Transcript Public Sector Procurement

Workshop on Public Procurement
Belgrade 27 March 2009
EU Directives
Scope of EU Directives & New Government Procurement Procedures
Jonathan Denison Cross
Contents
1. Scope of EU Directives
2. New Government Procurement Procedures
- Framework agreements
- Competitive Dialogue
- Mandatory Exclusions
- Mandatory Standstill
Office of Government Commerce
Policy and Standards
EU/International
 Negotiate European Directives and international
Agreements
Represent the UK in Europe and Internationally
Transposition of EU Directives and GPA into UK Law
 Domestic
Set domestic procurement policy and standards for
departments and offer guidance on procurement rules
Monitor performance and take action where necessary
Relevance of EU Directives to Regional Authorities
 Scope of EU Directives covers both central and sub-central
government i.e. all users of tax payers’ money
 Need to avoid temptation of purchasing “local”
 Potential for native suppliers to gain greater awareness of
the availability of local contracts through advertisements in
the OJEU
Summary of Key EU Activities (1)

EC Directives
2004/18/EC & 2004/17/EC
-
Negotiation
Implementation
Constant monitoring/updating
Remedies
Defence




Small Business Act SBA
Social/Green policies
E-Procurement
Mandatory exclusion of convicted suppliers: anti-corruption
EU Activities (2)

Statistics
Requirement
Collection procedures

Infractions
Procedures
Benefits

Supplier Feedback Service
EU Activities (3)

Wider EU Negotiations
• Regional Trade Agreements (RTA)
• Free Trade Agenda (FTA
• Economic (EPA)

PPN e.g. Supplier Feedback
• Presidency Role
• Benefits


EU Learning LAB
Technical Assistance Information Exchange Instrument (TAIEX)
Scope of EU Directives
The EU Objectives
 For procurement, the EU wants to:
 Open up public procurement to competition
 Achieve better value for money: better quality; better prices
 Reduce corruption
 Establish a single market
The hierarchy of rules
EU Treaty
EU Directives
UK National Law (Regulations)
UK Government Policy
The Treaty Principles
The Treaty sets the tone for all public procurement
The EU Treaty (Treaty of Rome) sets out key principles which
all Member States must follow
Key Treaty principles relating to procurement include:

Equal Treatment

Transparency

Non-discrimination
All public contracts, irrespective of their value, are subject to
these principles
The hierarchy of rules
EU Treaty
EU Directives
UK National Law (Regulations)
UK Government Policy
EU Directives
The EU Directives on Public Procurement are European Laws
Directives are formed via consultation between the Commission, Member
States, European Council and European Parliament
A Directive, once adopted by the EU, must be transposed into domestic
law within a specified timescale
The framework of Directives is dynamic – it is evolving – to keep pace
with changes in the real world
Examples: - Directive 2004/18/EC (The “Classic” Directive)
- Directive 2004/17/EC : (The “Utilities” Directive)
- Directive 2007/66/EC : (The “Remedies” Directive)
The hierarchy of rules
EU Treaty
EU Directives
UK National Law (Regulations)
UK Government Policy
UK Regulations
The UK transposes EU Procurement Directives into national law as
Regulations
The publishing of a new or amended Directive starts the clock for
transposition
OGC consults UK stakeholders on the implementation

Transposition is mandatory

But there are often optional elements

Plus opportunity to explain: the change; process; timescales
Examples: - The Public Contracts Regulations 2006
 The Utilities Contracts Regulations 2006
Scope
The rules apply in this context
Rules apply to all ‘Contracting Authorities’
All contracts which exceed certain thresholds
Below threshold – EU Treaty principles apply
Thresholds
The full EU rules apply when certain thresholds are
exceeded

Thresholds are set out in the directives (in Euros)

Revised every two years to take account of currency fluctuations
(January to December the following year)

Sterling equivalent thresholds in use – published on OGC
website
Different threshold values depending on procurement type

13 for Public Sector

9 for Utilities
Main thresholds
Supplies
“Part A” Services
Works
Schedule 1 bodies
£90,319
£90,319
£3,497,313
Other contracting
authorities
£139,893
£139,893
£3,497,313
Other key points:
Residual, or “Part B” services are subject to a lighter regime; threshold is
£139,893
Below threshold procurements are not rule-free! They are still subject to the
principles of the EU Treaty (transparency, equal treatment, non discrimination…)
as well as to the terms under the GPA
Specifications
 Purchasers are encouraged to use output / outcome based
specifications, so as to open up competition and encourage innovation
 Need to accept equivalent standards to those specified and other
offers which meet underlying needs
 Not to refer to specific make, trade mark, patent etc
 Bidders must demonstrate equivalence; Authority’s reason for not
accepting equivalence must be provided
 Whenever possible account should be taken of access arrangements
for disabled people or design for all users e.g. design of works
Sustainability
Sustainability requirements can to be specified in the tender
requirements, but these must be relevant
Must be sufficiently precise to allow bidders to understand the
requirement and to allow award of the contract
Green production standards and relevant aspects of eco-labels can be
specified but alternatives which demonstrate equivalence must be
considered
Special (including environmental and social) conditions relating to the
performance of a contract may be specified if:

Compatible with Community law

Mentioned in contract notice or in the specification

Relevant to the contract
Sustainability
At the selection stage, assessment of capability to undertake works and
services contracts may, where appropriate, include:
Assessment of environmental management measures relevant to the
performance of the contract
Certificates attesting compliance with environmental management standards may
be requested but proof of equivalence must be accepted. E.g. EMAS (eco
management and audit scheme) certificates
Sustainability

Relevant contracts may be limited to ‘supported’ businesses / employment
programmes / factories which employ mostly disabled people unable to gain
normal employment – must be stated in the contract notice

A supplier may be excluded for proven non-compliance with environmental and
social legislation relating to professional misconduct or for a poor track record
on previous contracts involving environmental or social requirements

Contract award criteria may include environmental characteristics provided
these are linked to the subject matter of the contract and looked at from the
point of view of the contracting authority e.g. running costs, energy costs and
additional environmental quality (toxic emissions) etc.
Procedures
There are 4 main procedures available
Open Procedure

All potential suppliers can bid
Restricted Procedure

2 stage procedure; only short-listed suppliers can bid
Negotiated Procedure

Exceptional procedure; direct negotiation
Competitive Dialogue Procedure

New procedure for complex contracts; controlled negotiation
Procedures: Take-up
UK Contract Notices 2006
8000
7000
6000
7393
5000
4000
3000
2000
2832
423
1000
256
0
Open
Restricted
Negotiated
Procedure Used
Comp Dialogue
Types of Contract
Contracting Authorities can choose their preferred model
Fixed Contract

Precise agreement; clear about volumes; clear about prices; clear about delivery
timescales

Framework Agreement (further details later)

More flexibility; parties agree broad terms; contracts are formed when the buyer ‘callsoff’ the framework; 4 years max; ‘closed’ system; mini-competitions used for multiple
suppliers

Dynamic Purchasing System

Similar to a framework agreement but: a) must be entirely electronic; and b) the system
is ‘open’ – new suppliers can join after the framework has been awarded
Publication of Notices
Contracts covered by the Regulations are subject to advertising and
transparency rules
Prior Information Notice (PIN)

Not compulsory. Used to:
– Warm up the marketplace;
– Reduce minimum timescales
– Helpful to SME’s in particular
Contract Notice

Commonly referred to as the Official Journal of the European Union (OJEU)
advertisement
Contract Award Notice

Confirms the results of the award procedure
Selection of Tenderers
 Minimum numbers of those invited to tender can be stated in the Contract
notice, but should be sufficient to ensure genuine competition
 Such minimum numbers are

5 for the restricted procedure

3 for the negotiated (with publication of a contract notice) procedure

3 for the competitive dialogue procedure
Those found guilty of organised crime, corruption offences or fraud
Must be excluded. This requirement is new and supports Community
efforts to tackle such issues. Guidance is available on OGC’s website
(further details later)
Award Criteria
 Regulations permit either lowest price or most economically advantageous
tender (MEAT)
 Contract notices and documentation must provide the relative weighting
given to each criterion used to judge MEAT
 Where this is not feasible, award criteria must be stated in descending order
of importance
 MEAT award criteria may include environmental characteristics (e.g. energy
savings, disposal costs) provided these are linked to the subject matter of
the contract
The hierarchy of rules
EU Treaty
EU Directives
National Law (Regulations)
UK Government Policy
UK Government Policy
The Government’s overarching policy is that public procurement
should deliver value for money
VfM is defined as the optimum combination of whole life costs and quality to
meet the user requirement
VfM is not lowest price! (Though sometimes the best VfM solution may be the
lowest priced bid). VfM is similar to MEAT
New Government Procurement Procedure
 Framework Agreements
 Competitive Dialogue
 Mandatory Exclusion of Suppliers
 Mandatory Standstill Agreements
Framework Agreements
Background
 An agreement with suppliers to establish terms governing contacts to be
awarded within given period, especially regarding price and quality
 Allows for specific purchases or call offs to be made throughout term of
agreement
If the framework is itself a contract obliging in writing an agreement to
purchase, EU rules apply
If the framework sets out terms and conditions for subsequent call offs but
no obligation on procurers to buy, contract only formed when purchases are
called off
Framework Agreements
Process
 Need to advertise framework in OJEU if estimated maximum value over
lifetime exceeds relevant threshold
 4 year maximum length for framework agreement can only be exceeded in
exceptional circumstances such as where 4 years are insufficient for a return
on investment
 OJEU notice needs to include estimated total value of goods/works/services
for which call offs are to be placed and if possible value and frequency of call
offs to be awarded
Awarding of call offs under framework agreements does not require
contracting authorities to go through full procedural steps in directives
although treaty provisions still apply
Framework Agreements
Benefits
 Can save transaction costs
 Can provide vfm savings
 Will be helpful for suppliers
As long as properly and fairly operated
Competitive Dialogue
• A new procedure created by the EC and used by public bodies procuring Public
Private Partnership projects for infrastructure assets
OJEU Notice
Pre Qualification
Select Participants
Dialogue Phase
Final Tenders
Selection of Preferred Bidders
PB Clarification
Contracts Signature
Competitive Dialogue
 During all procurements, contracting authorities work in partnership with
bidders to ensure that bid costs are kept to a minimum and to ensure value for
money
 The approach has adopted various guidelines which are published by the
National Health Service, OGC and the Building Schools for the Future
programme, amongst others
Mandatory Exclusion
 Mandatory requirement for contracting authorities to exclude
suppliers convicted of certain offences e.g. fraud and bribery
 Applies to individuals directly involved in the tendering process
Evidence of convictions can be obtained through central government
records
Unspent and spent convictions
Mandatory Standstill Period
10 Day Mandatory Standstill period for public contracts following European
Court of Justice (ECJ) judgements
Enables award decision to be set aside by a court where aggrieved bidder
has been prejudiced by breach of rules
Contracting authorities must inform all suppliers who have tendered in
writing of the result of the award and provide feedback to unsuccessful
tenderers
Does not apply below threshold
Key Benefits of EU Directives for Serbian/EU
Contracting Authorities

Regulatory procedures to ensure competition and VFM

Greater market choice at both central and sub-central level

Better quality goods and services

Competitive pricing does not imply lowest price

Improved statistical data on markets

More opportunities for UK/EU suppliers + increases their

competitiveness
Key Benefits of EU Directives for Serbian/EU
Contracting Authorities

Major emphasis on transparency and non-discrimination

Guaranteed access to markets within the EU

Sub-contracting, in particular with regard to SMEs

Enforcement procedures through the EU dispute settlement system
Procedures EU Directives offer to help contracting
authorities and suppliers

Rules to ensure non-discrimination and transparency e.g prescribed
advertising procedures, tender processes

Thresholds

Introduction of modern techniques such as, e-procurement/electronic
reverse auctions