The new Public Procurement Rules
The much anticipated new public procurement directives have now been approved by the European Parliament. Judith Barnes and Alexandra Von Westernhagen assess the main changes.
On 15th January 2014, the European Parliament approved two new public procurement directives to replace Directive 2004/17 (Utilities Directive) and Directive 2004/18 (Public Sector Directive), respectively, and a separate proposed directive on the award of concession contracts.
These directives will now be formally approved by the Council and published in the Official Journal, with an expected entry into force in March 2014. Member States have an implementation period of two years; the UK government has, however, expressed its intention to effect this in a shorter time period.
DAC Beachcroft has played an active role in the shaping of the texts since the early stages of the review process, going back to before the initial European Commission proposal was made in December 2011. The below contains informal comments from members of the European Commission who drafted the initial proposal.
Changes
The below table considers key changes for the Public Sector Directive (Directive), which has attracted considerable attention from DAC Beachcroft clients throughout the adoption process. Additional changes to take note of include the introduction of a mandatory use of electronic communications, a new innovation partnership procedure as well as simplified procedures for local authorities. Most of the changes listed in the table below will also be reflected in the new Utilities Directive.
New Public Sector Directive | |
Social, healthcare, education and other similar services (including most legal services) |
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Award Criteria: |
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Dynamic Purchasing System (DPS) |
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Procurement Procedures |
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Contracts between Contracting Authorities (CAs) |
The In-house Exemption A contract will fall outside the Directive where: a) The CA(s) exercise(s) control over the legal person similar to that which it exercises over its own departments; b) more than 80% of the average turnover of that legal person relates to the performance of tasks entrusted to it by the controlling authority, or by other legal persons controlled by that contracting authority; and c) there is no direct private capital participation. The Directive contains further elaboration on the definition of control. It also allows for the in-house exemption to apply where the CA exercises control over the legal person jointly with other CAs. The in-house exemption has been explicitly extended to the award of contracts between companies which are controlled by the same parent (“sister companies”) as well as to the award of contracts by the controlled company to its parent. The Shared Services Exemption A contract will fall outside the Directive where: a) the contract establishes or implements a co-operation between the participating CAs, with the aim of ensuring that the public services they have to perform are provided with a view to achieving objectives they have in common; b) the implementation of that co-operation is governed solely by considerations relating to the public interest; and c) the participating CAs perform on the open market less than 20% of the activities concerned by the co-operation. These provisions facilitate, at least at first sight, the co-operation between CAs. However, many questions remain open, for example, to what extent a CA, to which a contract is awarded under this provision, can aim to make a profit under the contract. |
Modifications to contracts during their term |
The new Directive clearly sets out under what circumstances a CA can make a change to a regulated contract without infringing public procurement rules. The provisions go beyond Pressetext, which sets out the parameters within which a CA can work. The new Directive mainly allows for a change of the contractor’s identity where:
Changes to contract terms and conditions are permitted where either:
If the above conditions do not apply, the Directive is clear that the change will be an illegal change where:
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Judith Barnes is a Partner and Alexandra Von Westernhagen is an Associate at DAC Beachcroft. Judith can be contacted on 0113 251 4712 or This email address is being protected from spambots. You need JavaScript enabled to view it..