European Union Legislation and Procurement Reform (Scotland) Act 2014: reference pack

4. Specific Exclusions from the scope of the Legislation

Exclusions from the scope of the Public Contracts (Scotland) Regulations 2015 and the Procurement (Scotland) Regulations 2016

In addition to exclusions from the scope of procurement legislation in the 2012 Regulations, the 2015 Regulations introduce further exclusions:

• Certain legal services,
• Civil defence, civil protection, and danger prevention services ^[12] that are provided by non-profit organisations or associations except patient transport ambulance services,
• Public passenger transport services by rail or metro,
• Political campaign services ^[13] when awarded by a political party in the context of an election campaign.

These specific exclusions also apply to Reform Act Regulated procurements.

Exclusions from the Scope of the Concessions Contracts (Scotland) Regulations 2016

Regulations 9-12

Exclusions applicable to concessions awarded by contracting authorities and contracting entities . These regulations contain much of the same information as the Public Contracts (Scotland) Regulations 2015 on specific exclusions for service contracts. It also contains information on “Public contracts awarded and design contests organised pursuant to international rules” and “Service contracts awarded on the basis of an exclusive right”.

Regulation 13

Specific exclusions in the field of electronic communications. This regulation excludes concessions from the scope of the Regulations where a contracting entity is providing or exploiting public communications networks.

Regulation 14

Specific exclusions in the field of water. This regulation covers the exclusion of works and services concessions to provide or operate fixed networks intended to provide a service to the public in connection with the production, transport or distribution of drinking water or the supply of drinking water to such networks. Also, concessions for the disposal or treatment of sewage and for hydraulic engineering projects, irrigation or land drainage (provided that the volume of water to be used for the supply of drinking water represents more than 20% of the total volume of water made available by such projects, irrigation or drainage installations) should also be excluded in so far as they are connected with an excluded activity.

Regulation 15

Concessions awarded to an affiliated undertaking. This regulation sets out the specific circumstances within which the Concessions Contract (Scotland) Regulations 2016 will not apply to affiliated undertakings. An affiliated undertaking is any undertaking of the annual accounts which are consolidated with those of the contracting entity in accordance with the requirements.

Regulation 16

Concessions awarded to a joint venture or to a contracting entity forming part of a joint venture. This clarifies that the Regulations do not apply to joint ventures where they are for the purpose of carrying out activities to provide: gas or heat, electricity, public transport, airports and ports, postal services, extracting oil or gas, and exploring for or extracting for coal. Neither does it apply to a contracting entity which is the parent organisation to the joint venture.

Regulation 17

Notification of information by contracting entities. This regulation requires contracting entities to notify the Commission if they are requested to do so where they have applied the exclusions as set out in regulations 15 and 16 of the Concessions Contracts (Scotland) Regulations 2016 so that they can determine whether or not the exclusion has been made legitimately.

Regulation 18

Exclusion of activities which are directly exposed to competition.

This regulation refers to situations where there is sufficient competition in a marketplace and therefore no requirement to legislate for it. This is on the basis that a contracting entity can demonstrate that, in the Member State in which it is performed, the activity is directly exposed to competition on markets to which access is not restricted. The activity concerned may form part of a larger sector or be exercised only in certain parts of the Member State concerned.

Regulation 19

Concessions between entities within the public sector. This states that the Regulations do not apply in situations where the control and the function tests are satisfied and there is no private sector involvement in the controlled legal person. This can also be achieved through joint control. In addition, the codification of the Hamburg Case also provides clarity so that contracting authorities and entities can collaborate as long as it is in the public interest and there is no profit derived from the collaboration.

Which Research and Development services are covered?

The Public Contracts (Scotland) Regulations 2015 will continue the application of the Regulations to research and development contracts, but only where the benefits accrue exclusively to a public body for its use in the conduct of its own affairs and the contracts are wholly paid for by the public body.

However, the Public Contracts (Scotland) Regulations 2015 are now more specific as they shall only apply to public service contracts for research and development services which are covered by specific CPV codes.

These specific exclusions also apply to Reform Act Regulated procurements.

Public or Concessions Contracts between Public Sector organisations

A contract or concession between two or more public bodies may fall outside the procurement regulations -

The following cumulative conditions must all be met before a contract falls outside the scope of the procurement regulations:

• Where the buying authority exerts on the supplying authority a control similar to that which it exercises over its own departments.
• Where 80% of the activities of the supplying authority are for the buying authority or other bodies controlled by it.
• Where there is no direct capital participation in the “supplying authority”. Direct capital participation could for instance be shares owned by a body which is not itself a public body or investment in the “supplying authority” by other legal persons.

A public or concession contract between two or more contracting authorities or entities may be exempted from the procurement regulations where the following cumulative tests are met:

• The participating contracting authorities/entities co-operate to perform public services they must provide with a view to achieving objectives they have in common;
• The implementation of that cooperation is only in respect of the public interest; and
• The participating contracting authorities/entities perform on the open market less than 20% of the activities concerned by the cooperation.