Public Contract Regulations

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Public Contract Regulations

The Public Sector Directive 2004/18/EC sets out the EC public procurement requirements and it was implemented into English law by the Public Contracts Regulations 2006 (SI 2006/05) (the ’Regulations’). The law as set out in the Regulations is subject to interpretation through evolving European and national case law. The law is applicable to “contracting authorities” as defined in Regulation 3 of the Regulations.

A contracting authority by public law is defined (Article 1 of the Directive and Regulation 3) as anybody meeting the following two conditions:

  • Established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character; and
  • Having legal personality; and financed for the most part by the State or regional or local authorities or other bodies governed by public law, or subject to management supervision by those bodies, or having an administrative, managerial or supervisory board, more than half of whose members are appointed by the State, regional or local authorities, or other bodies governed by public law.

The public procurement procedures set out in the Regulations must be followed before awarding certain contracts when its value is above a certain threshold. In particular the contracts should be advertised in the Official Journal of the European Union (OJEU). OJEU is the central database for European public sector tender notices. Thresholds are set every 2 years and the current thresholds are set out below. These can be found on the OJEU website,  and grant recipients should check this to ensure that they are working to the correct values.

From 1 January 2014 (thresholds are net of VAT):

  Supplies Services Works
Entities listed in Schedule 1 of the Regulations £111,676 £111,676 £4,322,012
  €134000 €134000  €5186000 
Other public sector contracting authorities £172,514 £172,514 £4,322,012
  €207000 €207000 €5000000
Indicative notices £625,050 £625,050 £4,322,012
  €750000 €750000 €5000000
Small lots £66,672 £66,672 £833,400
  €80000 €80000 €1000000

Classification of types of contracts

There are three types of contracts under Regulations:

 I. Supplies – essentially the purchase or hire of goods (including electricity and gas). 
 II. Services – which fall into three categories with different levels of regulation applying:

  • Part A: Priority Services i.e. those in which EU-wide competition could most realistically be undertaken and to which the Regulations apply in their entirety.

  • Part B: Residual Services i.e. those that cannot so easily be subject to EU-wide competition and which there is a more limited application of the Regulations as set out in Regulation 5 ‘Application’.
  • Mixed Services where there is a mix of Part A and Part B, it is the element with the greater financial value that determines the classification. If the values are equal it is a Part B procurement. Schedule 3 of the Regulations lists Part A (Categories 1-16) and Part B services (Categories 17-27).