Regulation 45 – Variants

Commentary

Regulation 45 of the Public Contracts Regulations 2015 (PCR2015) and Art 45 of Directive 2014/24/EU regulate the admissibility of variants or alternative offers in public tenders. The possibility of using variants is not new and has been around in public procurement for a long time but has never been very popular or widespread. The rules in the PCR2015 do not provide any novelty that will anticipate a change in practice.

The rules in Regulation 45 PCR2015 are facilitative of the admission of variants and establish some minimum guarantees that contracting authorities must comply with in order to ensure the effectiveness of the general principles of procurement (Regulation 18 PCR2015) and, in particular, transparency, non-discrimination and competition. These are:

(a) Contracting authorities need to indicate in tender documentation whether or not they authorise or require variants (Regulation 45(2)), and variants shall not be authorised or required without such an indication and shall be linked to the subject-matter of the contract (Regulation 45(3)). In our view, this requirement of transparency is appropriate, but the default position should be the opposite. Given the strong focus on technical neutrality in Regulation 42 PCR2015, and in case performance specifications are used, distinguishing a variant from a ‘standard’ offer may be very difficult or actually impossible depending on the circumstances. Hence, the restriction derived from the need for the contracting authority to include an authorisation of variants in the tender documents is superfluous and could be problematic. An alternative default rule authorising variants in all cases, subject to meeting minimum technical specifications (see below) would have been preferable in our opinion.

(b) In case they require or authorise them, contracting authorities shall state in the procurement documents the minimum requirements to be met by the variants and any specific requirements for their presentation, in particular whether variants may be submitted only where a tender which is not a variant has also been submitted (Regulation 45(4)). Only variants meeting the minimum requirements shall be taken into consideration (Regulation 45(6)). The establishment of minimum technical specifications makes sense and is similar to the rule concerning procedures involving negotiations (Regulation 29 PCR2015). However, in case a contracting authority did not do so, it would suffice to assume that all technical specifications are minimum, so that variants can be incorporated in terms of performance requirements or potential improvements on the minimum specifications. 

The last clause of Regulation 45(4) PCR2015, whereby contracting authorities can require the submission of a ‘standard’ offer for their variant to be accepted is very problematic and actually thwarts this instrument from delivering diversity of technical solutions and maximising competition for the contract by suppliers that cannot meet ‘standard’ requirements but could deliver on the basis of an alternative offer that could be advantageous for the contracting authority. In my view, unless very good reasons exist, contracting authorities should refrain from requiring variants pegged to ‘standard’ offers.

(c) In order to make the assessment of all offers possible, transparent and non-discriminatory, contracting authorities that authorise or request variants shall ensure that the chosen award criteria can be applied to variants meeting those minimum requirements as well as to conforming tenders which are not variants (Regulation45(5)). As accepting variants implies that the tenders being submitted may be very different from one another, the contracting authority is under the obligation to provide the minimum requirements which shall be common to all tenders, as well as award criteria that are broad enough to encompass the variants. This is naturally more difficult to achieve than a straight comparison with narrow and detailed technical specifications and can explain the reticence by contracting authorities in using variants. Contracting authorities want to reduce complexity, time involved in assessing tenders and obviously risk as well, as if the award criteria and minimum requirements are not set well, they may face incomparable tenders. It can be argued however that good functional specifications would naturally facilitate the use of variants (by establishing the objectives/outputs and not the means) but those are also quite uncommon across the EU as well.

In any case, contracting authorities shall not reject a variant on the sole ground that it would, where successful, lead to a different type of contract (supply, service) than the one originally envisaged [reg.45(7)]. In other words, the definition of a contract as a supply or services contract cannot be used as a minimum requirement.

These requirements could have been implicit as extensions of the general principles in Regulation 18 PCR2015, but their express imposition probably limits the scope of discretion of contracting authorities once they resort to the use of variants in their procurement. Nonetheless, they do not exhaust the requirements derived from the general principles. Contracting authorities keep complaining about the lack of flexibility of procurement rules, but the truth is there is plenty of flexibility for people that understand the rules and have the right skills. If what perhaps is meant in those “lack of flexibility” comments is “we cannot just pick who we want”, then yes, that kind of “flexibility” is not really permitted under the rules.

Generally, the rules on variants and their evaluation are linked to the rules applicable to non-compliant and non-fully compliant bids. For discussion, please see A Sanchez-Graells, Rejection of Abnormally Low and Non-Compliant Tenders in EU Public Procurement: A Comparative View on Selected Jurisdictions”, in M Comba & S Treumer (eds) Award of Contracts in EU Procurements, vol. 5 European Procurement Law Series (Copenhagen, DJØF, 2013) 267-302.

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

45.—(1) Contracting authorities may authorise or require tenderers to submit variants.

(2) Contracting authorities shall indicate, in the contract notice or in the invitation to confirm interest, whether or not they authorise or require variants.

(3) Variants shall not be authorised or required without such an indication and shall be linked to the subject-matter of the contract.

(4) Contracting authorities authorising or requiring variants shall state in the procurement documents the minimum requirements to be met by the variants and any specific requirements for their presentation, in particular whether variants may be submitted only where a tender which is not a variant has also been submitted.

(5) Contracting authorities shall ensure that the chosen award criteria can be applied to variants meeting those minimum requirements as well as to conforming tenders which are not variants.

(6) Only variants meeting the minimum requirements laid down by the contracting authorities shall be taken into consideration.

(7) In procedures for awarding public supply or service contracts, contracting authorities that have authorised or required variants shall not reject a variant on the sole ground that it would, where successful, lead to either a public service contract rather than a public supply contract or a public supply contract rather than a public service contract.