1. European government procurement policy and experience Rita Beuter Senior Expert, European Policies, EIPA, Maastricht (NL) r.beuter@eipa.eu © EIPA – 2008

2. 2 Facts on Procurement Procurement represents about 17% of EU GDP, about Euro 2000 billion 16 % (in value) was published in 2002 at EU level; publication in the Official Journal (OJ) in 23 languages; Tenders Electronic Daily (TED) estimated aggregated value of procurement contracts published in the OJ increased from 59 billion (1993) to 270 billion Euros in 2004 cross-border procurement accounted for 10%, but indirect procurement is relevant European rules apply to 30 countries, the EU, Norway, Iceland, Liechtenstein

3. 3 Legal Framework/Basis - Public Procurement International Treaties and Agreements WTO: Government Procurement Agreement (GPA) - plurilateral Agreements with Third countries EC Treaties: no definition Primary EC law (Internal Market, fundamental principles) European rules apply to the European Economic Area (EEA) Secondary EC law: Procurement Directives National Law Sub-national

4. 4 Objective of Public Procurement Policy/European Procurement open up public procurement to competition buy goods and services of a better quality and a better price, value for money anti-corruption tool tool for stimulating innovation tool for stimulating sustainable development establishment of a single market

5. 5 Principles in the Treaty applying to public contracts and Fundamental Principles: non- discrimination on grounds of nationality free movement of goods freedom of establishment freedom to provide services equality of treatment obligation of transparency proportionality mutual recognition

6. 6 The Rules in Public Procurement Legislative Package 31 January 2006: Classic or Public Sector Directive - Directive 2004/18/EC on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts Utilities Directive - Directive 2004/17/EC coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sector

7. 7 The Rules in Public Procurement Remedies Directives - 89/665/EEC, public supplies and public works - 92/13/EEC, public utilities - amending remedies directive: Directive 2007/66/EC amending Council Directives 89/665/EEC and 92/13/EEC with regard to improving the effectiveness of review procedures concerning the award of public contracts

8. 8 Structure of the Public Sector Directive 2004/18/EC Preamble- Recitals Title I Definitions and general principles Title II Rules on public contracts -scope of application (thresholds, specific situations, excluded contracts, special arrangement) -arrangements for public service contracts -technical specifications -procedures (open, restricted, negotiated, competitive dialogue) -framework agreements, dynamic purchasing systems -advertising and transparency -time limits -selection of contractors -award of contracts

9. 9 e-procurement directive provides legal basis for carrying out electronic procurement at European level definition of electronic means and their use shortening of time-limits covers electronic communications covers new tools available: - dynamic purchasing systems - electronic auctions (reverse electronic auctions) as a tool for the award

10. 10 Definition Contract concluded in writing; for pecuniary interest; for works, supplies or services Which contracts are affected? Contracts which exceed certain financial thresholds Contracts which are not excluded in accordance with the exceptions provided for in the directive Contracts below the relevant threshold level: fundamental principles apply,transparency (degree of advertising), cross-border interest

11. 11 Excluded contracts – Some examples Contracts declared secret or requiring special security measures contracts awarded pursuant to international rules specific exclusions (employment contracts, arbitration & conciliation services, etc) service concessions

12. 12 Definition of contracting authorities the State, regional or local authorities, bodies governed by public law, or associations formed by one or more such authorities or bodies governed by public law It includes bodies of any kind which contracting authorities create by law, regulation or administrative action the State encompasses legislative, executive and judicial bodies

13. 13 Definition of contracting authorities Bodies governed by public law: 3 cumulative criteria: established for… meeting needs in the general interest, not having an industrial or commercial character having legal personality; and financed, or supervised or appointed, for the most part, by the State, regional, local, other bodies

14. 14 Thresholds as of 1 January 2008 EUR 133 000 supplies/services - central level Annex V list of products awarded by contracting authorities in the field of defence EUR 206 000 supplies/services - sub-central level Annex B services/non-GPA services subsidised service contracts products not covered in Annex V EUR 5 150 000 works

15. 15 Defence Procurement Directive applies to public contracts awarded by contracting authorities in the field of defence (defence ministries are covered), subject to Article 296 of the Treaty problem: exemption used extensively by the Member States initiative at European level for a Directive in the field of Defence and Security

16. 16 Central Purchasing Bodies definition: contracting authority, which acquires supplies and/or services intended for other contracting authorities or awards public contracts or concludes framework agreements for works, supplies or services intended for other contracting authorities examples: CONSIP (Italy), OGC Buying Solutions (UK), UGAP (France)

17. 17 Public Sector Directive special arrangements (reserved contracts) – social consideration arrangements for public service contracts – distinction between Part A Services and Part B Services

18. 18 Technical Specifications to be set out in contract documentation (notices, contract documents, etc) take into account accessibility for people with disabilities should provide equal access for tenderers reference to technical specifications, or equivalent performance or functional requirements (environmental characteristics) or mixture not to refer to specific make, source, particular process, trade marks, patent, etc

19. 19 Public Sector Directive variants (only possible award criteria: most economically advantageous tender), stimulate innovation subcontracting in order to stimulate SME participation conditions for performance of contracts, social and environmental considerations New procedures/provisions/systems - competitive dialogue - framework agreements - dynamic purchasing systems

20. 20 Procedures Open procedure (all potential suppliers / contractors / service providers) Restricted procedure (only selected potential suppliers/contractors/service providers, two-stage procedure) (minimum of 5 must be invited to tender) Competitive dialogue contracting authority enters into dialogue with bidders following an OJ notice (only for complex contracts) Negotiated procedure (direct negotiation with chosen suppliers/contractors/service providers; only in exceptional circumstances; burden of proof on contracting authority; justification) negotiated procedure with prior publication negotiated procedure without prior publication Accelerated restricted/negotiated (for use only in exceptional circumstances of urgency not due to fault of contracting authority)

21. 21 Competitive Dialogue new procedure for particularly complex contracts contracting authority considers that the open or restricted procedure will not allow the award of the contract a flexible procedure...which preserves not only competition between economic operators but also the need for contracting authorities to discuss all aspects of the contract with each candidate considerably used in France and the UK

22. 22 Framework Agreements Def.: Agreement between one or more contracting authority and one or more economic operators to establish the terms governing contracts during a certain period framework duration 4 years, exceptions for contracts based on a framework agreement, distinction: - all terms are laid down (single economic operator/versus several economic operators, at least 3) - not all terms laid down: mini-round of competition in practice: framework agreements are frequently used

23. 23 Dynamic Purchasing Systems (DPS) Definition A dynamic purchasing system is a completely electronic process for making commonly used purchases... which is limited in duration and open throughout its validity to any economic operator which satisfies the selection criteria and has submitted an indicative tender that complies with the specification. -a new system which has hardly been used in practice -could be seen as an open electronic framework, similar system for below threshold applied in CONSIP

24. 24 Publication of notices prior information notice (PIN) or information on buyer profile (to make known intended total procurement after beginning of fiscal year) not compulsory contract notices notices for design contests (services) notices for works concessions (works) contract award notice (CAN)

25. 25 Debriefing – informing candidates and tenderers Contracting authority must inform candidates and tenderers of decisions reached: a) award of contracts, conclusion of framework, admittance to dps b) discontinuation of procedure and grounds c) to restart a procedure or implement a dps written information must be given after request to the c.a. After written request, contracting authority must inform a) unsuccessful candidates/tenderers of reasons for rejection of application/tender b) admissible tenderer of characteristics and relative advantages of selected tender, name of tenderer / parties to framework This information must be given within 15 days after receipt of request

26. 26 Selection Criteria Suppliers, contractors or service providers must meet specific objective criteria: good repute, professional qualifications, economic and financial standing, technical knowledge, ability mandatory exclusion of tenderers/candidates (i.e. criminal organisation, fraud, corruption, etc.) tenderers/candidates may be excluded: bankrupt, grave professional misconduct, etc indication of environmental management measures in appropriate cases

27. 27 Award criteria l the lowest price only, or l the most economically advantageous tender choice for the contracting authorities depends on the subject matter of the contract

28. 28 Most economically advantageous tender non-exhaustive list of criteria mentioned in the directive, for example: quality price technical merit aesthetic and functional characteristics environmental characteristics running costs cost-effectiveness after-sales service and technical assistance delivery date and delivery period or period of completion security of supplies

29. 29 Most economically advantageous tender award criteria must be linked to the subject- matter of the contract criteria of most economically advantage tender from the point of view of the contracting authority

30. 30 Most economically advantageous tender the contracting authority shall state in the contract notice/contract documents/descriptive document the relative weighting which it gives to each of the criteria (range) if not possible: descending order of importance

31. 31 Some experiences from the Member States Italy: in the past, the use of the most economic advantageous criterion was not allowed for public works contracts. Following a judgement by the European Court of Justice this limitation was removed. UK: most economically advantageous tender is used in most procurement as award criteria Austria: lowest price only allowed if quality standard can be described with precision Ireland: for more complex projects the most economically advantageous tender award criterion is the most commonly used trend towards life-cycle costing and sustainability

32. 32 Some experiences from the Member States – most economically advantageous tender – evaluation committees Italy: a committee must be established for evaluation of tenders (maximum 5 members, experts in the specific sector, no conflict of interest) UK: in general a committee, for strategic contracts external experts, academics, no conflict of interest not determined by European directives

33. 33 Award decision and conclusion of contract contracting authority is obliged to inform tenderers of its award decision prior to conclusion of contract standstill period between award decision and signature of the contract decision to award a contract must in all cases be open to review procedures prior to the conclusion of the contract

34. 34 Supervision different systems and levels/degrees in the Member States (centralised/semi-centralised/decentralised procurement structures) Italy: Public Procurement Code provides for an independent authority, focus on EC principles and fair and efficient use of public funds, complaint to Court of Auditors new Member States: central procurement offices have strong monitoring and control functions (Poland, Czech Republic, Hungary, Estonia, etc) France: key institution DAJ (advise) and public procurement observatory National audit offices and courts of auditors European Commission can ask for report and monitoring of practices; for Member States obligation to provide statistics

35. 35 Dealing with complaints Body responsible for appeal/mediation procedures must be indicated in the contract notice aim of EC remedies: rapid and effective remedies; current reform tackles race to signature and illegal direct awards divergence in national remedies, different legal systems in the Member States (courts, tribunals, arbitration, etc) complaints to the European Commission infringement proceedings by the European Commission

36. 36 Procurement training Some experiences professional training in UK: Chartered Institute of Purchasing & Supply NEVI in the Netherlands some countries: the central procurement office; other countries: hardly any training national training institutes for the public sector University level private providers of training

37. 37 For further information EIPA website on public procurement http://www.eipa.eu/en/topics/show/&ti d=30 Rita Beuter EIPA Tel. 0031 – 43 – 3296240 r.beuter@eipa.eu EIPA website on public procurement http://www.eipa.eu/en/topics/show/&ti d=30 Rita Beuter EIPA Tel. 0031 – 43 – 3296240 r.beuter@eipa.eu