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Key government procurements are set to get tougher at the pre-qualification questionnaire (PQQ) stage, as a new set of PQQ questions published by HM Government's central procurement body includes questions which allow past poor performance by bidders to be taken into account and questions about a bidder's tax compliance record.
These new PQQ questions come into effect immediately for all centrally-tendered procurements, with limited exceptions.
The Crown Commercial Service published a procurement policy note (PPN 08/14) on 11 July 2014, which set out fresh guidance on the use of PQQs by central government departments, executive agencies and non-departmental government bodies.
This PPN sets out new questions that are to be used by these bodies as part of their PQQ at the selection stage of tender processes for contracts awarded by them, allowing past bidder performance to be factored into any assessment of reliability as an aspect of technical competence, and tax compliance to become a formal category for determining inclusion or exclusion at the qualification stage.
These new questions are annexed to the PPN and constitute 'core' questions, so will mandatorily form part of every new PQQ from the date of the PPN onwards. It should be noted that this PPN does not apply to construction procurements.
The guidance notes to candidates in relation to the new core question concerning bidders' past performance warns that:
"any failure to discharge obligations under the previous principal relevant contracts of those who will be involved in performing the contract (if awarded to the bidder) is taken into account in the assessment of whether specific minimum standards or reliability for such contracts are met."
This makes clear that past performance now forms a central element of the assessment as to technical capability and reliability, meaning that it will count materially against tenderers if they have had difficulties meeting the specifications and KPIs of similar contracts in the past.
What is more, the guidance also states that it is now central government procurement policy to "re-assess reliability based on past performance before key points in the procurement process".
This is stated to include short-listing, preferred bidder status and contract conclusion, meaning that (as the PPN explicitly provides) bidders can be asked to update the authority or provide additional evidence relating to on-going performance on new or existing contracts.
For all these reasons, it pays even more than previously to ensure that when bidding for central government contracts you don't allow the preparation of your organisation's PQQ response and subsequent tender submission to detract from your performance on current or recent contracts with that body and/or for similar works in another location.
The PPN also confirms the inclusion in central government PQQs of the various tax questions set out in its policy note of earlier this year (PPN 03/14: promoting tax compliance). This includes questions seeking confirmations relating to:
If there have been any instances of the above, the PQQ question allows you to provide evidence of actual or planned corrective action, subsequent changes in personnel or ownership and any changes in financial, accounting, audit or management processes that might help to mitigate any tax compliance issues raised.
If you think you might have a tax compliance issue in relation to any PQQ you have been sent, our dedicated corporate tax team at Speechly Bircham can assist in working out whether this needs to be disclosed in your response, and how any adverse effect on your PQQ scores can be limited.
The EU & Competition Law team are of course expertly placed to field any queries you might have about the implications of the new PQQ questions discussed in this update.
In many cases it is the manner in which you answer, and the way in which you select and present the information to be included in your responses, which will help determine your scores in the PQQ.
Indeed, if you think about past performance and/or tax issues early enough, we can help you put in place a mitigation programme and, if necessary, help you to decide whether the opportunity advertised is one to pass on for the time being.
As you know, these are all vitally important commercial considerations for your business.
This article was written by Rory Ashmore.
For more information please contact Rory on +44 (0)20 7427 1031 or firstname.lastname@example.org