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CIPS Devon & Cornwall Branch
Wednesday 3 July 2013
Reform of EU Public Procurement Rules
www.michelmores.com
EU Public Procurement Reform
2004 – Public Sector Directive
2007 – Remedies Directive
2014 – New Public Sector Directive
• Latest draft: 357 pages; 439 pages of
European Parliament amendments!!
• Important to start thinking ahead now
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EU Public Procurement Reform
• Engine for growth!
• EU’s Competitiveness Council!
• Simplification
• Flexibility (more opportunity to negotiate)
• Cutting red tape
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EU Public Procurement Reform
• No more Part B Services
• But lighter touch procurement regime for health, social,
cultural and education services
• And legal services?!
• Only basic advertising requirements, obligation to act
transparently and to treat bidders equally
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EU Public Procurement Reform
Helping SMEs
• Self-certification at PQQ Stage
• Turnover requirements: 3 times contract value
• Required division into lots (or else justify why not):
– Contracts for goods and/or services over 500,000 Euros
– Contracts for construction works over 5 million Euros
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EU Public Procurement Reform
Exclusion Grounds
• Corruption, money laundering, insolvency etc. remain
• Past Performance
• Taxes
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EU Public Procurement Reform
New procedures/New flexibility
• No requirement to justify using the competitive dialogue
procedure
• Competitive procedure with negotiation – Contracting
Authorities negotiating directly with tenderers with a view to
improving the content of their offers
• Innovative Partnerships – Establishing a structured
partnership for the development of an innovative product,
service or work
• Abolition of negotiated procedure with advertisement for
public bodies
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EU Public Procurement Reform
• Speedier timetables
• 30 months – Move to 100% electronic tendering required
• Open procedure – 35 Days
• PQQ – 30 Days
• ITT – 30 Days
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Award Criteria
• Qualification and experience of staff assigned to perform
the contract specifically recognised as an award criteria
• Social welfare conditions allowed – working conditions,
staff health protection and the promotion of
disadvantaged and unemployed persons
• Life-cycle costs allowed: Energy consumption, collection
and recycling
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EU Public Procurement Reform
Thresholds
• Euros 200,000 for supplies and services
• Euros 130,000 for supplies and services
(Schedule 1 Bodies)
• Euros 5 Million for construction works
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EU Public Procurement Reform
• Codification of landmark case-law
• Teckal – contracts can be awarded to “in-house”
bodies without a full procurement process
• Pressetext – variations can be made to contracts
without a full procurement process
• Only in some circumstances!
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Teckal Exemption.
• The authority exercises the same kind of control over the
service provider as it does over its own departments (the
“control test”)
• As much control as over one of your own departments
• Similar but not identical – Does the authority exercise a
power of decisive influence over both the strategic
objectives and the significant decisions of the other
entity?
• Joint (public sector) control permissible
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Teckal Exemption • The service provider carries out the principal part of its
activities with the authority (the “function” test)
• Does most of its work for you – are the supplier’s activities
devoted principally to the controlling authority with other
activities only of minor significance?
• Cabotermo – 80% of the entity’s activities to be devoted to
the contracting authority
• Article 11(3) (80%)
• Narrow exemption and complex to apply
• There must be no private shareholding in the entity to whom
the contract is awarded by the authority
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Shared Services
• Hamburg Exemption – Case C-480/06
• Inter authority co-operation, in principle, does not fall
within the ambit of the EU public procurement rules
• Waste disposal facility being procured by four
neighbouring local authorities (cost sharing, landfill
capacity sharing, co-operation on waste collection and
waste disposal)
• Not Teckal – authorities have no control over each other
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Hamburg Exemption
• The agreement is designed to ensure that a public task
is carried out (including saving taxpayers money)
• There is no financial transaction other than
reimbursement of costs/expenditure incurred on the
authority’s behalf
• The participating contracting authorities do not perform
on the open market more than 20% in terms of turnover
of the relevant activities Article 11(4)
• There must be no private shareholding in any of the
contracting authorities/entities involved
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EU Public Procurement Reform
• Pressetext – Variations to Contracts (Article 72)
• Parties still not generally able to materially change
contracts or change the economic balance in favour of
the contractor
• But new ‘safe harbours’ where contracts can be changed
without new contract awards:
a) Where the change is provided for in the contract; or
b) The value of the change is less than 10% (supplies and
services) or 15% (construction works) of the initial contract
value; or
c) A set of conditions are fulfilled
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EU Public Procurement Reform
• Pressetext – Variations to Contracts
• Set of conditions to be fulfilled:
• The need for modification is due to unforeseen circumstances
• The overall nature of the contract is not altered
• Any increase in price is not higher than 50% of the value of the
original contract or framework agreement
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Abnormally low tenders
(Article 69) • Is a tender too good to be true?
• Speculatively low prices – Genuine intention of delivering
at the low price or simply getting a foot in the door and
then increasing revenues once they have been
appointed?
• Purchasers – Facing significant pressure to make
savings and are more likely than before to be swayed by
a low headline figure and therefore not fully consider
whether the price is actually deliverable
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Abnormally low tenders
What is an abnormally low tender?
• No definition in the Regulations or provided by the
European Court of Justice
• European Commission Report – A tender may be
abnormally low if it does not provide a margin for normal
levels of profit and the low tender cannot be explained by
the economy of the selected construction method, the
technical solution chosen, exceptionally favourable
conditions available to the tenderer, or the originality of
the work proposed
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Abnormally low tenders
• Look for a significant difference from the other
bids received – More than 25% lower?
• Know what the suppliers/services/works should
cost – accurate management information about
what a service is currently costing (or what
similar works have previously cost)
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Abnormally low tenders
• Regulation 30(6) – Contracting authorities
right to reject an abnormally low tender,
subject to requirement to give bidder a
right to justify its tender
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Next Presidencies
• July – Dec 2013 Lithuania
• Jan – June 2014 Greece
• July – Dec 2014 Italy
• Jan – June 2015 Latvia
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Awards
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