BESA Annual Conference UK & EU Procurement Policy Update (including the impact these changes will make on how schools spend their money) Jack Salter Head of Commercial Policy Department for Education Wednesday 6 November 3.45 to 4.00 QE11 Conference Centre, London

Two main Topics  New EU Directives / UK Public Contract Regulations  Wider Public Sector Procurement Reform

Managing Public Money and European Union Treaty requirements Requirement is for public bodies to achieve value for money and do so following EU Treaty principles of transparency, proportionality equal treatment and non- discrimination. The competitive process:  Helps ensure value for money  Helps demonstrate Transparency.

4  The EU Context Current directives were made in 2004; implemented by UK as Public Contracts Regulations 2006 Many calls for change/simplification over the years, including post financial crisis 4 legislative proposals by the European Commission to update the existing EU rules regime:  Revised Directive on public procurement (“classic”)  Revised Directive on utilities procurement  New Directive on concessions contracts  New Regulation on access to/from 3rd country markets (reciprocity)

New EU Public Procurement Directive Agreed  The revised EU Public Procurement Directives were agreed by the European Parliament and the Council on 26 June 2013  The legislators strove to improve flexibility in the procurement process for both the public and private sector while at the same time giving greater importance to quality and innovation. Directive requires transposition in Member States within 2 years of adoption at EU level, UK Cabinet Office Ministers want to transpose early, to realise benefits quickly. Informal consultation in stages on policy choices and legal drafting (August to January 2014). Formal consultation early 2014, anticipated UK law Aug 2014.

EU Directive Agreed – European Parliament Press Notice  Core changes to the new directives include:  ‘Most economically advantageous tender’ (MEAT) will become the standard award criterion replacing lowest price. This includes an emphasis on quality, environmental, social or innovative characteristics, transparency in sub-contraction and rules on abnormally low bids.  Innovation partnerships: a new tool to issue a call for tenders without specifying a product but a problem that needs to be solved. This allow discussion and cooperation between public and private sector.  Tender documents eligible for EU-wide bidding will be made available in all EU languages, and tenders from national databases will have to be made available to eligible bidders.

“Light Touch” regime for Education & Social Services  The new Regulations no longer differentiate between Part A & Part B (local) services.  At present for certain services there is no requirement to advertise across Europe and follow the full detailed procedures for certain services.  However we have negotiated an exemption for Education & Social Services (& Health) that enables us to use a “light touch” regime for services under 750,000 Euros.  The UK is required to put in place “appropriate procedures” for the award of contracts under this process in the UK Regulations, the Cabinet Office will be sending out consultation after Xmas.

20 June 2013 Temporary exemption for public service Mutuals Much simpler process of assessing bidders’ credentials:  much greater use of supplier self-declarations  only the winning bidder should have to submit various certificates and documents to prove their status More freedom for buyers to negotiate with suppliers Legally exclude suppliers who have a poor track record Greatly simplified rules on Dynamic Purchasing Systems Main UK-inspired changes - Cabinet Office

Main UK-inspired changes (cont’d) Expressly permit use of e-marketplaces for public procurement. Reduced red-tape on suppliers’ response times. Legally binding commitment on Commission to review financial thresholds. Take account of relevant skills and experience of individuals when awarding contracts for consultants, etc. Improved rules on social and environmental aspects

Consultation on making wider public sector procurement more accessible to SMEs  Gov has consulted on a range of measures to make public procurement more accessible to SMEs.  The reforms have been developed by the Cabinet Office, Department for Business, Innovation and Skills, Department for Communities and Local Government, the Home Office, the Department of Health and Department for Education.  A well reasoned response from BESA was received before the closing date for responses of 16 th October 2013.

Consultation on making wider public sector procurement more accessible to SMEs  With an annual spend of £230bn, public sector procurement has the potential to create significant business and growth opportunities through increased participation for small and medium sized enterprises (SMEs), as well as improving the public sector’s access to SME’s creativity and innovation.   SMEs are a crucial engine for growth: 99.9% of the UK’s 4.5 million businesses are SMEs; they are responsible for over 14 million private sector jobs, and account for almost half of the net growth over that period in jobs.

Consultation on making wider public sector procurement more accessible to SMEs  SMEs have historically been shut out of government business and have found bidding for public sector contracts excessively, and sometimes prohibitively, bureaucratic, time-consuming and expensive.  Since 2010 there has been considerable progress in central government and many other parts of the public sector in opening up the procurement process to SMEs. For example, Pre-Qualification Questionnaires (PQQs) have been removed for almost all central government contracts below £100,000, and the proportion of central government spend with SMEs on goods and services is increasing.

Consultation on making wider public sector procurement more accessible to SMEs  Government recognises that much more needs to be done. Building on Lord Young’s report of May 2013, in which he advocated recommended developing a set of “single market” principles to be applied by all public bodies in their procurement  Government now wishes to implement, potentially through legislation, a simple and consistent approach to procurement across all public sector authorities so that SMEs can gain better and more direct access.

Consultation on making public sector procurement more accessible to SMEs  These principles should simplify and standardise the advertising, bidding and payment of public contracts, and should remove the complexity, cost and inconsistency when trying to sell to more than one public sector body.  They would apply to businesses as direct contractors with government and as sub-contractors or partners in a procurement supply chain.

Consultation on making Wider public sector procurement more accessible to SMEs  Summary of proposed reforms  Pre-Qualification: eliminating the use of PQQs for low value contracts, mandating a core PQQ with standard questions for high value contracts, and allowing suppliers to provide PQQ data only once.  Transparency: ensuring all new contract opportunities and contract awards are advertised online and the public sector reports its performance on spend with SMEs and centrally negotiated deals (Proposal is that schools are exempt).  Payment and finance: ensuring contractors pay their suppliers on time; use of performance bonds, and encouraging the use of e-invoicing in the public sector.

Public Service (Social Value) Act  This new Act requires contracting authorities to consider at the pre-procurement stage :-  How what is proposed to be procured may improve the economic, social and environmental well-being of their areas.  How the contracting authority may act with a view to securing that improvement in conducting the process of procurement.  In addition, the contracting authority would be required to consider whether to undertake any community consultation on the above matters.

Contacts Jack Salter - Commercial Policy   Mobile