• The new EU Public Procurement Directives

Carina Risvig HamerPh.d. Assistant Professor, University of Southern Denmark Carh@sam.sdu.dkwww.udbudslov.dk

Agenda

• Main changes in the EU Procurement Directive

• Implementation in Denmark

Modernisation of the EU Procurement Directives

• January – April 2011: Commission’s Green Paper hearing

• April 2011: Single Market Act points out the procurement directives as a key initiative

• December 2011: Commission Proposals• December 2012: Council general position• January 2013: Parliament proposal • June 2013 – Political agreement• Published March 2014 (Directive 2014/24/EU)

Public Procurement Directive 2014/24/EU

• Cluster 1: Flexible Procedures• Cluster 2: Strategic use of Procurement • Cluster 3: Reduction of documentation costs • Cluster 4: E-procurement• Cluster 5: SMV access • Cluster 6: Aggregation of demands• Cluster 7: Other procedural requirements• Cluster 8: Sound procedures • Cluster 9: Governance• Cluster 10: Scope

Cluster 1. Flexible procedures

1. Increased access to the procedures ”Competitive procedure with negotiation” and ”competitive dialogue”

– Article 26(1)(C) Contracting authorities may apply a competitive procedure with negotiation or a competitive dialogue when

– ”i) (i) the needs of the contracting authority cannot be met without adaptation of readily available solutions;

2. Innovation partnership, (Article 31)

3. Reduction of the minimum time limits

Cluster 2. Strategic use of procurement

1. Life-cycle costing Article 68

2. Use of labels: specific environmental, social labels, Article 43

3. New terminology regarding award criteria

4. Possibility to use tenderers experience in the award phase when– (b) organisation, qualification and experience of staff assigned to

performing the contract, where the quality of the staff assigned can have a significant impact on the level of performance of the contract;

5. Abolishing the A/B Services and introduction of a new “light regime”

New terminology regarding award criteria

• Art. 67(1), the award of public contracts shall be based on the most economically advantageous tender (MEAT)

• Art. 67(2) MEAT shall be identified based on– Price – Cost, using a cost-effectiveness approach, such as

life-cycle costing in accordance with Article 68, – The best price-quality ratio,

”Light regime”

• Social and other specific services (Annex XVI )

• Fx hotel og restaurant services, certain legal services, firefighting services and prison services

• Thresholds 750.000 euro

Light regime

• Art. 74-76. Contracting authorities shall make known their intention by – Light Contract Notice or– Light PIN

• Contract award Notice

• Member States shall put in place national rules for the award of contracts subject to this Chapter in order to ensure contracting authorities comply with the principles of trans parency and equal treatment

Cluster 3 Reducing documentation requirements

1. Possibility for contracting authorities to request the economic operators concerned to submit, supplement, clarify or complete information or documentation which appears to be incomplete or missing

2. (updated) Exclusion grounds

3. European Single Procurement document

4. Self-cleaning

Exclusion grounds

• Art. 57 (3) b)• Possibility to exclude an economic operator in case he has

shown significant or persistent deficiencies in the performance of a substantive requirement under a prior public contract which led to early termination of that prior contract, damages or other comparable sanctions;

Cluster 4: E-procurement

1. Mandatory availability of procurement documents

2. Mandatory electronic communication and tender submission within 2 ½ years after transposition deadline

3. E-auctions and E-catalogues, dynamic purchasing systems

Cluster 5: SME Access

1. The minimum yearly turnover that economic operators are required to have shall not exceed two times the estimated contract value,

2. Contracting authorities must provide an indication of the main reasons for their decision not to subdivide into lots,

Cluster 6: Aggregation of demand

1. Dynamic purchasing systems

2. Clarification of use of framework agreements (mini-competition and ”direct award”)

3. Clarification of responsibility between CPB and its users

Clarification of use of framework agreements

• Art. 33(4) b• The choice of whether specific works, supplies or services

shall be acquired following a reopening of competition or directly on the terms set out in the framework agreement shall be made pursuant to objective criteria,

• Recital 61• Such criteria could for instance relate to the quantity, value or

characteristics of the works, supplies or services concerned, including the need for a higher degree of service or an increased security level, or to developments in price levels compared to a predetermined price index.

Responsibility

• Art. 37(3) A contracting authority fulfils its obligations pursuant to this Directive when it acquires supplies or services from a CPB

• Art. 37(3) The contracting authority shall be responsible for (a) awarding a contract under a dynamic purchasing system, (b) conducting a reopening of competition

• (c) pursuant to points (a) or (b) of Article 33(4), determining which of the economic operators, party to the framework agreement, shall perform a given task under a framework agreement that has been concluded by a central purchasing body.

Cluster 8 Sound Procedures

1. New provision on conflict of interest

– Member States shall ensure that contracting authorities take appropriate measures to effectively prevent, identify and remedy conflicts of interest arising in the conduct of procurement procedures so as to avoid any distortion of competition and to ensure equal treatment of all economic operators.

– Directly or indirectly, a financial, economic or other personal interest which might be perceived to compromise their impartiality and independence in the context of the procurement procedure.

Cluster 8 Sound Procedures

1. Termination of contracts

1. Substantial modification of the contract2. The contractor should have been excluded because of an

exclusion ground3. The contract should not have been awarded to the

contractor in view of a serious infringement of the obligations under the Treaties and this Directive that has been declared by the Court of Justice of the European Union in a procedure pursuant to Article 258 TFEU.

Cluster 8 Sound Procedures

• Substantial modification of the contract– …where it renders the contract or the framework agreement

materially different in character from the one initially concluded. [Pressetext pr 34] (….)

• Substantial in any event:– a) introduces conditions which, had they been part of the initial

procurement procedure, would have allowed for the admission of other candidates/tenderers [Pressetext, pr. 35]

– B) changes the economic balance of the contract or the framework agreement in favour of the contractor in a manner [Pressetext pr. 37]

– c) extends the scope of the contract or framework agreement considerably; [Pressetext pr. 36]

– d) where a new contractor replaces the one to which the contracting authority had initially awarded the contract in other cases than those provided for under point (d) of paragraph 1.

Replacing a contractor

• (d) replacing a contractor– (i) an unequivocal review clause or option

– (ii) universal or partial succession into the position of the initial contractor, following corporate restructuring, including takeover, merger, acquisition or insolvency, of another economic operator that fulfils the criteria for qualitative selection initially established provided that this does not entail other substantial modifications to the contract and is not aimed at circumventing the application of this Directive; or

De minimis rule

• Never substantial – where the value of the modification is below both

of the following values: – (i) the thresholds set out in Article 4; and – (ii) 10 % of the initial contract value for service

and supply contracts and below 15 % of the initial contract value for works contracts.

• The modification may not alter the overall nature of the contract or framework agreement.

Governance

1. Member States shall ensure– application of public procurement rules is monitored.– information and guidance on the interpretation and appli

cation of the Union public procurement law is available free of charge to assist contracting authorities and economic operators, in particular SMEs

• Contracting authorities shall, at least for the duration of the contract, keep copies of all concluded contracts with a value equal to or greater than: – (a) 1 000 000 EUR in the case of public supply contracts or public

service contracts; – (b) 10 000 000 EUR in the case of public works contracts.

Cluster 10: Scope

1. Definition and thresholds

2. Exceptions– Legal services, political campaign, public

passenger transport services by rail or metro, loans,

3. In-house (art. 12)

In-house (art. 12)

• A contract can be awarded without following the Directive if

a) the contracting authority exercises over the legal person concerned a control which is similar to that which it exercises over its own departments; (Control criterion)

b) 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 (…) (the activity criterion)

c) There is no direct private capital participation in the controlled legal person with the exception of non- controlling and non-blocking forms of private capital participation required by national legislative provisions, in conformity with the Treaties, which do not exert a decisive influence on the controlled legal person.

.

In-house (art. 12) Horisontal

• A contracting authority can award a contract to another contracting authority

a. the contract establishes or implements a cooperation between the participating contracting authorities with the aim of ensuring that public services they have to perform are provided with a view to achieving objectives they have in common;

b. the implementation of that cooperation is governed solely by considerations relating to the public interest; and

c. the participating contracting authorities perform on the open market less than 20 % of the activities concerned by the cooperation.

• Danish implementation of the EU Procurement Directives

Danish ”set-up”

• How Denmark implemented the 2004-Directives – A general act empowers the minister to implement new procurement

rules

– Can be done on the administrative level on basis of a governmental order – The governmental order deals with the rights and obligations of the

contracting authorities– The actual text of the directive is annexed – This means that text of the Directive constitutes the current legislation

(“telles quelles”)

Danish ”set-up”

• The public sector in Denmark is very decentralised– 2 619 Tenders in TED (2011)

– Total expenditure in regard to public procurement is estimated at 294 billion Danish kroner (39,4 billion €)

• National law for works below the EU thresholds• National law on advertising goods and services of a value above DKK

500,000 (app. € 67,000) but under the EU threshold values (only A-services)

• No rules for B-services• 1 Complaints board for Public Procurement

Implementation (Public Procurement Directive)

• Public Procurement law committee

• President: Director of Competition Authority• Members:

– Advokatsamfundet/Danske Advokater, LO, FTF, Dansk Byggeri, Dansk Erhverv, Danske Regioner, DI, Erhvervs- og Vækstministeriet, Finansministeriet, Foreningen af offentlige indkøbere, Foreningen af Rådgivende Ingeniører, Kommunernes Landsforening, Håndværksrådet, Statens og Kommunernes Indkøbsservice, Økonomi- og Indenrigsministeriet

Subcommittee’s

• Subcommittee regarding the procedures for goods and services below the EU tresholds and the light regime

• Subcommittee regarding E-Procurement

• Subcommittee regarding award criterira and transparency

The outcome?

• One (big?) Act• Wording close to the Directive? • Preparatory acts…

• Last meeting end of September 2014• Proposal beginning of 2015• New Government…..

Thank you for your attention

Carina Risvig HamerPh.D. Assistant Professor

University of Southern Denmark

Legal DepartmentTlf. 0045-23717973

E-mail: carh@sam.sdu.dkwww.udbudslov.dk