Q&As

Where a group company structure has been set up by a local authority, is the 80% calculation of a company's activities for its controlling authority under regulation 12 of the Public Contracts Regulations 2015, SI 2015/102, calculated with reference to the group or each individual company?

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Published on LexisPSL on 09/10/2020

The following Public Law Q&A provides comprehensive and up to date legal information covering:

  • Where a group company structure has been set up by a local authority, is the 80% calculation of a company's activities for its controlling authority under regulation 12 of the Public Contracts Regulations 2015, SI 2015/102, calculated with reference to the group or each individual company?
  • How is the 80% calculation of a controlled legal person’s activities determined for the purpose of this exemption?

Regulation 12 of the Public Contracts Regulations 2015 (PCR 2015), SI 2015/102, provides that the award of a public contract by a contracting authority to a separate legal entity under its control may be exempt from the public procurement rules under PCR 2015, SI 2015/102, Pt 2, provided that certain specified conditions are met. Conditions for applying this exemption (also known as the ‘in-house exemption’ or ‘Teckal exemption’), include the following:

  1. control—the contracting authority (individually or jointly with other authorities) exercises control over the legal person concerned, which is similar to that which it exercises over its own departments

  2. function—more than 80% of the activities of the controlled legal person are carried out in the performance of tasks entrusted to it by the controlling contracting authority/authorities or by other legal persons controlled by the contracting authority/authorities

  3. private capital—there is no direct private capital participation in the controlled legal person (except non-controlling/non-blocking private capital participation required by law, which do not exert decisive influence on the controlled legal person)

The term ‘legal person’ for the purpose of this exemption is defined under PCR 2015, SI 2015/102, reg 2 as ‘a person, whether governed by private law or public law, other than a natural person’.

How is the 80% calculation of a controlled legal person’s activities determined for the purpo

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