Alliancing and restrictions under EU Procurement law The EU procurement regulations governing most public sector and utilities contracts of any significance have long been regarded as imposing severe restrictions upon the use of partnering or alliancing agreements on a long term basis. The EU public procurement regulatory regime has at its heart the principle of open competitive tendering for all contracts within its scope. The formation of longer term relationships embracing a series of projects is, accordingly, contrary to this principle.
Under these new regulations, a utility or public body may award a contract under a framework agreement without a call for competition, provided that the framework agreement itself was awarded after a call for competition. A framework agreement is defined as a contract which establishes the terms upon which a utility or public body may enter into subsequent contracts and may be entered into with one or more service providers.
The benefits that can be obtained from industries seeking to move towards more efficient and less confrontational methods of procurement and in developing long term relationships has, however, also been recognised by the EU. Framework agreements were recognised in the utilities sector and given very restrictive recognition in other areas of public procurement. The more liberal arrangements for utilities have recently been extended to other areas of public procurement. The current regime, as incorporated into English law, is reflected in the Utilities Contract Regulations 2006 and the Public Contracts Regulations 2006 which came into force on 31 January 2006.
Partnering has a contribution to make in procurement of construction and services in engineering projects for appropriate parties in appropriate projects. One size does not fit all. If partnering or alliancing arrangements are entered into, they need to be underpinned by suitable legal structures. The Birse and Alstom cases provide salutary reminders of the consequences of failure to do so. Expressions of positive intention at the outset cannot alone guarantee successful conclusion of a project without conflict.
If you would like to discuss any of the issues raised in this paper in more detail please contact:
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