Tag: European Commission

Tendering across Europe – How to step out of the UK

With £714 billion being spent on the public sector in the UK in 2014 you may feel that there is plenty of business to go around. However, if you are considering broadening your options or want to look further afield you could consider bidding for tenders across the European Union.

The European Union was created on the basis of it being a single market which includes the free movement of goods, capital, people and services across all member states. In practice this means that a UK company should have an equal chance of winning a tender in a different EU member state as the local companies and there should be no barrier to intra-EU trade. We often hear of dissatisfaction that local contracts in the UK have been awarded to non-local suppliers and so this could be considered the other side of that coin.

While it may seem like it is easy to go for these types of opportunities there are certain things that need to be considered before taking the leap! All the points made by my colleague Gemma on this blog: How SMEs can break into the public sector will apply but there will be other aspects that will need to be considered as well.

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Cabinet Office consultation on public contracts

Cabinet Office sign

In December 2010 the Cabinet Office invited feedback on the effectiveness of the public procurement rules. The purpose of that exercise was to inform the UK’s involvement in the ongoing review of the rules by the European Commission.

The Commission’s review is still underway, and it has now released a formal public consultation paper to which the Cabinet Office is preparing a UK response. Since the Commission’s recent consultation paper is substantially more detailed than the information previously provided by the Cabinet Office, they have extended the deadline for comments until 25th February.

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Modernisation of the European Public Procurement Market

European map with EU stars

Public procurement accounts for roughly 17% of the European Union’s GDP. In times of tight budgets and economic difficulties in many Member States, public procurement policy must ensure the most efficient use of public funds, with a view to supporting growth and job creation. This would require flexible and user-friendly tools that make transparentEuropean map with EU stars and competitive contract awards as easy as possible for European public authorities and their suppliers. With these objectives in mind, the European Commission has  launched a consultation which will focus on the modernisation of the rules, tools and methods for public procurement. The deadline for responses to the Green Paper is 18 April 2011.

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European Commission investigates Glasgow Housing Association’s failure to openly tender

Glasgow Housing Association (GHA) is a private not-for-profit company created by the Scottish Government for the purpose of owning and managing Glasgow’s social housing stock. The housing stock, of approximately 81,000 houses and flats, was previously owned by the Glasgow City Council.

Following a poll of the Council’s tenants, the vast majority of their social housing was transferred to the ownership of the Glasgow Housing Association. The transfer was mired in controversy at the time, there was a strong No campaign backed by the Scottish Trades Union Congress (STUC) and many commentators doubted that there was a genuine desire on the part of the tenants to transfer to another landlord. However, a condition of having Glasgow’s housing debt written off was a transfer whole stock. This was initially going to be to one landlord, however, the Scottish Government intervened and introduced the concept of Second Stage Transfer (SST) to smaller Housing Associations over time.

Taroub Zahran, the Chief Executive of Glasgow Housing Association, resigned from her position at the end of Taroub Zahran Former Chief Executive - Glasgow Housing AssociationSeptember after what was believed to have been disagreements with the Scottish Government and Glasgow City Council over the slow speed of stock transfer.

A total of 322 tenants in Glasgow transferred to a new landlord at the end of July following the transfer of homes from Glasgow Housing Association (GHA) to two community-based housing associations under the Second Stage Transfer process.

Provanhall Housing Association took control of 195 homes, and another 127 houses in Hyndland were transferred to Glasgow West Housing Association.

Provanhall and Glasgow West join Shettleston, Ardenglen, Cassiltoun and Parkhead housing associations which took ownership of GHA homes in March this year.

A further 21 Local Housing Organisations who currently manage approximately 19,000 houses on behalf of GHA are still progressing through the various stages of the SST process. Ballots for a further four potential transfers are planned for this calendar year, with transfer potentially by the end of the financial year.

The European Commission, who will have begun their investigation following a complaint, has asked the UK Government to provide further information on how these contracts were awarded as it believes that they were public service contracts and as such should have been awarded on the basis of an open and transparent tendering process. If the European Commission is correct that no open tendering process was conducted, the UK will have failed to fulfill its obligations under the Public Procurement Directive 2004/18/EC.

The penalty for failing to fulfill such obligations is often simply that the relevant member state has to demonstrate that it has taken measures to rectify the situation and to prevent a future re-occurrence. Although sometimes, if it is not satisfied with the action that has been taken, the Commission will ask the European Court of Justice to impose a financial penalty.

In 2004 the Commission sought to impose daily fines against Germany for two long term (30 years) waste contracts that had not been correctly tendered.The fines sought were €31,680 per day for the City of Bockhorn contract and €126,720 per day for the City of Brunswick contract, which would be payable until the illegal contracts had been cancelled. That’s €58 million per year for 30 years!

The German government were in a bit of a sticky situation here, as it was the City authorities that had entered into the contracts and so the Government had no direct authority. Fortunately they managed to negotiate an agreement annulling the contracts.

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