Sometimes there is some confusion over whether or not a purchaser MUST tender for particular services contracts. The position is as follows:

The European Directive, 2004/18/EC, and subsequently the UK Public Contracts Regulations (2006) set out a clear set of requirements for purchasers. However, both sets of legislation allow a "light touch" approach to the procurement of certain services. These are known as Part B services and are listed in Schedule III to the regulations. Part B tenders must comply with the regulations in that they must be "adequately advertised", must include a technical specification, and feedback must be available.

Underpinning the legislation are the requirements of the Treaties of Maastricht and Lisbon. Here Articles 81 and 82 (Maastricht) and 85 (Lisbon) are relevant. The Treaties and UK competition law require that “nothing shall be done which in any way prevents, restricts or distorts competition.”  Whilst the appraisal of tenders for Part B service contracts must comply with the EU and UK principles of “transparency, fairness and equal treatment [of all tenders submitted]”.

Therefore, although a contract may be for services which fall under Part B of procurement legislation, it is likely that it will be caught by the Treaty requirements in terms of competition requirements and thus the adoption of a tendering process for the ;purchase of Part B services becomes necessary. Government accepted the recommendation of the Glover Report, published in November 2008 which include that all tenders for contracts valued at £20,000 and above should be advertised electronically  by 2010, and that tenders should be electronic (no "paper only" tenders) by 2012. Despite the plethora of procurement portals, this target appears not to have been universally met.

Identifying Part B Services

Health, education and social care are included in those categorized as Part B services. This heading includes a wide range of other services such as gambling and casinos, ice breaking and making films for propaganda purposes. By using the following system it is possible to identify which services are included under the Part B heading, and therefore the light touch procurement system applies.

With effect from 16th September 2008 all tender notices published in the OJEU, and all other tenders notices were required to reference a new set of CPV codes. This set of codes has not been updated since September 2008 and are therefore current.These are a set of standard codes used across the entire EU to identify the goods and services to be purchased in a procurement process. The codes are important as they are used to identify which services fall under the heading of "Part B", that is to say those services which the public purchaser may procure without the need to comply fully with the Public Contracts Regulations 2006. 

How to identify Part B services

Start by downloading the document entitled "CPV Codes 2008" from the link below.  The schedule which starts on page 4 provides the full list of the new codes. For the identification of Part B codes printing out of the whole list is not necessary. In order to save paper just those which start with the number 4 and onwards will include all of those which currently fall under the Part B classification.

Also an Amending Regulation has been published which updates Schedule III of the Public Contract Regulations, and is [confusingly] re-named as “Schedule II. This lists the codes which are categorised as Part B services. It is a fairly common view that these services are ill defined. They are actually well defined in this document.

 Download the document from the link below "PCR amendment 2008".

Go to Schedule II of the NEW document which starts on page 7. This lists the CPV codes for Part A services. On page 9 the list starts for the codes for Part B services.

Print out the codes for Part B services.

By matching the CODES for Part B services from the PCR amendment list [Schedule II] with the numerical codes and titles from the CPV Codes 2008 list it is a straightforward job to identify exactly which services fall under the Part B classification, and therefore to which the Public Contract Regulations do NOT apply in full.

When a tender is published it is a good idea to check that the codes are correct. There have been occasions where purchasers have claimed that a procurement exercise fell under Part B, but when the codes quoted were checked it was found that the services were coded using those which the Schedules classify as being Part A. In each case the situation has been the subject of a legal challenge.

However, even for the purchase of Part B services, competition law applies and the procurement process must be open, transparent and not prevent, hinder or distort competition.

 

Part B Services and Advertising

Health, Education and Social Care are currently classified as "Part B" services under the Directive. Some purchasers believe that they can opt out of the advertising these services. The European Commission (EC) has won a case in the European Court of Justice (ECJ) against Ireland where the Commission argued that to award a contract without competition is a breach of the Treaty principles.

Case-law handed down by the ECJ in recent years holds that the Treaty provisions on the freedoms of establishment and service imposed on member States in respect of the award of public contracts in many respects fall outside the scope of the Directives. With this in mind the Commission has successfully submitted that Community Law requires an appropriate level of advertising despite a contract falling outside the scope of the Directive. Just because a contract falls under the Part B services provisions of the Directive this is not sufficient for the purchaser to fail to advertise the tender sufficiently to ensure competition.

There has been a further judgement against Ireland over a similar but separate complaint brought by the EC. The decision in this case also was that Ireland failed to comply with its obligations under the Treaty through failure to advertise a Part B contract. The reason for the judgement was that as advertising did not take place, the contract had not been subject to competition. This has led to the Country breaching Articles 43 and 49 of the Treaty in regard to the free movement rules, despite the service being a Part B service.

These judgements mean that purchasing Authorities must be careful to advertise contracts widely and to do all in their power to avoid discrimination in their procurement procedures.

ECJ case law now confirms that the treaty principle of non-discrimination implies an obligation of transparency on contracting authorities whilst also confirming the other underlying principles of fairness and equal treatment. The ECJ has indicated a need to ensure that there is "a sufficient degree of advertising to enable the market to be opened up to competition and the impartiality of the procurement process to be reviewed "