Regulation 12 of The Public Contracts Regulations concerns provisions concerning contracts between one public body and another public body, also referred to as public-public contracts. Some of these contracts are subject to the EU procurement rules, whereas others are excluded.
Regulation 12 sets out various tests to determine whether a public-public contract is excluded from the rules. These are sometimes referred to as 'Teckal' exemptions after a case bought by a company of the same name.
Regulation 12(1) sets out the cumulative conditions for the “vertical” exclusion to be met. These can be summarised as:
- Where the contracting authority exerts on the ‘supplying authority’ a control similar to that which it exercises over its own departments (R12(1)(a)), and
- Where more than 80% of the activities of the supplying authority are performed for the buying authority or by other bodies controlled by it (R12(1)(b)), and
- Where there is no direct private capital participation in the ‘supplying authority’ (R12 (1) (c)).
Regulation 12 (7) sets out the cumulative conditions for the horizontal exclusion to be met. These are:
- The participating authorities co-operate to perform public services they provide, meeting common objectives (R 12(7)(a)) and
- The co-operation is for public interest reasons only (R 12(7)(b)) and
- The participating authorities perform less than 20% of the cooperative activities on the open market (R 12(7) (c)).
Regulations 12(4 - 6) set out the conditions where a contracting authority may award a public contract directly to a supplying authority/organisation over which it exercises control jointly with other contracting authorities, even though it does not exercise control over the supplying authority/organisation individually.
Regulation 12(2) makes clear that a contracting authority may make use of the exemption where it awards a contract to its controlling contracting authority or to another legal person controlled by the same contracting authority.
The CCS guide on public to public contracts provides more information and answers to common questions such as ‘what constitutes control of an organisation’ and ‘how to calculate the percentage of activities’.