Procuring our services

Question 1

Accepted Answer

This note aims to help existing and potential clients of the Government Actuary’s Department (GAD) understand the procurement rules that apply where a government or other public body wishes to secure GAD’s services. It describes the position as at time of publication and has been drafted in the context of UK entities. This information in this note was provided by the Government Legal Department in February 2024.

The Procurement Bill received Royal Assent in October 2023, and the government intends to implement the new regime in October 2024. Future changes could therefore impact this note. This summary should not be relied on as a definitive description of the requirements. In each case, before engaging GAD, the contracting body may wish to seek advice from specialists in this field, having regard to their specific circumstances.

Question 2

Legal requirements on public sector procurement

Accepted Answer

The Public Contracts Regulations 2015 (‘PCR 2015’), as amended, remains the key legislation for most public procurement rules in England and Wales. Due to Brexit, the regulations have been amended in specific areas. A summary of this new legislative background is provided later in this note. References in this note to PCR 2015 are to the regulations as amended as at date of publication.

Many factors affect whether PCR 2015 applies. Firstly, the body seeking to engage GAD must be a contracting authority to whom PCR 2015 applies. Regulation 2 defines contracting authorities as:

the State
regional or local authorities
bodies governed by public law
associations formed by one or more such authorities or bodies

This includes central government authorities. Regulation 2 also lists what characteristics determine if a body falls within ‘bodies governed by public law’. Bodies unsure whether this applies to them should contact their commercial or procurement team.

Not all contracts will necessarily fall within PCR 2015. There are many exemptions which might apply so that the body is not obliged to apply the procurement processes laid down in the procurement law. As an example, PCR 2015 will not apply if the contract has an estimated value which is below the relevant thresholds. The different threshold amounts are published by the Cabinet Office and are regularly reviewed.

Estimated contract values should include VAT when being assessed against the thresholds.

PCR 2015 also provides that services listed in schedule 3 of the Guidance on the New Light Touch Regime for Health, Social, Education and Certain Other Service Contracts (PDF, 486KB) are subject to a light touch regime, meaning that contracting authorities must submit notice to the UK e-notification service but are free to determine the procedures applicable.

Another situation where PCR 2015 does not apply is where the procuring body is a Crown Body. As GAD is a Crown Body, the procuring body and GAD are both part of the Crown, so the procurement rules won’t apply to that arrangement.

Even where PCR 2015 does apply, there are exemptions which might be relevant.

There is an exemption from PCR 2015 for an ‘in-house arrangement’. This can be relevant to situations where the contracting authority and supplier are sufficiently closely linked by way of controls, activities and funding. Such arrangements fall outside the requirements of PCR 2015.

In so far as PCR 2015 might apply because the agreement is not considered to be in-house or otherwise exempt, the next section of this note provides a summary of the key, initial requirements that you should be aware of. This note does not obviate the need to obtain your own advice.

The diagram below provides a visual summary of the decision process set out in this note.

Question 3

Framework agreements

Accepted Answer

If your organisation has a framework agreement with GAD as a supplier then you can follow that procedure. A framework agreement does not generally give rise to a binding obligation on a supplier to supply or on a contracting authority to buy. There is usually a competition among the suppliers on that framework before the award of a contract for specific services. In some circumstances a framework may allow the direct award of a contract.

Question 4

Further guidance

Accepted Answer

The Cabinet Office regularly publishes updates and guidance on best practice for public sector procurement. They contain useful information to be aware of including the thresholds referenced below.

Question 5

Summary of the new legislative background

Accepted Answer

Following Brexit, PCR 2015 has been amended. The Public Procurement (Amendment etc) (EU Exit) Regulations 2020 created a UK based procurement regime. The regulations remove obligations and references to the EU Directives and replace them with UK based equivalents.

A main change is that new UK public procurement opportunities must be published on the UK e-notification service called Find a Tender service (FTS). The FTS means new UK opportunities will no longer be sent to the Official Journal of the European Union or Tenders Electronic Daily.

On 1 January 2021 the World Trade Organisation Agreement on Government Procurement (GPA) came into force for the UK as an independent party following the UK’s withdrawal from the EU.

The GPA applies to procurement undertaken by certain types of authorities and for contracts above a certain threshold. The UK’s public procurement regulations comply with the GPA so, by fully complying with domestic procurement law, contracting authorities will also comply with the GPA.

The UK-EU Trade and Co-operation Agreement (TCA) came into force on 1 January 2021 and is implemented in the UK by the European Union (Future Relationship) Act 2020. The TCA implements the GPA and provides further rights. These include providing that contracting authorities in the UK must treat EU-owned suppliers based in the UK no less favourably than UK-owned suppliers based in the UK.

Question 6

Requirements for contracts equal to or above the relevant PCR 2015 threshold

Accepted Answer

The PCR 2015 threshold is:

£139,688 for central government bodies
£214,904 for sub-central authorities

A sub-central authority is any contracting authority not listed in schedule 1 of PCR 2015 such as local authorities, schools and fire and police authorities.

Where the procurement rules apply, a series of procedural requirements apply to contracts above the prescribed threshold. These are detailed requirements and should be considered with your internal specialists as appropriate. These procedural requirements often include requirements for contracting authorities to publish certain notices on FTS. The Cabinet Office has published a list of frequently asked questions which includes helpful information about FTS.

Contracts may not be deliberately broken down into smaller lots, so they fall below the threshold with the intention of avoiding the requirements or of artificially narrowing competition (see regulation 18(2) of PCR 2015). However, services can be broken down into separate service lots where awards to different suppliers are likely to take place.

Question 7

Requirements for contracts below the relevant PCR 2015 threshold

Accepted Answer

Where the procurement rules apply, contracts that fall below the prescribed thresholds are not subject to the above provisions of PCR 2015. However, part 4 of PCR 2015 provides a tailored set of procedural requirements for contracts valued at:

£12,000 or over for central government bodies
£30,000 or over for sub-central authorities

Contracts that fall within this financial threshold must be listed on the Contracts Finder website. They must set out when interested parties should respond and any requirements for participation. The authority can also advertise the opportunity in other ways if desired. They should not use a separate pre-qualification stage but may ask candidates questions if relevant and proportionate.

The Contracts Finder website also signposts to separate websites for Scotland, Wales and Northern Ireland.

The PCR 2015 rules do not apply for contracts below any of the prescribed thresholds. The procuring body would still need to apply its own controls and rules.

On 15 December 2020, the Cabinet Office published Procurement Policy Note 11/20: Reserving below threshold procurements, which provides options for contracting authorities to consider when procuring below threshold contracts. The options, which may be used alone or both together, are reserving:

by supplier location
for small and medium-sized enterprises, and voluntary, community and social enterprise organisations

Question 8

Direct awards

Accepted Answer

In certain limited circumstances, it may be possible for a procuring body to make a direct award of a contract to GAD, without going through the competition stages set out in PCR 2015. The specific circumstances where this is permitted are set out in regulation 32 of PCR 2015 and the grounds for using the procedure are limited to those listed in the regulation. They include:

where an open or restricted procedure generates no suitable tenders or no suitable requests to participate
where the works can be supplied only by a particular operator
in an extreme urgency

For more information please see Procurement Policy Note 01/21: Procurement in an Emergency.

Procuring our services