Transcript www.procurementconnection.co.uk

EU Procurement and
Remedies Changes
Masterclass session
Peter Andrews – October 2009
Outline (1)
The first session
• Common mistakes bidders notice
• Why are bidders challenging? What are they after?
• Why are the remedies rules changing?
• When are they changing?
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Outline (2)
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New standstill (“Alcatel”) provisions
New limitation periods
When can a contract be “torn up”?
What happens then?
When can you be fined?
Framework call-offs, Part B services and below
thresholds
• Summing up...
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Outline (3)
The second session…(briefly)
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Part B services and flexibility
Shared services
Competitive Dialogue
Development agreements after the Roanne case
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Common mistakes
Top 5 mistakes
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Mixing up selection and award
Award criteria and weightings
End stages of competitive dialogue
Frameworks:
– Illegal access
– Illegal call-off, including amends to terms
• Moving goalposts, renegotiating
• “Negotiating” in restricted procedure
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Current position...
Why are bidders challenging
and what are they after?
Why are bidders challenging?
• Recession
• Greater knowledge
• More feeling of “formality”
• Less fear of “rocking the boat”
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Bidder tactics
• Nasty letter
• Threatened legal action
• Exploiting uncertainty
• Ultimate aim, currently?
– Pre-conclusion
– Post-conclusion
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Defence tactics
• Getting it right in the first place
• What are they after?
• Are they well advised?
• Will they go the distance?
• Can you safely call their bluff?
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Why are the Rules changing,
and when?
Changes – why, and when?
• Commission fear...
– Lack of teeth
– Alcatel period
– Many cases in some countries, very few in others
– “Race to contract”
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When?
• Response
– Remedies Directive 2007/66/EC
– Must be implemented by 20 December 2009
– OGC consultation processes
• Transitional...
– New rules apply to “new” processes after 20 Dec
– What about framework call-offs?
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Changes to standstill provisions
Standstill (“Alcatel”) provisions
• Only a few changes.
• Send Reg 32(1) notice, must include:
– Award criteria
– Name of winner and score
– Receiving bidder’s score
– Summary of reasons
– Summary of standstill period rules.
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Standstill provisions (2)
• Additional information request in writing by
midnight of second working day following
sending of notice? (Reg 32(4) notice)...
– Send reasons 3 working days before end of
standstill period
– If later, can’t conclude contract until at least three
days after info is provided
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Standstill provisions (3)
• Can’t conclude contract until...
– Midnight at end of 11th (calendar) day following “relevant
sending date” [if sent electronically]
– Midnight at end of 16th (calendar) day following “relevant
sending date” [if sent otherwise]
• Cannot conclude if legal proceedings are issued
(Reg 47G)
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Standstill provisions (4)
• Note, no mandatory standstill for:
– Part B contracts
– Where no OJEU notice required
– Framework call offs
• But for each, note “choice” later.
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New limitation periods
Limitation periods
• Currently
– “Promptly and in any event within three months
from when grounds for bringing proceedings first
arose”
• Change...
– “Promptly” never to mean <10-15 days
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Limitation periods (2)
• Special limitation period for “ineffectiveness”:
– Where award noticed published, and includes justification
of why contract was not “OJEU” in first place, 30 days
after award notice
– Where there was a tender, and all bidders were told, 30
days after the date on which they were told
– Otherwise, 6 months from contract conclusion
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When can a contract be “torn up”?
“Ineffectiveness” generally
• Significant change
• Court obliged to declare ineffective where...
• One of the three “grounds” apply,
– Where OJEU notice required
– Award during standstill period
– Framework call-offs
• UNLESS “public interest” exception applies
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Ground #1 : Reg.47K(1)
• Award without an OJEU contract notice,
where there should have been one.
• Does not apply if...
– CA believes no notice required (e.g. Part B, £,
exception)
– CA has published “voluntary transparency” notice
– AND contract not signed for 10 days.
• Aim?
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Ground #2 : Reg.47K(4)
• Signing during standstill period, where:
– Other, substantive, breach of the Rules
– Causes bidder serious harm
• Aim?
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Ground #3 : Reg.47K(7)
• Call-off under framework where:
– Call-off illegal (flawed competition, or changes)
– Value of call-off over advertising thresholds
– UNLESS
• CA has run a voluntary standstill period.
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Public interest exception
• Court discretion where “over-riding reasons in
general interest”.
• Economic interests generally not included,
unless “exceptional”.
• Where Court exercises discretion, it must
– Shorten the contract and / or
– Fine the contracting authority
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What happens if the Court
“tears up” the contract?
What happens then?
• Three issues:
– Existing contract
– Procuring a new contract
– Fines
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Contract issues
• Ineffectiveness “prospective”.
• Court discretion over:
– Who gets paid what
– Work already done? Funds already committed?
– Extension to allow re-procurement?
• Must have regard to “pre-nuptual” agreement
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Fines / contract shortening
• Where :
– “over-riding interest” exception; or
– CA has concluded during standstill period, but no
substantive breach
• Then Court must:
– Impose “dissuasive” fine on CA; and / or
– Reduce the contract term.
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Clarifying a few points
Frameworks
• No obligation to run-standstill, but voluntary
standstill will fend-off “ineffectiveness”
• Framework pre-Dec 09 and call-off after?
– OGC prefer to apply “old” rules (consulting)
• If the “framework” is ineffective, what happens
to existing “call-offs”?
– OGC prefer they “stand” unless Ct says so (consulting)
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Part B and below thresholds
• No standstill obligation
• No ground for ineffectiveness, unless should
actually have been “OJEU”d fully.
• To protect against risk, could issue “voluntary”
transparency notice and wait 10 days.
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Summing up
Summing up
• Will this make a difference?
• What does it mean for you?
• Consider:
- Pre-nuptual wording
- Voluntary transparency notices on Part B and <£
- Voluntary standstill on some framework call-offs
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Part B and below – threshold
procurement
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Part B: Outline (1)
• The obligatory health-warning
• Part B focus
• (1) Introduction
– Part A vs Part B services and to tell which is which
– How Part B services used to be treated
– How this changed
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Part B - Outline
• (2) How to procure Part B contracts
– (a) Market-testing?
– (b) Advertising : where? and what do I need
to say?
– (c) Pre-qualification
– (d) The award phase
– (e) How do I treat the incumbent?
– (f) Standstill period and debriefing?
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Part A vs Part B services
• Why the difference?
• How to tell which is which?
– Sch 3 of the Regs
– CPV (see http://simap.europa.eu/)
– What you buy, not who you are
• What if I have a “mixed” contract?
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Part B – the old attitude
• Only a few bits of the Regs apply…
– Award notice (technically)
– Rules on technical specs.
• So people used to…
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Part B: How this changed
• Case-law on basic Treaty principles…
– Transparency…
– Equal treatment / non-discrimination
– Proportionality
• Early 2000s on…
• Commission Guidance (2006)
= “diet” version of the rules
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1(c): How this changed
Part A services > GBP 139k : full Regs apply
V
A
In between : Part A & Part B services : “diet” rules apply
L
U
E
No cross-border interest : Part A & Part B : neither Regs nor
“diet” rules apply
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Part B: Advertising
• Do I need to advertise?
– Two or three quotes from select list not enough
– Advertisement where?
– Website, portals always ok
– Local / trade press?
– OJEU? [take care!]
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Part B: what should the advert say?
• No need for massive detail
• Short description of:
– contract details
– tender procedure
– Invitation to contact authority
• Information “reasonably needed to make a decision”
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Part B: Pre-qualification
• Do I want to do it?
• If so…
– What are you allowed to consider at this stage
– Best to focus on bidder, not bid
– Setting out the rules – transparency
• In practice – PQQs & marking
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Part B: The bid phase
• What is this?
• The ITT document
• Clarity vs flexibility
• Describing / specifying the service
• Be clear about “must have” vs “nice to have”
• Describing the tender process
• Can I short-list / fine-tune / interview?
• Timescales
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Part B: The bid phase
• Award criteria
• What are they?
• The Newham case:
– What is it?
– Does it apply here?
• What to do in practice?
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Part B: Standstill period?
• What is it?
• Do I need one for Part B services? [No]
• Should I include one anyway?
• Debriefing
– Legal duty?
– Not under Regs, under transparency?
– A good idea?
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Shared Services
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Shared services: Overview
• Current context
• Is the arrangement a “public contract”?
– Procurement vs “inter-municipal co-operation”?
– In-house?
– Exceptions?
• Some shared service models
• Practical risk assessment, incl. remedies
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Shared services: Current context
• Drive for efficiency savings
• The “C word”
• A “good thing” = room for flexibility?
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Shared Services: Traditionally…
• Part A service contract, full OJEU and
regulated tender if:
– value > GBP 139k
– not “in-house”
– no exceptions apply
• Part B service contracts and below –
threshold contracts are regulated, but more
lightly (see 2006 Commission notice).
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Shared Services traditionally…(2)
• NB: joint buying is different
• Sharing a chief executive?
• Shared services = sourcing services outside own authority?
• No exception for buying from another public body.
• Perception?
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THE LANDKREISE CASE
 C-480/06, June 2009
 Facts
 AG said…
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THE LANDKREISE CASE (2)
 Court said Rules don’t apply.
 No Teckal, but distinguish:
– “Intermunicipal co-operation” on public service tasks; vs
– Normal procurement
 Reasoning:
– Agreement purely between public bodies, in public
interest
– Teckal would have applied if they’d set up a company to
do it
– Didn’t prejudice the actual commercial procurement
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THE LANDKREISE CASE (3)
 Commission case-closure : 8 October 2009
– Dortmund agreed to provide IT services to Bocum. [Fee?]
– Zweckverband Kommunale Datenverarbeitungszentrale Rhein-Erft-Rur
(KDVZ) conluded agreement for supply and operation of the software to
Kweckverband Kommunales Rechenzentrum Miden-Ravensburg (KRZ)
– In both cases, contracts “involved solely the transfer of public tasks
between public entities”...”co-operation governed solely by considerations
relating to pursuit of objectives in the public interest”
– Applied Landkreise, cases closed.
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THE LANDKREISE CASE (4)
•
Commission case-closure : 8 October 2009:
– Public-public co-operation for waste treatment in Rhine Palatinate
– Agreements between various public bodies re co-operation in waste
– “Solely on considerations and requirements relating to pursuit of objectives
in the public interest”
– Applied Landkreise case, and closed file
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THE LANDKREISE CASE (5)
 Where does this leave us?
 Inter-municipal co-operation vs commercial procurement
 “Straight” buying services from another LA?
 Arrangements between LAs, with one to go to market?
 Pooling functions?
 Case-closures suggest liberal interpretation?
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TECKAL…
 If body is “in-house”, no need to tender
 Teckal (paraphrasing)
– As much control as over one of your own departments
– Does most of its work for you [or other public bodies].
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TECKAL…(2)
 Any private sector equity is a problem
– Stadt Halle (C-26/03)
– Setco (c-573/07) (existing)
 Shared ownership w. other public sector bodies is ok
– Cabotermo (C-340/04); ASEMFO (C-295/05)
– Even if stake is very small – ASEMFO (C-295/05)
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TECKAL…(3)
 Control through committee of member LAs is ok
– Coditel (C-324/07)
– Setco (C-573/07) - solely LA directors
 Narrow focus activities for public owners is helpful
– Setco (C-573/07)
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THE BRENT CASE
 The facts
 Court of Appeal (same day as Landkreise)
 LAML not a Teckal Co because…
– Board had extensive powers
– Directors have duty to LAML, not LAs
– Power of 75% of owners to direct board not enough
– Overall appearance of 3rd party
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JOINT COMMITTEES
 S.101 LGA 1972
 What are they?
 Public contract?
– Delegate function
– vs providing service
 Messy…
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SUMMING UP…
 So need to ensure arrangements:
– Are “inter-municipal co-operation”; or
– Are technically “in-house”; or
– Are procured properly by you; or
– Have been properly procured by someone else (and are open to you).
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Competitive Dialogue
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Competitive Dialogue Outline
• The “political” background
• When is it available?
• Quick run-through
• The difficult areas
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“Political” background
• Why does this matter?
• Commission unhappy with UK use of
negotiated procedure
• UK insistence on flexibility for PFI
• Some compromise
• Some issues “parked” through ambiguity
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CD: When is it available?
• “Particularly complex contracts”:
- Technical
- Legal or financial
• In reality:
- Negotiated?
- Restricted?
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A quick run-through
- See separate sheet
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“Difficult” areas (1): Confidentiality
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What’s the issue?
Reg 18 (21)(c)
Express agreement to disclosure?
Implied agreement to disclosure? (See
Commission Guidance)
• Deal with at start of dialogue phase
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(2) Completeness of final tenders
• Reg 18 (25)(b)
• “… all elements required for the performance of the
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contract.”
But, note clarification, specification, fine-tuning etc.
How do bidders react?
How to deal in practice?
OGC:
- affordability and approval at an early stage
- contractual terms and risk allocation during
competitive stage
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(3):Post-tender discussion
• Reg 18(26)
– Clarify, specify, fine-tune a tender… provided no
changes to basic features, ……. no distortion of
completion… no discriminatory effect.”
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Not negotiation, but what is it?
OGC view
Commission view
Practice
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(4): Discussion with preferred bidder
• Reg 18(28):
– “clarify, confirm commitments, …. provided this does not
have the effect of modifying substantial aspects.. and
does not risk distorting competition or causing
discrimination.”
• Again, not negotiation, but what is it?
• OGC view: design, funder due diligence,
finalise contract
• Commission view
• Practice: reason for change?
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OGC practical guidance
- Undertake thorough assessment of CA’s needs
and objectives
- Ensure affordability and approvals
consideration addressed at early stage
- Ensure process conducted to minimise bidder
costs whilst maintaining competition
- Ensure contractual terms and risk allocation
settled during the competitive stage
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Competitive Dialogue: confidentiality of
bidders’ information
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Regulation 18(21)(c)
No “cherry-picking”
However scope for sharing information and solutions - provided agreement to
disclosure
Sharing information: Address the issue at the outset of the dialogue phase
See Commission guidance: Consent to disclosure may be implied in ITPD
Duty of Confidence
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Inline
LRT v The Mayor
Express Medical
Varec
Freedom of Information Act
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Development Agreements
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Development Agreements
• Why be concerned?
• Issues:
– Are works being procured?
– Extent of public element? “La Scala” decision
– Specification & control? “Jean Auroux” decision
Why be concerned?
• Best Practice
• HCA framework
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Questions?