What’s a public contract?

 
 

The entire public procurement process starts with one essential component: need.

A public authority will identify something they need, and they’ll look for a supplier to fulfil that need. To do this, they publish a contract notice.

Essentially, it’s the public sector version of a wanted ad. And it’s where your journey to winning new business begins.

 
 

What is a contract notice?

A contract notice is how a public body formally announces an opportunity. It’s your first opportunity to understand what the buyer wants and, if you understand how to read a notice carefully, it’s your first chance to put yourself in the running for the eventual award.

Jargon Buster!

OJEU: The Official Journal of the European Union. The place where all tenders from the public sector valued above a certain financial value (or threshold) according to EU legislation must be published.

 

When you view a notice, it’s described as either ‘Below OJEU’ or ‘OJEU’:

‘Below OJEU’: Also known as non-OJEU or Low Value, these are contracts where the estimated value is less than the relevant Official Journal of the European Union (OJEU) threshold – currently just over £111,000 for most supplies and services contracts from central government.

‘OJEU’: Contract notices advertising higher-value procurements worth more than the relevant OJEU threshold.

 
 

More about thresholds

Any public sector organisation publishing a contract opportunity over a certain value (known as a threshold) must advertise it in the OJEU. There are different thresholds in place depending on the type of contract being awarded and the sector the contract is being advertised for.

For regular public contract notices to provide goods, works or services, the current thresholds are:

The Public Contracts Regulations

Suppliers

Service

Works

Entities listed in Schedule 1 (S.I. 1995/201)

£106,047

£106,047

£4,104,394

Other public sector contracting authorities

£164,176

£164,176

£4,104,394

Contracts for Social and other specific services

£589,148

Small Lots £62,842 £62,842 £785,530

In addition, the Public Contracts Regulations 2015 introduced a new category called ‘Social and other specific services’. This covers a wide range of service contracts and the advertising threshold for these contracts, irrespective of who the contracting authority, is £589,148 / €750,000.

However, some contracts in more specialised sectors require their own thresholds.

The European Utilities Contracts Regulations 2006 and Defence and Security Public Contracts Regulations 2011 are used for utility companies operating in the energy, water and transport sectors and defence and security related organisations and authorities, respectively.

Due to the specialised nature of these industries and marketplaces, the following specific thresholds are used:

The Utilities Contracts Regulations

Suppliers

Service

Works

All sectors

£328,352

£328,352

£4,104,394

Small Lots

£62,842

£62,842

£785,530

 

The Defence and Security Public Contracts Regulations

Suppliers

Service

Works

All sectors

£328,352

£328,352

£4,104,394

Small Lots

£62,842

£62,842

£785,530

Threshold values apply from 1 January 2016 to 31 December 2017. These thresholds are exclusive of VAT and relate to the full life of the contract.

 
 

What’s in a notice?

The contract notice will usually contain the following information:

  The name and contact details of the buying organisation
  Who will be entitled to use the contract (particularly if the contract is being placed on behalf of a group of public bodies)
  The type of contract on offer (supplies, works or services)
  The main commodity being procured
  Any other items required which are not covered by the main object category
  The tendering procedure that will be followed

The criteria that suppliers will have to meet
  Whether there’s an alternative way of meeting the requirements of the contract notice
  The total quantity or scope of the contract (One item or many? A one-time service or an ongoing package?)
  The economic, financial and technical capacity that will be expected of successful bidders

The notice could provide more information than this, and that’s great news for you. The more information offered, the better.

 
 

Contract Award Notice

An award notice gives information about a public contract which has been awarded to a supplier. It should include the following information:

 
  The date the contract was awarded
  The award criteria
  The number of offers received
  The name and address of the successful tenderer(s)
  The value of the contract
 

Award notices can be incredibly useful for a supplier. By understanding who is winning contracts you can track your potential competitors and build a clearer picture of the overall marketplace.

Perhaps more importantly, an award notice could alert you to further opportunities at a later date in the wider supply chain.

For example, if an award notice is published to build a new school and your firm can supply teaching equipment, you can use the award notice to contact the winning supplier to find out if future subcontracting opportunities will be available to provide the equipment your firm specialises in.

 
 

Prior Information Notice (PIN)

When a contract is worth over a certain value, buyers may issue a Prior Information Notice (PIN). A PIN is almost like a pre-contract notice: it advertises planned procurements.

This is considered best practice, but is not a mandatory requirement for the buying organisation.

The Public Contracts Regulations 2015 introduced a new way of using the PIN.

As well as being used to advertise future plans, a PIN may now be used as a ‘Call for Competition’ in both the Restricted Procedure and the Competitive Procedure with Negotiation.  This means that the buyer will not publish any further contract notice after the PIN so contractors will need to read the full text of the notice and respond accordingly.

PINs follow a standard form and outline:

 – who the buyer is

 – what’s required

 – the anticipated contract value

 – the type of contract

 – scheduled date for start of award procedure

PINs allow you to prepare to bid for the contract before the procurement process officially begins. The more prepared you are in advance of the contract being published, the better your eventual chances of success will be.

PINs also make it possible to reduce the time needed to complete and submit a bid.

 
 

Other types of opportunities to look out for

Framework Agreement

In some cases, a public sector authority will identify a need, maybe on a repetitive basis, but may not yet fully understand the full extent of what is required – for example, how long the need may last or how many suppliers may be needed to provide a solution.

In this case, a contracting authority may publish a Framework Agreement, either on its own or in collaboration with other buyers. This is an arrangement where the buyer selects suppliers and sets the terms and prices for a period in advance (often up to 4 years in the future), selects suppliers and then calls on those suppliers to deliver the specification when required.

Framework agreements are commonly set up to cover things required on a routine basis like construction and maintenance, various forms of consultancy, office and IT supplies, facilities operations and so on.

Although there is never a guarantee of work even if you are part of a Framework Agreement, being awarded a place on a framework is a sign to others that your business is a key player in the industry.

 
 

Now that you understand notices…

It’s time to get your hands on them!

As we’ve already discussed, the public sector is vast. There are thousands of buyers out there and, as a result, there are thousands of places you can look to find opportunities.

In the next section, we’ll show you where to get these opportunities and how to sort irrelevant contracts from relevant opportunities.

 
 

If you liked this chapter, you might also like this:

 
 
 

The Public Sector Marketplace

Back Chapter 2

How to find contracts

Chapter 4 Forward

 
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