considered to have been ineffective as from the time when the declaration had been made. Consequently, the practical effects of the declaration of ineffectiveness need to be adjusted to the time of the adoption of such declaration, even if that means that it gains some retrospective effectiveness upon confirmation (or lift of the stay).
In practical terms, reg.101(3) PCR2015 allows the Court making a declaration of ineffectiveness to make any appropriate order addressing the implications of the declaration of ineffectiveness and any consequential matters arising from the ineffectiveness. Such order can be made at the same time of the decision on ineffectiveness, or at any time after doing so. Reg. 101(4) PCR2015 further clarifies that such an order may, for example, address issues of restitution and compensation as between those parties to the contract who are parties to the proceedings so as to achieve an outcome which the Court considers to be just in all the circumstances.
Consequently, it seems clear to me that the interpretation of the conditions for the exception to the first ground of ineffectiveness to apply needs to be restrictive and ultimately rely on objective tests [see R Caranta, "Remedies in EU Public Contract Law: The Proceduralisation of EU Public Procurement Legislation" (2015) 8(1) Review of European Administrative Law 75, 83-84].
In that regard, it is worth reminding that, in its Judgment of 23 January 2015 in Energy Solutions v NDA, the High Court ruled on a preliminary issue in a public procurement dispute and held that the review court has no discretion (not) to grant damages for losses resulting from a breach of the public procurement rules. In my view, the Energy Solutions v NDA Judgment should be criticised at least for two reasons: firstly, because it misinterprets the EU rules on public procurement remedies and their link with the general principle of State liability for breaches of EU law; and secondly, because it creates an analytical framework based on the commercial decisions of disappointed bidders that would result in excessive (strategic) claims for damages. My arguments are fully developed here.