Guidance

DSPCR Chapter 1: overview

Updated 1 March 2024

Introduction

1). The Defence and Security Public Contracts Regulations (DSPCR) 2011 implemented the European Union (EU) Defence and Security Procurement Directive (the “Directive”)^{[footnote 1]} into United Kingdom (UK) law. They came into force on 21 August 2011.

2). The DSPCR is ‘retained EU law’ by virtue of section 2 of the European Union (Withdrawal) Act 2018. This means that the regulations will remain in place and continue to have effect after 31 December 2020 (Transition Period completion day) in the UK.

3). However, the DSPCR has been amended by two Statutory Instruments to ensure the rules continue to operate effectively after the UK leaves the EU. Those Statutory Instruments are: The Defence and Security Public Contracts (Amendment) (EU Exit) Regulations 2019^{[footnote 2]} and The Defence and Security Public Contracts (Amendment) (EU Exit) Regulations 2020^{[footnote 3]}. After 31 December 2020, the DSPCR are national regulations which sit outside the Directive.

4). Decisions made by the Court of Justice of the European Union (CJEU) after 31 December 2020 will not be binding on UK domestic courts and tribunals. However, UK domestic courts and tribunals will, when interpreting and applying retained EU law, be bound to follow judgments of the CJEU and domestic courts that were passed before 31 December 2020, insofar as they apply to unmodified retained EU law. This is known as retained case law.

5). The fact that retained EU law such as the DSCPR has been modified does not of itself prevent it from being interpreted in accordance with retained case law – the Withdrawal Act provides that modified retained EU law should still be interpreted in accordance with retained case law where that would seem to have been the legislative intention.

6). EU exit issues rectified by the revised DSPCR are:

a. The definition of “economic operator”, a collective term for ‘contractor’, ‘supplier’ and ‘services providers’, has been amended so that it refers only to economic operators from the UK and Gibraltar.

b. References to the Official Journal of the European Union (OJEU) for procurements launched after 31 December 2020 have been deleted and replaced with the new UK e-notification service. This is because the UK no longer has access to the OJEU for procurements launched after 31 December. The UK e-notification service has now been developed and is to be known as the Find a Tender Service (FTS). For procurements launched before 31 December 2020, please refer to paragraphs 87-98 below on ‘Transitional Procurements’.

c. The effect of Article 346 has been preserved by writing it into the DSPCR at regulation 6(3A) to 6(3C). Further information can be found in Chapter 4-Exemptions and Exclusions.

7). The DSPCR applies to defence and sensitive security procurements by contracting authorities^{[footnote 4]} and utilities^{[footnote 5]} (the “procurers”) throughout England, Scotland, Wales and Northern Ireland.

8). The Ministry of Defence (MOD) is responsible for the DSPCR including statistical reporting and amendments. We work closely with the Cabinet Office, who are custodians of the UK Government’s public procurement policy and are responsible for the other procurement regulations.

What contracts are covered?

9). The DSPCR covers specific contracts in the fields of defence and sensitive security for the procurement of:

      a. the supply of military equipment, including any parts, components or sub-assemblies of military equipment;
      b. the supply of sensitive equipment, including any parts, components or sub-assemblies of sensitive equipment;
      c. work^{[footnote 6]}, works^{[footnote 7]}, goods and services directly related to the equipment referred to in sub-paragraphs a. and b. for any and all elements of its life cycle;
      d. work, works and services for specifically military purposes or sensitive work or works and sensitive services; including the supply of specific tools, test facilities or support. You can find full guidance on the scope of the DSPCR in Chapter 2.

10). The DSPCR applies to all contracts within its scope which have a value^{[footnote 8]} (inclusive of VAT) equal to or greater than:

      a. £429,809 for Supplies and Services; and
      b. £5,372,609 for Works.

11). You can find full guidance on financial thresholds in Chapter 3.

12). The Public Contracts Regulations (PCR) 2015 and the Utilities Contract Regulations (UCR) 2016 and their equivalent Regulations in Scotland cover procurement of civil and non-sensitive security works, goods and services.

What are our obligations to economic operators outside the UK and Gibraltar?

13). One of the major changes under the 2019 amendment is the rights and remedies UK procurers are legally required to afford to economic operators outside the United Kingdom or Gibraltar.

14). The definitions of “contractor”, “supplier” and “service provider” in regulation 3, which feed into the economic operator definition at regulation 5 have been amended so that they are geographically limited to the UK and Gibraltar.

15). Left unchanged, the original wording would mean UK industry would not have legal rights to participate in procurement opportunities or access to remedies in the UK market. Moreover, EU-27 industry would continue to enjoy the right to participate and have remedies in the UK market.

16). Suppliers established outside the UK and Gibraltar are no longer economic operators as defined in the DSPCR. They do not have the right, under the DSCPR, to participate in a procurement procedure, and do not have access to the remedies in Part 9 (Applications to the court) of the DSPCR. Suppliers in the EU-27 will now be treated the same as suppliers outside the EU were treated when the UK was an EU member State.

17). Details on the transitional arrangements for economic operators in procurements started before 31 December 2020 can be found at paragraphs 87-98.

18). This change does not mean that competition should be limited to UK industry only. MOD policy is to use open competition as widely as possible to provide best value for money. The Armed Forces benefit from the UK acquiring military capability from an open market, as open competition pushes innovation and efficiency in the market.

19). EU Treaty rights relating to the free movement of goods continue to apply in Northern Ireland under the terms of the Northern Ireland Protocol. Consequently, for supplies, services or works procurements where goods are to be moved into Northern Ireland to provide the requirement under the contract, economic operators from the EU Member States should not be prevented from tendering, your procurement must be opened up to competition in EU Member States. Procurement documents must clearly state that even if competition is opened up to economic operators from EU Member States, it is not an admission that rights under the DSPCR are being extended to those economic operators from outside the UK or Gibraltar.

20). You should be aware that where you seek and receive responses to an invitation to tender, an implied contract may come into existence, whereby the procurer agrees to consider all tenderers submitted on the basis of the terms set out in the tender. This may benefit suppliers from outside the UK or Gibraltar who you have allowed to participate in the procurement. Alternatively, a public law claim (judicial review) may also be available to such suppliers.

What are the main features of the DSPCR?

21). Procurement under the DSPCR must follow the advertising rules for publishing on the Find a Tender service. You must follow the correct procurement procedures and draft the necessary notices, tender and contract documents with care to ensure you give the correct information.

22). Unlike the PCR 2015, the DSPCR does not include the open procedure, dynamic purchasing systems or provisions relating to concession contracts. Neither does it include the many simplified and modernised rules of the PCR 2015. It is important to be aware of this divergence and not assume that the rules are the same. An overview of the main features of the DSPCR is set out below.

Advertising

23). The Find a Tender service has replaced OJEU in the amended DSPCR for all procurements launched after 31 December 2020. You must use the Defence Sourcing Portal to post notices to the appropriate platform. However, if your procurement was launched before 31 December 2020 however, you will continue to post adverts on the OJEU, as your procurement is a ‘transitional procurement’ . Further details on transitional procurements can be found at paras 87-98.

Procurement procedures

24). The default procedures in the PCR 2015 are the open and restricted procedures. However, your starting position in the DSPCR will be a free choice of running a competition under the restricted procedure or using the negotiated procedure with prior publication of a contract notice (referred to as the “competitive negotiated procedure” in this guidance).

25). You may only use the competitive dialogue procedure for particularly complex procurements if you cannot place the contract under the restricted or negotiated procedure with prior publication of a contract notice.

26). In the DSPCR, you may carry out non-competitive procurement (or in certain instances limited competition) under the negotiated procedure without prior publication of a contract notice, but only if it is justified for the following reasons:

      a. if you receive irregular, unacceptable, unsuitable tenders or no applications in response to a call for competition during a restricted, competitive dialogue or competitive negotiated procedure;
      b. where for technical reasons or for reasons connected with protection of exclusive rights you may only award the contract to a particular supplier;
      c. where the normal and accelerated time limits laid down for the restricted and competitive negotiated procedures cannot be met:

(1) for reasons of urgency resulting from a crisis;
(2) due to the nature of the market for air and maritime transport services when deploying military or security forces abroad; or
(3) for extreme urgency brought about by events not foreseeable or attributable to the procurer.

      d. for additional deliveries by the original supplier ensuring that the length of these contractual arrangements may not generally exceed five years;
      e. where goods are quoted and purchased on a commodity market;
      f. to benefit from particularly advantageous terms in a closing down sale or where a supplier is bankrupt, insolvent or being wound up;
      g. for research and development services other than those services exempt under the research and development exclusion;
      h. where you are procuring goods solely for research, experiment or development, and not with a view to establishing commercial viability or recovering research and development costs; and/or
      i. for new works or services which are a repetition of the contracted for works or services, if you commence the procedure for the new contract within 5 years of the original contract being entered and the possibility was referred to in the original contract notice.

27). You can find full guidance on procurement procedures in Chapter 8.

Framework agreements

28). The provisions in the DSPCR on framework agreements (Regulation 20) allow you to place a framework agreement with a permitted maximum duration of 7 years.

29). You can only place a framework agreement longer than 7 years in exceptional circumstances. You must determine the circumstances by considering the expected service life of any delivered items, installations or systems and the technical difficulties that a change in supplier may cause. You must include the justification in the contract notice.

30). You can find full guidance on framework agreements in Chapter 11.

Central purchasing bodies

31). The definition of a central purchasing body in the DSPCR includes a European public body. This has been maintained post exit day as it may be appropriate for the UK to continue to purchase through a European public body as such bodies are not necessarily institutions of the EU and participation is not necessarily linked to EU membership. Although the DSPCR does not define a European public body, it may include, for example, the European Defence Agency.

32). Regulation 22 (Central purchasing bodies) sets out the provisions relating to purchases by central purchasing bodies. If a procurer purchases from or through a central purchasing body, the procurer has complied with the DSPCR:

      a. to the extent that the central purchasing body has itself complied with the DSPCR; or
      b. if the central purchasing body is, for example, a European public body:
(1) the contract award rules applied by it are compliant with the DSPCR; and
(2) the contracts awarded are subject to efficient remedies provisions which are comparable to those set out in the DSPCR.

What are the rules on technical specifications?

33). The term “technical specifications” means the document identified in the contract documents by the procurer, which sets out their requirements in respect of the provision of works, goods or services.

34). Technical specifications must not have the effect of creating unjustified obstacles to open competition. The DSPCR does not permit technical specifications which have the effect of favouring or eliminating particular companies or goods.

35). The provisions in the DSPCR takes into account a number of additional defence-specific standards. To guarantee interoperability, they refer to technical requirements to be met by the UK under international standardisation agreements.

36). You can find full guidance on technical specifications in Chapter 7.

What are selection criteria?

37). The purpose of selection criteria is to ensure that the tenderers have sufficient financial, economic, technical and professional capacity to fulfil the contract. However, you are also able to limit the number of suitable candidates through the application of additional objective and non-discriminatory criteria.

38). You must write clear and non-discriminatory selection criteria regardless of the value of the contract and the type of procurement procedure you use.

39). The chosen selection criteria must not go beyond what is relevant and proportionate to the subject matter of the contract. You must declare the criteria in full in the contract notice.

Mandatory & Discretionary Exclusion

40). The selection criteria for the rejection of potential suppliers include convictions for terrorist offences or offences linked to terrorist activities as mandatory grounds for exclusion. There are several defence and sensitive security specific discretionary grounds for exclusion.

41). You may exclude candidates or tenderers from a procurement if they have committed an act of grave misconduct in the course of their business. An act of grave misconduct could include a previous breach of contractual obligations relating to security of supply or security of information, which were imposed in a previous contract.

42). There is also a provision that gives you the ability to exclude a candidate or tenderer where you can establish, through any evidence (which may include evidence provided by a protected data source) that the candidate or tenderer lacks the “reliability” necessary to exclude risks to the security of the UK. You can find guidance on this in Chapter 12 – Security of Information.

Economic and financial standing

43). The selection criteria for economic and financial standing set out in Regulation 24 (Information as to economic and financial standing) ensure the prospective tenderers can handle the commercial and financial risks of the proposed contract. The suppliers must be in a sound financial position to participate in the procurement. You may wish to state what level of financial standing is acceptable. You could use this level as a trigger for seeking bank or parent company guarantees to ensure the supplier has the financial capability to carry out the work.

Technical and professional ability

44). The selection criteria for technical or professional ability are specifically suited to the defence sector. For example, in terms of the evidence of technical and professional ability for suppliers to provide, the DSPCR permits:

      a. The required list of principal deliveries or services provided up to 5 years.
      b. Checks on production capacities, study and research facilities and quality control measures may be carried out as a matter of course rather than just where the products or services to be provided are complex or required for a special purpose.
      c. A description of the tools, materials, technical equipment, staff numbers, know-how and sources of supply available to:
(1) perform the contract;
(2) demonstrate the ability to cope with additional purchases resulting from a crisis, if required; or
(3) carry out maintenance, modernisation or adaptation of the goods covered by the contract.

      d. Evidence of the ability to process, store and transmit classified information at the level of protection required by the procurer. This may include evidence of holding a security clearance, recognised by the UK, equivalent to the relevant protective mar king.

45). You may grant additional time, where appropriate, for a supplier to obtain necessary security clearances.

46). You may ask suppliers to provide evidence of their technical or professional ability by other documents as considered appropriate if, for valid reasons, for example, obligations of confidence to third parties, the supplier cannot provide the required references.

Quality assurance standards

47). The selection criteria for quality assurance requires accreditation from an independent accredited body established in the UK or Gibraltar which conforms to European accreditation and certification standards. This is because the organisations who set these accreditations and standards are not linked to EU membership and the UK is likely to want to stay closely aligned. However, procurers can accept, if they consider it appropriate, other evidence of conformity to equivalent quality management system standards.

48). You can find full guidance on selection criteria and choosing tenderers in Chapter 15 – Supplier Selection.

What award criteria can I use?

49). You must award the contract based on either the “lowest price” or the “most economically advantageous tender”.

50). If the award criterion chosen is “lowest price”, after checking to ensure the tenders are technically and commercial compliant, you must award the contract to the tender who offers the lowest price.

51). If the award criterion chosen is “most economically advantageous tender”, you must use award criteria that are objective and linked to the subject matter of the contract to assess the tenders and determine which is most economically advantageous.

52). You must publish the weightings or rankings applied to the award criteria in the contract documents. The DSPCR provides a non-exhaustive list of examples of criteria, and includes new criteria such as security of supply, interoperability and operational characteristics.

53). You can find full guidance on award criteria and tendering in Chapter 16 – Conducting the Tendering Exercise.

What special contract conditions can I use?

54). The DSPCR allows you to impose special contract performance conditions if you indicate them in the contract notice or contract documents and they are compatible with retained EU law.

55). Contract conditions must not therefore breach the procurement principles of transparency, non-discrimination, and equality. If you consider that a proposed contract condition may breach these principles, you must seek legal advice.

Security of Information

56). The DSPCR are intended to provide procurers with the ability to protect classified information throughout the tendering and contracting process, which includes the ability to:

      a. impose obligations on contractors and require flow-down of those obligations to subcontractors to safeguard information throughout the tendering and contracting process;
      b. reject contractors and subcontractors where they:
(1) do not possess the necessary reliability to exclude risks to national security; or
(2) have breached obligations relating to security of information during a previous contract in circumstances amounting to grave misconduct;
      c. request information from contractors and subcontractors to assess their ability to protect information;
      d. impose contractual obligations to protect information to the required level.

57). You can find full guidance on security of information in Chapter 12.

Security of Supply

58). The DSPCR includes provisions to enable the procurer to assess the capability of a contractor and its subcontractors to meet the procurer’s security of supply requirements.

59). You can, for example, require tenderers to provide information:

      a. demonstrating that they can honour their contractual obligations by obtaining the necessary export licences;
      b. identifying any restrictions on the disclosure, transfer or use of technology arising out of export controls or security arrangements;
      c. demonstrating that their supply chains will be able to comply with the security of supply requirements set out in the contract documents.

60). You can also require suppliers to provide commitments on security of supply. These can include commitments from the supplier to:       a. ensure that changes in their supply chain during the performance of the contract will not adversely affect the security of supply requirements;
      b. establish or maintain the industrial capacity required to meet additional needs arising from a crisis on terms to be agreed;
      c. carry out the maintenance, modernisation or adaptation of the goods covered by the contract; and/or       d. provide you with all necessary licences and information to produce spare parts, components, assemblies and testing equipment in the event that the supplier is no longer able to provide these goods.

61). These requirements and any award criteria must be relevant and proportionate to the subject matter of the contract. You can find full guidance on Security of Supply in Chapter 13.

Directing Subcontracts to Third Parties

62). The DSPCR gives you the option to:

      a. require tenderers to indicate what they propose to subcontract and to whom;
      b. require tenderers to indicate any planned changes of subcontractors before or during the life of the contract;
      c. oblige successful tenderers to award all or a certain portion of its proposed subcontracts to third parties through advertising on the Find a Tender service; and/or
      d. reject a subcontractor selected by a tenderer at any stage of the contract award procedure or during contract performance in accordance with all or part of the selection criteria for the main contract.

63). Generally, the tenderer you select will take full responsibility under the contract for delivering the requirement. That said, even if you do not mandate advertisement of proposed subcontracts on the Find a Tender service, you should encourage the prime contractor where appropriate to use competition to select subcontractors and advertise subcontract opportunities on the Government’s Contract Finder portal through Defence Sourcing Portal (DSP).

64). Using the DSPCR to direct the successful tenderer to advertise subcontracts to third parties requires very careful consideration. Inappropriate use of these measures will add costs and delays to the procurement without providing benefits to either the procurer or the contractor. You should justify any mandate by considering:

      a. the value of the contract (e.g. it may be disproportionate to mandate subcontract competition for contracts valued below £10-million as it would discourage small to medium sized enterprises (SMEs) from bidding for these contracts);
      b. the nature of the contract (e.g. using subcontract competition for high technology equipment may not be possible due to exclusive intellectual property rights or technical reasons); and
      c. the structure of the market (e.g. is there likely to be a sufficient response from the market to challenge the existing supply chain).

65). You can find full guidance on directing subcontracting to third parties in Chapter 14 – Subcontracting under the DSPCR.

Procurement Principles

66). UK contracting authorities remain obliged to treat all economic operators from the UK and Gibraltar (as defined by the DSCPR) equally and in a non-discriminatory and transparent way in accordance with regulation 5(2) DSPCR.

What are exemptions and exclusions?

67). An exemption allows you to relax your compliance with the procurement principles and / or disapply all or part of the DSPCR for specific procurements. An exclusion allows you to disapply the DSCPR for specific procurements.

Regulation 6(3A), formerly Article 346 TFEU

68). The amended regulations have replicated the effect of Article 346 TFEU by importing its terms into the DSPCR at regulation 6(3).

69). Regulation 6(3A) permits the MOD to protect its essential security interests in two circumstances:

      a. by not obliging MOD to supply information in a procurement process which would be contrary to its essential security interests (regulation 6(3A)(a)); or
      b. to take such measures MOD considers necessary to protect its essential security interests in relation to the production or trade in arms, munitions and war material, provided that such measures do not adversely affect the conditions of competition regarding products which are not intended for specifically military purposes (regulation 6(3A)(b)).

Regulation 6(3A)(a) – the “security of information” exemption

70). This regulation replicates Article 346(1)(a) TFEU into domestic law. It permits MOD to disapply all or part of the DSPCR where following the procurement process under the regulations would require MOD to disclose classified information which it considers would prejudice its essential security interests.

71). One example may be the procurement is so sensitive that it is considered that the obligation to advertise the requirement would prejudice the UK’s essential security interests. Another example may be that the information is classified as UK Eyes Only resulting in the requirement to restrict the competition to those suppliers that can provide the requirement with employees who are UK nationals. If this is the case you may need to consider using this exemption together with the general exclusion at Regulation 7(1)(a) of the DSPCR.

72). It should be noted that because the definition of economic operator is now limited to those who are established in and nationals of the UK and Gibraltar, there may be cases where previously a procurement may have been considered exempt under Article 346(1)(a) TFEU but can now be carried out under the DSPCR.

Regulation 6(3A)(b), the “warlike stores” exemption.

73). This regulation replicates the effect of Article 346(1)(b) TFEU into domestic law. It permits the MOD to disapply all or part of the DSPCR to protect its essential security interests subject to two conditions:

      a. the procurement must relate to arms, munitions and war material which are listed on the ‘1958 List’. The 1958 List is the list of military equipment which was included in Council Decision 255/58 and which has now been incorporated into DSPCR;

      b. the measure taken (such as single sourcing to a particular supplier) cannot affect the conditions of competition regarding products which are not intended for specifically military purposes. Retained case law on Article 346 TFEU.

74). Section 6 of the EU (Withdrawal) Act makes it clear that the UK Courts (other than the Supreme Court) continue to be bound by “retained case law” in relation to the interpretation of retained EU law (which includes the DSPCR). Retained case law is defined as including decisions of both the domestic courts and those of the Court of Justice of the European Union (CJEU) which were made before exit day where retained EU law is not modified.

75). However, even where retained EU law is modified (as in the case of Article 346 TFEU through regulation 6(3A) DSPCR), provisions can still be interpreted in accordance with retained case law where the intent is for the law to operate in the same way. Given regulation 6(3A) replicates the terms of Article 346 TFEU almost verbatim it is likely the existing case law from the CJEU will continue to be used by the domestic courts to interpret the scope and extent of regulation 6(3A).

76). Therefore, unless and until the domestic courts find otherwise, regulation 6(3A) should only be used where it is strictly necessary to protect the UK’s essential security interests. There should continue to be a clear link between the measure taken and the essential security interest being protected; and the measure taken should be the minimum measure necessary to protect that essential security interest.

What general exclusions are in the DSPCR?

77).In addition to the exemptions, there are general exclusions in the DSPCR which allow you not to apply the DSPCR, including exclusions for:

      a. contracts awarded in accordance with specific procedural rules of:
(1) international agreements or arrangements between the UK and another State;
(2) international agreements or arrangements on the stationing of troops between the UK and another State; or (3) international organisations that have specific procurement rules;
      b. contracts which would oblige the UK to supply information, the disclosure of which is contrary to its essential security interests;
      c. contracts for intelligence activities;
      d. cooperative programmes between the UK and an EU Member State(s)based on research and development for a new product;
      e. contracts awarded in a country other than the UK or Gibraltar during military or security operations taking place outside the UK or Gibraltar, if operational needs require them to be placed with local suppliers; and/or
      f. research and development services except where the benefits accrue exclusively to the procurer for the conduct of its own affairs and where the procurer wholly pays for the service.

78). You can find full guidance on exemptions and exclusions in Chapter 4.

What about “in-house” procurement?

79). You also need to consider whether the works, goods or services you are procuring are from an “in-house” body (e.g. Defence Science and Technology Laboratory) as this may determine whether the DSPCR applies.

80). The DSPCR will not apply if the procurement is from:

      a. organisations which are part of the same legal person, for example, MOD procuring from DECA or DSTL; or
      b. organisations which are legally separate but so closely connected that it is inappropriate to make their dealings subject to procurement law, and they are therefore considered to be indistinguishable for procurement purposes.

81). The classification of bodies of the type referred to in paragraph 69(b) above as “in-house” follow the decision of the European Court of Justice in the Teckal case (Case C-107/98). This interpretation remains valid as it is saved under the EU Withdrawal Bill. You can find further guidance on in-house procurement in Chapter 2 - Scope.

What about industrial participation or offset?

82). The DSPCR do not mention industrial participation, offset or any other form of economic compensation for awarding a contract to a foreign supplier.

83). You must not seek offers of industrial participation or offset that would distort competition under the DSCPR. You may consult DES IRG for advice on how MOD encourages industrial investment in the UK. If in any doubt you should consult your legal advisers.

What needs to be considered for a procurement strategy?

84). You need to consider as a minimum the following questions to decide if the DSPCR will apply to your procurement:

      a. Does the procurement involve a new contract(s) or a material amendment to an existing contract?
      b. Is the procurement from an in-house body?
      c. Are you a procurer?
      d. Does regulation 6(3) apply to the procurement?
      e. Does the procurement fall within the scope of the DSPCR?
      f. Does the value of the procurement exceed the threshold?
      g. Does an exclusion set out in Regulation 7 apply to the procurement?

85). The flowchart at Annex A illustrates the decision making process which you should use as part of drawing up the procurement strategy.

Can procurement decisions be challenged?

86). The DSPCR contains review procedures that enable suppliers to challenge procurement decisions and provide effective remedies to protect their rights. These procedures are very similar to those in the PCR 2015 but contain important elements that are tailored to the defence and sensitive security market.

87). You must be aware that any procurement decision may be subject to a legal challenge. This includes but is not limited to any decision.

      a. to apply an exemption or exclusion in the DSPCR;
      b. to use the negotiated procedure without prior publication of a contract notice;
      c. to not select a supplier to tender after it has expressed an interest in the requirement; and/or
      d. to award the contract to a particular supplier.

88). You must ensure that you record the reasons for taking any procurement decision, including any defence or security issues, at the time that the decision is made. This evidence will be required in the event of future challenge.

89). Any decisions to exempt procurements from the DSPCR are likely to come under greater scrutiny. You should only use an exemption or general exclusion for the purpose that it is intended (i.e. to protect the interests that it is designed to safeguard).

90). You must consult your legal advisers if you are not clear whether you can use an exemption or general exclusion for a specific procurement.

91). Any failure to comply with the DSPCR could result in an aggrieved supplier or would-be supplier bringing an action in the UK courts for damages and / or for the decision or action to be set aside, or both.

92). Like the PCR 2015, the DSPCR requires a ‘standstill period’, before concluding a contract. This gives rejected tenderers the opportunity to start a review procedure at a time when the Court can correct unfair decisions. If you have not respected this standstill period, the DSPCR requires the UK courts under certain conditions to set aside a signed contract, by rendering the contract “ineffective”.

93). The DSPCR also seek to combat illegal direct awards of contracts, which is the most serious infringement of UK procurement law. The UK courts may render contracts ineffective if you have awarded the contract without prior publication of a contract notice on the Find a Tender service where the DSPCR requires one.

94). The UK courts will have to consider defence and sensitive security interests when considering applications for interim orders (such as injunctions) or when deciding whether to make a declaration of ineffectiveness.

95). You must maintain an audit trail of any major procurement decision (for example, use of an exemption) in case of a legal challenge. You can find further guidance on procurement challenges in Chapter 18 - Legal Review, Remedies and Ineffectiveness.

Transitional Procurements

96). If your procurement procedure was launched but not finalised by 31 December 2020, the end of the Transition Period, your procurement is a ‘Transitional Procurement’ and will continue to follow the Regulations under which your procurement commenced: the pre-Transition Period DSPCR.

97). Transitional Procurements are procurement procedures for contracts and framework agreements (and procedures for the call-off of contracts placed under them), launched but not finalised before the end of the Transition Period, together with procedures for the calling-off of contracts under framework agreements where the framework agreements had not expired or been terminated before 31 December 2020. The definition of launched and finalised are below:

Launched: a procedure is launched when a call for competition or any other invitation to submit applications has been made in accordance with the pre-Transition Period DSPCR. Where the pre-Transition Period DSPCR do not require such a call or invitation, it is the date when you contacted economic operators in relation to the specific procedure.

Finalised: a procedure is finalised upon publication of a contract award notice in accordance with the pre-Transition Period DSPCR.

Where the 2011 Regulations do not require the publication of such a notice, upon conclusion (award) of the relevant contract. Where you have decided not to award a contract, upon informing the tenderers, or persons otherwise entitled to submit applications, of the reasons why the contract was not awarded.

98). This means that if you launch a procurement process before the end of the transition period, but that procurement process has not finalised by the end of the Transition Period, you must continue to publish notices relating to your procurement on the OJEU. This includes any relevant notices such as contract notice, contract award notice, contract amendments notice and corrigenda. Overall however this will have little impact on you, as you will continue to place your adverts through Defence Sourcing Portal, which will place the advert in the appropriate place.

Annex A: Decision Making Process for using DSPCR

1). Does the requirement fall wholly within the scope of the Public Contracts Regulations (PCR) 2015 or Utility Contracts Regulation (UCR) 2016?

Yes: Use the PCR 2015 or UCR 2016.

2). Does the requirement fall wholly or partly within the scope of the DSPCR (Chapter 2: Scope paragraphs 7 to 38)

No: The DSPCR does not apply.

3). Are you procuring from an ‘In-house’ body? (Chapter 2- Scope paragraphs 52 to 57 the ‘Teckal case’)

Yes: The DSPCR does not apply.

4). Is the value of the requirement above the thresholds at Regulation 9?

No: The DSPCR does not apply.

5). Does regulation 6(3) apply (Chapter 4: Exemptions and Exclusions)?

Yes: You may be able to relax your compliance with the procurement principles and / or disapply all or part of the DSPCR.

6). Do any of the general exclusions apply (Chapter 4: Exemptions and Exclusions)?

Yes: The DSPCR does not apply. No: The DSPCR applies.

1. Directive 2009/81/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of procedures for the award of certain works contracts, supply contracts and services contracts by contracting authorities or entities in the fields of defence and security, and amending Directive 2004/17/EC and Directive 2004/18/EC. ↩

2. The Defence and Security Public Contracts (Amendment) (EU Exit) Regulations 2019 on legislation.gov.uk. ↩

3. The Defence and Security Public Contracts (Amendment) (EU Exit) Regulations 2020 on legislation.gov.uk. ↩

4. “Contracting authority” is defined by Regulation 2 of the Public Contracts Regulations 2015 and Regulation 2 of the Public Contracts (Scotland) Regulations 2015. ↩

5. “Utility” is defined by Regulation 2 of the Utilities Contracts Regulations 2006 and Regulation 3 of the Utilities Contracts (Scotland) Regulations 2012. ↩

6. “Work” means the outcome of building or civil engineering works that is sufficient to fulfil an economic or technical function. ↩

7. “Works” means the building and civil engineering activities listed in Schedule 1 of the DSPCR. ↩

8. The values of the financial threshold are revised every two years and take effect from 1 January on an even numbered year. ↩