Low Value Contracts Procurement Week 2013 Aileen Murtagh A&L Goodbody 19 March 2013

Agenda Overview of SME Involvement in Public Procurement Thresholds for Application of EU Procurement Rules  EU Principles Applicable National Rules Applicable UK rules Welsh rules Irish rules Overview

Overview of SME Involvement in Public Procurement

Background SME involvement in Public Procurement process – consistent problem; Changes in business and economic environment; Governments have taken interest in procurement matters generally; Particular focus on SME participation; Need to keep guidance up to date; 2008 EU Code of Best Practice on SME participation in Public Procurement; Roles for Governments and SME in improving SME opportunities.

Barriers to SMEs Public sector culture; Process too bureaucratic; Absence of uniformity in procurement procedures; Emphasis on price rather than value; and Public sector purchasers tend to be risk averse.

Barriers to SME Participation Levels of qualification deemed excessively high; Size of contracts; Access to and quality of information; Timing issues with the preparation and submission of tenders; Procedure for evaluation can be complex and pose a barrier to SMEs; and Cost is the biggest obstacle

SME perceptions of public purchasers Absence of a track record; One large-scale provider; Focus on price v value; and Absence of (support/back-up/servicing) resources;

Thresholds for Application of EU Procurement Rules

Thresholds The award of contracts valued at or above certain thresholds by public sector and utility bodies is subject to EU public procurement rules EU procurement directives set out detailed procedures for the award of such above-threshold contracts and they must be advertised in the Official Journal of the EU (OJEU) The thresholds are adjusted every 2 years. The current thresholds apply from 1st January 2012 Thresholds are net of VAT This presentation relates to below threshold procurement

Thresholds Public Sector – Central Government Bodies   Public Sector – Central Government Bodies Public Sector – Non-central Bodies Utilities Sector Bodies Supplies and Services £113,057 (€130,000) £173,934 (€200,000) £347,868 (€400,000) Works Contracts £4,348,350 (€5,000,000) €5,000,000 Central Government Bodies e.g. Government Departments Non-Central Public Sector Bodies e.g. Local Authorities, Hospitals

EU Principles Applicable

EU Principles Applicable Although the Directives do not apply to below threshold procurement, if there is potential cross-border interest in the contract, the fundamental principles of EU law must be adhered to Non- Discrimination Transparency Equal Treatment Proportionality Mutual Recognition The Contracting Authority may also be obliged to follow government guidelines / national rules

Below Threshold Procurement - UK Rules

UK Rules Procurement Policy Note – Use of Pre Qualification Questionnaires (Action Note 01/12, February 2012) Sets out mandatory requirements for central government departments, their executive agencies and non departmental public bodies. All other Contracting Authorities “strongly encouraged” to apply requirements Eliminates use of PQQs or other pre-tender selection process for procurement under the EU threshold. Award decision to be solely based on supplier’s response to invitation to tender Financial checks, if applied in below threshold procurement, should not eliminate a supplier without “clear evidence that the supplier’s financial position places public money or services at unacceptable risk” English public sector contracts for works, supplies and services worth more than £10,000 must be advertised on ContractsFinder

Below Threshold Procurement - Welsh Rules

Welsh Advertising rules Opening Doors: the Charter for SME Friendly Procurement; Focus on education and creating awareness of public procurement opportunities; Lots; Consortia bids; E-procurement. Welsh Government requirement - all public sector contracts worth more than £25,000 to be advertised on sell2Wales. Not yet a legal requirement

Below Threshold Procurement - Irish Rules

Irish Government Guidelines Department of Finance Public Procurement Guidelines: Competitive Process - supplies and services contracts Less than €5K: verbal quotes; lowest priced/most suitable selected €5K-€25K: May advertise on e-tenders website/national media; at least 3 written quotes; objective evaluation; most suitable tender selected €25K – EU Thresholds: advertising on government e-tenders website; tender docs circulated; objective evaluation; MEAT/lowest priced tender selected; debriefing; restricted procedure (i.e. with pre-selection stage) should not be used for contracts up to a value of €125K

Irish Government Guidelines Department of Finance Circular 10/10 – Supplies and Services Aimed at encouraging SME participation in public contracts Contracts of €25k+ estimated value must be advertised on e-tenders Contracts below €125K in the case of advertised contracts for supplies and general services and €250,000 in the case of advertised contracts for works and related services must be awarded under an open procedure (i.e., a one stage process with all candidates submitting tenders) Less documentary evidence required upfront, tenderers must confirm that they are in a position to produce evidence when requested No charges to be imposed on tenderers Framework agreements should be contemplated where appropriate Encouraged to communicate requirements in advance

Irish Government Guidelines - Works Capital Works Management Framework - Guidance Notes (NPPPU, 2009) Less than €50K (incl. VAT): Give “serious consideration” to publishing on e-tenders; invite at least 5 to tender; value for money €50K – EU Thresholds (incl. VAT): e-tenders website ad; time period for receipt of tenders must be at least 21 days; restricted procedure not to be used for contracts and related services with a value up to €250K; self-certification process See: www.constructionprocurement.gov.ie

Below Threshold Procurement - Summary

Summary Objective is to create a level playing field – cannot favour SMEs Attempt to reduce formal procedural requirements imposed by contracting authorities As fundamental EU principles must still be followed, less certainty for contracting authorities that procedural requirements have been met Contracting authorities reluctant to depart from PQQs/pre-selection process – evident from results of Mystery Shopper report Self-certification issues Proportionate financial requirements – positive for SMEs, but already a requirement under Treaty Principles

Q&A 

Low Value Contracts Procurement Week 2013 Aileen Murtagh A&L Goodbody 19 March 2013