Public Contracts Regulations 2015 - Regulation 73
On 26 February 2015, the Public Contracts Regulations 2015 came into force, transposing into UK national legislation European Union Directive 2014/24/EU. Amongst a raft of changes, one aspect that will be of particular importance to the public and private sectors alike is Regulation 73. This places an obligation on contracting authorities to provide arrangements to govern the sometimes uncomfortable relationship between procurement and contract law.
Regulation 73 sets out three scenarios in which the contracting authority must be able to terminate the contract of an economic operator:
- The contract has been subject to a substantial modification which would have required a new procurement procedure.
- Grounds for exclusion of the economic operator (as defined by the Directive) become applicable.
- The contract is declared ineffective by a Court.
This is not a change in the law per se as various jurisprudence has created this duty for contracting authorities to terminate when the circumstances outlined above occurred. What Regulation 73 provides for is an obligation for contracting authorities to codify the right to terminate in their contracts. However, the mechanics of how this is to be achieved – notices, payment for loss and expense etc. – is at the discretion of contracting authorities.
Further, and in a ‘belt-and-braces’ approach, Regulation 73 states that where a contracting authority has not included provisions for termination on one or more of the three grounds, such a right may be implied.
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