Issue Tracker - Revision of the EU's Public Procurement rules 19/04/2012

Executive Summary

Public procurement – government spending on contracts to buy goods, services and infrastructure – accounts for 19% of the EU's GDP. Better rules would help governments use this money more efficiently, leading to more innovation, transparency, jobs and environmentally friendly growth.

In this breath, the European Commission initiated a period of consultations in view of a future legislative initiative – late 2011 or early 2012 - to be put before the Legislator (i.e., the European Parliament and the Council of the European Union). The Internal Market and Services Directorate-General (DG MARKT), working under the political authority of Commissioner Michel Barnier, is in charge of coordinating this revision.

Immediate actions

• Release of the 2^nd 2011 Monitoring Report (January 2012);

• Respond to Commission's consultation on Procurement of ICT Products

• With the release of the Commission's Proposal for a Directive on Public Procurement and the beginning of the institutional negotiations that precede the adoption of a Directive by the Legislator, OFE will start a round of meetings with the Presidency of the Council of the European Union (held by Denmark) and with Members of the European Parliament (OFE is also planning meetings with key players of the Institutions to cover the current European Standardisation Revision).

Current stage of the legislative revision

The European Commission issued the following documents:

• Survey on guidelines for Public Procurement of ICT goods and services (deadline 14.02.2012);

• Draft Guidelines for the procurement of standards-based ICT – Elements of Good Practice (as proposed by Europe Economics and handed out during a Commission's Workshop on ICT Procurement on 12.12.2011)

• Consultation on the Green Paper on expanding the use of e-Procurement in the EU (closed since 31.01.2011 );

  • Summary of Responses;

  • Evaluation Report (18.10.2010)

     

• Consultation on the Green Paper on the modernisation of EU's public procurement policy (closed since 18.04.2011);

  • Summary of Responses;

     

• Consultation on the access of third countries to the EU's public procurement market (closed since 2.8.2011).

As background to the forthcoming legislative revision, the European Commission has made public a series of evaluations and reports.

• Commission Staff Working Paper – Impact Assessment Accompanying the document Proposal for a Directive of the European Parliament and of the Council on Public Procurement and the Proposal for a Directive of the European parliament and of the Council on procurement by entities operating in the water, energy, transport and postal sectors;

• Evaluation Report: Impact and Effectiveness of EU Public Procurement Legislation (Summary);

• Final Report on Cross-Border Procurement above EU thresholds;

• Public procurement in Europe – Cost and effectiveness;

• Estimating the Benefits from the Procurement Directives (DG MARKT);

• Strategic Use of Public Procurement in Europe;

• 2009 Public Procurement Indicators;

• 2009 Internal Market Scoreboard;

• Evaluation of Public Procurement Directives (1993-2002) – Summary

The European Commission also hosted Conferences on the subject.

• Workshop on ICT Procurement – as part of the work undertaken by Europe Economics to develop guidelines to assist public procurers in purchasing ICT that is based on standards;

• Conference on the Modernisation of EU Public Procurement Policy (30.06.2011) – Summary of the proceedings;

• Public Hearing on the Initiative on access of third countries to the EU's public procurement market.

11/02/2012 – The European Commission published a notice to call for application for the selection of experts as members of the new Commission stakeholder expert group on public procurement. The purpose is to provide legal, economic and technical input in shaping the public procurement policy of the EU.

21/03/2012 - The EC proposed a new instrument allowing the EC to exclude foreign bidders from EU public procurement contracts. The mechanism, as jointly proposed by Commissioners Karel de Gucht and Michel Barnier, also allows local contracting authorities to request the Commission to block individual bidders from national markets. On a press release, the EC believes this mechanism will increase "incentives for the EU's trading partners to open their public procurement markets to EU bidders". On this respect,

• Michel Barnier (Commissioner responsible for the Internal Market) declared that "The EU should no longer be naive and should aim for fairness and reciprocity in world trade. Our initiative builds on Europe's belief that the opening of public procurement generates benefits at global and European level. We are open for business and we are ready to open up more, but only if companies can compete on an equal footing with their competitors".

• Karel de Gucht (Commissoner for Trade) said: "I am a firm believer in making sure trade flows freely and government procurement must be an essential part of open trade markets worldwide. (...) This proposal will increase the leverage of the EU in international negotiations and with our partners to open up their procurement markets for European companies.

   

  It is important to note that the EU has exclusive competence for the common commercial policy and that the access of third country goods and services to the EU public procurement market falls within the scope of this policy. If the proposal is adopted, the new mechanism will be based on the following elements:

   

• (1) Contracting Authorities will be permitted to reject tenders or contracts of an estimated value of €5 million or above and consisting of more than 50% of goods and services not subject to the EU's international procurement commitments. The contracting authorities will need to notify the Commission about their intention to reject them. The Commission will have two months time (possible to prolong for another 2) to access the existence of substantial reciprocity in the country in question and whether or not to approve such an exclusion. The EC would adopt and implementing act concerning the approval or not of the intended exclusion, in accordance with the examination procedure. Below the threshold, EU markets remain free, and no discrimination against foreign bids is allowed (de minimis).

   

• (2) In the event of repeated and serious discrimination against European suppliers in other countries, the following mechanism could be used:

   

• At EU level, the EC will have the power to conduct investigations into possible discriminatory procurement practices in the foreign country concerned and to start consultations with the country concerned to solve those market access problems and to take, if necessary, measures restricting the access to the EU's market. The restrictive measures would be targeted, for example excluding tenders originating in a non-EU country from a particular sector or imposing a price penalty on the non-EU bids.

• Additionally, when public authorities intend to accept tenders that are abnormally low (which is to say, contracting authorities may decide not to apply such restrictive measures), they should inform the other tenderers of their intention and explain why they accept it, so as to increase the transparency of the procedure. A tender is deemed abnormally low when the price charged to the contracting authorities appears to be too low in relation to the goods and services offered. Also, such possibility is only allowed if "there are no Union and/or covered goods or services available which meet the requirements of the contracting entity"or "application of the measure would lead to a disproportionate increase in the price or costs of the conduct"

The European Parliament, as response to the consultation launched by the Commission, released a Resolution on Modernisation of Public Procurement on the 25^th October 2011. The Committee on Internal Market and Consumer Protection (IMCO) was the responsible committee for the draft of the report.

• European Parliament's own-initiative report on the modernisation of public procurement:

• Rapporteur: Heide Rühle (Greens);

• Shadow rapporteurs: Frank Engel (EPP); Bernadette Vergnaud (S&D); Jürgen Creutzmann (ALDE); Malcolm Harbour (ECR); Dennis de Jong (GUE); Matteo Salvini (EFD).

• Rapporteurs for committees providing opinions: Kader Arif (S&D, INTA); Staes Bart (Greens, BUDG); Julie Girling (ECR, EMPL); Asa Vestlung (S&D, ENVI); Konrad Szymanski (ECR, ITRE); Nicole Manescu (ALDE, REGI).

• Amendments 1-210 to Heide Rühle's draft report (26.7.2011)

On the same subject, the European Parliament organised the following Public Hearings:

• 1^st Public Hearing on the Modernisation of Public Procurement (24.05.2011);

• Programme

• Brian Winn, Head of Technology and Product Introduction, National Innovation Centre, National Health Service, UK

• Marc Steiner, Judge, Federal Administrative Court, Switzerland

• Prof Luis Valadares Tavares, Professor of Operational Research and Systems Engineering, Technical University of Lisbon, Portugal

• Miguel Sobral, Executive Vice-President, Vortal, Portugal

• Sara Oberg, Deputy Director, Svenskt Naringsliv, Sweden

• Andrea Marconi, European Builders Confederation

• Neil Hopkins, Head of Strategy and Performance, Corporate Procurement Services, Birmingham City Council, UK

   

• 2^nd Public Hearing on the Modernisation of Public Procurement (20.03.2012)

• Programme

• Presentation by David De Roy

• Presentation by Ph.D. Albano – Consip S.p.A

• Presentation by Janet Meissner Pritchard – ClientEarth

• Position paper by ETUC

• Presentation by Jakob Scharff – Danish Chamber of Commerce;

• Position Paper by Client Earth

• Position paper by CEMR

• Speech by Angelika Poth-Mogele – CEMR

• Presentation by Christophe Veys – IWT

• Presentation by ANCP – Government of Portugal

The European Parliament has for some time shown interest in a revision of the EU public procurement rules.

• Previous relevant documents issued by the European Parliament:

  • 18/05/2010 - New developments in Public Procurement: own-initiative resolution from the EP; it deplores the fact that the 2004 revision failed to simplify the legislative framework and to create more legal certainty.

• Parliamentary questions to the European Commission:

  • 07/06/2011 (Bendt Bendtsen, EPP) – Public procurement and the public interest/administrative requirements;

  • 07/06/2011 (Bendt Bendtsen, EPP) – Public procurement and the lack of cross-border activity;

  • 12/05/2011 (Lambert van Nistelrooij, EPP and Angelika Niebler, EPP) – Simplification of and transparency for national, cross-border and pan-European software licences for governments and companies;

  • 11/05/2011 (Petru Constantin Luhan, EPP) – Public procurement of innovative products and services;

  • 20/05/2011 (Mary Honeyball, S&D) – Why is Windows 7 to be the new Commission operating system?;

  • 14/04/2011 (Bart Staes, Verts) – ICT procurement under a negotiated procedure?;

  • 04/02/2011 (Heide Ruhle, Verts) – Green public procurement – procurement activities of the Commission;

  • 27/06/2011 (Jens Rohde, Jurgen Cretzmann, ALDE; Philippe Lamberts, Verts; Catherine Trautmann, S&D; Andreas Schwab, EPP) – Commission awarded contract to Microsoft for the acquisition of Microsoft high-level services;

  • 20/12/2010 (Diogo Feio, EPP) – Commission Work Programme for 2011 – Public procurement;

  • 08/12/2010 (Alan Kelly, S&D) – Strategic use of public procurement and the Innovation Union;

  • 23/08/2010 (Sean Kelly, EPP) – EU Public Sector support for ICT innovation in the context of pre-commercial procurement;

     

The Council of the European Union has published two working papers prepared by the European Commission to inform discussions at a meeting of the Working Group on Public Procurement, held on 23 January 2012, on the Commission's proposals for a new directive on public procurement (to replace to Directive 2004/18).

• The first working paper deals with the proposals for the flexibilisation of procedures. It discusses the five choices of procedure under the proposals: the open and the restricted procedure (which must be available in all member states) and the competitive procedure with negotiation, the competitive dialogue and the innovation partnership procedure (which member states may choose to make available). It highlights the new aspects of the proposals, including , in particular, the revisions to use of a negotiated procedure, the reasons for the new innovation partnership option and the revised deadlines under each procedure.

• The second working paper explains the proposals for the strategic use of procurement to pursue social, environmental, employment and other objectives. It explains the proposed changes to the contract award criteria (including use of a life-cycle costing approach to assessing the new lowest cost criterion and revisions to the criterion of the most economically advantageous tender), the new provisions relating to contract performance clauses, the proposals relating to use of technical specifications (including specifications relating to the specific process of production or provision of the works/services/goods), the new provisions relating to the use of labels and certification, the new ability to exclude a bidder for breach of social and environmental obligations, and the revised provisions relating to the reservation of contracts. It also explains the decision to remove the distinction between Part A and Part B services and the creation of a new regime for procurement of "social services".

13/02/2012 - The Council of the European Union published a note setting out two question for consideration during the orientation debate on the European Commission's proposal for a new public procurement directive to be held at the Competitiveness Council on 20-21 February 2012.

• 1^st question – Increase the situations in which MS may allow the use of competitive procedure with negotiation. The Council is invited to comment on the following: “Does the Commission's proposal provide procuring entities sufficient access to the competitive procedure with negotiation? If not, should access be as unrestricted as possible? How can it be secured that more flexibility does not lead to unequal treatment?”

• 2^nd question – related to the Commission's proposal to remove the distinction between Part A and Part B services. The Council is invited to comment on the following: “Is the Commission right in proposing a lighter regime for certain social, cultural, educational and health services? Should other services also benefit from the special regime? Has the Commission struck the right balance between promoting efficiency through competition and delivering on the objective of lighter public procurement rules?”

16/03/2012 – The Presidency of the Council of Minister released a compromise text on Article 24, 1^st paragraph on the choice of procedures.

20 and 21/02/2012 – Competitiveness Council held an orientation debate (see Council press release) on the Commission's proposal for the modernisation of EU Public Procurement. The outcome of the debate provides guidance for the continuation of technical work. In relation to the use of competitive procedure with negotiation, a majority of delegations agreed with its flexibilisation, provided that certain safeguards are put in place to ensure transparency and equal treatment to all bidders (see below entry on the outcome of discussion).

21/02/2012 – Council publishes Commission working papers on proposals on e-procurement and SME access in new procurement directive:

• 1^st working paper – relates to the proposals for improving e-procurement. In particular, it explains the proposals to make mandatory the use of electronic means and also to give to the Commission the power to adopt measures to mandate specific technical standards.

• 2^nd working paper – relates to the proposals to facilitate SME access to public procurement procedures. In particular, it explains the proposals to split contracts into lots and the award of such lots and also suggests selection criteria relating the financial and economic capacity of the bidder.

29/02/2012 – the Council of Minister publishes a working paper prepared by the Commission relating to the proposals on “aggregation of demand”. The paper explains the Council's view on the proposed amendments to the existing rules on framework agreements and dynamic purchasing systems.

20/03/2012 – The Presidency of the Council published a compromise text addressing the use of the competitive procedure with negotiation and the competitive dialogue. The proposed text is intended to allow greater flexibility in the use of these procedures. The text also addresses the removal of the distinction between Part A and Part B services and the proposed specific regime for social services.

Article 24 of the proposed Directive on Public Procurement sets out the circumstances which have to met by Contracting Authorities in order to use the competitive procedure with negotiation and the competitive dialogue. The Commission proposed the following five situations:

1. With regards, to works, where the works contract has as its object both the design and the execution of works or where negotiations are needed to establish the legal and financial make-up of the project;

2. In respect of public works contracts, for works which are performed solely for purposes of research or innovation, testing or development and not with the aim of ensuring profitability or recovering research and development costs;

3. With regard to services and supplies, where the technical specifications cannot be established with sufficient precision with reference to standards, European technical approvals, common technical specifications or technical references;

4. In the event of irregular or unacceptable tender in response to an open or a restricted procedure;

5. Due to specific circumstances related to the nature of the complexity of the works, supplies or services or the risks attaching thereto, the contract cannot be awarded without prior negotiations.

The compromise text provides that Contracting Authorities may use such special procedures if the following criteria is fulfilled:

• Where the needs of the contracting authority cannot be met without adaptation of readily available solutions;

• They include design or innovative solutions;

• The contract cannot be awarded without prior negotiations because of specific circumstances related to the nature, the complexity or the financial make-up or because of the risks attaching to them;

• The technical specifications cannot be established with sufficient precision by the contracting authority;

• Where, in response to an open or a restricted procedure, only irregular or unacceptable tenders are submitted. In such situations contracting authorities need not publish a contract notice where they include in the negotiated procedure all of, and only, the tenderers which satisfy the selection criteria and which, during the prior open or restricted procedure, have submitted tender in accordance with the formal requirements of the procurement procedure.

Other Institutions also have reacted to the Commission's legislative consultation:

• Committee of Regions: Opinion of the Committee of the Regions on the Modernisation of EU Public Procurement Policy: towards a more efficient European Procurement Market;

• Court of Auditors: Opinion of the Court of Auditors on the Commission's Green Paper on the modernisation of public procurement.

Openforum Europe's actions

• Monitoring of invitations to tender at EU level;

• Release of annual report on EU Member States practice of referring to specific trademarks when procuring for Computer Software Packages and Information Systems:

• 2011 2^nd Procurement Monitoring Report;

• 2011 1^st Procurement Monitoring Report;

• 2010 Procurement Monitoring Report;

• 2009 Procurement Monitoring Report;

• 2008 Procurement Monitoring Report.

• Production of notes and reports covering all matters related to open procurement:

• Note on the merits of open procurement to present to Members of the European Parliament and officials from the European Commission;

• Position paper regarding the European Parliament's own initiative report on the modernisation of public procurement;

• Note on the Importance of ICT Standards and Specifications for European Public Procurement.

• Attendance of conferences and seminars on matters related with the EU's Single Market, the Digital Agenda and Public Procurement:

• Contacts with Members of the European Parliament to discuss the interests of the IT sector in the forthcoming revision, the persistence of discriminatory practices, the misuse of special procedures to award contracts in public procurement; the link between innovation and an open and transparent procurement process; the link between open standards and open procurement:

• February 2012 – Contacts with German and Polish Permanent Representations for comments on the results from 2^nd Monitoring Exercise of 2011 that identified both Germany and Poland as the worst offenders;

• 14^th of June 2011 – Meeting with assistants to Frank Engel and Malcolm Harbour, at the European Parliament in Brussels, to discuss tabling of amendment to the European Parliament's own initiative report on the modernisation of public procurement;

• 1^st of June 2011 – Meeting with assistant to Correia de Campos, at the European Parliament in Brussels, regarding the Digital Agenda and the Single Market Act;

• 26^th of May 2011 – Meeting with assistant to Correia de Campos, at the European Parliament in Brussels, regarding the Digital Agenda and the Single Market Act;

• 26^th of May 2011 – Meeting with assistant to Malcolm Harbour, at the European Parliament in Brussels, regarding the forthcoming revision of EU's legislation on public procurement;

• 11^th of May 2011 – Meeting with Jürgen Creutzmann, at the European Parliament in Strasbourg, regarding the forthcoming revision of EU's legislation on public procurement;

• 10^th of May 2011 – Meeting with Frank Engel and Bernardette Vergnaud, at the European Parliament in Strasbourg, regarding the forthcoming revision of EU's legislation on public procurement;

• 9^th of May 2011 – Meeting with Heide Rühle, at the European Parliament in Strasbourg, regarding the forthcoming revision of EU's legislation on public procurement;

• 31^st of March 2011 – Meeting with Heide Rühle, at the European Parliament in Brussels, regarding open standards and open procurement;

• 3^rd of February 2011 – Meeting with Niall Bohan (Head of Unit G4 in DG MARKT) and Marco Tardioli, at the European Commission, to discuss matters related to public procurement.

   

Institutional Press Releases and News

• European Commission: Modernising European Public Procurement to Support growth and employment (20.12.2011)

• European Commission: Single Market Act: EU public procurement framework has saved around 20 billions euros (24 Jun 2011)

• European Commission: Modernisation of EU public procurement rules – FAQs (24 Jun 2011);

• European Commission: European Commission consults public authorities, business and civil society on access to public procurement markets (07 Jun 2011);

• European Commission: European Commission consults on the modernisation of the European Public Procurement Market (27 Jan 2011);

• European Commission: Press release on public consultation on e-procurement (18 Oct. 2010);

• European Commission: Commission advocates new approach to investing public money in risky high-tech research (14 Dec 2007);

General and Industry News

• EurActiv – EU moves towards reform of public procurement (27 Jan 2011)

• Examples of useful industry websites:

• http://www.ukauthority.com/

• http://www.computerweekly.com/Home/

• http://www.publicservice.co.uk/

• http://www.osor.eu/

• http://www.publicserviceeurope.com/