1. The EU Modernisation Package on Procurement°
Jonathan Branton
May 2014

2. Do we need new rules on public procurement ?
16/05/2014
Do we need new rules on public procurement ?
A glimpse into the future……..
Underlying requirements - simplification and flexible procurement (but what will that really mean in practice)?
Europe 2020 strategy – smart sustainable and inclusive growth
Package of legislative proposals (public sector, utilities, concessions)
Formally adopted on 15 January 2014
Implementation into national law within 2 years (NB. UK Cabinet Office has ambitious plans for early transposition, so that advantage can be taken of some additional flexibilities)
Question, is the result of the modernisation, simplification or a vastly more complex set of rules applying across public sector, utilities and concessions
Answer probably the latter…
Europe 2020
RDI, Eco innovation, social innovation - pre commercial procurement
Importance of innovation, encourage use of variants and defining minimum requirements to be met by variants
Allow market pull without foreclosing the market

3. Looking at the key changes
16/05/2014
Looking at the key changes
More freedom to negotiate – where requirements are not “off the shelf”
Distinction between Part A and B services removed
For CA’s other than central government, PIN can be used in place of individual adverts for contracts using restricted and competitive procedure with negotiation
New higher threshold and lighter regime for social, health, educational services (NB. Threshold of EUR 750k)
Legal clarity that CA’s can take account of relevant skills and experience of individuals at award stage (services, consultants, architects, lawyers etc.)
Social as well as environmental criteria
Use of labels with specific environmental, social or other characteristics
But very specific requirements (must be linked to the subject matter of the contract, label requirements based on objectively verifiable and non discriminatory criteria, open transparent procedure involving all relevant stakeholders, labels accessible to all etc.)
Negotiation
More freedom to use competitive form of negotiated procedure and/or competitive dialogue (works, where design with innovative solutions – services or supplies with adaptation or design – intellectual services, consultancy, architectural engineering and ICT) BUT not for off the shelf services or supplies
Use of negotiated procedure without advert [Article 30] still limited to extreme urgency or where clear from the outset that the publication would not trigger more competition or better procurement outcomes, because objectively only one economic provider can perform the contract (near technical impossibility)
Clarification re artistic – where the aim of the procurement is the creation or acquisition of a unique work of art or artistic performance
Clarification re technical – where competition is absent for technical reasons
When no reasonable alternative or substitute exists and the absence of competition is not the result of an artificial narrowing down of the parameters of procurement
Part A/B removal
Light regime for social, health and educational services
So new category of services to the person (health, social, educational hotel and restaurant) with limited cross border dimension - hence – new lighter regime with a higher threshold of EUR 750,000
Directive does not apply to emergency services (civil defence, civil protection and danger prevention) where performed by non profit or associations (specific list of CPV codes provided) HOWEVER patient transport ambulance services subject to the lighter regime and higher threshold
Election campaigns (propaganda file and video tape production services )
Contracts for political campaign services (specific CPV references)
Teckal clarifications from caselaw introduced
Public contracts awarded to controlled legal persons (Teckal) are not subject to the Directive where the control exercised is the same as that exercised over its own department and the controlled legal person carries on more than 80% of its activities with the controlling contracting authority or by other legal persons controlled by that controlling authority. [Article 11(1)(b)]
No direct participation UNLESS capital in controlled legal person is made compulsory by a national law (currently, NO private capital allowed) [Article 11(1)(c)]
Public to public exceptions [Article 11(4)]
Article 15(2) MS shall take appropriate measures to ensure that in the performance of public contracts, economic operators comply with the applicable obligations in the fields of environmental, social and labour law established by Union law, national law, collective agreements or by the international environmental, social and labour law provisions list in Annex XI SO NEW SCOPE FOR SOCIAL AND LABOUR LAW
RESERVED CONTRACTS Article 17 MS may reserve right to participate in pp procedures to sheltered workshops and economic operators whose main aim is the social and professional integration of disabled and disadvantaged persons provided that at least 30% of the employees of these workshops, economic operators or programmes are disabled or disadvantaged workers

4. Looking at the key changes
16/05/2014
Looking at the key changes
Time limits on response times have been reduced by about a third (expressions of interest and tender deadlines)
Ability to reserve the award of certain services to mutuals or social enterprises for a limited time limit (typically for outsourcing situations)
This exception was strongly advocated by the UK, seeing it as a halfway house between in house provision and full competitive outsourcing.
Codify Teckal (in house exemption)/Hamburg Waste (public sector collaboration)
Codify Pressetext (changes to contracts)
Electronic communication / e-procurement will become mandatory following years after the directive’s adoption
Time limits reduced to:
Open 35 days, if PIN then reduce by 15 days (if certain conditions met)
Restricted 30 days for requests to participate – 30 days for receipt of tenders
Negotiated with advert 30 days for requests to participate (or from PIN) – 30 days for receipt of tenders
CD 30 days for requests to participate
Innovative Partnerships 30 days for requests to participate

5. Improvements to exclusion grounds
16/05/2014
Improvements to exclusion grounds
Poor performance under previous contacts will be permitted as a ground for discretionary exclusion – how to measure?
Where the CA has sufficiently plausible indications that economic operator entered into agreements with other economic operators aimed at distorting competition (price fixing, bid rigging)
Where there are no less intrusive measures (ie. discretionary exclusion as last resort) to remedy:
a conflict of interest
a distortion of competition arising from the prior involvement of the economic operator in the preparation of the procurement procedure
Poor performance NB MS have the option, in implementing Directives, to make this a mandatory requirement
Interesting in that Commission has just announced infringement proceedings against Poland on the grounds that the Polish Public Procurement Act may substantially hinder access to procurement markets. According to its provisions, economic operators are excluded from tendering procedures if they have caused damage by failing to perform a previous contract properly or if a contracting authority has terminated a previous contract due to circumstances for which that operator was responsible. This automatic exclusion also applies in cases where the economic operator has not acted in an intentional or even negligent manner. These grounds for exclusion related to the professional qualities of the economic operator do not figure in the exhaustive list of such grounds contained in Directive 2004/18/EC and may result in discriminatory treatment.

6. Safeguard measures Corruption - improved measures to counter
16/05/2014
Safeguard measures
Corruption - improved measures to counter
Conflicts of interest
Illegal attempts to influence the decision making process
Undue preference in favour of those who advise the CA or involved in the preparation of tenders
Self-cleaning
Dealing with economic operators who have mended their ways (or not)
If measures considered insufficient and exclusion to continue, a statement of reasons must be provided
Maximum periods of exclusion must be specified by Member States. Where the period of exclusion is not set by final judgment, it should not exceed 5 years for mandatory exclusions and 3 years for discretionary exclusions
MS to ensure “appropriate measures” to effectively prevent, identify, and remedy conflicts of interest so as to avoid any distortion of competition
This is to cover at least where procurement staff have a financial, economic or other personal interest which might be perceived to compromise impartiality and independence in the context of the procurement procedure [Article 21]
The compromise text is significantly shorter than that proposed by the Commission originally which included in the definition of private interests any family, emotional, economic, political or other shared interests with the candidates or tenderers including conflicting profession interests !!

7. Measures aimed at assisting participation by SMEs
16/05/2014
Measures aimed at assisting participation by SMEs
Focus on SMEs as engine for growth in EU
Buyers encouraged to break contracts into lots (but discretion where not justified)
CAs may limit the number of lots that can be awarded to one tenderer provided maximum number of lots per tender is stated in OJEU notice/procurement documents
Objective and non discriminatory criteria/rules to determine how evaluation will be carried out, to be provided in advance
Member States have possibility to make it obligatory to split contracts into lots
Turnover cap introduced to facilitate SME participation – general rule is that CA’s cannot set turnover requirements at more than twice contract value
Self declarations “European Single Procurement Document” to be introduced allowing self certification that no grounds for exclusion apply and selection criteria met

8. ERDF Procurement Thresholds & action required
Estimated Value of Goods or Services
Action Required
Below £20,000
Sufficient degree of advertising; but likely not to affect Internal Market. Consider using their own website or a portal such as ‘contracts finder’.
VFM must be demonstrated by requesting or obtaining 3 quotes or prices but this need not be done through a formal competition.
£20,001 to OJEU threshold
The level of advertising must be sufficient to allow a level of competition, potentially from another member state (if the contract award might be of interest to suppliers located in other Member States and depending on other factors eg geographical location). Formal invitation to tender process must be followed and the requirement advertised in the press and/or on the internet for a minimum of 10 days to enable fair competition.
Over OJEU threshold
Goods/Part A Services
Full advertisement in OJEU of a fully-compliant open/negotiated or other regulated process
Part B Services – the lighter-touch regime specified in the Regulations
Value of Works 
Below £429,999
VFM must be demonstrated by obtaining or requesting 3 quotes or prices but this need not be done through a formal competition.
Over £430,000
The level of advertising must be sufficient to allow a level of competition, potentially from another member state (if the contract award might be of interest to suppliers located in other Member States and depending on other factors, eg geographical location). Formal invitation to tender process must be followed and the requirement advertised in the press and/or on the internet.
“National Procurement Requirements” ERDF-GN (

9. Concessions
Separate new regime for works and services concessions (public sector and utilities)
Threshold EUR 5m
OJEU notice required
No set procurement procedure but general principles of equal treatment and non-discrimination apply
Social and environmental considerations can be taken into account
Specific rules on what is regarded as a material change to the contract requiring a retender
Some specific exclusions (e.g. the water sector, lottery services awarded on the basis of an exclusive right)
Usual remedies must be made available

10. Our People Jonathan Branton Partner
Head of Central and Local Government

11. Values Our firm is driven by its core Values which focus on:
Our Clients
Our People
Our Community
Our Environment