EU procurement reform

The European Commission’s Marta Laszuk discusses the scope of the EU’s procurement reform package.

Introducing new public procurement processes across Europe has been a work in progress since February 2014 when the EU adopted three new directives:
•    Directive 2014/24/EU (replaces the current Classic Sector Directive);
•    Directive 2014/25/EU (replaces the current Utilities Directive); and
•    an entirely new Concessions Directive 2014/23/EU.
The member states must now meet a final implementation deadline of 18 April 2016.  For European Commission legal officer Marta Laszuk, it seems like everyone is on track. She is not aware of any major obstacles or problems facing the member states. In fact, the UK is currently the most advanced having already implemented Directive 2014/24/EU.
“The new directives already entered into force in April 2014,” Laszuk comments. “Now the states are in the process of transposing the directives.”
She continues: “The Concessions Directive especially is a major development of EU law in the area of public procurement because only works concessions are partly regulated right now by the Classic Sector Directive and service concessions are not regulated at all by any secondary legislation. They are regulated by the treaty principles and the extensive jurisprudence of the Court of Justice of the European Union.”
To date, no changes have been made to the Directive on defence procurement and the Remedies Directives were amended only to take into account concessions and changes to references. “We are in the process of drafting a report on the effectiveness of the public procurement remedies system to the European Parliament and Council,” says Laszuk. “To be able to provide this, we launched a public consultation which will be open until 20 July this year.”
All views are welcome on whether the remedies system is effective. Some parallel initiatives are also related to the reform e.g. the international procurement instrument which is still being negotiated and a new Directive 2014/55/EU on electronic invoicing in public procurement.
Laszuk highlights: “There are some constructive ambiguities because these directives are actually a result of a difficult compromise in the Parliament and the Council. They were subject to long negotiations.”
Prior to tabling the proposals, the European Commission conducted extensive public consultations. “Simple, more flexible rules were needed both by the contracting authorities and the economic operators participating in the procurement process,” Laszuk explains. “It turned out that public procurement should be better used to obtain strategic objectives – environmental, societal and related to innovation. There was also a need to reinforce procedures in terms of preventing favouritism and corruption.
“It was also necessary to improve the legal framework in favour of SMEs and their participation in public procurement and, finally, it was necessary to improve enforcement of EU rules on public procurement at a national level.”

Process
The “simple, more flexible rules” include the European Single Procurement Document (ESPD) i.e. a declaration that will be required from any operators participating in procurement procedures. It will be a standard form, based on implementing the Regulation being prepared by the Commission.

She continues: “We’ve introduced more negotiations in public procurement. This is a very significant evolution of EU law because the EU is no longer sceptical about negotiations over procurement.”

Time limits have been reduced significantly by 30 per cent, a light-touch regime has been created for social and other services, and more flexibility has been awarded to non-central government authorities and in contract modifications and co-operation in the public sector. eProcurement will gradually become mandatory, and will be fully implemented in autumn 2018.

For green procurement, the most important aspect is that the contracting authority may now consider the full life-cycle cost of products, including CO2 footprints and the production process of specific works, services or supplies.

Working out how societal needs are incorporated into public procurement resulted in lengthy negotiations. Member states must now ensure that the economic operators of public contracts comply with social and labour rules at all levels. Anyone who fails to comply with the relevant regulations could be excluded from the procurement procedure.

It is hoped that innovation in procurement will be fostered through a new ‘innovation partnership’. Laszuk explains: “This allows for the development of a new innovative product, service or works which then allows the contracting authority to seek a procurement purchase for this particular product.”

For SMEs, the new directives have been designed to allow better access to the public procurement process by dividing contracts into lots, limiting the turnover cap to twice the contract value (except in justified cases), and simplified documentation requirements.

The new rules for the utilities sector cover the areas of water, energy, transport and postal services but not activities related to oil and natural gas exploration which are subject to competitive pressure. Certain sections of the postal service (finances and logistics) have also been excluded.

The new Concessions Directive covers works and services but this does not include water services after a successful campaign by members of the public.  The Commission was initially going to include water services but there was a significant misunderstanding among the public over the scope of the application of the Concessions Directive. Citizens, especially in Germany and Austria, were wary that the Commission was going to introduce the privatisation of water services through the back door (which was never the intention) and the very first citizens’ initiative petition over the right to water was a success.

To ‘police’ the reforms, the onus is on member states to monitor specific violations or systemic problems. Guidance and support must also be supplied free of charge to contracting authorities, SMEs and economic operators on the interpretation and application of public procurement law.

In conclusion, the directives are the result of a difficult compromise. For some, they went too far. For others, they did not go far enough.

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