The Utilities Supply and Works Contracts Regulations 1992

PART I GENERAL

Title and commencement

1.  These Regulations may be cited as the Utilities Supply and Works Contracts Regulations 1992 and shall come into force on 13th January 1993.

Interpretation

2.—(1) In these Regulations—

“to award” means to accept an offer made in relation to a proposed contract;

“carrying out” in relation to a work or works means the construction or the design and construction of that work or those works;

“the Commission” means the Commission of the Communities;

“contract documents” means the invitation to tender for or to negotiate the contract, the proposed conditions of contract, the specifications or descriptions of the goods, services, work or works required by the utility and all documents supplementary thereto;

“contract notice” means a notice sent to the Official Journal in accordance with regulation 14(2)(b);

“contractor” has the meaning ascribed to it by regulation 4;

“ECU” means the European Currency Unit as defined in Council Regulation (EEC) No. 3180/78(1);

“established” means the same as it does for the purposes of the Community Treaties;

“financial year” means the period of 12 months ending on the date in any year in respect of which the accounts of a utility are prepared;

“framework agreement” means a contract or other arrangement which is not in itself a supply or a works contract but which establishes the terms (in particular the terms as to price and, where appropriate, quantity) under which the supplier or contractor will enter into supply or works contracts with a utility in the period during which the framework agreement applies;

“goods” includes substances, growing crops and things attached to or forming part of the land which are agreed to be severed before the purchase or hire under a supply contract, any ship, aircraft or vehicle, and, when the utility is an entity specified in Part T of Schedule 1, is deemed to include telecommunications software services;

“Minister” has the meaning ascribed to it by regulation 27;

“Minister of the Crown” means the holder of an office in Her Majesty’s Government in the United Kingdom, and includes the Treasury;

“national of a member State” means, in the case of a person who is not an individual, a person formed in accordance with the laws of a member State and which has its registered office, central administration or principal place of business in a member State;

“negotiated procedure” means a procedure leading to the award of a contract whereby the utility negotiates the terms of the contract with one or more persons selected by it;

“Official Journal” means the Official Journal of the Communities;

“open procedure” means a procedure leading to the award of a contract whereby all interested persons may tender for the contract;

“periodic indicative notice” means a notice sent to the Official Journal in accordance with regulation 13;

“public telecommunications network” means an infrastructure for the use of the public which enables signals to be conveyed by wire, microwave, optical means or other electromagnetic means between physical connections which are necessary for access to and efficient communication through the network;

“public telecommunications services” means services which consist in whole or in part in the transmission and routing of signals on a public telecommunications network by means of telecommunications process other than radio broadcasting and television;

“restricted procedure” means a procedure leading to the award of a contract whereby only persons selected by the utility may submit tenders for the contract;

“ship” includes any boat and any other description of a vessel used in navigation;

“software services” means the design or adaptation of software;

“substance” means any natural or artificial substance, whether in solid, liquid or gaseous form or in the form of a vapour;

“supplier” has the meaning ascribed to it by regulation 4;

“supply contract” means a contract in writing for consideration (whatever the nature of the consideration)—

(a)

for the purchase of goods by a utility (whether or not the consideration is given in instalments and whether or not the purchase is conditional upon the occurrence of a particular event), or

(b)

for the hire of goods by a utility (both where the utility becomes the owner of the goods after the end of the period of hire and where it does not),

and for any siting and installation of those goods, but where, under such a contract services are also to be provided, the contract shall only be a supply contract if the value of the consideration attributable to the goods and to any siting or installation of the goods is greater than the value attributable to the services;

“telecommunications software services” means software services for use in the operation of a public telecommunications network or which are intended to be used in a public telecommunications service as such;

“utility” has the meaning ascribed to it by regulation 3;

“work” means the outcome of any works which is sufficient of itself to fulfil an economic function;

“working day” means a day other than a Saturday, Sunday or Bank Holiday within the meaning of the Banking and Financial Dealings Act 1971(2);

“works” means any of the activities specified in Schedule 3, being activities contained in the general industrial classification of economic activities within the Communities;

“works contract” means a contract in writing for consideration (whatever the nature of the consideration)—

(a)

for the carrying out of a work or works for a utility, or

(b)

under which a utility engages a person to procure by any means the carrying out for the utility of a work corresponding to specified requirements;

and

“year” means a calendar year.

(2) The value in the currency of any member State of any amount expressed in these Regulations in ECU shall be determined by reference to the rate for the time being applying for the purposes of Council Directive 90/531/EEC(3) as published from time to time in the Official Journal(4).

(3) Where a thing is required to be done under these Regulations—

(a) within a period after an action is taken, the day on which that action was taken shall not be counted in the calculation of that period;

(b) within a certain period, that period must include 2 working days;

(c) within a period and the last day of that period is not a working day, the period shall be extended to include the following working day.

(4) References in these Regulations to a regulation are references to a regulation in these Regulations and references to a Schedule are references to a Scheduleto these Regulations.

Utilities

3.  For the purposes of these Regulations a utility is a person specified in the first column of Schedule 1.

Suppliers and Contractors

4.—(1) For the purposes of these Regulations a “supplier” means a person who sought, or who seeks, or would have wished, to be the person to whom a supply contract is awarded, and a “contractor” means a person who sought, or who seeks, or would have wished, to be the person to whom a works contract is awarded, and in either case means a person who is a national of and established in a member State.

(2) When these Regulations apply a utility shall not treat a person who is not a national of and established in a member State more favourably than one who is.

Application of the Regulations

5.  These Regulations apply whenever a utility seeks offers in relation to a proposed supply contract or a proposed works contract other than contracts excluded from the operation of these Regulations by regulations 6, 7 and 9 below.

General exclusions

6.  These Regulations shall not apply to the seeking of offers in relation to a contract—

(a) other than for the purpose of carrying out an activity specified in the Part of Schedule 1 in which the utility is specified;

(b) for the purpose of carrying out any activity outside the territory of the Communities but only if the carrying out of that activity does not involve the physical use of a network or geographical area within the Communities;

(c) for the purpose of acquiring goods or works in order to sell or hire them to another person unless the utility has a special or exclusive right to sell or hire such goods or works or other persons are not free to sell or hire them under the same conditions;

(d) which is classified as secret by the Minister or where the performance of the contract must be accompanied by special security measures in accordance with the laws, regulations or administrative provisions of any part of the United Kingdom or when the protection of the basic interests of the security of the United Kingdom require it;

(e) where different procedures govern the procedures leading to the award of the contract and it is to be entered into—

(i) pursuant to an international agreement to which the United Kingdom and a State which is not a member State are parties and it relates to goods or provides for the carrying out of works intended for the joint implementation or exploitation of a project pursuant to that agreement;

(ii) pursuant to an international agreement relating to the stationing of troops; or

(iii) in accordance with the contract award procedures of an organisation of which only States are members (an “international organisation”) or of which only States or international organisations are members.

(f) by a utility which engages in an activity specified in Part A, B or C of Schedule 1 for the purchase of water; and

(g) by a utility which engages in an activity specified in Parts D to N of Schedule 1 for the purchase of energy or of fuel for the production of energy;

Exclusion in respect of certain contracts awarded by utilities operating in the telecommunications sector

7.—(1) These Regulations shall not apply to the seeking of offers in relation to a contract by a utility specified in Schedule 2 for the exclusive purpose of enabling it to provide one or more of the public telecommunications services specified in the Part of Schedule 2 in which the utility is specified.

(2) A utility specified in Schedule 2 when requested shall send a report to the Minister for onward transmission to the Commission describing the public telecommunications services provided by it which it considers are services specified in the Part of Schedule 2 in which the utility is specified.

(3) A utility may indicate that any of the information included in the report referred to in paragraph (2) above is of a sensitive commercial nature and request that it not be published.

Exemption in respect of certain utilities operating in the energy sector

8.—(1) Where the Commission has decided that an activity specified in Parts M or N of Schedule 1 to these Regulations is not to be considered an activity defined in article 2(2)(b)(i) of Council Directive 90/531/EEC(5) and that entities undertaking that activity shall not be considered as operating under special or exclusive rights by virtue of article 2(3)(b) of that Directive, a utility need not comply with Parts II to V of these Regulations and regulations 23, 24, 25, 26 other than paragraph 2(a), and 28 below in seeking offers in relation to a contract to be awarded for the purpose of carrying out any activity referred to in that decision.

(2) A utility which relies on the exemption in paragraph (1) above shall observe the principles of non-discrimination and competitive procurement, and in particular shall—

(a) hold a competition unless it can objectively justify not doing so; and

(b) in making information about its procurement intentions available to suppliers and contractors, in specifying its requirements to them, in establishing and using a qualification system, in selecting suppliers or contractors to tender for or to negotiate the contract and in awarding the contract, make decisions objectively on the basis of relevant criteria.

Thresholds

9.—(1) These Regulations shall not apply to the seeking of offers in relation to a proposed contract where the estimated value of the contract (net of value added tax) at the relevant time is less than the relevant threshold.

(2) The relevant threshold for the purposes of paragraph (1) above—

(a) in relation to a supply contract to be awarded by a utility other than one specified in Part T of Schedule 1, is 400,000 ECU;

(b) in relation to a supply contract to be awarded by a utility specified in Part T of Schedule 1, is 600,000 ECU; and

(c) in relation to a works contract, is 5,000,000 ECU.

(3) Subject to paragraphs (4), (5), (6), (9), (14) and (15) below in the case of a supply contract, and subject to paragraphs (10), (11), (12), (13), (14) and (15) below in the case of a works contract, the estimated value of a contract for the purposes of paragraph (1) above shall be the value of the consideration which the utility expects to give under the contract.

(4) The estimated value for the purposes of paragraph (1) above of a supply contract for the hire of goods for an indefinite period, or for a period which is uncertain at the time the contract is entered into, shall be the value of the consideration which the utility expects to give in respect of the first four years of the hire.

(5) Subject to paragraph (8) below where a utility proposes to enter into two or more supply contracts at the same time in order to purchase or hire goods of a particular type, the estimated value for the purposes of paragraph (1) above of each of those contracts shall be the aggregate of the value of the consideration which the utility expects to give under each of those contracts.

(6) Subject to paragraph (8) below where a utility has a requirement over a period to purchase or hire goods of the type to be purchased or hired under the contract and for that purpose enters into—

(a) a series of supply contracts,

(b) a supply contract which under its terms is renewable, or

(c) a supply contract which is for the purchase of goods over an indefinite period,

the estimated value for the purposes of paragraph (1) above of the supply contract shall be the amount calculated under paragraph (7) below.

(7) The utility shall calculate the amount refered to in paragraph (6) above either—

(a) by taking the aggregate of the value of the consideration given by the utility under supply contracts which have similar characteristics, and which are for the purchase or hire of goods of the type to be purchased or hired under the contract, during the last financial year of the utility ending before, or the period of 12 months ending immediately before, the relevant time, and by adjusting that amount to take account of any expected changes in quantity and cost of the goods to be purchased or hired in the period of 12 months commencing with the relevant time, or

(b) by estimating the aggregate of the value of the consideration which the utility expects to give under supply contracts which have similar characteristics, and which are for the purchase or hire of goods of the type to be purchased or hired under the contract, during the period of 12 months from the first date of delivery of the goods to be purchased or hired under the contract or, where the contract is for a definite term of more than 12 months, during the term of the contract.

(8) Notwithstanding paragraphs (5) and (6) above when the goods to be purchased or hired under the contract are required for the sole purposes of a discrete operational unit within the organisation of a utility and—

(a) the decision whether to purchase or hire goods of that type has been devolved to such a unit, and

(b) that decision is taken independently of any other part of the utility,

the valuation methods described in paragraphs (5) and (7) above shall be adapted by aggregating only the value of the consideration which the utility has given or expects to give, as the case may be, under contracts for the purchase or hire of goods which were or are required for the sole purposes of that unit.

(9) Where a supply contract includes one or more options the estimated value of the contract shall be determined by calculating the highest possible amount which could be payable under the contract.

(10) Subject to paragraphs (11) and (12) below, the estimated value for the purposes of paragraph (1) above of a works contract which is one of a number of contracts entered or to be entered into for the carrying out of a work shall be the aggregate of the value of the consideration which the utility has given or expects to give under all the contracts for the carrying out of the work.

(11) Paragraph (10) above shall not apply to any works contract (unless the utility chooses to apply that paragraph to that contract) if that contract has an estimated value (calculated in accordance with paragraph 3 above) of less than 1,000,000 ECU, and the aggregate value of that contract and of any other works contract for the carrying out of the work in respect of which the utility takes advantage of the disapplication of paragraph (10) above by virtue of this paragraph is less than 20 per cent of the aggregate of the value of the consideration which the utility has given or expects to give under all the contracts for the carrying out of the work.

(12) Where a utility intends to provide any goods or services to the person awarded a works contract for the purpose of carrying out that contract, the value of the consideration for the purposes of paragraphs (3) and (10) above shall be taken to include the estimated value at the relevant time of those goods and services.

(13) Where the estimated value of a works contract estimated in accordance with paragraph (3) above is less than the relevant threshold and where goods which are not necessary for its execution are to be purchased or hired under it the estimated value of the contract for the purposes of paragraph (1) above shall be the value of the consideration which the utility expects to give for the goods and the relevant threshold shall be determined in accordance with paragraph (2) above as if the works contract were a supply contract.

(14) The estimated value of a framework agreement shall be the aggregate of the values estimated in accordance with this regulation of all the contracts which could be entered into under the framework agreement.

(15) A utility shall not enter into separate contracts nor select nor exercise a choice under a valuation method in accordance with paragraph (7) above with the intention of avoiding the application of these Regulations to those contracts.

(16) The relevant time for the purposes of paragraphs (1), (7) and (12) above means—

(a) if the utility selects suppliers or contractors to tender for or to negotiate the contract in accordance with a qualification system established in accordance with regulation 17 below, the date on which the selection commences, or

(b) if the utility satisfies the requirement that there be a call for competition by indicating the intention to award the contract in a periodic indicative notice in accordance with regulation 14(2)(a)(i) below, the date on which the notice is sent to the Official Journal; or

(c) in any other case, the date on which a contract notice would be sent to the Official Journal if the requirement that there be a call for competition applied and the utility decided to satisfy that requirement by sending such a notice.

Framework agreements

10.—(1) A utility which is proposing to enter into a framework agreement may choose to treat that agreement as a contract to which these Regulations apply; and, accordingly, in respect of such an agreement references in these Regulations to a contract shall include a reference to such a framework agreement.

(2) A utility which chooses to treat a framework agreement as a contract under paragraph (1) above shall not use the framework agreement to hinder, limit or distort competition.

PART II TECHNICAL SPECIFICATIONS

Technical specifications in the contract documents

11.—(1) In this regulation—

“common technical specification” means a technical specification drawn up in accordance with a procedure recognised by the member States with a view to uniform application in all member States and which has been published in the Official Journal;

“European specification” means a common technical specification, a British standard implementing a European standard or a European technical approval;

“European standard” means a standard approved by the European Committee for Standardisation (“CEN”) or by the European Committee for Electrotechnical Standardisation (“CENELEC”) as a “European Standard (“EN”)” or a “Harmonisation Document (“HD”)” according to the Common Rules of those organisations or by the European Telecommunications Standards Institute (“ETSI”) according to its own rules as a “European Telecommunications Standard (“ETS”)”;

“European technical approval” means an approval of the fitness of a product for a particular use, issued by an approval body designated for the purpose by a member State, following a technical assessment of whether the product fulfils the essential requirements for building works, having regard to the inherent characteristics of the product and the defined conditions of application and use as provided for in Council Directive 89/106/EEC on the approximation of laws, regulations and administrative procedures in the member States relating to construction projects(6);

“standard” means a technical specification approved by a recognised standardising body for repeated and continuous application, compliance with which is in principle not compulsory;

“technical specifications” means the technical requirements defining the characteristics required of the work or works, materials or goods (such as quality, performance, safety or dimensions) so that the works, work, materials or goods are described objectively in a manner which will ensure the use for which they are intended by the utility. In relation to materials and goods, “technical specifications” include requirements in respect of quality assurance, terminology, symbols, test and testing methods, packaging, marking and labelling. In relation to a work or works, they include requirements relating to design and costing, the testing, inspection and acceptance of the work or works, the methods or techniques of construction and all other technical conditions.

(2) If a utility wishes to lay down technical specifications which the goods to be purchased or hired under a supply contract or the work or works to be carried out under a works contract and which the materials and goods used in or for a woeks contract must meet, it shall specify all such technical specifications in the contract documents.

(3) Subject to paragraph (4) below, the technical specifications in the contract documents shall be defined by reference to any European specifications which are relevant.

(4) A utility may define the technical specifications referred to in paragraph (3) above other than by reference to relevant European specifications if—

(a) the utility is under an obligation to define the technical specifications by reference to technical requirements which are mandatory in the United Kingdom (but only to the extent that such an obligation is compatible with Community obligations);

(b) it is technically impossible to establish satisfactorily that the goods, materials, work or works do conform to the relevant European specifications;

(c) definition by reference to European specifications would conflict with the application of Council Directive 91/263/EEC on the initial stage of the mutual recognition of type approval for telecommunications terminal equipment(7) or Council Decision 87/95/EEC on standardisation in the field of information technology and telecommunications(8);

(d) subject to paragraph (5) below, application of European specifications would oblige the utility to acquire a work, works or goods incompatible with equipment already in use or would entail disproportionate costs or disproportionate technical difficulties;

(e) subject to paragraph (6) below, the relevant European specification is inappropriate for the particular purpose or it does not take account of technical developments which have come about since its adoption;

(f) the project for which the contract is to be entered into is of a genuinely innovative nature for which use of existing relevant European specifications would be inappropriate.

(5) A utility may only define the technical specifications other than by reference to European specifications on the grounds specified in paragraph (4)(d) above where the utility has a clearly defined and recorded strategy for changing over to European specifications.

(6) A utility relying on the derogation in paragraph (4)(e) above shall inform the appropriate standardising organisation or other body empowered to review the European specification, of the reasons why it considers the European specification to be inappropriate and shall request its revision.

(7) A utility shall state in any contract notice or periodic indicative notice sent pursuant to regulation 14(2)(a)(i) below which of the circumstances specified in paragraph (4) above was the ground for defining the technical specifications other than by reference to European specifications.

(8) In the absence of European specifications which relate to the matter in respect of which the utility wishes to lay down technical specifications, the technical specifications in the contract documents shall be defined, as far as possible, by reference to other standards which are in common use within the Community.

(9) If it is necessary to lay down further technical specifications to complement European specifications or other standards included in the contract documents the utility shall, if possible, lay down technical specifications that indicate performance requirements rather than design or description characteristics unless they would be inadequate.

(10) Subject to paragraph (12) below, the contract documents shall not include technical specifications which refer to goods of a specific make or source or to a particular process and which have the effect of favouring or eliminating particular suppliers or contractors.

(11) Without prejudice to the generality of paragraph (10) above, references to trademarks, patents, types, origin or means of production shall not beincorporated into the technical specifications in the contract documents.

(12) Notwithstanding paragraph (10) and (11) above, a utility may incorporate the references referred to in paragraph (10) and (11) above into the technical specifications in the contract documents if—

(a) the subject of the contract makes the use of such references indispensable, or

(b) the subject of the contract cannot otherwise be described by reference to technical specifications which are sufficiently precise and intelligible to all suppliers or contractors, provided that the references are accompanied by the words “or equivalent”.

(13) Subject to paragraph (14) below, the utility shall provide to any supplier or contractor who requests it a copy of the technical specifications which are regularly laid down as terms of the supply and works contracts which it awards or which it intends to lay down as terms of a contract which has been indicated in a periodic indicative notice sent to the Official Journal in accordance with regulation 13 below.

(14) Where the technical specifications referred to in paragraph (13) above are basedon documents which are available to suppliers and contractors the obligation inparagraph (13) shall be satisfied by informing any supplier or contractor who requests it of the documents which include those technical specifications.

PART III PROCEDURES LEADING TO THE AWARD OF A CONTRACT

The Open, Restricted and Negotiated Procedures

12.  For the purposes of seeking offers in relation to a proposed contract a utility shall use the open, the restricted or the negotiated procedure.

Periodic indicative notices

13.—(1) Subject to paragraphs (2) and (3) below, a utility shall, at least once every12 months, send to the Official Journal a notice, in a form substantially corresponding to that set out in Part A of Schedule 4 and containing the information therein specified, in respect of—

(a) the supply contracts which the utility expects to award during the period of 12 months beginning with the date of the notice; and

(b) the works contracts which the utility expects to award.

(2) The obligation under paragraph (1)(a) above shall apply only to those supply contracts whose estimated value (within the meaning of regulation 9 above) at the date of despatch of the notice is not less than the relevant threshold specified in regulation 9(2) above and which are for the purchase or hire of goods of a type which the utility expects at the date of despatch of the notice to purchase or hire under supply contracts which have an estimated value (within the meaning of regulation 9(3), (9) and (14) above) which in aggregate for that type of goods is, or is more than, 750,000 ECU.

(3) The obligation under paragraph 1(b) above shall apply only to those works contracts whose estimated value at the date of despatch of the notice is not less than the relevant threshold specified in Regulation 9(2) above.

(4) A notice sent to the Official Journal in accordance with paragraph (1) above need not repeat information about contracts included in a previous periodic indicative notice, provided that the notice clearly states that it is an additional notice.

Call for competition

14.—(1) Subject to regulation 15, for the purposes of seeking offers in relation to a proposed contract a utility shall make a call for competition.

(2) The requirement under paragraph (1) above to make a call for competition shall be satisfied—

(a) in the case of a contract to be awarded using the restricted or negotiated procedure—

(i) if the intention to award the contract has been indicated in a periodic indicative notice and the requirements referred to in paragraph (3) below are satisfied in relation to the contract; or

(ii) if a notice indicating the existence of a qualification system for suppliers or contractors has been sent to the Official Journal in accordance with regulation 17(12) below and the requirement referred to in paragraph (4) below is satisfied; or

(b) in any case by sending to the Official Journal a contract notice in a form substantially corresponding to that set out in—

(i) Part B of Schedule 4, in the case of a contract to be awarded using the open procedure,

(ii) Part C of Schedule 4, in the case of a contract to be awarded using the restricted procedure, and

(iii) Part D of Schedule 4, in the case of a contract to be awarded using the negotiated procedure,

and containing the information specified in the relevant Part in respect of the contract.

(3) The requirements referred to in paragraph (2)(a)(i) above are that—

(a) the periodic indicative notice refers specifically to the goods or works which are to be the subject of the proposed contract,

(b) the notice states that offers are to be sought using the restricted or negotiated procedure without further publication of a notice calling for competition and invites suppliers or contractors to express their interest in writing,

(c) the utility sends to all suppliers or contractors who express such an interest detailed information on the contract concerned and before beginning the selection of suppliers or contractors invites them to confirm their wish to be selected to tender for or to negotiate the contract, and

(d) the notice was not published more than 12 months before the date on which the invitation sent in accordance with sub-paragraph (c) above is sent.

(4) The requirement referred to in paragraph (2)(a)(ii) above is that the suppliers or contractors selected to tender for or to negotiate the contract are selected from the candidates who qualify in accordance with the system.

Award without a call for competition

15.—(1) A utility may seek offers in relation to a proposed contract without a call for competition in the following circumstances—

(a) in the absence of tenders or suitable tenders in response to a procedure with a call for competition but only if the original terms of the proposed contract have not been substantially altered;

(b) when the contract is to be awarded purely for the purposes of research, experiment, study or development but not where it has the purpose of ensuring profit or of recovering research and development costs;

(c) when for technical or artistic reasons, or for reasons connected with the protection of exclusive rights, the contract may only be performed by a particular person;

(d) when (but only if it is strictly necessary) for reasons of extreme urgencybrought about by events unforeseeable by the utility, the time limits specified inregulation 16(1) to (4) below cannot be met;

(e) when the contract to be awarded is a supply contract and the goods to be purchased or hired under the contract are required by the utility as a partial replacement for, or addition to, existing goods or an installation when to obtain the goods from a person other than the person who supplied the existing goods or the installation would oblige the utility to acquire goods having different technical characteristics which would result in—

(i) incompatibility between the existing goods or installation and the goods to be purchased or hired under the contract, or

(ii) disproportionate technical difficulties in the operation and maintenance of the goods or installation;

(f) when the contract to be awarded is a works contract and the utility wants a person who has entered into a works contract with the utility to carry out additional works which through unforeseen circumstances were not included in the project initially considered or in the original works contract and—

(i) such works cannot for technical or economic reasons be carried out separately from the works carried out under the original works contract without great inconvenience to the utility, or

(ii) such works can be carried out separately from the works carried out under the original works contract but are strictly necessary to the later stages of that contract;

(g) subject to paragraph (2) below when the contract to be awarded is a works contract and the utility wishes a person who has entered into a works contractwith it following a call for competition which satisfies the requirement ofregulation 14(1) above to carry out new works which are a repetition of works carried out under the original contract and which are in accordance with the project for the purpose of which the first contract was entered into;

(h) in respect of a supply contract for the purchase or hire of goods quoted and purchased on a commodity market;

(i) when the contract to be awarded is to be awarded under a framework agreement which has been awarded in accordance with these Regulations and to which the provisions of regulation 10 apply;

(j) when the contract to be awarded is a supply contract, to take advantage of a particularly advantageous bargain available for a very short period of time at a price considerably lower than normal market prices; and

(k) when the contract to be awarded is a supply contract, to take advantage of particularly advantageous conditions for the purchase of goods in a closing down sale or in a sale brought about by insolvency.

(2) A utility shall not seek offers without a call for competition pursuant to paragraph (1)(g) above unless—

(a) the original contract was awarded after a call for competition,

(b) when the utility invited contractors to tender for or to negotiate the contract it gave notice that a works contract for new works which would be a repetition of the works carried out under the original contract might be awarded without a call for competition pursuant to paragraph (1)(g) above, and

(c) in determining the estimated value of the original contract for the purposes of regulation 9 above the utility took into account the value of the consideration which it expected to pay for the new works.

Time Limits

16.—(1) Subject to paragraph (2) below, the date which a utility using the open procedure shall fix as the last date for the receipt by it of tenders made in response to the contract notice shall be specified in the notice and shall be not less than 52 days from the date of despatch of the notice.

(2) When the utility has published a periodic indicative notice in accordance with regulation 13(1) above it may substitute for the period of not less than 52 days specified in paragraph (1) above a period of not less than 36 days.

(3) The date which a utility using the restricted or the negotiated procedure with a call for competition shall fix as the last date for the receipt by it of requests to be selected to tender for or to negotiate the contract shall be specified in the contract notice or, where the call for competition is made by means of a periodic indicative notice, in the invitation to suppliers or contractors made in accordance with regulation 14(3)(c), and shall in general be at least five weeks from the date of the despatch of the notice or invitation and shall in any case be not less than 22 days from that date.

(4) The date which shall be the last date for the receipt of tenders made in response to an invitation to tender by a utility using the restricted or the negiotiated procedure with a call for competition shall be agreed between the utility and the suppliers or contractors invited to tender and shall be the same date for all supplies or contractors or, in the absence of agreement to this date, shall be fixed by the utlity and shall be as a general rule at least 3 weeks and in any event not less than 10 days from the date of despatch of the invitation to tender.

(5) In fixing the time limits referred to in paragraphs (1), (2) and (4) above a utility shall take into account the time required to allow for any examination of voluminous documentation such as lengthy technical specifications, or any inspection of the site or documents relating to the contract documents, which is necessary.

(6) A utility using the open procedure shall send the contract documents as a general rule within 6 days of the receipt of a request from any supplier or contractor provided that the documents are requested in good time and any fee specified in the contract notice has accompanied the request.

(7) A utility using the restricted or the negotiated procedure with or without a call for competition shall send invitations in writing and simultaneously to each of the suppliers or contractors selected to tender for or to negotiate the contract and the invitation shall be accompanied by the contract documents.

(8) The following information shall be included in the invitation—

(a) the address to which requests for any further information should be sent, the final date for making such a request and the amount and method of payment of any fee which may be charged for supplying that information;

(b) the final date for the receipt of tenders, the address to which they must be sent and the language or languages in which they must be drawn up;

(c) a reference to any contract notice;

(d) an indication of the information to be included with the tender;

(e) the criteria for the award of the contract if this information was not specified in the contract notice; and

(f) any other special contract condition.

(9) A utility using the open, the restricted or the negotiated procedure with or without a call for competition shall provide not less than 6 days before the final date for the receipt of tenders such further information relating to the contract documents as may reasonably be requested by a supplier or contractor provided the information is requested in good time and any fee specified in the contract notice or in the invitation to tender has accompanied the request.

(10) A utility shall not refuse to consider an application to be invited to tender for or to negotiate the contract if it is made by letter, telegram, telex, facsimile, telephone or any electronic means provided that, in the last 5 cases, it is confirmed by letter despatched before the date fixed by the utility as the last date for the receipt of applications to be invited to tender for or negotiate the contract.

PART IV QUALIFICATION AND SELECTION OF SUPPLIERS AND CONTRACTORS

Qualification system for suppliers or contractors

17.—(1) A utility may establish and operate a system of qualification of suppliers or contractors if that system complies with the following paragraphs of this regulation.

(2) The system may involve different stages of qualification and shall be based on objective rules and criteria as determined from time to time by the utility using European standards as a reference when they are appropriate.

(3) The rules and criteria shall be made available on request to suppliers or contractors and if so requested any amendment of those rules and criteria shall be sent to them as the amendment is incorporated into the system.

(4) A utility may establish a system of qualification pursuant to which a supplier or contractor may qualify under the system of, or be certified by, another person, and in those circumstances the utility shall inform suppliers and contractors who apply to qualify of the name of that other person.

(5) The utility shall inform applicants for qualification of the success or failure of their application within a reasonable period and, if the decision will take longer than 6 months from the presentation of an application, the utility shall inform the applicant, within 2 months of the application, of the reasons justifying a longer period and of the date by which his application will be accepted or refused.

(6) In determining what rules and criteria are to be met by applicants to qualify under the system and in determining whether a particular applicant does qualify under the system a utility shall not impose conditions of an administrative, technical or financial nature on some suppliers or contractors which are not imposed upon others and shall not require the application of tests or the submission of evidence which duplicates objective evidence already available.

(7) A utility shall inform any applicant whose application to qualify is refused of the decision and the reasons for refusal.

(8) An application may only be refused if the applicant fails to meet the requirements for qualification laid down in accordance with paragraph (2) above.

(9) The utility shall keep a written record of qualified suppliers and contractors which may be divided into categories according to the type of contract for which the qualification is valid.

(10) The utility may cancel the qualification of a supplier or contractor who has qualified under the qualification system only if he does not continue to meet the rules and criteria laid down in accordance with paragraph (2) above.

(11) The utility may not cancel a qualification unless it notifies the supplier or contractor in writing beforehand of its intention and of the reason or reasons justifying the proposed cancellation.

(12) The utility shall send a notice substantially corresponding to the form set out in Part E of Schedule 4 and containing the information relating to the qualification system therein specified to the Official Journal when the system is first established and, if the utility expects to operate the system for more than three years, or if it has operated the system for more than three years, it shall send additional notices annually.

Selection of suppliers and contractors in the restricted or negotiated procedures

18.—(1) A utility using the restricted or the negotiated procedure, with or without a call for competition, shall make the selection of the suppliers or contractors to be invited to tender for or to negotiate the contract on the basis of objective criteria and rules which it determines and which it makes available to suppliers or contractors who request them.

(2) The criteria which a utility uses for deciding not to select a supplier or contractor may include the following, namely that the supplier or contractor—

(a) being an individual is bankrupt or has had a receiving order or administration order made against him or has made any composition or arrangement with or for the benefit of his creditors or has made any conveyance or assignment for the benefit of his creditors or appears unable to pay, or to have no reasonable prospect of being able to pay, a debt within the meaning of section 268 of the Insolvency Act 1986(9), or Article 242 of the Insolvency (Northern Ireland) Order 1989(10), or in Scotland has granted a trust deed for creditors or become otherwise apparently insolvent, or is the subject of a petition presented for sequestration of his estate, or is the subject of any similar procedure under the law of any other state;

(b) being a partnership constituted under Scots law has granted a trust deed or become otherwise apparently insolvent, or is the subject of a petition presented for sequestration of its estate;

(c) being a company has passed a resolution or is the subject of an order by the court for the company’s winding up otherwise than for the purposes of bona fide reconstruction or amalgamation, or has had a receiver, manager or administrator on behalf of a creditor appointed in respect of the company’s business or any part thereof or is the subject of proceedings for any of the above procedures or is the subject of similar procedures under the law of any other state;

(d) has been convicted of a criminal offence relating to the conduct of his business or profession;

(e) has committed an act of grave misconduct in the course of his business or profession;

(f) has not fulfilled obligations relating to the payment of social security contributions under the law of any part of the United Kingdom or of the member State in which the supplier or contractor is established;

(g) has not fulfilled obligations relating to the payment of taxes under the law of any part of the United Kingdom or of the member State in which the supplier or contractor is established; or

(h) is guilty of serious misrepresentation in providing information to the utility.

(3) Without prejudice to the generality of paragraph (1) above the criteria may be based on the need of the utility to reduce the number of suppliers or contractors selected to tender for or to negotiate the contract to a level which is justified by the characteristics of the award procedure and the resources required to complete it.

(4) The utility shall take account of the need to ensure adequate competition in determining the number of persons selected to tender for or to negotiate the contract.

Consortia

19.—(1) In this regulation a “consortium” means two or more persons, at least one of whom is a supplier or contractor, acting jointly for the purpose of being awarded a contract.

(2) A utility shall not treat the tender of a consortium as ineligible nor decide not to include a consortium amongst those persons from whom it will make the selection of persons to be invited to tender for or to negotiate a contract on the grounds that the consortium has not formed a legal entity for the purpose of tendering for or negotiating the contract; but where a utility awards a contract to a consortium it may, if to do so is justified for the satisfactory performance of the contract, require the consortium to form a legal entity before entering into, or as a term of, the contract.

(3) In these Regulations references to a supplier or contractor where the supplier or contractor is a consortium includes a reference to each person who is a member of that consortium.

PART V THE AWARD OF A CONTRACT

Criteria for the award of a contract

20.—(1) Subject to regulation 21 below, a utility shall award a contract on the basis of the offer which—

(a) offers the lowest price, or

(b) is the most economically advantageous to the utility.

(2) The criteria which a utility may use to determine that an offer is the most economically advantageous include price, delivery date or period for completion, running costs, cost effectiveness, quality, aesthetic and functional characteristics, technical merit, after sales service and technical assistance, commitments with regard to spare parts and security of supply.

(3) Where a utility intends to award a contract on the basis of the offer which is the most economically advantageous it shall state the criteria on which it intends to base its decision, where possible in descending order of importance, in any contract notice or in the contract documents,

(4) Where a utility awards a contract on the basis of the offer which is the most economically advantageous, it may take account of offers which offer variations on the requirements specified in the contract documents if the offer meets the minimum requirements of the utility and it has stated those minimum requirements and any specific requirements for the presentation of an offer offering variations in the contract documents; but if the utility will not take account of offers which offer such variations it shall state that fact in the contract documents.

(5) A utility may not reject a tender on the ground that the tender is based on, or the technical specifications in the tender have been defined by reference to, European specifications (within the meaning of regulation 11(1) above) or to national technical specifications recognised as complying with the essential requirements of Council Directive 89/106/EEC on the approximation of laws, regulations and administrative procedures in the member States relating to construction products(11).

(6) If an offer for a contract is abnormally low the utility may reject that offer but only if it has requested in writing an explanation of the offer or of those parts which it considers contribute to the offer being abnormally low, which request may set a reasonable period for reply, and has—

(a) if awarding the contract on the basis of the offer which offers the lowest price, examined the details of all the offers made, taking into account any explanation given to it of the abnormally low offer, before awarding the contract, or

(b) if awarding the contract on the basis of the offer which is the most economically advantageous, taken any such explanation into account in assessing which is the most economically advantageous offer,

and, in considering that explanation, the utility may take into account explanations which justify the offer on objective grounds including the economy of the construction or production method, the technical solutions suggested by the supplier or contractor orthe exceptionally favourable conditions available to the supplier or contractor for the performance of the contract or the originality of the goods or works proposed by the supplier or contractor.

(7) A utility may reject a tender for a contract which is abnormally low owing to the receipt of a state aid within the meaning of article 92 of the Treaty but only if it has consulted the supplier or contractor and the supplier or contractor has not been able to show that the aid in question has been notified to the Commission pursuant to article 93(3) of the Treaty or has received the Commission’s approval.

(8) A utility which rejects a tender in accordance with paragraph (7) above shall send a report to the Minister for onward transmission to the Commission.

(9) For the purposes of this regulation “offer” includes a bid by one part of a utility to supply goods or to carry out a work or works for another part of the utility when the former part is invited by the latter part to compete with the offers sought from other persons.

Rejection of third country offers

21.—(1) In this regulation an offer of third country origin is an offer to enter a supply contract under which more than 50% of the value of the goods offered originate, as determined in accordance with Council Regulation (EEC) No. 802/68(12), in States with which the Communities have not concluded, multilaterally or bilaterally, an agreement ensuring comparable and effective access for undertakings in member States to the markets of those States or in States to which the benefit of the provisions of Council Directive 90/531/EEC(13) has not been extended.

(2) Notwithstanding regulation 20, a utility need not accept an offer of third country origin.

(3) Notwithstanding regulation 20, where an offer of third country origin is equivalent to an offer which is not of third country origin a utility shall not accept the offer of third country origin unless not to accept that offer would oblige the utilty to acquire goods having technical characteristics different from those of existing goods or an installation resulting in compatibility, technical difficulties in operation and maintenance or disproportionate costs.

(4) In the case of a contract to be awarded on the basis of the offer which offers the lowest price offers are equivalent for the purposes of paragraph (3) above if their prices are to be treated as equivalent in accordance with paragraph (6) below.

(5) In the case of a contract to be awarded on the basis of the offer which is themost economically advantageous to the utility offers are equivalent for the purposes of paragraph (3) above if their prices are to be treated as equivalent in accordance with paragraph (6) below and if disregarding any difference in price the offer which is not of third country origin is at least as economically advantageous to the utility as the offer of third country origin.

(6) The prices of offers are to be treated as equivalent for the purposes of paragraphs (4) and (5) above if the price of the offer which is not of third country origin is the same as or is not more than 3% greater than the offer of third country origin.

Contract award notice

22.—(1) A utility which has awarded a supply or a works contract (other than one excluded from the application of these Regulations by regulations 6 to 9 above) shall no later than two months after the award, send to the Official Journal a notice, substantially corresponding to the form set out in Part F of Schedule 4 and including the information therein specified.

(2) The utility may indicate that any of the information included in paragraphs 6 and 9 of the notice is of a sensitive commercial nature, and request that it not be published.

PART VI MISCELLANEOUS

Obligations relating to employment protection and working conditions

23.  A utility which includes in the contract documents relating to a works contract information as to where a contractor may obtain information about the obligations relating to employment protection and working conditions which will apply to the works to be carried out under the contract, shall request contractors to indicate that they have taken account of those obligations in preparing their tender or in negotiating the contract.

Sub-contracting

24.  A utility may require a supplier or contractor to indicate in his tender what part of the contract if any he intends to sub-contract to another person.

Preservation of records

25.—(1) When these Regulations apply to the seeking of offers in relation to a contract a utility shall keep appropriate information on each such contract sufficient to justify decisions taken in connection with—

(a) the qualification and selection of suppliers or contractors and the award of contracts;

(b) the recourse to derogations from the requirement that European specifications be referred to pursuant to regulation 11(4) above; and

(c) the use of a procedure without a call for competition pursuant to regulation 15 above.

(2) When a utility decides not to apply these Regulations to the seeking of offers in relation to a contract in accordance with regulations 6, 7 and 9 above it shall keep appropriate information on such a contract sufficient to justify that decision.

(3) The information referred to in paragraphs (1) and (2) above shall be preserved for at least four years fromm the date of the award of the contract.

Statistical and other reports

26.—(1) A utility shall each year by the date notified to it by the Minister send to the Minister a report specifying the aggregate value (estimated if necessary) of the consideration payable under the contracts awarded in the previous year and excluded from the operation of these Regulations by regulation 9 above for each of the following categories of activity—

(a) the production, transport or distribution of drinking water, hydraulic engineering, irrigation, land drainage or the disposal or treatment of sewage;

(b) the production, transport or distribution of electricity;

(c) the transport or distribution of gas or heat;

(d) the exploration for and extraction of oil or gas;

(e) the exploration for and extraction of coal or other solid fuels;

(f) railway services;

(g) urban railway, tramway, trolleybus or bus services;

(h) the provision of airport facilities;

(i) the provision of maritime or inland port or other terminal facilities; and

(j) the operation of telecommunications networks or the provision of telecommunications services.

(2) A utility when requested shall send to the Minister a report for the purpose of informing the Commission—

(a) containing such information as the Minister may from time to time require in respect of a particular supply or works contract (including contracts excluded from the application of these Regulations by regulations 6 to 9 above);

(b) specifying which of its activities it considers are not activities specified in the Part of Schedule 1 in which the utility is specified, or are activities outside the territory of the Communities not involving the physical use of a network or geographical area within the Communities; and

(c) specifying the categories of goods or works it considers comprise the goods and works which it acquires in order to sell or to hire them to another person, but which it does not have a special or exclusive right to sell or hire and which other persons are free to sell or hire under the same conditions.

(3) A utility may indicate that any of the information included in a report sent to the Minister pursuant to paragraph 2(c) above is of a sensitive commercial nature, and request that it not be published.

The Responsible Minister

27.—(1) Any reference to the Minister in these Regulations shall be deemed to be a reference to the Minister responsible for that utility.

(2) The Minister responsible for a utility shall be the Minister of the Crown whose areas of responsibility are most closely connected with the functions of the utility; and any question as to which Minister of the Crown’s areas of responsibility are most closely connected with the functions of a utility shall be determined by the Treasury whose determination shall be final.

(3) The requirement on a utility to send any report in accordance with regulations 7(2), 20(8) and 26 to the Minister shall be enforceable, on the application of the Minister responsible, by mandamus, or in Scotland, for an order for specific performance.

(4) Proceedings under paragraph (3) above brought in Scotland shall be brought before the Court of Session.

(5) In the application of this regulation to Northern Ireland references to the Minister shall include references to the head of a Northern Ireland department.

(6) The Minister to whom a report is sent in accordance with regulations 7(2), 20(8) and 26 shall send the report to the Treasury for onward transmission to the Commission.

Official Journal notices

28.—(1) Any notice required by these Regulations to be sent to the Official Journal shall be sent by the most appropriate means to the Office for Official Publications of the European Communities(14).

(2) The utility shall retain evidence of the date of despatch to the Official Journal of each notice.

(3) The utility may in exceptional cases request that a contract notice be published within 5 days of the date of despatch, provided that it is sent by electronic mail, telex or facsimile(15).

(4) The utility may publish the information contained in a contract notice in such other way as it thinks fit but it shall not do so until the notice has been despatched in accordance with paragraph (1) above and shall not publish any information other than that contained in the notice.

Confidentiality of Information

29.  A utility which makes information available to a supplier or contractor pursuant to these Regulations may impose requirements on him for the purpose of protecting the confidentiality of that information.

PART VII APPLICATIONS TO THE COURT AND CONCILIATION

Enforcement of obligations

30.—(1) The obligation on a utility to comply with the provisions of these Regulations other than regulations 7(2), 20(8) and 26, and with any enforceable Community obligation in respect of a supply or a works contract (other than one excluded from the application of these Regulations by regulations 6, 7 or 9 above), is a duty owed to suppliers and contractors.

(2) A breach of the duty owed pursuant to paragraph (1) shall not be a criminal offence but any breach of the duty shall be actionable by any supplier or contractor who, in consequence, suffers, or risks suffering, loss or damage.

(3) Proceedings under this regulation shall be brought in England and Wales and in Northern Ireland in the High Court and, in Scotland, before the Court of Session.

(4) Proceedings under this regulation may not be brought unless—

(a) the supplier or contractor bringing the proceedings has informed the utility of the breach or apprehended breach of the duty owed to him pursuant to paragraph (1) above by that utility and of his intention to bring proceedings under this regulation in respect of it; and

(b) they are brought promptly and in any event within 3 months from the date when grounds for the bringing of the proceedings first arose unless the Court considers that there is good reason for extending the period within which proceedings may be brought.

(5) Subject to paragraph (6) below, but otherwise without prejudice to any other powers of the Court, in proceedings brought under this regulation the Court may—

(a) by interim order suspend the procedure leading to the award of the contract in relation to which the breach of the duty owed pursuant to paragraph (1) above is alleged, or suspend the implementation of any decision or action taken by the utility in the course of following such a procedure; and

(b) if satisfied that a decision or action taken by a utility was in breach of the duty owed pursuant to paragraph (1) above—

(i) order the setting aside of that decision or action or order the utility to amend any document, or

(ii) award damages to a supplier or contractor who has suffered loss or damage as a consequence of the breach, or

(iii) do both of those things.

(6) In proceedings under this regulation the Court shall not have power to order any remedy other than an award of damages in respect of a breach of the duty owed pursuant to paragraph (1) above if the contract in relation to which the breach occurred has been entered into.

(7) Where in proceedings under this regulation the Court is satisfied that a supplier or contractor would have had a real chance of being awarded a contract if that chance had not been adversely affected by a breach of the duty owed to him by the utility pursuant to paragraph (1) above the supplier or contractor shall be entitled to damages amounting to his costs in preparing his tender and in participating in the procedure leading to the award of the contract.

(8) Paragraph (7) above shall not affect a claim by a supplier or contractor that he has suffered other loss or damage or that he is entitled to relief other than damages and is without prejudice to the matters on which a supplier or contractor may be required to satisfy the Court in respect of any other such claim.

(9) Notwithstanding sections 21 and 42 of the Crown Proceedings Act 1947(16), in proceedings brought under this regulation against the Crown the Court shall have power to grant an injunction or interdict.

Conciliation

31.—(1) A supplier or contractor who considers that—

(a) a utility has breached or may breach the duty referred to in regulation 30(1) above, and

(b) in consequence he has suffered, or risks suffering, loss or damage

and who wishes to use the conciliation procedure provided for in articles 10 and 11 of Council Directive 92/13/EEC(17) shall send a request for the application of the procedure to the Treasury for onward transmission to the Commission.

(2) Neither the request for nor any action taken pursuant to the conciliation procedure referred to in paragraph (1) above shall affect the rights or liabilities of the supplier or contractor requesting it, of the utility in respect of which the request is made, or of any other person.

PART VIII AMENDMENTS

Amendment of the Public Works Contracts Regulations and the Public Supply Contracts Regulations

32.—(1) The Public Works Contracts Regulations 1991(18) shall be amended by substituting—

(a) for paragraphs (a), (b) and (c) of regulation 6 the following paragraphs:

“(a) for the purpose of carrying out an activity specified in the second column of Schedule 1 to the Utilities Supply and Works Contracts Regulations 1992, other than an activity specified in paragraphs 2 or 3 thereof;

(b) when a contracting authority exercises the activity specified in paragraph 1 of Schedule 1 to the Utilities Supply and Works Contracts Regulations 1992, for the purpose of carrying out an activity specified in paragraph 2 or 3 thereof;”;

(b) in regulation 10(2)—

(i) in subparagraph (a) where it first appears “(3)” for “(4)” and “restricted” for “negotiated”;

(ii) in subparagraph (d) “(3)” for “(4)”;

(iii) in subparagraph (g) “(4)” for “(5)”;

(iv) in subparagraph (h) “(5)” for “(6)”;

(c) in regulation 12(4) “contractor” for “supplier”;

(d) in regulation 13—

(i) in paragraph (1)(b) “11(7)” for “11(6)”;

(ii) in paragraph (2) “2” for “3”;

(e) in regulation 18 “16(1)(b)” for “17(1)(b)”;

(f) in regulation 31(6) “paragraph (7)” for “paragraph (6)”; and

(g) in paragraph 6(a) of Part D of Schedule 2 “requests to participate” for “tenders”.

(2) The Public Supply Contracts Regulations 1991(19) shall be amended—

(a) by substituting for paragraphs (a), (b) and (c) of regulation 6 the following paragraphs:

“(a) for the purpose of carrying out an activity specified in the second column of Schedule 1 to the Utilities Supply and Works Contracts Regulations 1992 other than an activity specified in paragraph 2 or 3 thereof;

(b) when a contracting authority exercises the activity specified in paragraph 1 of Schedule 1 to the Utilities Supply and Works Contracts Regulations 1992 for the purpose of carrying out an activity specified in paragraph 2 or 3 thereof;”

(b) by inserting in regulation 10(3)(e), “and not attributable to”, after the words “unforeseeable by”; and

(c) by substituting in regulation 26(6) “has” for “had”.

Norman Lamont

Tim Wood

Two of the Lords Commissioners of Her Majesty’s Treasury

23rd December 1992