An Architect's Guide to Public Procurement

Fin Garvey

• Publisher: RIBA Publishing
• Year: 2019
• eBook ISBN: 9781000701661
• Topic: Architecture
• Subtopic: Architecture General

There is suspicion in the UK and across Europe that the upcoming introduction of new European Directives will encourage a regime of conservatism and legal risk aversion, fostering the delivery of mediocre and banal building design. This book dispels these myths and instead looks at the genuine impact of EU law on architectural practice.
Engaging in public sector work requires a broad understanding of this seemingly complex and constantly evolving subject, and unlike other texts, the book is designed to explore public procurement from the perspective of the architect. An easy to follow guide through the complex legal and technical jargon involved in the procurement process, the book provides practical tools which will assist architects in developing their own, clear procurement strategy.
Although written with a UK audience in mind, the advice will also be applicable to other European jurisdictions. It is invaluable reading for existing practitioners wishing to expand their current involvement in the public procurement process, as well as those encountering it for the first time.

Part 1
Demystifying Public Procurement

01.
Public procurement in the EU and UK: purpose and core principles

The competitive award of architectural services has a long and prestigious pedigree extending from building the Acropolis to the Reichstag restoration. In the commissioning process, ensuring buildings are of a high architectural quality most definitely constitutes a goal that is ‘in the public interest’. On this basis, public procurement is of the highest priority.

The many challenges within the UK construction industry are exacerbated by procurement practices that ignore the consequences of devaluing architectural quality. Badly designed buildings, coupled with poor construction standards, impact on both their users and society at large for many years. By contrast, well designed schools deliver better educational outcomes, better designed healthcare facilities improve medical care and, given that our buildings consume almost half of total energy usage, energy-efficient buildings are a critical part of the formula in addressing the challenges of climate change and peak oil. Architectural design contracts are complex and heterogeneous and consequently must not be treated as commodity purchases, nor be awarded on price alone, as the quality of design is an essential part of the sustainability of the product.

There is, however, much suspicion in the UK and across Europe that the introduction of new European directives (eg the current EU Directive 2014/24/EU on public procurement and its predecessors), and their transposition into national regulations, has prompted an abandonment of common sense, and has introduced a regime of conservatism and legal risk-aversion that leads to the delivery of the mediocre and the banal.¹

This book specifically focuses on dispelling myths and differentiating the genuine impact of EU law from other factors that may serve to diminish the quality of outcomes. There are many public procurement texts written from the perspective of the buyer. Unlike other texts, this book is designed to explore public procurement from the perspective of the supplier of architectural services. Architects engaging in public sector work require a broad understanding of this complex and constantly evolving subject. This benefits not only themselves but the industry and architecture as a whole.

There are many instances of common and repeated approaches being applied in pursuit of distinctly different procurement outcomes. Such obsessive use of the ‘cut and paste’ procurement methodologies may well be coupled with a deficient understanding among public procuring entities or contracting authorities (the definition of which we will clarify in Chapter 3) of their legal obligations. In these circumstances, there is a requirement for the professionalisation of the client through appropriate and targeted feedback systems. In the past, contracting authorities were much less regulated and aggrieved suppliers were devoid of effective remedies. Fortunately, things have changed and suppliers are now empowered with effective recourse. Interestingly, one of the earliest court cases on public procurement cases was Young v Royal Leamington (1883) 8 AC 517, in which an authority, by breaking procedural requirements, had concluded a contract which was held to be void. The unfortunate supplier was therefore not entitled to any remuneration or restitution.

The Royal Institute of British Architects (RIBA) has researched and published a document called ‘Building Ladders of Opportunity: How reforming construction procurement can drive growth in the UK economy’.² In its foreword, President Angela Brady (2011–2013), stated that ‘the effectiveness of public procurement is vital to our economy’ and that the ‘current public procurement system has not been working for some time’.³ It is well recognised that in the commissioning of architecture, practices that fail to embrace architectural quality will have disproportionate consequences for the long-term future and quality of the built environment.

It is possible, however, to view the procurement of architectural services as a much broader pursuit than one simply focused on the built outcome. Strategies aimed at the use of procurement to achieve indirect outcomes are generally known as horizontal policies.⁴ These policies include tackling corruption, protecting the environment and market creation and development.⁵,⁶

The opportunity for a more value-driven procurement exists in inclusive approaches where the contracting authority can adopt new standards, re-balance priorities and stimulate innovation.⁷ These should be explored to address current practice and its impact on small- and medium-sized enterprises (SMEs) as the category applies to the vast majority of architectural practices. Specific issues raised by the industry include:

• Inappropriate selection and award criteria.
• Unbalanced quality v price weightings.
• Misuse of framework agreements.
• Exclusionary contractual requirements.

The Legal Context

Unlike other countries in the EU, the UK has not had a tradition of enacting laws on the tendering and award of public contracts, and the provision of effective remedies for aggrieved parties. Instead, there has been a focus on non-legally binding directions and guidelines published by central government and associated agencies. This has placed a great deal of discretion and flexibility in the hands of each specific contracting authority and procuring officer. However, in recent years there has been a trend towards a formalisation of legal rules, driven by the effect of a wide-ranging and expanding array of EU law.

The core objective of the EU procurement regime is to create a single market where suppliers from all member states can trade and compete on an unfettered and equal basis. This single market is primarily implemented through two instruments:

• The EU Treaty (now formally known as the TFEU (Treaty on the Functioning of the European Union).
• The procurement directives.

The treaty sets out overriding principles that prohibit discrimination against other member states. The treaty has ‘direct effect’, meaning that it is enforceable without implementing any national legislation. The directives were designed to supplement the measures outlined in the treaty, for example by outlining a set of transparent procedures that constrain authorities from concealing discriminatory actions. These will be explored in Chapter 2. The directives have also been extended to include additional self-policing enforcement measures that enable aggrieved tenders to challenge the procedures used by contracting authorities (as discussed in Chapter 3).

These directives require contracting authorities, when letting major projects, to:

• Advertise the contract in the Official Journal of the European Union (OJEU).
• Comply with the available procedures (often a form of competitive tendering).
• Allow reasonable periods of time for the relevant stages of the process.
• Ensure the means of selection and award are made transparent and disclosed, and based on proportionate and relevant criteria.
• Ensure that information on the outcomes will be disclosed to the competing suppliers and other interested parties.

Each directive requires member states to ensure that its own laws are appropriate for implementing the directive’s rules. This normally requires a member state to transpose the directive into national legislation in the form of regulations.

In the UK, the Directive 2014/24/EU on public procurement and the Directive 89/665/EEC (amended by 2007/66/EC) known as the ‘remedies directive’, have been given force for England, Wales and Northern Ireland by the Public Contracts Regulations (PCR) 2015. Of lesser relevance to architectural practice is Directive 2014/25/EU on public procurement for utilities and Directive 92/13/EEC (also amended by 2007/66/EC) on associated remedies, which are to be implemented into UK regulations by April 2016.

The UK devolution process that began in 1998 has passed various powers of legislation from Westminster to regional or devolved governments in Scotland, Wales and Northern Ireland. Under this process, the responsibility for public procurement policy now rests with the devolved administrations. Wales and Northern Ireland have retained the Treasury as their implementing body. For this reason England, Wales and Northern Ireland have a common set of procurement regulations. Scotland is yet to adopt separate implementing legislation for the 2014 directives.

After a number of years in development, the new Directive 2014/24/EU came into force on 17 April 2014 and each state has two years in which to establish and implement it in national law. In order to bring forward the perceived benefits, the adoption into UK law was expedited and came into force on 26 February 2015.⁸

When the body undertaking the procurement is subject to the regulations (a matter discussed in detail in Chapter 3), there is a further question on whether the specific contract will itself fall within the scope of regulations. The following items will be considered:

• The regulations will only apply to contracts that are concluded between the contracting authority and a third party in exchange for a consideration (which is not necessarily financial).
• All service contracts that exceed the threshold value set for services will be subject to the regulations. For the latest thresholds, which are reset every two years, consult http://www.ojec.com/Threshholds.aspx.
• When a procurement involves a mix of works and services, the relevant threshold will be the determined based on the ‘principal object’ or the primary purpose of the procurement.
• It is possible, if unlikely for architectural services, that there may be a specific exemption which applies. These exemptions may relate to:
  • — National security issues.
  • — Defence procurements.
  • — Acquisition of land.
  • — Service concessions.

There are also specific rules pertaining to aggregation and contract splitting. It is not lawful for a contracting authority to split contracts specifically to avoid the application of public procurement regulation by placing each contract under the relevant threshold. The contracting authority must determine whether a contract is over the threshold on the basis of the single overall requirement, even where it is broken into phases or lots. One exception to this rule is that services with a value below €80,000 and constituting 20% or less of the overall requirement do not have to be subjected to aggregation. However, even in these cases the principles deriving from the TFEU will continue to apply.

Originally the directive divided public services into Part A (priority service) and Part B (non-priority service). This distinction was based on the expected level of cross-border interest in the provision of services. The idea was that Part B services would only require a ‘light touch’ amounting to observation of transparency and non-discrimination principles, compliance with technical specification requirements and publication of the ultimate award. Part A services, due to their wider relevance to the EU market, were subject to the full rigours. In the new directive, Schedule 2 of the previous directive has been entirely omitted and instead there is a ‘light regime’ which is applied to some specific services listed in recitals 28...

Table of contents

• Cover
• Title
• Copyright
• Foreword
• Contents
• Part 1 Demystifying Public Procurement
• Part 2 Planning for Success
• Part 3 Challenging the Process
• Part 4 Managing the Architect’s Strategy
• Glossary
• Index