Stretching the public purse

The European Commission has published a green paper on the modernisation of EU public procurement policy. Interested parties were invited to respond to a large number of specific questions on the functioning of the procurement rules, and how those rules could be improved.

In parallel with the green paper, the Commission is also undertaking a comprehensive evaluation of the impact and cost-effectiveness of EU public procurement policy. The Commission will use the results of that evaluation and the responses to the green paper to come up with a proposal for legislative reform.

Even the briefest of looks at the green paper is enough to show that the Commission is contemplating the possibility of a fundamental overhaul of every aspect of procurement rules and policy. The green paper identifies several objectives to be achieved through this modernisation process, including increasing the efficiency of public spending and allowing procurers to make better use of public procurement in support of wider societal goals, such as protection of the environment and promoting social inclusion.

Hold on to your hats…

Among the key points up for debate include:

• A recognition of the role of procurement rules and policy in helping to ensure that public funds are used efficiently and procurement markets are kept open across the EU. The Commission’s aim is to simplify and update the rules, to make the award of contracts more flexible and, it seems, to ensure procurement is at least part of the answer to some of the challenges faced by procurers in dealing with the current economic difficulties.
• Simplifying the contract categories, perhaps replacing the definition of “works contract” with a simpler set of conditions covering all kinds of construction activity, regardless of the character and purpose of the works. The current definition is very wide but quite complicated, and the Commission sees this as leading to uncertainty for procurers as to what exactly is covered.
• Eliminating the distinction between Part A and Part B services, by getting rid of the current more lightly regulated regime for Part B services. This could mean that legal services, health and social services, and educational services would have to be procured using a full-blown OJEU tender process.
• How to provide for more flexible and leaner procurement procedures. The Commission’s aim is to subject the procedures to a thorough screening to ensure optimum outcomes and to reduce the administrative burden. Aspects to be put under the microscope include the standard form notices published in the EU’s Official Journal, the contents of tender documentation, and the evidence that can be asked for at selection stage.
• Whether to allow authoritiesto make greater use of the negotiated procedure. The Commission notes the advantages of doing this (such as greater flexibility), but also has concerns as to what it perceives as the potential disadvantages, such as an increased risk of favouritism towards certain bidders, and the need for authorities to have expert negotiation skills to get good results.
• Changing the rules on what criteria can be used at the selection and tender stages of the process. The Commission sees great advantages in maintaining the current strict separation between the two. Under that system, procurers can only look at bidder-related criteria such as experience and CVs at the selection stage of the process, and not at tender stage. The tender stage itself must focus solely on the bidders’ offers for that particular contract, and not look at issues relating to the bidder’s capacity or experience. In the Commission’s view, keeping the two stages separate guarantees fairness and objectivity when comparing tenders. The Commission is not closing its mind on this point, but warns that it will look at proposals, for example to allow authorities to look at CVs and experience at the tender stage “extremely carefully”.
• Reducing the administrative burden for local and regional authorities, by allowing a lighter procedural framework, including greater use of the negotiated procedure and providing more flexible procedures, such as qualification systems (currently only permitted under the utilities regime).
• Whether further guidance is needed to help authorities in assessing when the procurement rules require them to tender sub-threshold contracts (i.e. those low value contracts which nonetheless are of “certain cross-border interest”).
• Introducing specific rules on how to deal with major changes to existing contracts, including where the contractor wishes to sell the contract to a new provider. One point up for debate is whether there should be a simplified procurement procedure to replace the former contractor.

…but don’t hold your breath

The deadline for submitting responses on the green paper to the Commission was 18 April 2011. Given the slow pace of past legislative changes to the procurement rules, it may be a number of years before any legislation finally becomes “live” in Scotland, although the Commission intends to produce the first proposals for new legislation in early 2012.