Regulation 34 – Dynamic purchasing systems

Commentary

Regulation 34 establishes rules for dynamic purchasing systems in transposition of those in Article 34 Directive 2014/24/EU. 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.

General rules

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 (Regulation 34(5) PCR2015). This can be interpreted in two different ways: the first that in order to establish the dynamic purchasing system a restricted procedure needs to be followed. The second, that call- offs themselves need to follow a restricted procedure. An interpretation by analogy with framework agreements would indicate that the first interpretation is right but we struggle to make it compatible with the actual wording of paragraph 5 “[i]n order to procure under a dynamic purchasing system, contracting authorities shall follow the rules of the restricted procedure[…].” (emphasis ours) The keyword here is “procure”.  Neither the Directive nor the Regulations used “establish”, which would emphasise the creation of the system, but the actual procurement being undertaken.

Dynamic purchasing systems shall be operated as a completely electronic processes (Regulation 34(2) PCR2015) and all communications in the context of a dynamic purchasing system shall only be made by electronic means (Regulation 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 Regulation 33 PCR2015). These and the remaining aspects of dynamic purchasing systems are discussed in a Crown Commercial Service Guidance document.

Logic of dynamic purchasing systems

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 (Regulation 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’ (Regulation 34(6) PCR2015). When a need arises, then, the contracting authority must invite all operators already included in the system—plus those that show last-minute interest in participating in the tender (see Regulation 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 (Regulation 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 (Regulation 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 (Regulation 34(5) PCR2015).

However, the contracting authority has no possibility of restricting the maximum number of operators included in the system (Regulation 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 (Regulation 34(14) PCR2015).

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 (Regulation 34(21) to (24) PCR2015).

The extra administration costs due to the need to admit all interested economic operators during the lifecycle of a dynamic purchasing system constitutes a significant departure from framework agreements and a potential reason why its take up has been so limited so far (A Semple, A practical guide to procurement, 2015, Oxford).

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 (Regulation 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 (Regulation 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 (Regulation 34(29) PCR2015).

Dynamic purchasing systems’ lack of popularity

Over the last decade, framework agreements have been used a lot more widely than dynamic purchasing systems in the UK. One reason for this state of affairs may be that all participating suppliers must be invited all the time. Experience tells us that contracting authorities (particularly in the UK) do not like to receive lots of bids or even to have the risk that multiple bids are submitted. Over the years we have seen plenty of practices with this objective in mind such as charging for tender documents, detailed PQQs or establishing high turnover requirements: the objective of which was to raise barriers to supplier participation. Therefore, under this light, dynamic purchasing systems are a lot less compelling than a framework agreement for a contracting authority as the latter “allows” for more fine-grained controls.

The second potential reason was mentioned above already: dynamic purchasing systems have higher administration costs than framework agreements. This is due to another key difference between both, as in the dynamic purchasing system suppliers can apply to join at any time during the lifetime of the system. Each admission does not need to incur in a lot of work, but is certainly more burdensome (yet another task to keep track of) than simply “setting and forgetting” a framework agreement. In addition, dynamic purchasing systems traditionally required a number of notices to be sent for official publication. Those have now been reduced and could easily be automated with the right systems in place.

The third reason is the mandatory use of electronic means. This was already present in the Public Contracts Regulations 2006, so it is not unfathomable to consider that if most contracting authorities are not e-procurement experts today, they certainly were not in 2006. With the mandatory use of electronic means upon us, we can hope that this justification will no longer make sense in a couple of years.

Proposed citation: Albert Sanchez-Graells & Pedro Telles, (2016) Commentary to the Public Contracts Regulations 2015, available at: www.pcr2015.uk.

Last modified: September 5, 2016 by Pedro Telles

General features

34.—(1) Contracting authorities may use a dynamic purchasing system for commonly used purchases the characteristics of which, as generally available on the market, meet their requirements.

(2) The dynamic purchasing system shall be operated as a completely electronic process, and shall be open throughout the period of validity of the purchasing system to any economic operator that satisfies the selection criteria.

(3) The dynamic purchasing system may be divided 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.

(4) Such characteristics may include reference to the maximum allowable size of the subsequent specific contracts or to a specific geographic area in which subsequent specific contracts will be performed.

(5) In order to procure under a dynamic purchasing system, contracting authorities shall follow the rules of the restricted procedure, subject to the following provisions of this regulation.

(6) All the candidates satisfying the selection criteria shall be admitted to the system, and the number of candidates to be admitted to the system shall not be limited in accordance with regulations 28(4) and 65.

(7) Where contracting authorities have divided the system into categories of products, works or services in accordance with paragraph (3), they shall specify the applicable selection criteria for each category.

Time limits

(8) The following provisions about time limits shall apply instead of those provided for in regulation 28(2) and (5) to (10).

(9) The minimum time limit for receipt of requests to participate shall be 30 days from the date on which—

(a) the contract notice is sent, or

(b) where a prior information notice is used as a means of calling for competition, the invitation to confirm interest is sent.

(10) No further time limits for receipt of requests to participate shall apply once the invitation to tender for the first specific procurement under the dynamic purchasing system has been sent.

(11) The minimum time limit for receipt of tenders shall, subject to paragraph (12), be at least 10 days from the date on which the invitation to tender is sent.

(12) Sub-central contracting authorities may set the time limit for the receipt of tenders by mutual agreement between the contracting authority and all selected candidates, provided that all selected candidates have the same time to prepare and submit their tenders.

Requirement to use electronic communication

(13) All communications in the context of a dynamic purchasing system shall only be made by electronic means in accordance with regulation 22(1) to (7) and (11) to (20).

The call for competition etc

(14) For the purposes of awarding contracts under a dynamic purchasing system, contracting authorities shall—

(a) publish a call for competition making it clear that a dynamic purchasing system is involved;

(b) indicate in the procurement documents at least the nature and estimated quantity of the purchases envisaged, as well as all the necessary information concerning the dynamic purchasing system, including how the dynamic purchasing system operates, the electronic equipment used and the technical connection arrangements and specifications;

(c) indicate in the procurement documents any division into categories of products, works or services and the characteristics defining them;

(d) offer unrestricted and full direct access, as long as the system is valid, to the procurement documents in accordance with regulation 53.

Requests to participate and their evaluation

(15) Contracting authorities shall give any economic operator, throughout the entire period of validity of the dynamic purchasing system, the possibility of requesting to participate in the system under the conditions referred to in paragraphs (5) to (12).

(16) Contracting authorities shall finalise their evaluation of such requests in accordance with the selection criteria within 10 working days following their receipt.

(17) That period 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.

(18) Despite paragraphs (16) and (17), as long as the invitation to tender for the first specific procurement under the dynamic purchasing system has not been sent, contracting authorities may extend the evaluation period provided that no invitation to tender is issued during the extended evaluation period.

(19) Where contracting authorities intend to extend the evaluation period in accordance with paragraph (18), they shall indicate in the procurement documents the length of the extended period that they intend to apply.

(20) 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.

Tendering and the award of the contract

(21) Contracting authorities shall invite all admitted participants to submit a tender for each specific procurement under the dynamic purchasing system, in accordance with regulation 54.

(22) Where the dynamic purchasing system has been divided into categories of works, products or services, contracting authorities shall invite all participants having been admitted to the category corresponding to the specific procurement concerned to submit a tender.

(23) Contracting authorities shall award the contract to the tenderer that submitted the best tender on the basis of the award criteria set out in the contract notice for the dynamic purchasing system or in the invitation to confirm interest.

(24) Those criteria may, where appropriate, be formulated more precisely in the invitation to tender.

Means of proof

(25) Contracting authorities may, at any time during the period of validity of the dynamic purchasing system, require admitted participants to submit a renewed ESPD within 5 working days from the date on which that request is transmitted.

(26) Regulation 59(8) to (11) shall apply throughout the entire period of validity of the dynamic purchasing system.

Period of validity of the system

(27) Contracting authorities shall indicate the period of validity of the dynamic purchasing system in the call for competition.

(28) Contracting authorities shall notify the Commission of any change in the period of validity, using the following standard forms:—

(a) where the period of validity is changed without terminating the system, the form used initially for the call for competition for the dynamic purchasing system;

(b) where the system is terminated, a contract award notice under regulation 50.

Charges

(29) No charges may be billed, prior to or during the period of validity of the dynamic purchasing system, to the economic operators which are interested in or party to the dynamic purchasing system.