A significant change to how rolling contracts are handled under the new Regulations.
The 6 month implementation phase has now commenced, and the Act comes into force on 28 October 2024. Following all the recent amendments to the legislation, there are going to be quite a few things for RP’s to consider, but probably the most pressing one for all RP’s is a significant change in how rolling contracts will be handled under the Act:
Under the current Public Contract Regulations (PCR 2015), Reg. 6 states that if a contract does not have a capped value and / or is “rolling” the value is calculated by multiplying the monthly cost by 48 to give a 4 year value, which means that it is a very simple process to determine whether a contract is above or below threshold, and if it is below then a Contracting Authority is free to proceed as they wish.
From the 28th October this year, the status of rolling contracts alters radically. Schedule 3(5) of the Act states that if a contracting authority is “unable to estimate the value of a contract” they must treat the TCV as being above threshold. That means that unless an exemption can be applied, every rolling contract will need to be amended to a term contract or be awarded via a compliant route to market to maintain compliance. Unsurprisingly CCS are pushing their own frameworks such as G-Cloud as a quick and easy way to achieve compliance.
This Schedule has clearly been drafted with Central & Local Government in mind, and no one has considered the impact on non-governmental contracting authorities (groundhog day!). Hopefully, at some point CCS will issue a work-around by way of a PPN, but in the meantime you may wish to look at your pipeline to identify all rolling contracts and work with suppliers to port the affected contracts to sub-threshold fixed term, and potentially also capped value, contracts.