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NEW EUROPEAN PROCUREMENT DIRECTIVES

The European Commission has put forward a package of amendments to simplify and modernise the existing EC Public Procurement Directives comprising two draft Directives. The first will consolidate the existing three Directives on the award of public works, services and supplies contracts ("the Consolidated Directive") and the second will replace the existing Utilities Directive.

It now appears that the final vote on whether to adopt the new Directives will take place at the start of next year.

Overview of the Proposals

The New Utilities Directive
The Commission's specific changes to the Utilities Directive at present appear as though they will be fairly minor. The main changes relate to:

Telecoms and Future Liberalisation
As a consequence of the liberalisation of the telecommunications industry throughout the EU, the new Utilities Directive excludes this sector. The Commission also proposes that sectors such as electricity, water and transport can also be excluded once liberalisation and effective competition become a reality.

The Commission has commented that it will submit proposals to exclude sectors when they operate in conditions of effective competition in a given EC Member State. However, even when liberalisation and competition become a reality, the exclusion will not be automatic. A Member State will have to request exemption of the given sector in its country and notify the Commission of all relevant information to allow an appropriate economic assessment to be made. The Commission will make its decision within 6 months of a submission by a Member State.

Amendments to both directives
The most significant other proposed amendments to both Directives are:

Strengthening the Award Criteria
Award criteria typically used include factors such as price, value for money, quality, deliverability of the services within the agreed timescale, experience of providing similar projects, technical merit and resources, financial strength of the tenderer, innovation, level of risk accepted by the tenderer, proposals relating to health and safety and experience of dealing with environmental issues.

The existing provisions under the Directives relating to award criteria require contracting entities to list the award criteria in the notice or contract documents in descending order of importance. As a consequence contracting entities can attach more weight to one criteria than others when tenders are opened and manipulate the tender procedure. The proposals provide that a compulsory weighting for each award criteria must be stated at the start of a procurement process in order to ensure a more transparent process.

Electronic Purchasing
Although the existing Directives provide that tenders can be submitted via electronic methods there are a number of circumstances in which the use of electronic transmission is not specifically mentioned (for example, transmission of notices). The Commission proposes to place more emphasis on the use of electronic tendering procedures by reducing the time-limits contained in the existing Directives. The new Directives will allow for shorter deadlines, namely: 7 days less where Contract Notices are sent electronically, and a further 5 days less where contract documents are made available on the Internet to encourage the use of electronic transmission.

Reduction of number of thresholds
Due to the fact that the existing thresholds distinguish between central government, other public bodies and the utilities and are not easy for the layman to apply, the Commission has proposed a reduction in (and a simplification of) the thresholds.

Common Procurement Vocabulary
At present four different nomenclatures are used - the CPC, NACE, the Common Procurement Vocabulary (CPV) and the Combined Nomenclature. This will be replaced with only the CPV under the proposed new regime.

Next Steps

The European Commission has indicated that the Directives could be adopted by the start of next year. The effect of the proposed changes to the procurement regime could be of crucial importance to your business. To ensure compliance with the proposed reforms we recommend that public bodies and companies subject to the procedures conduct a detailed audit now of their contract award procedures in readiness for the forthcoming changes.

Preparations to Consider in Preparation for the New Regime:

• Develop buyer profiles, electronic notices and electronic contract documents to reduce minimum deadlines
• Develop strategies for identifying and excluding persons known to have been convicted of organised crime, corruption offences and fraud
• Define minimum qualification requirements and appropriate criteria for the selection of participants
• Experiment with the relative weighting of selection criteria and develop rules for applying them
• Develop permitted award criteria and ways to define their relative weighting
• Adopt the CPV and press the Commission for improvements to it as necessary
• Develop appropriate technical specifications and be prepared to accept offers of European equivalents
• Develop systems for recording the debriefing of candidates and tenderers on request

key expertise

Geraldine Tickle
Partner
geraldine.tickle@martjohn.com

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