Over the coming months the Tenders Direct Blog will cover the changes coming into force as a result of the new EU Directives on Public Procurement. The first of this series will cover the history and a brief overview of the changes. Please sign up to the blog for updates on when the next in the series is published.
The new EU Directives on Public Procurement have been published!
On 28th March 2014 the three new Public Procurement Directives were published in the Official Journal of the European Union. These will come into force on 17 April 2014. The UK has two years to transpose these Directives into national law. It has been rumoured that this may, however, take place as soon as autumn.
The History:
In April 2011 the European Commission communicated its intention to modernise the legislative framework for public procurement and in December 2011 confirmed that this would be carried out by way of reviewing the existing directives. The key objectives of this reform outlined by the European Commission in 2011 were as follows:
- Simplify the rules and procedures and make them more flexible.
- Increased recourse to carry out negotiations.
- Increased use of e-procurement.
- Reduce administrative burden on suppliers.
- Facilitate a qualitative improvement in the use of public procurement.
- Improved integrity in public procurement.
- Appointment of national review body to monitor public procurement practices.
- Creation of a Concession Contracts Directive to complete the legal framework for European public procurement.
On 15th January 2014 the European Parliament approved the following three new directives on Public Procurement which, as afore mentioned, will come into force on 17 April 2014:
– Public Contracts Directive 2014/24/EU
– Utility Contracts Directive 2014/25/EU
– Concession Contracts Directive 2014/23/EU
This series of blogs will cover the changes in more detail but in reference to the above key objectives it is worth mentioning the following changes that have been implemented to assist in achieving these objectives:
- Simplify the rules and procedures and make them more flexible.
The various procedures have been altered to make them more flexible. For example, under the new Public Contracts Directive now exists an accelerated open procedure and the reasons to use both the new accelerated open procedure and the pre-existing accelerated restricted procedure has been made more flexible. This no longer precludes reasons that could have been avoided by the procurement officers making the use of these accelerated procedures both simpler and more flexible.
- Increased recourse to carry out negotiations.
Changes have been made to both the Negotiated Procedure with Notice (now named “Competitive Procedure with Negotiation”) and to the Competitive Dialogue Procedure to make their use more available to procurement officers.
- Increased use of e-procurement.
New requirements will be coming in to force under the new Public Contracts Directive to require that all notices are sent to the journal electronically, all documents are made available electronically and all responses to notices are submitted electronically. Please note that the Millstream myTenders Pro service will provide you with the facilities to meet these new requirements.
- Reduce administrative burden on suppliers.
The Public Contracts Directive provides suppliers with the option of using the European Single Procurement Document (ESPD). This enables suppliers to agree that they have all the required certification without providing evidence until this is essential (i.e. at the end of the tendering process but prior to award). It is hoped that this will help reduce the burden on suppliers during the bidding stages.
- Facilitate a qualitative improvement in the use of public procurement.
This refers to ensuring greater consideration for social and environmental criteria such as life-cycle costs or the integration of vulnerable and disadvantaged persons. This has been provided for in the Public Contracts Directive with new emphasis being placed on sustainable procurement and in particular life cycle costs of a tender. This is a move away from price and allows for quality to play a prominent part in the tender.
- Improved integrity in public procurement.
One of the key objectives of public procurement legislation has always been to combat corruption and improve integrity. It is therefore logical that this would be reviewed when reforming the Directives to ensure that the rules are still adequate to achieve these objectives. The new Public Contracts Directive has included further additions to the mandatory and discretionary exclusions as well as further obligations to investigate abnormally low tenders and changes to when a concluded contract can be amended. The Commission has had to balance this integrity objective with the objective of making the process less burdensome, given the nature of these two objectives they often conflict.
- Appointment of national review body to monitor public procurement practices.
This requirement has been entered into the new Public Contracts Directive.
- Creation of a Concession Contracts Directive to complete the legal framework for European public procurement.
As previously mentioned, a new Concession Contracts Directive was also published on 28th March 2014. This was in addition to a more comprehensive Utility Contracts Directive. The Commission are now reforming the remaining Remedies Directive to “complete the legal framework for European public procurement”.
Apologies if this topic has already been covered but I am new to the blog. I am interested to know if there is any guidance or case history on “relevance” of the object of contract or title attributed. I have participated in a number of PQQ’s with fairly generic titles only to find the subsequent ITT does not provide me with any opportunity to bid i.e. the items are not within our range. I can accept this as part of the fun of tendering. However, I have now experienced two instances where the framework from a tender I was NOT able to bid on, due to the specific tender lines available, is later used as supposedly a compliant vehicle for a mini-competition for a range of products not on the original ITT but for which I would certainly have bid had they been included.
Do I have any recourse, other than complaining, and any definitions or rulings on what may or may not be considered relevant to the original object of the contract?
Without knowing the details of the OJEU contract notice and the tender documentation it’s difficult to be specific as each case should be looked at on its own merits, but the key point is that it is not permissible to let a contract for one category of product or service and then use it to procure other products or services.
The key legal case is Pressetext which established that a material amendment to a contract would amount to the award of a new contract. That new contract should be put out to market with a full OJEU notice (assuming it was itself above-threshold and none of the exemptions in the Regulations apply) and failure to do so would expose the contract to the risk of a declaration of ineffectiveness.
The European Court of Justice decision in the Pressetext case set out three situations in which an amendment would be a material amendment:
• It would have allowed others to participate in the tender or a different tender to be accepted;
• It would extend the scope of the contract considerably to encompass services not initially covered; or
• It would change the economic balance of the contract in favour of the contractor in a manner not provided for in the terms of the initial contract.
The situation you describe seems to indicate a potential extension of the scope, which in turn would have allowed others (including your company) to participate in the tender. The judgement to be made in this situation is whether the original contract notice and associated tender documentation was written in a way that included the additional products that are now being tendered, using mini-competitions under the terms of the framework agreement.
Assuming it is a fairly clear cut case of a material amendment what are the options available to you?
1. Informally contact the buyers at the organisation and explain the situation from your point of view, i.e. that you would have bid, but the original tender didn’t include your products/services, etc. You are aware that the scope has been increased to include the products and services you do supply and that you feel that as that is a material amendment the framework should have been re-tendered. Then wait and see how they respond, as its much easier to do business with someone if you can sort it out amicably.
2. If the informal approach fails then you can contact the Mystery Shopper service, to see if they can help resolve the situation.
3. If you feel strongly enough about the case you could raise a court action, but we’d advise caution as its an expensive time-consuming process and frustrating though it might be it is usually better to write it off to experience, or as you put it ‘part of the fun of tendering.’
Regards
Kim
Where I can find an exact sourcing part pinpointing that a insurance broker in procurement procedures for services (insurance) can be a tenderer as economic operators? Even though I carefully read the second part of paragraph 2 of Article 58 (Selection criteria), I cannot find a word ‘insurance broker’? Does economic operators comprise insurance brokers?
how will the EU Directive on public procurement, work in relation to NHS services wishing to set up as a social enterprise i.e the possibility of reserving health contracts to employee mutuals and social enterprises.
Hi Shaun,
Article 77 of the new European procurement Directive (Directive 2014/24/EU) is intended to facilitate the establishment of employee mutuals and social enterprises that you describe, although it is subject to specific conditions, as follows:
The last two of these conditions would seem to be problematic for any new mutual or social enterprise, i.e. what happens after the first 3 years if it is not possible to award the new contract to the same entity?
Kim, Any confirmed details to date of taking past performance into account when evaluating PQQ or ITT submissions and what aspect of poor past performance can be considered e.g. would this need to be a court prosecution or HSE enforcement notice ect.
Hi Paul,
The new Directive does include a provision to allow for past performance to be considered. Contracting authorities can exclude a bidder from the procedure if that bidder has shown in the past significant or persistent deficiencies during the execution of a public contract. The provision states that this previous poor performance must have resulted in an early termination of the contract, damages or other comparable sanctions.
It is also worth noting that the Directive provides for defence to exclusions. If a tenderer can display that adequate measures have been taken to resolve the issues behind their exclusion then they cannot be excluded. However, this is not the case where the exclusion results from a “final judgement”.
Kind regards,
Kim
The provisions read as follows:
Past Performance: Article 57 (4) (g)
4. Contracting authorities may exclude or may be required by Member States to exclude from participation in a procurement procedure any economic operator in any of the following situations:
(g) where the economic operator has shown significant or persistent deficiencies in the performance of a substantive requirement under a prior public contract, a prior contract with a contracting entity or a prior concession contract which led to early termination of that prior contract, damages or other comparable sanctions;
Defence to Exclusion: Article 57 (6)
6. Any economic operator that is in one of the situations referred to in paragraphs 1 and 4 may provide evidence to the effect that measures taken by the economic operator are sufficient to demonstrate its reliability despite the existence of a relevant ground for exclusion. If such evidence is considered as sufficient, the economic operator concerned shall not be excluded from the procurement procedure.
For this purpose, the economic operator shall prove that it has paid or undertaken to pay compensation in respect of any damage caused by the criminal offence or misconduct, clarified the facts and circumstances in a comprehensive manner by actively collaborating with the investigating authorities and taken concrete technical, organisational and personnel measures that are appropriate to prevent further criminal offences or misconduct.
The measures taken by the economic operators shall be evaluated taking into account the gravity and particular circumstances of the criminal offence or misconduct. Where the measures are considered to be insufficient, the economic operator shall receive a statement of the reasons for that decision.
An economic operator which has been excluded by final judgment from participating in procurement or concession award procedures shall not be entitled to make use of the possibility provided for under this paragraph during the period of exclusion resulting from that judgment in the Member States where the judgment is effective.
The vast majority of businesses in Europe as well as the world we inhabit are SMALL i.e. less that fifty employees. How does the changed rules help them grow their businesses when most tenders are written to favour the larger and medium sized firm who are actually the minority of businesses?
Hi Galen,
There are several changes to the Directives that have been included in the hope to encourage SMEs. For example, there will be an expectation for large contracts to be broken down into lots to allow the work to be more available / appropriate to smaller organisations. If a Contracting Authority does not break a contract down into lots then they will be required to provide justification for why they have not done so. There is also the introduction of the “European Single Procurement Document (ESPD)” which is hoped to reduce the administrative burden and cost to bidders during the tendering stage which should, in theory, encourage the involvement of more SMEs.
Much of this is explained in a fact sheet provided by the EU that may be of interest to you.
Kind regards,
Kim
With regard to attempt to improve integrity in the procurement process, will there be any requirement for a meaningful appeals process, a challenge to decisions that is to a separate body independent of the consultant that made the decision, or any whistleblowers charter to allow confidential reportage of corrupt decision making (widespread and endemic) in current public procurement within the UK?
Kind regards
john
Hi John,
The appeals process is covered under the Remedies Directive. This Directive was last reviewed in 2007. As this Directive has not been repealed at this stage I am unaware of any changes to the processes of appealing decisions. The Commission have produced a fact sheet on how the most recent changes to the Public Contracts Directive will assist in maintaining transparency and anti-corruption that may be of interest to you but as the appeals process is out with the scope of this Directive it is not covered in any detail within this literature.
Kind regards,
Kim
Hi John,
You may find the Cabinet Office’s Mystery Shopper Scheme of interest. Their scope and remit can be found here.
Kind regards,
Kim
Will there still be a standstill period?
Hi Jamie,
The standstill period is detailed within the Remedies Directive. This Directive was last reviewed in 2007 when the standstill period was introduced into the legislation. As this Directive has not been repealed the standstill period will still be applicable.
Kind regards,
Kim
Will Environment play any role in the new procurement
Regards
Jim Dunlop
Seacourt Ltd
http://www.seacourt.net
Hi Jim,
Environment does play a role in the new Directives. The EU have provided a fact sheet on the this that may be of interest to you.
Kind regards,
Kim