Prepare now for modernisation of EU procurement rules, says Cabinet Office

The Government has urged contracting authorities to “begin preparing the ground to ensure a smooth transition” in relation to the modernisation of the EU procurement rules.

Issuing a procurement policy note (PPN), the Cabinet Office reported that the trilogue negotiations on the revised directives concluded last month in Brussels, with a provisional agreement being reached between the EU Council, the Commission and Parliament.

This stage was reached after 18 months of scrutiny and debate on the Commission’s draft proposals.

A package of three directives – a revised public sector directive, a revised utilities sector directive and a new directive containing procedural rules for the award of concessions directives – has been provisionally agreed.

The final formal stage of the EU process, when the EU adopts the package and publishes the new directives in the Official Journal of the European Union, is expected in the Autumn of 2013.

The Cabinet Office said that it was preparing an “ambitious” transposition timetable so that the UK can take advantage of the additional flexibilities in the new rules as soon as possible.

It insisted that the revised package represented “an excellent overall outcome”, claiming that progress had been achieved on all its priority objectives.

“These changes support UK Government priorities of economic growth and deficit reduction by making the public procurement process faster, less costly and more effective for business and procurers alike,” the Cabinet Office said.

It added: “For contracting authorities, this means being able to run procurement exercises faster, with less red tape, and more focus on getting the right supplier and the best tender. And for suppliers, the process of bidding for public contracts should be quicker, less costly and less bureaucratic, enabling suppliers to compete more effectively.”

The Cabinet Office pointed out that the basic principles of the EU Treaty will not change, so contracts would still have to be competed and awarded transparently and without discrimination.

“The new rules have a similar overall structure to the existing rules, but the many new flexibilities will enable better commercial outcomes to be achieved,” it said.

The PPN, which can be viewed here, said the Cabinet Office would consult on the draft implementing regulations before they come into force. 

Annex A – Summary of key changes in the new Public Sector Directive

i) A much simpler process of assessing bidders’ credentials, involving greater use of supplier self-declarations, and where only the winning bidder should have to submit various certificates and documents to prove their status.

ii) More freedom to negotiate – constraints on using the negotiated procedure have been relaxed, so that procedure is available for any requirements that go beyond “off the shelf” purchasing.

iii) Poor performance under previous contracts is explicitly permitted as grounds for exclusion.

iv) The distinction between Part A and Part B Services has been removed, and a new light-touch regime introduced for social and health and some other services. There will be OJEU advertising and other specific obligations for this new light-touch regime, but a much higher threshold has been agreed (EUR 750,000).

v) The rules on “Dynamic Purchasing Systems” have been greatly simplified, with the removal of the onerous obligation to OJEU-advertise call-off contracts made under the DPS.

vi) The ability to reserve the award of certain services contracts to mutuals/social enterprises for a time limited period.

vii) Electronic marketplaces for public procurement are expressly permitted, removing any doubt as to their legality.

viii) Reduced red-tape on suppliers’ response times: The statutory minimum time limits by which suppliers have to respond to advertised procurements and submit tender documents have been reduced by about a third. This flexibility could be helpful for speeding up simpler or off-the-shelf procurements, but still permits longer timescales for requirements where bidders will need more time to respond.

ix) Review of thresholds: The directive includes a binding commitment on the Commission, to review the economic effects on the internal market as a result of the application of thresholds, which could lead to an increase in the thresholds, which have been broadly static for 20 years. The review must happen within 3 years of the directive’s transposition.

x) Legal clarity that buyers can take into account the relevant skills and experience of individuals at the award stage where relevant (eg for consultants, lawyers, architects, etc).

xi) Improved rules on social and environmental aspects, making it clear that:

• social aspects can now also be taken into account in certain circumstances (in addition to environmental aspects which had previously been allowed).
• buyers can require certification/labels or other equivalent evidence of social/environmental characteristics, further facilitating procurement of contracts with social/environmental objectives.
• and refer to factors directly linked to the production process.

xii) Electronic communication / e-procurement will become mandatory following 4.5 years after the directive’s adoption.

xiii) Various improved safeguards from corruption:

• specific safeguards against conflicts of interest, similar to common existing UK practice where declarations are signed by procurement staff to confirm they have no outside interests with bidders etc.
• similar provision against illicit behaviour by candidates and tenderers, such as attempts to improperly influence the decision-making process or collusion.
• safeguards against undue preference in favour of participants who have advised the contracting authority or been involved in the preparation of the procedure.
• self-cleaning measures, for suppliers who have cleaned up their bad practices.

xiv) Buyers will be encouraged to break contracts into lots to facilitate SME participation, but there is discretion not to do so where appropriate.

xv) The new rules encourage and allow preliminary market consultation between buyers and suppliers, which should facilitate better specifications, better outcomes and shorter procurement times.

xvi) A turnover cap has been introduced to facilitate SME participation. Buyers will not be able to set company turnover requirements at more than two times contract value.

xvii) A new procedure has been introduced: the “Innovation Partnership” procedure. This is intended to allow scope for more innovative ideas. The supplier essentially bids to enter into a partnership with the authority, to develop a new product or service.

xviii) The full life-cycle of costings can be taken into account when awarding contracts; this could encourage more sustainable and/or better value procurements which may save money over the long term but appear more costly on the initial purchase price.

xix) Public authorities will no longer have to submit detailed annual statistics on their procurement activities. The Commission will collect this information directly from the online system, thereby freeing up valuable time and resources for public authorities.

xx) “E-certis”: Where contracting authorities require certificates etc from winning bidders, suppliers need to know what type of information and documents they will need to provide. “E-certis” will be a central, on-line point where suppliers can find out the type of documents which they may be asked to provide in any EU country, even before they decide to bid. This should be of particular help when suppliers wish to bid cross-border, as they may be unfamiliar with the detailed requirements of other EU Member States.

xxi)  Concessions contracts (works and services) will need to be advertised in OJEU where the contract value exceeds EUR 5million, and procured in compliance with the new procedural rules regime for concessions.

Source: Procurement Policy Note - Further progress update on the Modernisation of the EU Procurement Rules