Jonathan Denison Cross

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New Developments in Public Procurement in the EU

• Jonathan Denison Cross
• Dubrovnik, May 28, 2009

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Contents

• 1. Scope of EU Directives
• 2. New Government Procurement Procedures
• - Framework agreements
• - Competitive Dialogue
• - Mandatory Exclusions
• - Mandatory Standstill

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Office of Government CommercePolicy and Standards

• EU/International
• Negotiate European Directives and
  International Agreements
• Represent the UK in Europe and
  Internationally
• Transposition of EU Directives and GPA into
  UK Law
• Domestic
• Set domestic procurement policy and
  standards for departments and offer guidance on
  procurement rules
• Monitor performance and take action where
  necessary

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Summary of Key EU Activities (1)

• EC Directives
• 2004/18/EC 2004/17/EC
• Negotiation
• Implementation
• Constant monitoring/updating
• Remedies
• Defence
• Small Business Act SBA
• Social/Green policies
• E-Procurement
• Mandatory exclusion of convicted suppliers
  anti-corruption

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EU Activities (2)

• Statistics
• Requirement
• Collection procedures
• Infractions
• Procedures
• Benefits
• Supplier Feedback Service

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EU Activities (3)

• SIGMA Joint OECD/EU
• Technical Assistance Information Exchange
  Instrument (TAIEX)
• Wider EU Negotiations
• Regional Trade Agreements (RTA)
• Free Trade Agenda (FTA)
• Economic Partnership Agreement (EPA)
• Public Procurement Network e.g. Supplier Feedback
• Presidency Role
• Benefits
• EU Learning LAB

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Scope of EU DirectivesThe EU Objectives

• For procurement, the EU wants to
• Open up public procurement to competition
• Achieve better value for money better quality
  better prices
• Reduce corruption
• Establish a single market

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The Treaty Principles

• The Treaty sets the tone for all public
• procurement
• The EU Treaty (Treaty of Rome) sets out key
• principles which all Member States must
• follow
• Key Treaty principles relating to
• procurement include
• Equal Treatment
• Transparency
• Non-discrimination
• All public contracts, irrespective of their
  value, are subject to these principles

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EU Directives

• The EU Directives on Public Procurement are
• European Laws
• Directives are formed via consultation between
  the Commission, Member States, European Council
  and European Parliament
• A Directive, once adopted by the EU, must be
  transposed into domestic law within a specified
  timescale
• The framework of Directives is dynamic it is
  evolving to keep pace with changes in the real
  world
• Examples - Directive 2004/18/EC (The Classic
  Directive)
• - Directive 2004/17/EC (The Utilities
  Directive)
• - Directive 2007/66/EC (The Remedies
  Directive)

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Scope

• The Directives apply in this context
• The Directives apply to all Contracting
  Authorities
• All contracts which exceed certain thresholds
• Below threshold EU Treaty principles apply

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Sustainability

• Sustainability requirements can to be specified
  in the tender requirements, but these must be
  relevant
• Must be sufficiently precise to allow bidders to
  understand the requirement and to allow award of
  the contract
• Green production standards and relevant aspects
  of eco-labels can be specified but alternatives
  which demonstrate equivalence must be considered
• Special (including environmental and social)
  conditions relating to the performance of a
  contract may be specified if
• Compatible with Community law
• Mentioned in contract notice or in the
  specification
• Relevant to the contract

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Sustainability

• At the selection stage, assessment of
  capability to undertake works and services
  contracts may, where appropriate, include
• Assessment of environmental management measures
  relevant to the performance of the contract
• Certificates attesting compliance with
  environmental management standards may be
  requested but proof of equivalence must be
  accepted. E.g. EMAS (eco management and audit
  scheme) certificates

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Sustainability

• Relevant contracts may be limited to supported
  businesses / employment programmes / factories
  which employ mostly disabled people unable to
  gain normal employment must be stated in the
  contract notice (Article 19 NEW)
• A supplier may be excluded for proven
  non-compliance with environmental and social
  legislation relating to professional misconduct
  or for a poor track record on previous contracts
  involving environmental or social requirements
• Contract award criteria may include environmental
  characteristics provided these are linked to the
  subject matter of the contract and looked at from
  the point of view of the contracting authority
  e.g. running costs, energy costs and additional
  environmental quality (toxic emissions) etc.

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Procedures

• There are 4 main procedures available
• Open Procedure
• All potential suppliers can bid
• Restricted Procedure
• 2 stage procedure only short-listed suppliers
  can bid
• Negotiated Procedure
• Exceptional procedure direct negotiation
• Competitive Dialogue Procedure (NEW)
• New procedure for complex contracts controlled
  negotiation

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Types of Contract

• Contracting Authorities can choose their
  preferred model
• Fixed Contract
• Precise agreement clear about volumes clear
  about prices clear about delivery timescales
• Framework Agreement (NEW)
• More flexibility parties agree broad terms
  contracts are formed when the buyer calls-off
  the framework 4 years max closed system
  mini-competitions used for multiple suppliers
• Dynamic Purchasing System (NEW)
• Similar to a framework agreement but a) must be
  entirely electronic and b) the system is open
  new suppliers can join after the framework has
  been awarded

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Publication of Notices

• Contracts covered by the Regulations are
• subject to advertising and transparency
• rules
• Prior Information Notice (PIN)
• Not compulsory. Used to
• Warm up the marketplace
• Reduce minimum timescales
• Helpful to SMEs in particular
• Contract Notice
• Commonly referred to as the Official Journal of
  the European Union (OJEU) advertisement
• Contract Award Notice
• Confirms the results of the award procedure

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Selection of Tenderers

• Minimum numbers of those invited to tender can be
  stated in the Contract notice, but should be
  sufficient to ensure genuine competition
• Such minimum numbers are
• 5 for the restricted procedure
• 3 for the negotiated (with publication of a
  contract notice) procedure
• 3 for the competitive dialogue procedure
• Those found guilty of organised crime, corruption
• offences or fraud Must be excluded. This
• requirement is NEW and supports Community
• efforts to tackle such issues.

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Award Criteria

• EU Directives permit either lowest price or most
  economically advantageous tender (MEAT)
• Contract notices and documentation must provide
  the relative weighting given to each criterion
  used to judge MEAT
• Where this is not feasible, award criteria must
  be stated in descending order of importance
• MEAT award criteria may include environmental
  characteristics (e.g. energy savings, disposal
  costs) provided these are linked to the subject
  matter of the contract

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Framework AgreementsBackground

• An agreement with suppliers to establish terms
  governing contacts to be awarded within given
  period, especially regarding price and quality
• Allows for specific purchases or call offs to be
  made throughout term of agreement
• If the framework is itself a contract obliging in
  writing an agreement to purchase, EU rules apply
• If the framework sets out terms and conditions
  for subsequent call offs but no obligation on
  procurers to buy, contract only formed when
  purchases are called off

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Framework AgreementsProcess

• Need to advertise framework in OJEU if estimated
  maximum value over lifetime exceeds relevant
  threshold
• 4 year maximum length for framework agreement
  can only be exceeded in exceptional circumstances
  such as where 4 years are insufficient for a
  return on investment
• OJEU notice needs to include estimated total
  value of goods/works/services for which call offs
  are to be placed and if possible value and
  frequency of call offs to be awarded
• Awarding of call offs under framework agreements
  does not require contracting authorities to go
  through full procedural steps in directives
  although treaty provisions still apply

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Framework AgreementsBenefits

• Can save transaction costs
• Can provide vfm savings
• Will be helpful for suppliers
• As long as properly and fairly operated

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Competitive Dialogue

• A new procedure created by the EC and used by
  public bodies procuring Public Private
  Partnership projects for infrastructure assets

OJEU Notice
Pre Qualification
Select Participants
Dialogue Phase
Final Tenders
Selection of Preferred Bidders
PB Clarification
Contracts Signature
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Competitive Dialogue

• During all procurements, contracting authorities
  work in partnership with bidders to ensure that
  bid costs are kept to a minimum and to ensure
  value for money

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Mandatory Exclusion

• Mandatory requirement for contracting authorities
  to exclude suppliers convicted of certain
  offences e.g. fraud and bribery
• Applies to individuals directly involved in the
  tendering process
• Evidence of convictions can be obtained through
  central government records
• Unspent and spent convictions

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Mandatory Standstill Period

• 10 Day Mandatory Standstill period for public
  contracts following European Court of Justice
  (ECJ) judgements
• Enables award decision to be set aside by a court
  where aggrieved bidder has been prejudiced by
  breach of rules
• Contracting authorities must inform all suppliers
  who have tendered in writing of the result of the
  award and provide feedback to unsuccessful
  tenderers
• Does not apply below threshold
• Guidance notes can be found on the OGC website
  www.ogc.gov.uk