Reg. 12 (PCR 2015)

Public contracts between entities within the public sector

In: Plan > Strategy and plan

Overview

This regulation provides that Part 2 PCR 2015 does not apply to contracts awarded by contracting authorities to ‘controlled persons’.

‘Controlled persons’ are legal persons:

  • whom the contracting authority exercises a decisive influence over (in terms of both strategic objectives and significant decision)
  • who carry out 80% of activities in the performance of tasks entrusted to it by the contracting authority (or by other legal persons controlled by the contracting authority), and
  • who do not have any direct private investment.

This regulation also applies in the following situations:

  • where a contracting authority awards a contract to its controlling contracting authority (or another legal person controlled by the same controlling contracting authority)
  • where a contracting authority awarding a contract has joint control (with at least one other contracting authority) over a controlled person who is being awarded the contract, and
  • where a contract establishes a co-operation between two contracting authorities with the aim of achieving common objectives in the provision of public services. The co-operation between the contracting authorities must be solely in the public interest and the co-operating contracting authorities must perform less than 20% of the public services on the open market.

Objective at this commercial stage

Part 2 PCR will not apply to any contracts between contracting authorities and controlled persons, or between contracting authorities, as referred to in this regulation (i.e. regulation 12).

Key considerations at this commercial stage

Contracting authorities should:

  • ensure the structure and circumstances of any contracts are reviewed and consideration is given as to whether this regulation (i.e. regulation 12) will apply.

See also in the Procurement Act 2023:

  • Section 3: Public contracts
  • Schedule 2: Exempted contracts, Part 1: Counterparty exempted contracts, Paragraph 2: Vertical arrangements
  • Schedule 2: Exempted contracts, Part 1: Counterparty exempted contracts, Paragraph 3: Horizontal arrangements

Additional support and guidance

Make sure you:

  • read the regulation
  • seek legal and commercial advice in the context of specific procurements