Public Procurement: Innovative or Unnecessary? You Decide

There are some important proposals for contracting authorities in the European Commission's Green Paper on public procurement. Deborah Ramshaw and Sarah Thompson examine the detail.

As part of the European Commission’s ongoing review of the impact and cost effectiveness of EU public procurement policy the Commission published a Green Paper on the Modernisation of EU Public Procurement Policy towards a more efficient European Procurement Market on 27 January 2011. (The document can be accessed in full here)

The rationale behind the consultation is to simplify and update the EU Procurement Directives (public and utilities sectors) to reflect the challenges posed by the economic downturn and growing demand for procurement to be more socially orientated and environmentally friendly.

In the Green Paper the Commission consults on a large number of very wide ranging procurement issues including most of the current “hot topics” and opens a public debate on over a 100 possible areas for reform. In addition stakeholders are also invited to raise any other areas they think should be addressed by the future reform.

Contracting authorities will be interested to note some of the Commission’s proposals to simplify the procurement rules set out below:

Classification

The Commission consults on the appropriateness of retaining the familiar three classification categories of public contracts – works, supplies and services. The Commission recognises the difficulties associated with classifying a contract within one of the categories at the outset of a procurement and asks for views on whether a reduction in the number of categories available would be of assistance to contracting authorities.

One option proposed is to reduce the classifications to two – services and supplies, with works contracts being considered as a form of services. For example “construction service contract”. Alternatively, a second option suggests using one unified concept of public contracts and differentiating according to the subject only when strictly necessary, for example, in respect of thresholds.

Part A and Part B

The Commission also considers whether there is a need for the types of services within Part A and Part B to be reviewed and updated or, if it would be more appropriate to remove the distinction altogether. The Commission notes that the original intention behind the distinction was to ensure that the full application of the rules was reserved only for Part A services. However, it is recognised that this distinction has been blurred by case law of the Court of Justice which has applied EU Treaty Principles to cross-border contracts and this has led to confusion over when it is appropriate to advertise a Part B services contract.

In the event that the distinction is eliminated the Commission proposes instead that a standard (and possibly simplified) regime is applied to all service contracts.

The toolbox

The Commission asks for views on whether the current “procurement toolbox” is appropriate, for example, in the new era of shared services, are the rules sufficient to enable contracting authorities to undertake joint procurements? Or, are further provisions required to deal with issues arising after contract award? More generally, do contracting authorities find that the rules are too detailed or not detailed enough? How could the rules be improved to reduce the administrative burden on contracting authorities whilst obtaining the best possible procurement outcomes?

The Commission also consults on whether there is need for increased flexibility to use the negotiated procedure especially in the tendering of large scale PPP contracts, where it is recognised that there is a greater need for a flexible procurement with significant scope for negotiation.

Selection and award

The Commission consults on whether a more flexible approach to selection and award criteria is required, acknowledging that in certain circumstances, it would be helpful for contracting authorities to be able to examine award criteria first. For example, where the contract award procedure involves the purchase of standard goods for the lowest price.

The Commission also considers if it may sometimes be appropriate to allow contracting  authorities to take account of bidder-related criteria at contract award stage including, for example, experience and qualifications.

Thresholds

The Commission consults on whether the thresholds should be increased enquiring as to whether contracting authorities find that cross border interest is currently too limited to justify the administrative burden of the contract award procedure. However, the inevitable negative effect of any increase, would be a consequent reduction in competition.

Whilst the Green Paper itself does not contain any policy decisions the Commission’s recognition of and, commentary on, the issues faced by contracting authorities provides an insight into how we may see the law change in these areas.

The consultation is open to all interested parties now. Contracting authorities can contribute by following the instructions on the link below until the 18 April 2011: http://ec.europa.eu/internal_market/consultations/2011/public_procurement_en.htm.

A high level analysis of the submissions will be undertaken at a conference in Brussels on 30 June 2011 with legislative proposals expected in early 2012.

Deborah Ramshaw is head of procurement and Sarah Thompson is a solicitor in the procurement team at Dickinson Dees. Deborah can be contacted on 0191 279 9836 or by email at This email address is being protected from spambots. You need JavaScript enabled to view it..