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I - Public Procurement in the EC services: how do we work

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1 I - Public Procurement in the EC services: how do we work
REGIONAL CONFERENCE ON PUBLIC PROCUREMENT REFORM IN WEST BALKAN -KEY CHALLENGES AND PRIORITIES FOR CHANGE- Pristina, 16 – 17 September 2008 Grand Hotel, Conference Room I - Public Procurement in the EC services: how do we work II - Public Procurement in the EU: recent developments Presented by: Olivier Moreau Seconded national expert in the European Commission Directorate General Internal Market & Services Unit C1: Economic and international dimension of procurement; E-procurement

2 DG Internal Market and Services
Director General Jörgen Holmquist Assistants Michael Hager Sven Gentner Internal Audit Capability Nathalie Stefanowicz Deputy Director General Thierry Stoll Deputy Director General (vacant) Principal Advisor J-C Thébault (detached to the President’s Cabinet) Dir A Planning, Administrative Support and Communication Henk Post Dir B Horizontal Policy Development Jacqueline Minor Adviser: Hakan Ander Dir C Public Procurement Policy Bertrand Carsin Dir D Knowledge-based Economy Margot Froehlinger Dir E Services Guido Berardis Dir F Free movement of Capital, Company Law and Corporate Governance Pierre Delsaux Adviser: Piotr Madziar Dir G Financial services Policy and Financial Markets David Wright Dir H Financial Institutions Elemer Tertak A1 Human and Financial Resources Olivier Salles Deputy: Jan Sempels B1 Policy Development and Coordination of the Internal Markt Bernhard Friess Deputy: Nathalie Berger C1 Economic and Interna- tional Dimension of Public Procurement; E-Procurement Erik Nooteboom Deputy: Christian Servenay D1 Copyright and Knowledge-based Economy Tilman Lueder E1 Services I Maria Martin-Prat Deputy: Martin Frohn F1 Free movement of Capital and Financial Integration Francisco Caballero Deputy: Laurence Lennan G1 Financial services Policy Jean-Yves Muylle H1 Banking and Financial Conglomerates Patrick Pearson Deputy : Arvind Wadhera A2 Planning and Internal Control Matthew King B2 Impact assessment, Evaluation and Economic Analysis Werner Stengg C2 Formulation and Enforcement* of Public Procurement Law I Matthias Petschke Deputy: Gauthier Pierens D2 Industrial Property Mirjam Söderholm (acting) E2 Services II Jean Bergevin Deputy: Salvatore D’Acunto F2 Company Law, Corpo- Rate Governance and Financial Crime Claire Bury Deputy: Philippe Pellé G2 Financial Markets Infrastructure Mario Nava H2 Insurance and Pensions Karel Van Hulle The European Commission as a whole is « the Guardian of the Treaty »: Article 211 In order to ensure the proper functioning and development of the common market, the Commission shall: — ensure that the provisions of this Treaty and the measures taken by the institutions pursuant thereto are applied (…) DG MARKT in charge of different issues relevant to of building and maintaining the opening up of the Internal Market (such as banks, insurances, services, intellectual and industrial property rights, etc… And esp. of the right implementation of Community law in the field of PP Why is PP important? It is all the more important when procurement is financed through Community funds, because it is the money of the taxpayers coming from the 27 MS which is at stake About Infringement procedures: Article 226 If the Commission considers that a Member State has failed to fulfil an obligation under this Treaty, it shall deliver a reasoned opinion on the matter after giving the State concerned the opportunity to submit its observations. If the State concerned does not comply with the opinion within the period laid down by the Commission, the latter may bring the matter before the Court of Justice. A3 Information Techno- Logy and Document handling Fernando Toledano Deputy: Santiago Vazquez Souto B3 Better Regulation Cycle: Legal aspects Henrik Mørch C3 Formulation and Enforcement** of Public Procurement Law I I Ugo Bassi Deputy: Klaus Wiedner D3 Regulated Professions Pamela Brumter Deputy: Jean-Marie Visée E3 Administrative Cooperation and Member State Network Nicholas Leapman F3 Accounting Jeroen Hooijer Deputy : Ulf Linder G3 Securities Markets Maria Velentza (acting) H3 Retail issues, Consumer Policy and Payment Systems Eric Ducoulombier (acting) A4 Internal and External Communication Panayotis Stamatopoulos B4 External aspects of the Internal Market Anthony Dempsey Deputy: Birgit Weise-Montag E4 Postal Services Jörg Reinbothe F4 Auditing Jürgen Tiedje G4 Asset Management Niall Bohan Deputy: Didier Millerot * For BE, CY, FR, EL, HU, IE, LU, LT, LV, NL, PT, PL,ES,UK ** For AT, CZ, DK, EE, FI, DE, IT, MT, SE, SK, SI

3 Our working methods General aspects of assessment
What is at stake? A well functioning, complete and sound procurement system Our contribution? - Providing explanations, recommendations and legal assistance to the national administration Our working methods for the assessment of legislative approximation and institutional reform in the area of public procurement Our aim is the creation of a well-functioning, complete and sound public procurement system, so apart from the legal and legislative aspects we provide comments and recommendations on administrative capacity building, institutional questions, control mechanisms, etc. We consider the public procurement system as an essential part of the reform of public spending. Our assistance is based on providing explanations, recommendations and legal assistance to the national administration.

4 Our working methods General aspects of assessment (II)
Incorporation of the relevant procurement rules: the basic principles of the EC Treaty the relevant EC Directives the relevant case-law of the ECJ the “soft law” of the EC on the acquis Consistency with the EU-partner country agreement PP provisions (when applicable) When evaluating legal texts or other documents related to the approximation to EU procurement rules, DG MARKT makes an assessment whether the given texts properly incorporate the relevant EU procurement rules. Such rules especially include: - the basic principles of the EC Treaty e.g. free movement of goods, the right of establishment, freedom to provide services, non-discrimination, equal treatment, transparency, proportionality, mutual recognition; - the relevant EC directives coordinating the procedures for the award of contracts (2004/17/EC, 2004/18/EC, 89/665/EEC, 92/13/EEC, 2007/66/EC); - the relevant case law of the European Court of Justice; - the "soft law" of the European Commission interpreting the relevant rules of the EU procurement acquis. In case there is an international agreement between the EC and the partner country, the Commission takes into account the specific, public procurement related provisions of that agreement.

5 Our working methods General aspects of assessment (III)
All kind of procedure: to comply with the Treaty Above the thresholds: according to the rules describes in the PP Directives Below the thresholds: proper solutions compliant to the relevant principles Level of requirement according to the status of the partner country Progress assessed within the whole spectrum of legal texts For institutional building, according to experience, in the absence of precise requirements in the acquis. During the evaluation of texts MARKT experts take especially into account the following: - all contract award procedures (irrespective of their value, type or any other feature) shall respect the principles of the EC Treaty (they shall be transparent, non-discriminatory and treat economic operators on an equal basis);[Commission Interpretative Communication 2006/C 179/2 ] - contracts above the thresholds stipulated in the EC procurement directives shall be awarded according to the rules described in them. Those phases or elements of the award procedure which are not regulated in the directives (e.g. decision making procedures of the award committee) shall comply with the principles of the EC Treaty (see above); According to Article 249 of the EC Treaty "a directive shall be binding, as to the result to be achieved, upon each member State to which it is addressed, but shall leave to the national authorities the choice of form and methods". On the basis of this, the Commission does not require the verbatim translation of the procurement legislation (although in some cases it can be the most appropriate solution) and does not intervene into the chosen level or form of legal approximation. On the other hand, MARKT meticulously checks whether the national legislation properly implements the principles and procedures and whether it is capable to attain the goals of the directives - since the EC Directives do not cover every aspect of contract award procedures (contracts under the EC thresholds, award decision, etc.) it is up to the national administration to find proper solutions and methods to address these issues which are compliant to the relevant principles - regarding partner countries which undertake legislative approximation, the Commission's approach is more flexible than towards Member States or candidate countries that have to transpose the relevant EU rules - the Commission evaluates the progress achieved on the whole spectrum of legislation, including primary and secondary level legislation as well as "soft law": guidelines, manuals, etc. - Creating the adequate institutional background is essential for a properly functioning public procurement system and experience gained from previous enlargements has proved that national legislation aligned with the acquis can only be implemented if the authorities concerned are up to this task. In the absence of detailed rules on the institutional background in the acquis DG MARKT examines the level of development on a practical basis (scope of authority, the quality of the drafted legislation, number of staff, experience of staff, etc.) drawn from our experience from previous enlargements.

6 Our working methods Sequencing of the informal assessment of draft legislation
- Meeting the consultant to discuss the planned legislation with special regard to its relevance to legal approximation - Prepare a draft text to be discussed with the consultant - redraft it according to the consultant's eventual comments - re-discuss it with the consultant - submit the "final" draft to the Commission for comments - discuss the text with the consultant in the light of the Commission's comments and redraft it (if necessary). Practicalities of the informal assessment of draft legislation The Commission services can assess draft legal documents in an informal fashion. The Commission services are ready to discuss any kind of draft legislation (primary or secondary, practical guides, manuals, etc.) at any stage of the adoption procedure, but practice in the past has shown that the most efficient method is to submit to the Commission those texts in terms of which all the necessary internal political decisions has been taken by the line ministry (or ministries) and the draft is ready to be sent to the government. At that stage the Commission can already have a clear and complete picture on the whole concept of the law and on the other hand our eventual comments can easily be taken into account and the text can be modified if necessary. Another consultation with the Commission before the adoption of the text (which might be substantially amended by legislative proposals by MPs) would be appreciated. Partner countries usually have access to technical assistance facilities funded by the EU (e.g. OECD/Sigma, TAIEX, twinnings). The Commission services prefer to receive draft legal texts which have already been properly discussed with the technical assistance consultants. This first "advisory phase" helps to avoid the most obvious mistakes and to better understand how national legislation can be approximated to the acquis. Nota bene: the consultants as well as the Commission services can help the drafting and can share their views and experiences with the national administration, but cannot take the responsibility of taking decisions on the form and content of the draft text. Ownership of the text and responsibility for its content remains entirely in the hands of the national legislators (administration drafting the text and Parliament enacting it). Having a proper feedback enormously helps our work, so any information on the acceptance or disregard of our (or the consultants) comments (or parts of it) would be appreciated. So here is described the sequencing which is usually the most efficient: Commission experts are ready to meet government experts from line ministries to discuss certain questions or problems of approximation concerning concrete, large scale legislative amendments i.e. the planned adoption of a new public procurement law, at any stage of the procedure. These meetings usually take place in Brussels and take one day. For the sake of efficiency the documents to be discussed should be sent to the Commission in due time. We can even help the national administration in defending the text in Parliament. The Commission does not have a formalized procedure for the assessment of draft legislation. It is sufficient if we receive the draft text by than the desk officer in charge reads the text and analyses it according to the relevant EU procurement rules described hereinabove. Usually we make two types of comments: general ones, referring to problems which appear regularly in the draft or which have substantial importance with regard to approximation; and specific ones, usually inserted in the relevant part of the text, noting a problem related to the given article or paragraph. The time limit that we need for the assessment depends on the length of the text as well as on our other workload. In any case, we try not to delay the procedures. Following the assessment we simply send back the commented version of the draft text to the sender by . We are ready to further comment the text once it has been redrafted.

7 Recent and future evolution
- some new legislative initiatives, - several non binding documents, - many studies and documents for reflection.

8 The Review of the Remedies Directives
Existing Directives on Remedies 89/665/EEC and 92/13/EEC - Pre-contractual remedies - Post-contractual remedies WHAT CONTRACTS ARE COVERED BY SUCH REMEDIES? According to the rulings of the Court of Justice the Member States should ensure that effective and rapid remedies are available against decisions taken by contracting authorities and contracting entities as to whether a particular contract falls within the personal and material scope of Directives 2004/18/EC and 2004/17/EC Principle of equivalence and jurisdictional protection (see C-92/00 krankenhaustechnik) COMMON FEATURES IN BOTH REMEDIES DIRECTIVES: - Interest to act - Prior information as an option. - One common remedy in the two Directives: award damages to persons harmed by an infringement. 1st Effective remedy in the public sector and as an option in the utilities sector: interim measures in interlocutory procedures, e.g. suspension of the procedure for the award of the contract ; injunction to communicate documents, injunction to re-tender or to amend certain conditions in the tender documents. 2nd effective remedy in the public sector and as an option in the utilities sector: setting aside of unlawful decisions including the removal of discriminatory specifications in the tender documents. Slide - 8

9 The Review of the Remedies Directives
New Directive on Remedies 2007/66/EC after the conclusion of a contract, the powers may be limited to awarding damages. Even when it is not the case in practice the Courts are reluctant to set aside decisions when the contract is concluded Improving the effectiveness of pre-contractual Remedies in formal award procedures Providing for effective Remedies against the practice of illegal direct award of public contracts WHAT IS THE IMPACT OF THE “ALCATEL” CASELAW ? THE TRADITIONAL SITUATION : - BEFORE THE CONCLUSION OF THE CONTRACT, THE PERSONS HARMED BY AN ADMINISTRATIVE DECISION MAY CONTEST IT (IN THEORY) BUT IN PRACTICE THEY OFTEN DO NOT KNOW THIS DECISION. - AFTER THE CONCLUSION OF THE CONTRACT, THEY ARE INFORMED BUT THEY CANNOT CONTEST IT ANYMORE SINCE THE CONTRACT HAS ENTERED INTO FORCE. BEFORE IS TOO SOON. AFTER IS TOO LATE.

10 The Review of the Remedies Directives
Directive 2007/66/EC - Key elements of the review Introduction of a standstill period between the award and the conclusion of a public contract Combat against illegal direct awards of public contracts Slide - 10

11 The Review of the Remedies Directives

12 The Review of the Remedies Directives
Sanctions in case of violation of standstill ineffectiveness of the contract alternative penalties, such as fines Slide - 12

13 The Review of the Remedies Directives
II. Illegal direct awards Post-contractual remedies available (ineffectiveness) Application within time limits (30 days or 6 months) Slide - 13

14 The Review of the Remedies Directives
Sanctions in case of illegal direct awards ineffectiveness of the contract alternative penalties, such as fines Slide - 14

15 The Review of the Remedies Directives
State of play legislative process Publication of Directive 2007/66/EC on 20 December 2007 Implementation by Member States within 24 months Slide - 15

16 Work in progress: the Defence procurement directive GPA revision
Update of lists of contracting authorities/entities annexed to the PP directives Les marchés de la défense Dans ce domaine, qui est très sensible, la Commission a publié un Livre vert. L’objectif de ce document consultatif est de lancer le débat sur les moyens de favoriser la concurrence transfrontaière pour certains types d’achat de défense, en agissant d’une manière adaptée aux spécificités du secteur. La Commission veut aider les Etats-membres – qui saluent l’émergence de ce débat – à mieux investir les quelque 30 milliars d’euros et plus que constitue le marché européen en la matière, et de créer une plate-forme industrielle européenne en la matière qui soit plus compétitive. Le Livre vert établit que la Commission pourrait éclaircir, par une communication, la définition des cas où les achats de défense peuvent être exonérés des règles communautaires, sur la base de l’exemption pour raisons de sûreté nationale prévue à l’article 296 du Traité, exemption des exigences générales du Traité sur la libre circulation des biens et services et exemption des directives. Le Livre vert demande également aux parties prenantes si la Commission devrait présenter une proposition de directive de coordination des procédure de passation des marchés de défense, dans les cas où l’exemption est inapplicable ou bien quand l’Etat membre choisit de ne pas en faire usage. Pour ces contrats, la directive introduirait de nouvelles règles souples, en adéquation avec les spécificités du secteur, mais susceptible d’assurer la transparence et la non-discrimination. Le débat est strictement centré sur la concurrence intra-communautaire et n’aura pas d’incidence avec le régime actuel des échanges extra-européens ou internationaux.

17 Future legislative initiatives
- new standard forms - ?

18 Adoption of non binding documents
Commission Interpretative Communication C(2007)6661on the application of Community law on Public Procurement and Concessions to Institutionalised Public-Private Partnerships (IPPP) - Addressing the creation and operation of IPPPs/ »in-house » - Political decision is necessary from the Commissioner and the College to go further through a legislative initiative on concessions - Key issues are: Definition of concession Scope of a possible initiative on concessions Qualification of mixed concessions Thresholds and method of calculation Procedure to award concessions Selection and award criteria Duration of concessions Amendments to the concession during its lifetime Remedies regarding infringements to the EU rules PPPs and concessions are a current issues of policy making PPPs cannot be considered as a specific type of public contract A PPP can be either a public contract or a concession, depending on the distribution of risks between the public partner and the private partner There might be specific provisions on PPP types of arrangements, but these should only be complementary to the provisions of the national law implementing EU PP Directives and not define specific procurement rules The following elements normally characterise PPPs: • The relatively long duration of the relationship, involving cooperation between the public partner and the private partner on different aspects of a planned project. • The method of funding the project, in part from the private sector, sometimes by means of complex arrangements between the various players. Nonetheless, public funds - in some cases rather substantial - may be added to the private funds. • The important role of the economic operator, who participates at different stages in the project (design, completion, implementation, funding). The public partner concentrates primarily on defining the objectives to be attained in terms of public interest, quality of services provided and pricing policy, and it takes responsibility for monitoring compliance with these objectives. • The distribution of risks between the public partner and the private partner, to whom the risks generally borne by the public sector are transferred. However, a PPP does not necessarily mean that the private partner assumes all the risks, or even the major share of the risks linked to the project. The precise distribution of risk is determined case by case, according to the respective ability of the parties concerned to assess, control and cope with this risk.

19 Adoption of non binding documents
Commission services is preparing a Small Business Act in favour of SMEs.

20 Studies and documents for reflection
Commission services are developing: - several projects listed in the Action plan on e-procurement (development on e-catalogues, e-signatures, compliance verification,…) - evaluation studies of the Action plan, Compliance verification mechanisms for e-procurement systems Interoperable e-procurement tools: e-signatures e-catalogues e-certificates

21 Partners countries responsibility
They shall: - make their legislation compatible with the Community acquis/or align to the acquis, - prepare guidelines and operational tools, - develop the capacity to manage an efficient and safe system of Public Procurement by setting up a relevant administrative capacity. The Parties recognise the importance of the approximation of Albania's existing legislation to that of the Community and of its effective implementation. Albania shall endeavour to ensure that its existing laws and future legislation will be gradually made compatible with the Community acquis. Albania will ensure that existing and future legislation will be properly implemented and enforced. (Albania-EU SAA, art. 70-1) – Give an organisation for procurement the task of guaranteeing a coherent policy and steering its implementation. – Present a comprehensive strategy which will include all reforms necessary for legislative alignment and institutional capacity building in order to comply with the acquis. (TR-UE Accession Partnership, Chapter 5: Public procurement)

22 Practical issues encountered in the course of public procurement
No provisions in the Directives regarding implementation of the contract The legal framework has to be completed in the national law implementing EU law And/or in its secondary legislation And/or in the internal rules of the Contracting Authorities In any case, implementation rules have to comply with the principles of the Treaty the provision of the Directives, if any

23 For instance… Addenda The calculation of the estimated value of a public contract shall be based on the total amount payable, net of VAT, as estimated by the contracting authority. This calculation shall take account of the estimated total amount, including any form of option and any renewals of the contract. (Dir 2004/18, art.9-1 §1, PPL art. Art.25-1) Contracting authorities may award public contracts by a negotiated procedure without prior publication of a contract notice in the following cases: (…) As soon as the first project is put up for tender, the possible use of this procedure shall be disclosed and the total estimated cost of subsequent works or services shall be taken into consideration by the contracting authorities when they apply the provisions of Article 7. (Dir 2004/18, art.31-4 b) §2, PPL art.122 j) §6) It is very clear from the wording of those provisions that, notwithstanding the other conditions to be fulfilled in such a case, the main principle here at stake is transparency when awarding the first contract: when reading the contract notice, every potential candidate must be able to estimate what could become the actual final dimension of the contract, in consideration of its possible extension through future addenda. Regarding contractual modifications during implementation of the contract, borders are illustrated esp. by an ECJ case-law: Succhi di Frutta.

24 For instance … (II) Black-listing
The contracting authority has the right to exclude within the award of the public procurement contract procedure any tenderer/candidate if the tenderer/candidate: (…) has been convicted in the last 3 years by definitive court judgement, for an act that doesn’t correspond with the professional ethics or for a grave professional misconduct; (PPL art. 181 d) implementing Dir 2004/ art d) As the areas of monitoring and control of public procurement in Member States are regulated by national law and by obligations under the EC Directives, these functions play a central role in all national public procurement systems. Control in this context does not cover the responsibilities of internal and external audit institutions or of complaints review bodies, but refers only to tasks exercised by central public procurement institutions. Such functions may include the following tasks: Managing of an official list of certified economic operators and/or certified procurement officers; Management of an official blacklist, wherever such lists exist, of economic operators who violated public procurement rules, did not fulfil their contracts, misrepresented information, or offered a bribe. To have such a list, when it does exist, maintained at central level is necessary in view of the principle of transparency , and in order to ensure that black-listing is grounded on objective and fair criteria as well as to preserve the right for the interested economic operators to challenge their black-listing in a review procedure.

25 Purchasers responsibility
Public Purchasers shall make use of all legal opportunities: - implement national regulations with the aim to get best value for money, - use the allowed flexibility (reduction of deadlines, specific types of procedures,…), - take advantage of the new varied solutions offered (e-procurement facilities).

26 Economic operators role
All economic operators should contribute to the completion of the Internal Market: - to a fair and sound competition, - to the reduction of public expenditures, - to the quality of public services, - to the improvement of productivity and the development of cross-border trade.

27 EC responsibility What Commission services could do for you?
Economic and Financial Assistance: DG ELARG Assistance by DG Internal Market and Services (Unit C1: Economic and International Dimension of Public Procurement Policy; e-procurement): Assistance in the interpretation of the EU procurement legislation, Organisation of bilateral expert meetings, Contribution to seminars and conferences, Support for the elaboration of national strategies, Help in the targeting of external assistance. Public Procurement advisers have a specific role to play: - provide and disseminate a knowledge of legal provisions, - advise on best practices, - provide confidence among operators and institutions.

28 FOR MORE INFORMATION DG Markt – web pages
(Action Plan, explanatory documents, studies) IDA/IDABC – e-procurement (e-procurement tools, technical background documents, demonstrators) SIMAP (standard forms, publication of notices) Contact:

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