This Nutshell will evaluate the recently published guidance on the scope and operation of Dynamic Markets under the new Procurement Act.
Introduction
The Procurement Act 2023 is expected to come into force on 28th October 2024.
The Act will, in particular, revoke the following:
- Public Contracts Regulations 2015 (PCR)
- Concession Contracts Regulations 2016
- Utilities Contracts Regulations 2016
Key terms
A dynamic market under the Act is a list of suppliers who have met the ‘conditions for membership’ of the dynamic market and are therefore eligible to participate in future procurements. Contracting authorities should note that admittance to a dynamic market does not (unlike the award of a framework) amount to the award of a public contract.
Establishment and membership of dynamic markets
A contracting authority should first publish a Dynamic Market Intention Notice which must, as explained further below, enable suppliers to determine whether they meet the conditions for membership and can therefore apply to join the market.
Conditions for membership of a dynamic market are similar to conditions for participation used in the award of a public contract. Conditions for membership must be a proportionate way of assessing a suppliers’ legal and financial capacity to perform contracts. The guidance explains that when considering whether a condition for membership is proportionate, contracting authorities must take into account the nature, complexity and cost of contracts to be awarded under the dynamic market.
The number of suppliers on a dynamic market cannot be limited and the conditions for membership of a dynamic market cannot be modified during the life of the dynamic market.
Removing members from a dynamic market
Contracting authorities are required to remove a supplier from a dynamic market where the supplier is an excluded supplier.
Contracting authorities have discretion to remove a supplier from a dynamic market where:
- The supplier is an excludable supplier
- The supplier does not meet the conditions for membership of the dynamic market
- The supplier has become an excludable supplier since joining the dynamic market
- The contracting authority has become aware that the supplier was an excludable supplier when it was admitted to the dynamic market and so could have been excluded at that point.
Before removing a supplier from a dynamic market, the contracting authority must inform the supplier that it is being removed, and the reasons for its removal.
The supplier can reapply for membership of the dynamic market if it can subsequently demonstrate that it now satisfies the conditions for membership or is no longer an excluded or excludable supplier.
Awarding a contract under a dynamic market
Contracting authorities should note that the award of a contract under a dynamic market must be done through the competitive flexible procedure. Contracts cannot be directly awarded through the dynamic market.
When procuring a contract under a dynamic market, a contracting authority must exclude suppliers that are not members of the dynamic market from participating or progressing in the competitive flexible procedure. However, a supplier can submit an application for membership of the market. The contracting authority must consider this application before excluding the supplier on the basis that the supplier is not a member of the dynamic market.
The guidance suggests that contracting authorities, in order to effectively manage the requirement to consider applications for membership, state in the Dynamic Market Notice for the relevant procurement a date by which applications must be submitted to ensure that there is sufficient time to consider them before the deadline to submit tenders.
Fees
Fees may be charged to suppliers on a dynamic market provided they are set out in the documents establishing the dynamic market.
For a dynamic market that is not a utilities dynamic market, fees can only be charged to suppliers that are awarded a contract under the dynamic market and such fees can only be a fixed percentage of the estimated value of the contract awarded to the supplier under the dynamic market.
Notices required for establishing a dynamic market
- Dynamic Market Intention Notice
The information provided in this notice should be sufficient to enable suppliers to determine whether they meet the conditions for membership and can decide whether they wish to apply to join the dynamic market.
- Dynamic Market Establishment Notice
This notice must be published as soon as reasonably practicable after the dynamic market has been established and should include the date the dynamic market was formed and details of the suppliers who have been admitted to the dynamic market
- Dynamic Market Modification Notice
This notice must be published as soon as reasonably practicable after the dynamic market has been modified and should include the following:
- The date from which the modification has effect;
- If the list of suppliers on the dynamic market is being amended, details of any supplier being added or removed;
- A summary explaining any other modifications being made. The guidance states that this summary should be sufficiently detailed to allow interested parties to identify the nature and scope of the modification.
- Dynamic Market Cessation Notice
This notice must be published as soon as reasonably practicable after the dynamic market ceases to operate.
Notices required for awarding a contract under a dynamic market
A Tender Notice is required when procuring a contract under a dynamic market. The notice should include a statement that the contract will be awarded by reference to suppliers’ membership of a dynamic market.
The guidance makes clear that contracting authorities are not required to observe a mandatory standstill period when awarding a contract under a dynamic market but may choose to apply a voluntary standstill.
The provisions relating to transparency and noticing for competitive flexible procedures will also apply, meaning that a Contract Details Notice will be required following the award of a contract under a dynamic market.
What does this mean?
Dynamic markets will not operate in a similar way to dynamic purchasing systems under the PCR due to the obligation to conduct a competition when awarding a call-off contract. As well as this, contracting authorities should make note of the additional notice requirements introduced by the Act given the importance of transparency under the new regime.
For further information please contact Melanie Pears or Tim Care in our Public Sector Team.
This article first appeared on https://www.wardhadaway.com/insights/updates/procurement-in-a-nutshell-procurement-act-2023-guidance-dynamic-markets/
