Overhauling EU public procurement rules
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In December 2011, the European Commission adopted proposals for the reform of EU public procurement rules. The Commission hopes that the proposals will be adopted by the EU institutions by the end of 2012. If that timetable is met, Member States will have to implement the new procurement framework into national law by the end of June 2014.
The proposed new framework – comprised of new directives on public sector procurements, procurements by utilities and concessions - is intended to be simpler, more flexible and allow public contracts to be better used to support the Commission's "Europe 2020" strategic goals on employment, innovation, education, social inclusion and climate/energy.
The proposals also include measures aimed at giving SME's and start-ups better access to procurement markets, safeguards against conflicts of interest and specific rules governing pre-market engagement.
A series of EU working papers (reference 2011/0438(COD)), available on the European Council website, explain the proposals in detail. This article summarises the main changes proposed to achieve a more flexible procurement process and to facilitate strategic use of public procurement.
Flexibilisation of Procedures
Competitive procedure with negotiation: This procedure would replace the existing negotiated procedure with publication of a contract notice. It includes more structured rules to safeguard objectivity, non-discrimination and equal treatment. The changes include requiring contracting authorities to make clear, from the outset, which elements of the procurement are negotiable, and which are not.
Innovative partnership: A new procedure would be available when a contracting authority requires the design and delivery of a new, innovative product or service which is not available on the market. Broadly, the innovative partnership procedure utilises the competitive procedure with negotiation, plus some additions and qualifications, such as particular attention being paid to a candidate's capacity and experience in researching and developing innovative solutions. It is likely to be most useful in areas which address the current societal challenges such as climate change and water efficiency.
Competitive dialogue: The existing competitive dialogue procedure would be retained but with a significant change. The limitation on contracting authorities only being able to ask the successful bidder to "clarify aspects of the tender or confirm commitments contained in the tender" would be relaxed and contracting authorities would be permitted to "negotiate the final terms of the contract … provided such negotiations do not have the effect of modifying essential aspects of the tender or the public procurement". This would give contracting authorities some room for manoeuvre in the final tender stages.
Strategic Use of Public Procurement
Contract award criteria: Contracting authorities would be allowed to make a broader assessment when assessing which tender is the most economically advantageous. As well taking into account cost, which can include all forms of costs, price and "life-cycle costs" (which will have its own conditions), contracting authorities will also be allowed to have regard to additional criteria linked to the subject matter of the contract (e.g., innovative character, accessibility and factors directly linked/relating to the process of production or provision of purchased goods, services or works). In addition, member states would be permitted to restrict or exclude the criterion of lowest cost (currently lowest price) for certain types of contracts.
Technical Specifications: Contracting authorities would have to decide upfront how intellectual property is to be dealt with, and document this in the technical specifications. In addition, technical specifications would need to take into account accessibility criteria where the subject of a procurement is intended for use by persons.
Excluding bidders for breach of social/labour and environmental law obligations: Contracting authorities would be able to exclude bidders if they are aware that they have infringed obligations laid down in social and labour law.
The Commissions' proposals must now work their way through the European institutions. We will continue to monitor and report on the progress of the reforms. It remains to be seen how the UK government will implement them in light of Francis Maude's new strategic approach to how the UK government procures goods and services (announced in November 2011), and whether the UK approach will be adjusted or "fine-tuned" in light of the European proposals.