1. 1 Introduction to Public Procurement Julie Nazerali Partner, Beachcroft LLP, Brussels and London 5 June 2009

2. 2 Today’s Menu  1. EU Procurement Regime  2. Public Private Partnerships and Competitive Dialogue  3. Key issues  4. Trends

3. 3 1.EU Procurement Regime So why procurement rules?  EC Treaty: Common Market between all Member States  Breach of public procurement rules acts as a barrier to trade  Total public procurement estimated at about 16% of EU GDP or £1000 billion  Increase of cross-border competition and improvement of prices

4. 4 1.EU Procurement Regime The General Regime  Directive 2004/18/EC (Works, Supply and Services)  Directive 2004/17/EC (Utilities)  Directive 2007/66/EC (Remedies)

5. 5 1. EU Procurement Regime What thresholds apply? Type of contractThreshold Supplies  Central Authorities  Other Authorities €133,000 €206,000 Services  Part A Central Authorities  Part A Other Authorities  Part B All Authorities €133,000 €206,000 Works  Works/Concessions €5,150,000

6. 6 1. EU Procurement Regime Procedures  Open = All bidders invited  Restricted = Only certain bidders invited  Negotiated = Allows discussion/negotiation  Competitive Dialogue = Allows discussion

7. 7 1. EU Procurement Regime Transparency / Equal treatment  Advertise intention to procure  Hold a competition between interested firms  Exclude firms only for justified reasons  Respect minimum time-limits for all participants  Award contract based on results of the competition  Provide information on decisions to interested parties  10 day standstill period between award decision and conclusion of contract Common principles

8. 8 1. EU Procurement Regime Rules applying to Part B services or below threshold contracts  Part B services: Health, education and cultural services  Full procurement rules don’t apply  When a contract is of “cross-border interest”:  EC principles apply: non-discrimination and equal treatment, transparency, proportionality  Sufficient degree of advertising, eg. Internet  Fair competition must be respected  Relevant factors to be considered: value/subject matter of the contract, size/structure of the sector concerned

9. 9 1. EU Procurement Regime Complaint to the Commission  Informal procedure – “a friendly settlement”?  Formal procedure:  Letter of infringement to Member State  Reasoned opinion  Proceedings before ECJ  Complainant does not receive damages Proceedings before a national court Now  Injunction proceedings  Damages What happens if things go wrong?

10. 10 2. Public Private Partnerships (PPPs)  PPPs deliver a project/service traditionally provided by the public sector  How?: Through concessions, JVs and partial privatisations  Contract awarded to a PPP vehicle does not need to be tendered, if:  The private partner was chosen in a fair and transparent tender exercise  The nature and scope of the contract was covered when tendering for the private partner  PPPs often used for road and rail infrastructure projects

11. 11 2. Competitive Dialogue (CD) Used for “Particularly Complex Contracts”  Came into operation in 2006  Negotiated procedure can only be used in limited cases and not for CD  Used where open/restricted procedures not available; and  Not possible to define technical specifications; or  The legal and/or financial make up of the project

12. 12 2. Competitive Dialogue OJEU Notice Pre-qualification Questionnaire Select/shortlist participants Invitation to tender Dialogue Phase – Successive stages possible End Dialogue and invite final TendersEvaluation of tenders Award contract Observe 10 day standstill Contract Signature Competitive Dialogue/Negotiated procedure All procedures apart from open procedure How does it work?

13. 13 2. Competitive Dialogue  Allows for discussions on all aspects of the contract during the dialogue stage  Authority can discuss each bidder’s individual solution  Allows for flexibility as to the setting/disclosure of evaluation criteria  Allows for limited post-tender discussions with preferred bidder

14. 14 3. Key issues The new Remedies Directive: four areas of reform  Introduction of “ineffectiveness”: contracts may be set aside for serious breaches of procurement rules (eg. contract notice not published in the OJEU)  Harmonisation of standstill provisions:  10/15 days before the conclusion of the contract  Contracting authorities must send reasons with the award decision  New time limits for seeking ineffectiveness in Court: 30 days for published award decisions / 6 months if bidders were not notified of the award decision or where OJEU contract award notice not published  New rules bring in a defacto injunction procedure

15. 15 3. Key issues The new Remedies Directive: some further info  Court may not render a contract ineffective if it finds that there are good reasons for doing so, ie. reasons relating to a “general interest of non-economic nature”  Alternative remedies: contract shortening and fines applied as  An alternative to using the ineffectiveness principle, and/or  In addition to prospective ineffectiveness  Does not apply to Part B services or below threshold contracts  To be implemented by December 2009

16. 16 3. Key issues Disclosure of Award Criteria/Weightings - what must be disclosed?  Award criteria and respective weightings: +  Sub-criteria and respective weightings: (+) if they could have had an impact on the preparation of bids  Other evaluation elements (scoring matrix etc.): (+) if they could have had an impact on the preparation of bids

17. 17 3. Key issues Exception to procurement rules: In-house contracts  A Contracting Authority (CA) can award a contract to another public body without holding a tender exercise, if:  The CA exercises control over the entity that is similar to the control it exercises over its own department, and  The entity carries out the essential part of its activities for the CA  Eg. the ECJ ruled that the transfer of the operation of a local authority’s cable TV network to a co-operative could be done without a tender exercise since the latter was controlled by a Board composed of representatives of the public authority (Coditel Brabant, Case C-342/07)

18. 18 4. Trends  Watch out for the Remedies Directive!  Bidders are becoming much more litigious  CAs must ensure robust procurement compliance  Still many grey areas in procurement law (eg. in-house awards, land transactions, change of award criteria in CD procedures, social award criteria, post-contract changes).

19. 19 Q&A Please don’t hesitate to ask questions! Julie Nazerali, Partner, Beachcroft LLP, Brussels +32/ (0)2 541 85 82 jnazerali@beachcroft.com