THE EUROPEAN PUBLIC PROCUREMENT POLICY

NEW PROCEDURES AND INSTRUMENTS

Christian SERVENAY

and Olivier MOREAU

Overall Presentation of the two New Directives

Directive 2004/18: Public sector

Directive 2004/17: Utilities (water, energy, transport, postal services)

Some historical references

• A lengthy development from the 70s to the 90s: from individual and specific directives to broad consolidated texts

• A new impulse from 1995 to 2000: Single Market Review, Green Paper,Communication, Proposals

The Aim of the Public Procurement Directives

to ensure the application of basic principles: - free movement of persons, goods and capital,

- freedom of establishment and to provide services - non-discrimination on grounds of nationality, - equality of treatment.

The main features of the Directives

Some important limits:

- a specific scope,

- key provisions aiming only at coordination,

- need of national implementing measures.

Objectives of the changes introduced

by the New Directives

- to simplify the existing legislation,- to modernise traditional rules, - to provide for more flexible solutions.

Main changes introduced by

both directives

Simplification measures:- only two directives:

public sector: 1 instead of 4.utilities: 1 instead of 2.

- less thresholds, expressed in euros- a new structure with a logical

presentation.

Main changes introduced by

both directives

Modernisation through the use of electronic means:- Main advantages: reduction of time, of

transaction costs, of bureaucracy; less risk of corruption.

- Key problem: to ensure non discrimination and respect equality of treatment.

USE OF ELECTRONIC MEANS

Binding provisions to regulate the use of electronic means:- similar level of acceptance of paper

documentation and electronic data,- detailed requirements for the presentation

and reception of applications and bids,- specific conditions to develop market places

(under the responsibility of purchasers).

USE OF ELECTRONIC MEANS

Provisions relating to means of communication:- contracting authorities choice,- generally available and interoperable,- not restrictive of access,- ensure integrity of data and confidentiality of

tenders (and requests).

USE OF ELECTRONIC MEANS

Five progressive steps in the use of electronic means:- transmission of notices- delivery of tender documents,- reception of applications and bids,- electronic auctions,- dynamic purchasing systems.

First Step

TO TRANSMIT THE CONTRACT NOTICES TO THE OJEU

• CONDITIONS : THE MEANS MUST BE GENERALLY AVAILABLE AND INTEROPERABLE WITH THE COMMUNICATION TECHNOLOGY PRODUCTS IN GENERAL USE

• ADVANTAGE : POSSIBILITY TO REDUCE THE TIME-LIMITS FOR RECEIPT OF TENDERS AND REQUESTS TO PARTICIPATE

Second Step

TO TRANSMIT THE TENDER DOCUMENTATION (AS WELL ANY ADDITIONAL DOCUMENT)

• CONDITIONS : UNRESTRICTED AND FULL ACCESS TO THE CONTRACT DOCUMENT FROM THE DATE OF PUBLICATION OF THE NOTICE BY GENERALLY AVAILABLE AND INTEROPERABLE MEANS OF COMMUNICATION (SEE TRANSMISSION OF NOTICES)

• ADVANTAGE : POSSIBILITY TO REDUCE THE TIME-LIMIT FOR RECEIPT OF TENDERS

Third StepTO ALLOW ELECTRONIC TRANSMISSION AND RECEIPT OF

REQUESTS TO PARTICIPATE AND TENDERS • CONDITIONS : INTEGRITY OF DATA, CONFIDENTIALITY OF REQUESTS AND TENDERS, AVAILABILITY OF TECHNICAL INFORMATION

REGARDING OF ELECTRONIC CONNECTION. • ADVANTAGE : POSSIBILITY TO REDUCE THE TIME-LIMITS FOR RECEIPT OF TENDERS.

Fourth Step

TO ORGANIZE ELECTRONIC REVERSE AUCTIONS (ERA)

• ERAs are possible only if contract specifications can be established with precision,

• ERAs must be announced in the contract notice,• ERAs must be based on price or features that are

quantifiable and can be expressed in figures or percentages,

• Any relevant information concerning the technical specifications of connection and the electronic auction process must be available.

Fifth Step

TO SET UP A DYNAMIC PURCHASING SYSTEM

A completely electronic process For commonly used purchases For a limited duration Open throughout its validity to any economic

operator Which satisfies the selection criteria And has submitted an indicative tender that complies with the specifications.

Main changes introduced by

Directive 2004/18

Flexibility:– Central Purchasing Bodies– Framework Agreements– Competitive Dialogue– Environmental and social issues

CENTRAL PURCHASING BODIES

Two possibilities:

- the body acquires supplies or services intended for contracting authorities

-or it awards contracts and framework contracts to which contracting authorities refer.

CENTRAL PURCHASING BODIES

Advantages: just one procedure (less time and cost); transfer of administrative burden; competition at higher level (larger choice, best quality); greater quantity (better price); bigger contracts (security of supply).

Problems: centralisation, lack of experience of public authorities, limited autonomy in choice, reduced access of SMEs.

FRAMEWORK AGREEMENTS

Agreements:- between one or more contracting authorities and one or more economic operators- aiming at establishing the main terms, but not all,- of contracts to be awarded during a given period,- in particular with regard to price and, when appropriate, the quantity envisaged.

FRAMEWORK AGREEMENTS

Advantages: just one procedure (less time and cost); competition at higher level (larger choice, best quality); greater quantity (better price); bigger contracts and and share of risks (security of supply); flexibility (adaptation to markets technical and financial evolution): possibility to buy products as the need appears and possibility to re-open competition in order to award orders or contracts

Problems: bigger contracts, some centralisation, risk of captive contracts, more complicated for contracting authorities, reduced access of SMEs.

FRAMEWORK AGREEMENTS WITH SEVERAL OPERATORS

MINIMUM : 3 ECONOMIC OPERATORS

IF ALL THE TERMS ARE LAID DOWN IN THE FRAMEWORK AGREEMENT, CONTRACTS MAY BE AWARDED BY APPLICATION OF THESE TERMS WITHOUT REOPENING COMPETITION

IF NOT, OBLIGATION FOR EACH CONTRACT TO CONSULT THE ECONOMIC

OPERATORS CAPABLE TO PERFORM THE CONTRACT

TIME-LIMIT LONG ENOUGH TO ALLOW TENDERS TO BE SUBMITTED

CONFIDENTIALITY OF THESE TENDERS UNTIL THE TIME-LIMIT HAS EXPIRED

CONTRACT AWARDED TO THE TENDERER WHO HAS SUBMITTED THE BEST TENDER ON THE BASIS OF THE CRITERIA SET OUT IN THE FRAMEWORK AGREEMENT.

COMPETITIVE DIALOGUE

For complex projects, contracting authorities may need to carry out something more flexible than the restricted procedure and more transparent than the negotiated one, in order to identify and define the means best suited to satisfy their needs.

Competitive dialogues apply when contracting authorities do not know what the market can offer as technical and/or financial or legal solutions.

HOW TO MANAGE A COMPETITIVE DIALOGUE ?

1st Step: Selection of candidates (at least 3)

- publication of a notice in the OJEU,- definition of the needs and requirements to be met in the notice or in a descriptive document,- select candidates after their suitability has been checked.

HOW TO MANAGE A COMPETITIVE DIALOGUE ?

2nd Step : Dialogue with selected candidates:- candidates present their first proposals on the basis of the descriptive document,- dialogue with each candidate on all aspects of its proposal and the solution proposed in order to allow the contracting authority to clarify,- possibility to organize successive stages in order to reduce the number of solutions,- when the solution or various solutions have been identified, participants are invited to present their final tenders.

HOW TO MANAGE A COMPETITIVE DIALOGUE ?

3rd Step : Award of the contract

The contracting authority chooses the most economically advantageous tender in accordance with the criteria mentioned in the notice,

Possibility of fine-tuning but no substantial change of the tender or the notice is allowed.

ENVIRONMENTAL AND SOCIAL ISSUES

Problem: May contracting authorities combine environmental or social requirements with public procurement rules (equal access of bidders and objectivity of procedures)?

For instance, are they allowed to buy « green buses » (less polluting) even if they are more expensive?

ENVIRONMENTAL ISSUES

ART. 23 : Possibility to include environmental characteristics into tender documents.

Technical specifications may be defined: by reference to national standards implementing

EU standardsor in terms of performance or functional

requirements if they are sufficiently precise to determine the subject of the contract

or partly by reference to one and the other.

ENVIRONMENTAL ISSUES

Art 53: Environmental award criteria are allowed only if those criteria:- Are linked to the subject of the contract,- Do not confer unrestricted freedom of choice on the contracting authority,- Are expressely mentioned in the contract notice and tender documents,- Comply with the fundamental principles of EU Law

SOCIAL ISSUES

Contracting authorities are allowed to lay down special conditions relating to the performance of the contract,

They may reserve the right to participate in award procedures to sheltered workshops whose more than 50% emplyees are people with disabilities.

CHANGES WHICH ARE SPECIFIC TO DIR. 2004/17

SCOPE OF APPLICATION OF DIR. 93/38

CONTRACTS AWARDED BY CONTRACTING AUTHORITIES OR PUBLIC COMPANIES WHICH PURSUE THEIR ACTIVITY IN THE DRINKING WATER, ENERGY, TRANSPORT OR TELECOMMUNICATION SECTORS,

OR BY OTHER ENTITIES (=PRIVATE ENTITIES) HAVING ONE OF THESE ACTIVITIES AND OPERATING ON THE BASIS OF SPECIAL OR EXCLUSIVE RIGHTS GRANTED BY A PUBLIC AUTHORITY

CHANGES WHICH ARE SPECIFIC TO DIR. 2004/17

1. EXCLUSION OF THE TELECOMMUNICATION SECTOR

Economic operators in this sector are now in competition and take their all decisions on an economical basis. No reason to submit them any longer to public procurement directives.

2. INCLUSION OF POSTAL OPERATORS

Their activities are progressively submitted to competition and become commercial since 2000. As a result these operators are will enter into the scope of DIR. 2004/17 before 31-12-2008 (depending on each member State).

CHANGES WHICH ARE SPECIFIC TO DIR. 2004/17

3. A NEW DEFINITION OF «SPECIAL OR EXCLUSIVE RIGHTS»

« Special or exclusive rights » mean rights granted by a competent authority by way of any legislative, regulatory or administrative provision the effect of which is to limit the exercise of activities defined in Art. 3 to 7 to one or more entities, and which substantially affect the ability of other entities to carry out such activity.

4. POSSIBILITY TO EXCLUDE AN ACTIVITY MENTIONED IN ART. 3 TO 7 IF IT IS DIRECTLY EXPOSED TO COMPETITION Exclusion of contracts intended to enable an activity mentioned in Art. 3 to 7 if, in the member State concerned, the activity is directly exposed to competition on markets to which access is not restricted (Art 30-1)Decision to be taken by the Commission according to a specific procedure.

A short reminder of the remedies provisions

• Directive 89/665: remedies for contracting authorities (contracts covered by directive 2004/18,

• Directive 92/13: remedies in the utilities sectors (contracts covered by directive 2004/17).

• Directive 2007/66: amending both previous directives

Main provisions of the remedies directives

• The principle:

• Member States must ensure that decisions taken by contracting entities may be reviewed as quickly as possible on the grounds that such decisions have infringed the public procurement legislation

Main traditional provisions of the remedies directives

– Three possible measures:– Interim measures including suspension of

the procedure,– Setting aside of decisions taken

unlawfully,– Damages granted to the person harmed by

the infringement.

Main improvements of the new directive

• Introduce and regulate a standstill period (cf. Alcatel case law (C-81/98)): 10/15 days period, some derogations.

• Several legal clarifications: availability, information of contracting authorities, suspension, time limits, ineffectiveness of contracts, ex ante transparency, alternative penalties.

Recent and future evolution

- some new legislative initiatives,- several non binding documents, - many studies and documents for reflection.

Future legislative initiatives

Three factors:- GPA revision,- completion of the present scope of the

directives (defence)- adoption of specific implementing measures

(list of entities, new CPV, new standard forms).

Adoption of non binding documents

Commission services will prepare:- a communication on Institutionalised Public

Procurement (IPP),- a Small Business Act in favour of SMEs.

Studies and documents for reflection

Commission services are developing:

- several projects listed in the Action plan on e-procurement (development on e-catalogues, e-signatures, compliance verification,…)

- evaluation studies of the Action plan,

Member States responsibility Member States shall: - adopt full primary and secondary

legislation implementing European texts, on time,- prepare guidelines and operational tools,- develop the capacity to manage an efficient

and safe system of Public Procurement.

Candidate countries responsibility

Candidate countries are required to progressively align their legislation and set up a relevant administrative capacity.

Purchasers responsibility

Public Purchasers shall make use of all legal opportunities: - implement national regulations with the aim

to get best value for money, - use the allowed flexibility (reduction of

deadlines, specific types of procedures,…),- take advantage of the new varied solutions

offered (e-procurement facilities).

Purchasers responsibility

Public Purchasers have a specific role to play:- in providing and dissiminating some

knowledge of legal provisions,- in advising on best practices,- in providing confidence among

operators and institutions.

Economic operators role

All economic operators should contribute to the completion of the Internal Market: - to a fair and sound competition,

- to the reduction of public expenditures, - to the quality of public services, - to the improvement of productivity and

the development of cross border trade.

Conclusions

What Commission services expect from you?

What Commission services could do for you?