A Snapshot Public Procurement Award Procedures and Selection Criteria. Michael Jürgen Werner Partner Norton Rose Fulbright LLP 15 December 2015

Transcription

1 A Snapshot Public Procurement Award Procedures and Selection Criteria Michael Jürgen Werner Partner Norton Rose Fulbright LLP 15 December 2015

2 Three different regimes Public regime (Directive 2014/24/EU) Utilities regime (Utilities Directive 2014/25/EU) Concession regime governmental and other public bodies MS are required to implement this directive by 18 April 2016 water, energy, transport and post MS are required to implement this directive by 18 April 2016 award of concessions, covering both concessions awarded by entities that are subject to the public regime, and concessions awarded by entities that are subject to the utilities regime 2 Public Procurement Award Procedures and Selection Criteria

3 Thresholds under the new directives Under the public sector directive / concessions directive Works & concessions contracts: 5,225,000 Services contracts: 135,000 / 209,000 some additional rules apply Supply contracts: 135,000 / 209,000 Services contracts for social and other specific services (Annex IV): 750,000 Works contracts: 5,225,000 Under the utilities directive Supply or service contracts: 418,000 Services contracts for social and other specific services (Annex XVII): 1,000,000 3 Public Procurement Award Procedures and Selection Criteria

4 Procedures (1) Open: Allows every interested candidate to submit an offer Restricted: Only candidates meeting certain criteria are invited to submit tenders Innovation partnership (new): Tender process for one or more partners to assist in the development of an innovative product or service, or even works, and the subsequent purchase of the innovative results 4 Public Procurement Award Procedures and Selection Criteria

5 Procedures (2) In case that The needs of the contracting authority cannot be met without adaptation of readily available solutions and/or Include design or innovative solutions and/or Complexity or the legal and financial makeup or because of risks attaching to them and/or Technical specifications cannot be established with sufficient precision, the following procedure may be applied: Competitive dialogue: Only available under public sector rules. Only candidates meeting certain criteria are invited to conduct a dialogue and ultimately submit tenders (only limited room for post-tender discussions) Competitive procedure with negotiation: Only candidates meeting certain criteria are invited to negotiate, more flexible than competitive dialogue (only limited use in public sector) 5 Public Procurement Award Procedures and Selection Criteria

6 Bidder selection and bid evaluation Distinction between bidder selection stage and contract award stage Bidder selection and bid evaluation basic requirements as to economic/financial standing and ability/technical capacity (e.g. experience) Contract award Current public sector directive: contracting authorities have a choice to award contracts on the basis of lowest price or most economically advantageous tender (MEAT) This choice has now been removed and under all three of the new directives authorities must award on the basis of MEAT (e.g. additional aspects: quality, delivery time, etc.) 6 Public Procurement Award Procedures and Selection Criteria

7 Bidder selection criteria ineligibility criteria Ineligibility criteria (bidder shall be excluded): Participation in a criminal organisation; Corruption, fraud, money laundering or terrorist offences / financing; Child labour and other forms of trafficking in human beings; Non-payment of taxes or social security contributions. Ineligibility criteria (bidder may be excluded): Non-compliance with environmental, social and labour law Economic operator is bankrupt or subject of insolvency proceedings Grave professional misconduct which renders its integrity questionable Sufficiently plausible indications for anti-competitive agreements with other economic operators Conflict of interests or unduly influence the decision making process of the contracting authority (also in prior procurement proceedings) 7 Public Procurement Award Procedures and Selection Criteria

8 Bidder selection criteria Selection criteria may relate to: Suitability to pursue the professional activity Economic and financial standing (e.g. minimum yearly turnover, annual accounts, professional risk indemnity) Technical and professional ability (e.g. human and technical resources, experience by providing suitable references). All requirements shall be related and proportionate to the subject matter of the contract 8 Public Procurement Award Procedures and Selection Criteria

9 Contract award criteria MEAT Contract award: Most Economically Advantageous Tender (MEAT) Using a cost-effectiveness approach, such as life-cycle costing, best price-quality ratio assess on basis of criteria linked to the subject-matter of the contract in question. Such criteria may comprise: Quality, including technical merit, aesthetic and functional characteristics, accessibility, design for all users, social, environmental and innovative characteristics and trading and its conditions; Organisation, qualification and experience of staff assigned to performing the contract, where the quality of the staff can have a significant impact; After-sales service and technical assistance, deliver conditions (date, process and period). The contracting authority shall specify the relative weighting which it gives to each of the criteria chosen 9 Public Procurement Award Procedures and Selection Criteria

10 Tender process Advertisement in the Official Journal of the European Union (OJEU) & Tenders Electronic Daily (TED) Receipt of expressions of interest Selection of bidders and invitation to tender or participate in dialogue or negotiate Submission of tenders (with our without a dialogue or negotiation process depending on procedure) Evaluation and award decision Standstill period Contract award N.B. minimum time periods 10 Public Procurement Award Procedures and Selection Criteria

11 Standstill period Minimum standstill period between notification of award and contract conclusion: 10 or 15 days depending on means of communication Must Inform in writing, as soon as possible those who submitted an offer and those who unsuccessfully sought selection and yet to be informed of reasons of nonselection Must Include award criteria reasons for decision, including the characteristics and relative advantages of the successful tender, the score (if any) obtained by notice recipient and successful tenderer name of successful tenderer a precise statement of exact standstill period 11 Public Procurement Award Procedures and Selection Criteria

12 Remedies for breach (overview) Remedies as enforcement at national level General remark: Remedies and procedural law concerning breach of EU law are to be considered matters for the national legislator, according to the principle of national and remedial autonomy Remedies Directives are: Directive 89/665/EEC, Directive 92/13/EEC, Directive 2007/66/EU (amended by Directive 2014/23/EU) Remedies Directives apply only to tender procedures falling in their scope nonetheless common principles apply such as principles of equivalence and effectiveness apply 12 Public Procurement Award Procedures and Selection Criteria

13 Remedies for breach of public procurement rules Interim measures: Crucial in order to ensure an efficient enforcement of the public procurement rules Damages: Several examples of successful actions for damages, including damages for loss of profit Ineffectiveness: Remedy against direct illegal award of contracts 13 Public Procurement Award Procedures and Selection Criteria

14 Contact Michael Jürgen Werner Partner Rechtsanwalt (German qualified lawyer) Norton Rose Fulbright LLP Avenue Louise Brussels Belgium Tel Fax michaeljuergen.werner@nortonrosefulbright.com 14 Public Procurement Award Procedures and Selection Criteria

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16 Disclaimer Norton Rose Fulbright US LLP, Norton Rose Fulbright LLP, Norton Rose Fulbright Australia, Norton Rose Fulbright Canada LLP and Norton Rose Fulbright South Africa Inc are separate legal entities and all of them are members of Norton Rose Fulbright Verein, a Swiss verein. Norton Rose Fulbright Verein helps coordinate the activities of the members but does not itself provide legal services to clients. References to Norton Rose Fulbright, the law firm and legal practice are to one or more of the Norton Rose Fulbright members or to one of their respective affiliates (together Norton Rose Fulbright entity/entities ). No individual who is a member, partner, shareholder, director, employee or consultant of, in or to any Norton Rose Fulbright entity (whether or not such individual is described as a partner ) accepts or assumes responsibility, or has any liability, to any person in respect of this communication. Any reference to a partner or director is to a member, employee or consultant with equivalent standing and qualifications of the relevant Norton Rose Fulbright entity. The purpose of this communication is to provide general information of a legal nature. It does not contain a full analysis of the law nor does it constitute an opinion of any Norton Rose Fulbright entity on the points of law discussed. You must take specific legal advice on any particular matter which concerns you. If you require any advice or further information, please speak to your usual contact at Norton Rose Fulbright. 16 Public Procurement Award Procedures and Selection Criteria

17 New Concessions Directive Dr. iur. Philipp Heuser Associate Norton Rose Fulbright LLP 15 December 2015

18 Once you consent to some concession, you can never cancel it and put things back the way they are.

19 3 New Concessions Directive

20 Concessions - Conceptual Features Concessions denote Public Works which are underpinned by: Risk transfer Exclusive rights of asset exploitation and / or End-user payment mechanism OR Service contracts which are underpinned by: Risk transfer Exclusive rights of asset exploitation and / or End-user payment mechanism 4 New Concessions Directive

21 Concessions Past and Current Treatment Works Concessions subject to specific provisions in Public Sector Directive (2004/18/EC) Works Concessions excluded from scope of Utilities Directive (2004/27/EC) but fundamental EU Treaty principles apply Services Concessions excluded from scope of both Classic Directive (2004/18/EC) and the Utilities Directive (2004/17/EC) but fundamental EU Treaty principles apply 5 New Concessions Directive

22 The new Directive on Concessions (1) Brings into play Remedies Directive Codifies jurisprudence (essential treatment and procurement requirements) Solidifies legal regimes of public sector and utilities for works and services concessions Clarifies definitions including thresholds EUR 5,225,000/GBP 4,104,394 6 New Concessions Directive

23 The new Directive on Concessions (2) Concession a format of public contract but economic consideration consists in the right to exploit the work or services (sometimes with payment from public sector) right to exploit implies a transfer of operating or demand risk transfer of risk is assumed where no guarantee to recoup investment of concessionaire Duration of concessions as long as necessary to recoup RoCE Demarcation of concessions from licenses, franchises, asset lease 7 New Concessions Directive

24 Exclusions Water Sector (Drinking water supply or distribution) Exclusive rights concessions in utilities Gaming concessions Concessions for public passenger transport (Regulation 1370/2007) Social services subject to light regime 8 New Concessions Directive

25 Requirements of the New Directive on Concessions Publication of OJEU notices (ex post & ex ante) Electronic notification and availability of concession documents No specific procedures negotiated procedures possible Selection and Qualification and exclusion grounds aligned with Public Sector and Utilities Directives Award Criteria aligned with Public Sector and Utilities Directives Rules on communication 9 New Concessions Directive

26 Impact of Concessions Directive Standardise regulation Align Concessions with PPPs and finally Enhance probity in procurement Deliver efficiently public services Reduce direct awards Treat porosity of European procurement acquis 10 New Concessions Directive

27 Contact Dr. iur. Philipp Heuser Associate Norton Rose Fulbright LLP Avenue Louise 489, 1050, Brussels, Belgium Tel Fax Philipp.heuser@nortonrosefulbright.com 11 New Concessions Directive

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29 Disclaimer Norton Rose Fulbright US LLP, Norton Rose Fulbright LLP, Norton Rose Fulbright Australia, Norton Rose Fulbright Canada LLP and Norton Rose Fulbright South Africa Inc are separate legal entities and all of them are members of Norton Rose Fulbright Verein, a Swiss verein. Norton Rose Fulbright Verein helps coordinate the activities of the members but does not itself provide legal services to clients. References to Norton Rose Fulbright, the law firm and legal practice are to one or more of the Norton Rose Fulbright members or to one of their respective affiliates (together Norton Rose Fulbright entity/entities ). No individual who is a member, partner, shareholder, director, employee or consultant of, in or to any Norton Rose Fulbright entity (whether or not such individual is described as a partner ) accepts or assumes responsibility, or has any liability, to any person in respect of this communication. Any reference to a partner or director is to a member, employee or consultant with equivalent standing and qualifications of the relevant Norton Rose Fulbright entity. The purpose of this communication is to provide general information of a legal nature. It does not contain a full analysis of the law nor does it constitute an opinion of any Norton Rose Fulbright entity on the points of law discussed. You must take specific legal advice on any particular matter which concerns you. If you require any advice or further information, please speak to your usual contact at Norton Rose Fulbright. 13 New Concessions Directive

30 Bidding as part of a consortium Brendan Ryan Associate 15 December 2015

31 Procurement issues for consortium bids Can an authority prevent subcontracting? Can an authority require subcontracting? Can a contractor or subcontractor be substituted after contract signature? Can an authority exclude subcontractors or potential subcontractors? Can bidders change consortia? Can a contractor or subcontractor be substituted during tender process? 2

32 Procurement issues for consortium bids 1. Can authorities control how consortia are formed? 2. Can consortia be changed? 3

33 Can authorities control how consortia are formed? (1) PREQUALIFICATION Selection criteria Exclusion criteria Can bidders perform the contract? Are bidders suitable? Economic / financial standing Technical resources and professional experience Mandatory exclusion? Discretionary exclusion? 4

34 Can authorities control how consortia are formed? (2) Authorities have very little control over the formation of consortia and subcontracting arrangements because: Tenderers cannot be required to take any particular legal form when submitting a bid; Tenderers can freely rely on the capacity of third parties to meet: (i) economic and financial criteria; (ii) technical and professional ability criteria Tenderers can any appropriate means to demonstrate the availability of third party capacity Tenderers cannot be required to perform a minimum percentage of the contract themselves. 5

35 Can authorities control how consortia are formed? (3) Recent developments give authorities some new controls: Authorities must verify that no mandatory exclusion criteria apply to proposed subcontractors; Authorities can require that certain critical tasks in the contract are not subcontracted (works and services contracts only); and Reliance on third parties is not just a formality 6

36 Can authorities control how consortia are formed? (4) But the 2015 regulations give authorities some new controls: Authorities must verify that no mandatory exclusion criteria apply to proposed subcontractors; Authorities can require that certain critical tasks in the contract not be subcontracted (works and services contracts only); and Reliance on third parties not just a formality 7

37 Can authorities control how consortia are formed? (5) C-324/14 - PARTNER Apelski Dariusz Contracting authority required the successful bidder to perform at least 25% of the contract using its own resources. Case was brought under the old (2004 Directive) rules. Advocate General: Requirement that a successful bidder must perform a certain proportion of the contract itself is a breach of EU public procurement law. Confirmed by the 2015 rules allows only certain critical tasks to be reserved to the main contractor. Critical tasks means well-defined tasks regarded as critical for implementing the contract. 8

38 Can authorities control how consortia are formed? (6) But the 2015 regulations give authorities some new controls: Authorities must verify that no mandatory exclusion criteria apply to proposed subcontractors; Authorities can require that certain critical tasks in the contract not be subcontracted; and Reliance on third parties not just a formality 9

39 Can authorities control how consortia are formed? (7) Technical / professional ability Bidders can rely on third party qualifications or experience if the third party will actually carry out the tasks for which that experience is required Financial capacity authorities may require that parties whose finances are relied upon be jointly liable for the execution of the contract 10

40 Can consortia be changed? (1) Can a business move from one bid team to another (e.g. following down-selection)? In general, yes, but there must be safeguards against information-sharing. Can a business join a prequalified bid team after PQQ? Yes, provided there are no grounds for its exclusion. Can a consortium survive if a business leaves the consortium after PQQ? Yes, but only if the consortium would have gotten that far without the departing business (i.e. passed PQQ, would not have been down-selected). Can a consortium survive if a subcontractor leaves the consortium after selection of the preferred bidder? Not if the subcontractor was essential to the bid s success. Can a prime contractor be substituted after contract signature? Yes, if the substitution arises from genuine commercial circumstances (e.g. takeover, merger, insolvency) and the contract isn t changed substantially 11

41 Can consortia be changed? (2) Pre-tender commercial negotiations During negotiation or dialogue (i) During negotiation or dialogue (ii) After identification of preferred bidder During the contract term P 1 P 2 P 3 P 1 P 2 P 1 P 4 P 1 P 4 CP 1 CP 1 S 1 S 1 S 1 S 2 CP 2 3 possible prime contractors 1 potential subcontractor Authority must ensure that the bid team meets the selection criteria and that there are no grounds to exclude any of the businesses P3 decides not bid not viable, P1 and P2 proceed Consortium survives if P3 wasn t essential to passing PQQ / any down-selection P2 decides terms are no long commerciallyviable leaves the consortium P4 replaces P2 Consortium survives if there are no grounds to exclude P4 and the consortium would not have been eliminated at any stage without P2 Consortium wins bid and is appointed preferred bidder Partnership incorporates as CP1 S1 becomes insolvent; S2 replaces S1 Was S1 a critical part of the consortium s success? Would S2 have been excluded? During contract performance, CP1 is subject to a takeover, merger, etc., or becomes insolvent and CP2 steps in. Would the new entity have passed PQQ? Ensure there are no other substantial modifications to the contract 12

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43 Tenders Compete fairly! Joosje Hamilton Of Counsel Norton Rose Fulbright LLP 15 December 2015 CEC-# v3

44 Overview What does the law say? Why does it matter? When to bear competition law in mind in a competitive tender process? What do you think? 5 key points to remember 2 Tenders - Compete fairly!

45 What does the law say?

46 What does the law say? Broad objective: Ensure that businesses: (i) compete with each other; (ii) innovate in order to sell their products/services; (iii) offer competitive prices Businesses are prohibited from: Entering into agreements or arrangements which prevent, restrict or distort competition Engaging in abusive behaviour when they enjoy a dominant market position Implementing certain mergers/acquisitions or establishing certain types of joint venture without seeking the prior approval from the relevant competition authorities Receiving any aid granted by the State or through State resources which distorts (or threatens to distort) competition and affects trade within the EU 4 Tenders - Compete fairly!

47 Why does it matter?

48 Why does it matter Understanding competition law is critical to achieving and maintaining a competitive edge sword and shield Breaching competition law is a serious matter: Risk of high fines Up to 10% of global group turnover for duration of infringement Bad for business: Risk of damages in court litigation to third parties who have suffered loss Damage to reputation and brand through negative publicity Distraction and value loss caused by investigations; legal fees, etc. Illegal aid needs to be repaid Bad for you In UK: Unlimited fines and prison sentences (up to 5 years); disqualification of directors of companies in breach 6 Tenders - Compete fairly!

49 When to bear competition law in mind in a competitive tender process?

50 When to bear competition law in mind? Exchange of commercially sensitive information Serious infringement if parties are competitors Information which is Non-public Non-generalised Current, recent or predicted in nature AND relates to topics such as Prices Margin costs Business strategies May amount to gun jumping Other issues Market intelligence and benchmarking - provided if information is public Indemnity for risk of ineffectiveness - Possible state aid Joint purchasing Generally provided small market shares Consider Z competition law! Bid rigging Agreement to limit competition in tender process Several forms: Bid rotation Bid suspension Cover pricing Serious infringement Form of price fixing and market allocation Joint ventures What type of JV is envisaged? Structural JV intended to be independent on the market / Parties transfer business to JV Looser form of cooperation Structural JVs may need approval from competition authorities Exclusivity - provided small market shares and limited duration 8 Tenders - Compete fairly!

51 What do you think?

52 Case study Four construction companies are excited about the new opportunities to deliver infrastructure projects in the UK and are keen to bid. However, the companies consider that it will be most cost-effective to win those contracts which are located the closest to their base of operations. The companies therefore indicate to each other which projects interest them the most and give detailed reasons for their preferences. If the companies agree, three of the companies submit a bid within a certain range, while the fourth company undercuts them. In return, the fourth company promises to give the three others any sub-contacts and/or pay them for services that may never be delivered. 10 Tenders - Compete fairly!

53 What do you think? Do the companies operate within the law? Would your answer be different if: Other third party bidders participated in the tender process? The companies CFO s discussed this arrangement over a pint in the pub? If the conversations were bilateral only? If the four companies formed a joint venture? 11 Tenders - Compete fairly!

54 Key points to remember

55 Key points to remember 1. Informal agreements ( chat in the pub ) may breach competition law 2. When exchanging commercial information, avoid or minimise sharing commercially sensitive information. As far as possible, ensure the information is historic or generalised/aggregated. 3. Some types of joint venture may need to be approved by the competition authorities prior to their implementation 4. Bid rigging is a serious infringement 5. Indemnity for risk of ineffectiveness? Consider the State aid rules 13 Tenders - Compete fairly!

56 Please contact me if you have any questions Joosje Hamilton Of Counsel, Norton Rose Fulbright LLP Joosje advises clients on the full range of issues arising under the EU and UK competition laws, merger control laws, utilities regulation, State aid laws and public procurement laws. She has considerable experience in advising clients in regulated sectors and the energy sector in particular. 14 Tenders - Compete fairly!

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58 Disclaimer Norton Rose Fulbright US LLP, Norton Rose Fulbright LLP, Norton Rose Fulbright Australia, Norton Rose Fulbright Canada LLP and Norton Rose Fulbright South Africa Inc are separate legal entities and all of them are members of Norton Rose Fulbright Verein, a Swiss verein. Norton Rose Fulbright Verein helps coordinate the activities of the members but does not itself provide legal services to clients. References to Norton Rose Fulbright, the law firm and legal practice are to one or more of the Norton Rose Fulbright members or to one of their respective affiliates (together Norton Rose Fulbright entity/entities ). No individual who is a member, partner, shareholder, director, employee or consultant of, in or to any Norton Rose Fulbright entity (whether or not such individual is described as a partner ) accepts or assumes responsibility, or has any liability, to any person in respect of this communication. Any reference to a partner or director is to a member, employee or consultant with equivalent standing and qualifications of the relevant Norton Rose Fulbright entity. The purpose of this communication is to provide general information of a legal nature. It does not contain a full analysis of the law nor does it constitute an opinion of any Norton Rose Fulbright entity on the points of law discussed. You must take specific legal advice on any particular matter which concerns you. If you require any advice or further information, please speak to your usual contact at Norton Rose Fulbright. 16 Tenders - Compete fairly!