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Procuring the future

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Katie Saunders and John Forde of Trowers & Hamlins explain how a dynamic purchasing system operates

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Procuring the future

A dynamic purchasing system (DPS) is a procurement procedure available under the UK procurement rules for commonly used purchases that are generally available on the market.

 

DPSs have been around for years, but were seldom used in the UK due to a series of strict rules about their set-up and use. The rules around DPSs were given a makeover in the 2014 directive, and incorporated into UK law via Regulation 34 of the Public Contracts Regulations (PCR) 2015 making DPSs more flexible and easy to use. In 2015, the Crown Commercial Service endorsed DPS for general use by UK contracting authorities.

 

A DPS works in a similar way to a framework agreement, by establishing a group of suppliers who have been pre-selected against stated criteria. The chosen suppliers, called ‘participants’, are then eligible to bid for specific projects awarded by a contracting authority as and when needed.

 


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There is no obligation on contracting authorities to use a DPS or to guarantee a minimum spend. DPSs can also be set up by central purchasing bodies for general use by current and future clients.

 

DPSs have a couple of advantages that make them commercially attractive. Unlike framework agreements, they are completely electronic procurement systems and not time-limited. Crucially, they are open to new suppliers at any time. This ‘dynamic’ feature may be especially useful for users seeking to demonstrate best value, which may be harder to do with the ‘closed list’ of a framework agreement.

 

There may also be advantages for landlords looking to recharge costs by way of service charges. This is because under Section 20 of the Landlord and Tenant Act 1985, landlords must consider nominations by leaseholders of alternative providers to provide a bid for the services.

 

If those nominated service providers are not appointed to the original framework agreement this creates a procurement problem for landlords in respect of compliance with PCR 2015.

 

However under the DPS arrangement, the nominated service providers can join the DPS and be included in a mini-competition provided they meet the required criteria.

 

Stage one: setting up a DPS

  • To set up a DPS, a contracting authority must place a call for competition in the Official Journal of the European Union to make known the intention to establish a DPS, and suppliers must be allowed at least 30 days to respond. Where applicable, a PIN may be used as an alternative to the contract notice.
  • The procurement documents should be made freely available electronically from the date of the advert and must remain available electronically throughout the duration of the DPS.
  • If the DPS is divided into categories, the selection requirements for each category should be appropriate to that category, and may vary between categories. In accordance with Regulation 59, suppliers should ‘self-certify’ their compliance with the selection requirements, and confirm that none of the grounds for exclusion apply, in order to gain admittance to the DPS.
  • Where a supplier has already submitted documents under a previous contract (DPS or otherwise) it should be asked to confirm these are still applicable, and only provide new documents as preceding ones expire, or circumstances change.
  • All suppliers who meet and pass the exclusion and selection criteria must be admitted to the DPS and/or the relevant categories within it. Suppliers may join the DPS at any point during its validity if they satisfy the selection requirements, and none of the grounds for exclusion apply. A contracting authority is required to evaluate suppliers’ requests within 10 working days of receipt.

Stage two: operating a DPS

  • In accordance with Regulation 54, once the DPS is set up, a contracting authority may award specific contracts by inviting all suppliers admitted to the relevant category to bid.
  • As with a framework, the award criteria to be used for the award of individual contracts are to be set out in the original notice. These criteria may be ‘formulated more precisely’ for specific contracts, as set out in the invitation to tender for the specific contract.
  • The award process and permissible award criteria are consistent with those for other procedures, with a minimum timescale for return of tenders of 10 days.
  • In accordance with Regulation 22, the DPS is to be mandatorily undertaken as a wholly electronic procedure.
  • There is no requirement to submit any form of award notice to the Official Journal following the setting up of the DPS, or when new suppliers are added to the DPS.
  • However, there is a requirement to publish contract award notices (which must be sent to the Publications Office within 30 days of award) for specific contracts awarded under the DPS. Authorities can choose to group DPS contract award notices on a quarterly basis, which must be sent within 30 days (after) the end of each quarter.

To join a DPS, suppliers complete a pre-qualification exercise, demonstrating their economic and financial standing and past experience. Suppliers who meet the contracting authority’s stated requirements will be invited to join the DPS, provided that they are not excluded under one of the mandatory or discretionary grounds set out in the PCR. Suppliers may apply as many times as they like, so it is possible for a supplier who was excluded earlier to apply again.

 

Throughout the life of the DPS, contracting authorities must allow new suppliers to apply to join the DPS, following an equivalent pre-qualification system as for the original participants. No limits are allowed to be set on the total number of participants in a DPS. This creates an advantage in terms of choice, but may make the DPS difficult to manage, especially if there are a high number of bidders in the marketplace.

 

DPSs are recommended for products, works or services that can be priced simply and where there are a limited number of available suppliers.

 

Procurements requiring a more complex assessment of price and quality, or where a high number of bidders are expected to bid, may be less suitable for DPSs and contracting authorities should continue to use framework agreements.

 

Katie Saunders, partner, and John Forde, senior associate, Trowers & Hamlins

 


This opinion piece was written independently, but first appeared in a chapter sponsored by Procurement Hub


 

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