Public Procurement Reform

• Gergő PoszlerEuropean Commission

• Directorate General Internal Market and Services• Unit C/2 – Public Procurement Legislation I.

• NB: The information in this presentation is not binding for the European Commission and does not present an official position of the European Commission

Objectives of the Reform

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1. Simpler / more flexible procedures

2. Strategic use

3. Better access (SMEs, cross-border trade)

4. Sound procedures

5. Governance / Professionalisation of procurement

Scope of proposals Two proposals, replacing Directive

2004/18/EC (Classic) and Directive 2004/17/EC (Utilities)

No changes to the Directives on Defence procurement (2009/81/EC) nor on Remedies (89/665/EEC and 92/13/EEC, both as amended by 2007/66/EC)

Other parallel proposals :– Proposal on concessions– Proposal for a Regulation on International Access

Scope/basic provisions Thresholds (no change) Exclusions: In particular public-public, Art. 11 Abandoning A/B-services distinction – but Specific regime for Social services (social, health and

cultural services): Simplified rules: Higher threshold – EUR 500 000 (Art. 4 d)– Below threshold: typically no-cross-border interest (recital 11)– Above threshold: Member States free to decide on procedures,

only requirement: ex-ante (+ ex-post) OJ publication (Art. 75) + non-discrimination (Art. 76 (1))

Flexibilisation of procedures Possibility of increased use of “competitive

procedure with negotiation” (Art. 24 & 27) Simplification/added flexibility for competitive

dialogue, framework agreements and DPS (dynamic purchasing systems)

Simplified publication for sub-central contracting authorities: prior information notice replaces contract notice (Art. 24 (2)(b))

General review of deadlines

Strategic use No abandoning of link with the subject matter,

but softening (production process, externalities – Art. 66, 67)

Facilitate handling of societal requirements through labels (Art. 41)– Specific label may be requested if requirements linked

to the subject-matter of the product– Equivalent labels must be accepted as well– Possibility for economic operators to provide alternative

evidence where no access to the label in due time

Strategic use: Environment Allow production process (e.g. paper bleach) in:

– technical specifications (Art. 40) and– as award criterion (Art. 66)

Clarify concept of life-cycle costing optional, allowing to take into account externalities if verifiable and monetisable (Art. 67.1 b)

Existing common EU methodology = mandatory where life-cycle costing chosen (Art. 67.3)

Strategic use: Social aspects

Production process related requirements

– as award criteria (Art. 66)

– in contract execution clauses

– requirements must concern

• protection of health of staff or

• social integration of disadvantaged persons (Rec. 41)

– Example: recruitment of disadvantaged persons for the provision of the service

Strategic use: Innovation Innovation partnership (Art. 29) = new

procedure: the contracting authority cooperates with a company selected in a regular competitive tender procedure to develop an innovative product, work or service,

which does not exist on the market

E-procurement Mandatory full electronic availability of tender

documents (Art. 51) Fully electronic communication = mandatory 2

years after transposition deadline (Art. 19.7) Improved e-tools:

simplification of Dynamic Purchasing Systems (Art. 32)

e-catalogues (Art. 34) e-signatures (Art. 19.5)

SME access Division of contracts into lots (Art. 44): “apply

or explain” - EUR 500 000 / EUR 5 Million

Turnover cap (Art. 56.3) (economic and financial standing): max. 3x the estimated contract value

Reduced documentation requirements, self-certification, use of existing databases

Direct payment of subcontractors

Sound procedures and governance

• Conflict of interest• Illicit conduct• Unfair advantages

• National oversight bodies• Knowledge centres • Administrative cooperation

Utilities: Proposed changes

Essentially same changes proposed for the Utilities as for the Classic Directive - but

Due regard to the different field of application (also public and private undertakings) and the ensuing need to conserve a more flexible regime.

Only few changes on issues specific to the Utilities Directive

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Utilities: Specific Issues

• (Ex Art. 30) Activities directly exposed to competition (Art. 27, 28, Annex III): Material conditions are unchanged - Uniform and more flexible

deadlines (Member States & contracting entities) - Mandatory inclusion of a reasoned and substantiated position by competition authority/regulator

Explicit clarification of the notion of "special and exclusive rights" (Art. 4(2), Annex II) No special or exclusive rights where rights granted following

procedures ensuring adequate transparency, based on objective

criteria; List of legislation (procedures) meeting the requirements (including

concessions proposal)19/04/23

Process

COMMISSION PROPOSAL 20 December 2011

COUNCIL GENERAL APPROACH

10 December 2012

PARLIAMENTIMCO REPORT

18 December 2012

TRIALOGUE February/March 2013 - ?

Council General Approach• Main amendments:

– Light regime• 750,000 threshold, additional services (legal, administrative,

investigation and security, restaurant, etc.)

– Documentation requirements• No procurement passport, diminished role for e-Certis

– Governance• Far-reaching reduction of scope of provisions

– Public-public• Outside activities increased from 10% to 20%

– Transposition, e-procurement introduction• Longer periods (+6, +12 months)

IMCO Report• Main amendments:

– “Localism” • short-distance award criterion, social external costs

– Contract modification• Increase of scope for modifications without new tender

– Additional exclusions• Danger prevention, fixed price procurement

– Public-public• Elimination of certain criteria for horizontal cooperation

– Reciprocity regarding 3rd country operators• Insertion of Art 58-59 from 2004/17/EC

Important remaining issues (1)– Procedures

• “Tool-box” vs. obligation to transpose all procedures • Use of PIN for sub-central contracting authorities

– Strategic procurement• MEAT only vs. lowest price/cost (at least for standardised goods)• Eliminate “localism” provisions• Obligation to ensure compliance with social, environmental and

labour law – coherence with posting of workers regime

– Documentary requirements• Replace procurement passport with enhanced access to national

databases

Important remaining issues (2)– E-procurement

• Fixing deadlines for mandatory introduction

– SMEs• Indication of reasons for not splitting into lots • Ratio minimum annual turnover – contract value• Subcontracting: “liability throughout the subcontracting chain”

– Aggregation of demand• Adherence of new contracting authorities to framework contracts;

maximum length (4-5 years) • Use of central purchasing bodies, occasional joint procurement

up to Member State / up to contracting authority

Important remaining issues (3)– Procedural requirements

• Variants: obligatory authorisation vs choice of contracting auth.

– Sound procedures• Modifications: ensure reasonable scope of de minimis rule for

non-substantial modifications (10%-15% and below threshold)

– Governance• Agree on scope for monitoring and national reporting

– Scope• Agree on exclusions, public-public, transposition deadline• Avoid blockade on reciprocity (3rd country operators)

Outlook

• Remaining issues are surmountable• Therefore aim to finalise project in 1st reading:

Letter COREPER - IMCO

TRIALOGUE Political Agreement reached

Vote - PARLIAMENT(endorsing the Political

Agreement)Adoption

COUNCIL

Thank you for your attention!

Questions?