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A sea change for legal services in social housing: The Public Contracts Regulations 2015

Background

The provision of social housing and related services is a complex business and almost all social housing providers rely to varying degrees on the provision of specialist legal services by external providers.

The relationship between RPs/RSLs and their external legal advisers has been in some cases unstructured and relatively informal, as legal services have for many years been exempt from the requirement for competitive tendering under the Public Contracts Regulations.

All this has changed however, with the coming into force earlier this year of the Public Contracts Regulations 2015. Under the new Regulations contracts for the provision of legal services above the relevant value threshold must now be advertised and exposed to competition.

The changes

Under the new rules, contracts for legal services above a value threshold of £625,050 must be advertised in the Official Journal of the European Union and exposed to competition in accordance with the specific requirements of the Regulations. In essence, this can mean that individual contracts without a fixed duration and framework agreements with a 4 year term with an average annual expenditure of less than £160,000 can be caught.

The impact of this new obligation is softened somewhat by the fact that the tender procedure for legal services contracts is subject to a new “light touch” regime designed for use on social, health and education contracts, which permits more flexibility in the structuring of the tender procedure. Care will be needed however to ensure that the conduct of the competition remains within permissible parameters, which in certain respects are not particularly clear.

Hidden dangers

RPs/RSLs will need to be alert to the fact that, under the aggregation rules set out in the Regulations, the requirement for competition applies whenever total expenditure on legal services by an RP/RSL creeps above that value threshold over a period of time. Depending in the relevant circumstances, this period can be up to 4 years in the case of framework agreements or arrangements without a specified duration.

It will also be necessary for RPs/RSLs to remember that even though competitive tenders may not be required under the Regulations for contracts falling below the above value threshold, it will still be necessary to comply with a host of other legal obligations such as the need to demonstrate value for money and a sufficient standard of probity. Where competitive tenders are invited outside the obligations of the Regulations, it will also be necessary to ensure, among other things, equality of treatment among bidders and sufficient rationality in any decisions taken.

It will also be impossible to hide the fact that contracts below the value threshold have been awarded without competitive tenders. Subject to a de minimis value of £25,000 a contract award notice must now be published for all contracts below the relevant value threshold giving much greater transparency to the manner in which contracts have been awarded by RPs/RSLs.