European Commission to review procurement legislation as calls grow for modernisation

The European Commission is to embark on a “comprehensive evaluation” of EU procurement legislation amid concerns that the system needs modernising to cope with the financial crisis and new demands such as greater cooperation between local authorities.

The study, which is to be completed by Spring 2011, will “examine the effectiveness of EU rules in promoting open, contestable and sound procurement.”

The Commission said the findings would be used to decide whether EU procurement rules required modernisation. “Any such modernisation will be driven by the objective of enabling contracting authorities to undertake procurement in a timely and effective manner so as to accomplish the public missions entrusted to them,” it added.

The review will also seek to clarify how contracting authorities can take into account environmental, social or other policy considerations when awarding contracts.

The Commission insisted that any eventual adjustments “should not come at the expense of transparent and contestable procurement markets. These principles have served us well so far and should remain the cornerstones of EU procurement policy.”

It said efficient procurement processes can contribute to the goal of doing more with less, as EU countries try to bring down their fiscal deficits. Procurement disciplines will also become more relevant in years to come because national and regional authorities are reorganising their systems, there is increased centralisation of procurement in the hands of specialist purchasing agencies and contracting authorities are starting to use electronic procurement platforms.

The Commission warned that EU procurement policy is faced with new demands and expectations as a result of a changing policy and market environment. These include:

• The need to cater for new methods of financing or delivering public infrastructure and services. The Commission acknowledged the need to clarify the extent to which EU procurement disciplines can usefully apply to public-private partnerships and to increased cooperation between local authorities
• Pressure, particularly from local and regional administrations, “to facilitate contracting authorities in procurement transactions by providing more flexibility in procedures, speeding up contract award, and reducing the risk of legal challenges afterwards”. However, the Commission warned in response to concerns over complexity and cost that care must be taken to preserve the benefits of a transparent and contestable procurement – “we must not throw the baby out with the bath-water”, it said
• Growing interest in using public procurement expenditure to pursue other policy objectives. The Commission said such policies can be implemented in a way that is compatible with sound and objective procurement. “The key is to frame desired procurement outcomes in clear and objective specifications which do not implicitly favour particular suppliers,” it suggested, although it warned that “too much scope for subjective appreciation or arbitrary decisions could weaken sound procurement disciplines and complicate the task of contracting authorities”
• The new challenges posed by the transition to electronic procurement. The Commission acknowledged that the legal and policy environment needed to keep pace with this change and “to avoid the emergence of a new generation of barriers to cross-border procurement which have their origin in different e-procurement models, information technology systems and applications”.

The Commission said it is exploring ways in which EU procurement policy can respond to these challenges. These include initiatives in the area of concessions and the application of procurement legislation to cases where local or other purchasing bodies cooperate in procurement.

In January this year, the director of legal at Local Partnerships told MEPs on the European Parliament’s Committee on Internal Market and Consumer Protection that EU public procurement rules had become so complex that public authorities have increased their focus on legal certainty and limitation of legal threat rather than on procedures which maximise value for money.

Rob Hann said the economic crisis and certain decisions of the European Court of Justice – such as Teckal, Roanne and Leonakis – had had “unexpected, unforeseen and unwelcome consequences” for projects procured in different circumstances. He also warned that these problems had been magnified by the Remedies Directive.