Regulation 40 – Preliminary market consultations

Commentary

Regulation 40 of the Public Contracts Regulations 2015 (PCR2015) transposes Article 40 of Directive 2014/24/EU into England, Wales and Northern Ireland, expressly allowing contracting authorities to conduct market consultations with suppliers prior to the start of a new procedure.

The Regulation is quite short with only three paragraphs setting out what the contracting authority “may” do and determines that, before launching a procurement procedure, contracting authorities may conduct market consultations with a view to preparing the procurement and informing economic operators of their procurement plans and requirements. For this purpose, contracting authorities may seek or accept advice from independent experts or authorities or from market participants, and that advice may be used provided that it does not have the effect of distorting competition and does not result in a violation of the principles of non-discrimination and transparency. It would have been preferable to have a clearer indication of what the contracting authority “shall not” do as part of preliminary market consultations. It would have been very beneficial to introduce clear red lines of what can and cannot be done during preliminary market consultations.

We suspect suppliers (and contracting authorities) lobbied for this change to be introduced in the Directive. From a common sense perspective, the upside is obvious: how can a contracting authority make an informed decision of what it wants to buy (and draft appropriate technical specifications) without knowing what is out there? The problem is that this common sense approach does not take into account the limited skills, time and availability of procurement officers. The right way to do preliminary consultations is to put out a notice (not on your local paper, or electronic equivalent) and talk with all interested parties. It is not clear to what extent confidentiality of the consultations should apply, so as to strike a right balance between constructive conversations and the improper disclosure of know how and business secrets, which are now bound to receive strengthened protection by mid-2018 under Directive 2016/943/EU (note that both commentators do not see this issue eye to eye, but agree that it is quite an essential element in the design of the preliminary market consultation). Moreover, carrying out proper market research takes time, delaying the launch of the actual procedure, and takes up more resources (person hours) than the alternative of not having a market consultation or talking with a single supplier.

Whereas large, well-staffed contracting authorities may make a good use of this possibility, most contracting authorities will simply use it as a shortcut to draft technical specifications. And if it is a shortcut due to limited skills, time or resources, then a simple conversation with a single supplier is all they actually need to achieve the goal of developing some technical specifications. This is an issue closely linked to the treatment of the prior involvement of candidates or tenderers in such preliminary market consultations or otherwise, which is covered by Regulation 41 PCR2015 [CROSSREF].

Whereas it is arguable that some other innovations (innovation partnership) are likely to be used only by a limited subset of contracting authorities (the 1%) the preliminary market consultations have the potential of being badly used by the vast majority of authorities . We suspect as well that this is the reason why suppliers really wanted preliminary market consultations: because they know that if they are the ones getting the call they get a huge advantage of tilting the technical specifications in their favour as the procurement officer will not have enough information to think otherwise (that is why they picked up the phone in the first place).

 

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

40.—(1) Before commencing a procurement procedure, contracting authorities may conduct market consultations with a view to preparing the procurement and informing economic operators of their procurement plans and requirements.

(2) For this purpose, contracting authorities may, for example, seek or accept advice from independent experts or authorities or from market participants.

(3) Such advice may be used in the planning and conduct of the procurement procedure, provided that it does not have the effect of distorting competition and does not result in a violation of the principles of non-discrimination and transparency.