Modernisation of EU Public Procurement Policy

Niels Schuster

DG Internal Market and Services

Association Agreements DCFTA

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Outline

1. Overview of the Reform

2. Classical Directive

3. Utilities Directive (Water, Energy, Transport, Postal)

4. New Concessions Directive

5. Government Procurement Agreement (GPA)

6. Association Agreements/DCFTA

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Overview of the Reform

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Current Rules

Classical Directive (2004/18/EC)

• Public works, public supplies and public services

Utilities Directive (2004/17/EC)

• Water, energy, transport and postal services sectors

Directive on Defence procurement (2009/81/EC)

Remedies Directives (89/665/EEC and 92/13/EC )

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New Rules: Preparatory works

Greenpaper on modernisation (January 2011)

Evaluation of existing rules

Results of public consultation (June 2011)

623 replies (Business, public authorities, civil society, academics & legal experts, citizens…)

Public procurement conference (June 2011)

European Commission proposal (December 2011)

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New Rules: Legislative process

July 2013: political agreement

February 2014: Adoption

Directive – needs to be transposed by EU Member States

2 years for transposition

4.5 years for e-procurement (at the latest)

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Objectives of the reform

1. Simplification & more flexibility

7. New rules for Concessions

3. Better access for Small & Medium Enterprises (SME)

2. Strategic use

6. Governance

4. Sound

procedures 5. Compliance with GPA

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Classical Directive

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Simplification & more flexibility I

Increased use of negotiated procedures

Reduction of administrative burden

Reduced time limits

Simplified rules for sub-central authorities

e-Procurement

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Simplification & more flexibility II

Light regime

New specific simplified rules for social, health, cultural and other services

• higher threshold – EUR 750 000;

• only requirements: ex-ante (and ex-post) publicity + non-discrimination principle; for the rest national rules

Other services covered:

• Hotel and restaurant services

• Certain legal services

• Rescue, fire fighting and prison services

• Government services and services to the community

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Strategic procurement I

(1) Strategic policies may be considered in award decision

(2) Technical specifications may refer to production process

(3) Integration of disabled & disadvantaged workers

(4) Innovation Partnership

(5) Use of labels

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Strategic procurement II

Sole Award Criterion:

Most economically advantageous tender (MEAT)

to be assessed on the basis of

1. price, or

2. cost, using cost-effectiveness approach (e.g. "life cycle"), or

3. the best price-quality ratio using criteria such as

• Production process

• Social & environmental criteria

• Innovative characteristics

NB: Criteria must be linked to the subject matter of the contract !

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Strategic procurement III

Life-cycle costs

Costs for the Contracting Authority

Acquisition

Use, Maintenance,

End of life

External Costs

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SME-friendly measures

Division into lots

"apply or explain" principle;

Proportionate criteria for financial standing

limited to twice contract value

Reduced documentary requirements

"European Single Procurement Document"

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Sound procedures I

• Conflicts of interests clarified

• Exclusion grounds strengthened and extended

• Compulsory exclusion in case of abnormally low tender

• Modifications of contracts simplified

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Sound procedures II

Principles of procurement – Horizontal clause

Appropriate measures to ensure that economic operators comply with applicable obligations in the field of environmental, social and labour law

Referred to under:

Non award

Exclusion grounds

Abnormally low tenders

Subcontracting

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Sound procedures III Main changes:

Competitive procedures with negotiation Replaces current negotiated procedure with publication

Competitive dialogue slightly broader scope for negotiations in the final stages

Innovation partnership Research services for the development of an innovative product by

one or more providers plus supply contract

Negotiations without publication no substantial changes

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Utilities Directive

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Utilities Directive

• Procurement for services, supplies or works

• By utilities (public or private)

• Utilitiy activity (water, energy, transport, postal)

Private entities subject to procurement rules if "operating on the basis of special and exclusive rights"

More flexible regime for utilities

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Utilities Directive

Essentially same changes for the Utilities as for the

Classic Directive

Differences

Framework contracts:

max 8 years (classic 5 years)

Contract modifications

Unforseen circumstances: unlimited (classic: max 50%)

Definition of special or exclusive rights

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New Concessions Directive

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New Directive on Concessions

Works & service concessions ≥ € 5 million

Classical & utilities sector

Not:

Drinking Water (supply or distribution)

Exclusive rights

Lotteries

Public passenger transport services

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Distinction contracts – concessions

Right to exploit the work or services (sometimes with payment)

transfer of operating risk

no guarantee to recoup the investments and costs.

risk can be limited by regulation, but always real exposure to possible loss, not merely nominal or negligible

demand or supply risk or both

Clear delimitation from situations such as licenses, authorizations

Duration of Concessions

The duration of concessions shall be limited

General principle for concessions lasting more than 5 years:

Shall not exceed time necessary to recoup investments made for operating works/services with return on invested capital

Possibility to take into account investments at beginning and during life of concession and those necessary to achieve specific contractual objectives.

Concessions: few procedural rules

• Publication (ex-ante & ex-post)

• Transparency, equal treatment, non-discrimination

• Procedural guarantees, not defined procedures

• Exclusion (=), selection criteria (light)

• Objective award criteria

• Minimum time-limits

Government Procurement Agreement (GPA)

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Government Procurement Agreement

Structure

• Text: General principles

• Annexes: coverage (schedules by parties)

Principle of non-discrimination (subject to coverage)

National treatment

Most favoured nation clause

Treatment of other Parties’ goods, services and suppliers that is “no less favorable than” that accorded to domestic/other parties' products, services and suppliers

Procurement rules in the text

• Tendering procedures

• Publication/invitations to participate

• Qualification of suppliers

• Time limits

• Necessary Documentation

• Award criteria

Revised GPA

Revised GPA: more user friendly, closer to EU Directives

• Easier access to procurement - Better use of electronic means

• Improved rights of developing countries to accede

• Rules to avoid conflicts of interest and prevent corrupt practices

• Introduces more flexibility for entities

• Use technical specifications aimed at protection of environment

• Technical specification relate to production process and methods

• Award: lowest price or most advantageous tender

Revised GPA : Future

Seeking accession:

China, New Zealand, Albania, Georgia, Jordan, the Kyrgyz Republic, Moldova, Montenegro, Oman, Panama and Ukraine

WTO commitments to accede:

the Former Yugoslav Republic of Macedonia , Mongolia, the Russian Federation and Saudi Arabia

Revised GPA : 2/3 Parties rule for entry into force

Association Agreements DCFTA

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Main points

(1) Mutual access to public procurement markets

(2) Gradual approximation of legislation with EU

To be accompanied by:

Enhanced institutional framework

Roadmap/Strategy

Cooperation and technical assistance

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Gradual Approximation (Classical Directive)

Basic elements

Definitions, thressholds, principles, procedures, exclusion grounds, selection and award criteria, publication, information …

Other mandatory elements

(Works) Concessions, design contests…

Non-mandatrory (but recommended)

Competitive Dialogue, FWA, Dynamic Puchasing Systems…

Out of scope

Reporting, statistical information… 33

Indicative Schedule

Phase Approximation Market access

1 • Institutional framework • Basic standards • Roadmap

Central government authorities (supplies)

2 • Basic elements Classical & Remedies

State, regional & local authorities and public law bodies (supplies)

3 • Basic elements Utilities & Remedies

All contracting entities (supplies)

4 • Other elements Classical All contracting authorities (services & works contracts and concessions)

5 • Other elements Utilities All contracting entities (services & works)

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More information

• EU Public Procurement Rules

• http://ec.europa.eu/internal_market/publicprocurement/index_en.htm

• EU-Georgia Association Agreement

• http://eeas.europa.eu/georgia/assoagreement/assoagreement-2013_en.htm

• EU-Moldova Association Agreement

• http://eeas.europa.eu/moldova/assoagreement/assoagreement-2013_en.htm

•

EU-Ukraine Association Agreement

• http://eeas.europa.eu/top_stories/2012/140912_ukraine_en.htm

•

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