Response to the European Commission s Green Paper on the Modernisation of EU Public Procurement Policy

Transcription

1 Response to the European Commission s Green Paper on the Modernisation of EU Public Procurement Policy 1. Introduction 1.1 We refer to the Commission s Green Paper on the modernisation of EU public procurement policy (the Green Paper ). This paper expresses the views of the Slaughter and May Competition Group. 2. General Comments 2.1 We welcome the Commission s decision to consider the modernisation of EU public procurement policy. We fully support the stated objectives of increasing the efficiency and effectiveness of the existing regime; making the award of public contracts simpler and more flexible; and thereby ensuring the most efficient use of public funds, as emphasized by the Europe 2020 strategy In our experience, compliance with the Public Procurement Directives 2 ( the Directives ) entails a substantial cost to business both for the procurer and for those participating in a tender. It is therefore important that the public procurement rules are designed so as to achieve the intended benefits of the regime in a way that outweighs the cost of complying with the Directives. 2.3 Our responses to the specific questions posed by the Green Paper are set out below and are based on the following principles that, in our view, should guide the approach taken in reforming the Directives: 1) The scope of the Directives should not exceed what is required to achieve their key objective ensuring that contracts let by public authorities and utilities in the internal market are subject to full competition and that public procurers achieve best value in their purchasing. The Directives should not be used as the vehicle to achieve other policy objectives as this is likely to add to the complexity of the rules and cause confusion as to their interpretation. 2) The Directives should where possible legislate for outcomes, and allow contracting authorities flexibility in the design of the process that delivers those outcomes. 3) The Directives should be as simple and precise as possible in order to minimise the costs of compliance. 4) The Directives should be designed so as to build on general principles that have been elaborated by the Court of Justice, such that so far as possible the same rules 1 These objectives are set out at pages 3 and 4 of the Green Paper. 2 Directive 2004/17/EC and Directive 2004/18/EC.

2 2 apply to the procurement of contracts that are inside and outside the Directives. The Directives should only overlay additional specific procedural requirements in circumstances where reliance on the Treaty principles alone is for some reason insufficient to deliver the intended outcome. 5) It would assist contracting authorities and tenderers in applying the Directives if there was additional guidance on the Commission s interpretation of relevant case law. The above principles for modernisation of the Directives ( Principle 1 to Principle 5 ) are referred to and elaborated in our responses to the questions below. Section 1: What Are Public Procurement Rules About? 1. Do you think that the scope of the Public Procurement Directives should be limited to purchasing activities? Should any such limitation simply codify the criterion of the immediate economic benefit developed by the Court or should it provide additional/alternative conditions and concepts? Yes. In our view the scope of the Directives should be expressly limited to purchasing activities in order to reflect their intended objective, as described at Principle 1 above. It would in particular be helpful to clarify that the Directives do not apply simply because a contract fulfils a public purpose. There is currently uncertainty on whether, or in what circumstances, the Directives apply to planning agreements on the basis that specifying building requirements in the exercise of regulatory planning powers serves a public purpose and therefore comprises a public contract. We share the concern that this uncertainty has lead to the delay of urban regeneration projects, in addition to wasted costs for public bodies and tenderers. We note that the Court of Justice s most recent case law on planning agreements (Helmut Muller 3 ) indicates that the contracting authority must derive direct economic benefit from a purchase for it to be within the scope of the Directives. We would support codification of this principle in the definition of public contracts, insofar as a precise definition of the concept of direct economic benefit is provided. More specifically, we suggest that the definition of public contracts should require at least one of the following indicators of direct economic benefit to be provided for under the contract: (i) a legal obligation on the contractor to carry out the contract that can be enforced by the contracting authority; (ii) ownership rights for the contracting authority, such as rights for future use and rights to make the contract product available to the public; (iii) the assumption of risk by the contracting authority in the case of a contract 3 Helmut Muller GmbH v Bundesanstalt fur Immobilienaufgaben, Case C451/08.

3 3 failure; (iv) or the making of a material financial contribution by the contracting authority to the costs of performing the contract. We do not however support the inclusion of any additional concepts in the definition of public contracts. The key criterion, in our view, is whether or not the contracting authority is purchasing for its own economic needs. We note that the alternative concepts of a strong and direct link and [as a] result of an initiative taken by the authority were proposed by A.G. Mengozzi in the Helmut Muller decision. We would not favour the inclusion of these concepts in the Directives as they lack precision and are not fully aligned with the Directives principal purpose the opening up of public contracts in the internal market to full competition and the achievement of best value by contracting authorities in respect of their purchasing needs, as described at Principle 1 above. 2. Do you consider the current structure of the material scope, with its division into works, supplies and services contracts, appropriate? If not, which alternative structure would you propose? On the basis that the Directives should be as simple as possible, as noted at Principle 3 above, we would prefer to avoid distinctions between different types of contracts. We do not support the making of a distinction simply because of qualitative differences in what is being procured. A distinction should only be made where necessary to establish whether the Directives apply to a particular procurement. For example, substantially different contract value thresholds apply to works contracts and therefore a distinction is required. We do not see a strong case for continuing to distinguish between supplies and services contracts, however, as the same rules apply to both types of contract where they are of equal value. 3. Do you think that the definition of works contract should be reviewed and simplified? If so, would you propose to omit the reference to a specific list annexed to the Directive? What would be the elements of your proposed definition? Yes. We think that the definition of a works contract should be simplified. In particular, the criterion of requirements specified by the contracting authority should be removed from the definition or clarified. In our experience this requirement is difficult to apply as the required level of influence over contractual requirements is not specified. For example, current confusion over whether planning agreements comprise public contracts (as described in our response to question 1 above) has been contributed to by uncertainty as to whether requirements specified includes relatively broad parameters for a proposed development that are set in a planning agreement. We would also support removal of the list containing examples of activities that qualify as a works contract at Annex 1 to Directive 2004/18. The same purpose could, in our view, be achieved by including a short list of examples in an improved definition of a works contract (e.g. including structural, engineering, building utilities, and structural

4 4 finishing projects ). This approach would reflect the objective of simplification of the Directives, as described at Principle 3 above. A / B services 4. Do you think that the distinction between A and B services should be reviewed? See our response to question 5 below. 5. Do you believe that the Public Procurement Directives should apply to all services, possibly on the basis of a more flexible standard regime? If not please indicate which service(s) should continue to follow the regime currently in place for B-services, and the reasons why. We think that the Directives should focus on services that are potentially of cross-border interest. We therefore support the requirements of the Directives being focused on Alisted services, although we could see a case for reviewing the list of services in order to ensure that the A-list continues to cover the appropriate types of contract. For the same reason, that the Directives should be focused on the areas of concern only, we would not support inclusion of all services in the standard regime. We would also encourage the Commission to review the rationale for maintaining a B- list, and the associated requirements, instead of relying on Treaty principles to ensure fair procurement of all non-a-list services. At present, only two procedural outcomes are achieved from B-list classification (compliance with requirements in respect of technical specifications and publication of contract award notices) and, in our view, these measures do not play a substantive role in ensuring that fair procurement takes place. The Treaty principles relevant to public procurement have been elaborated by the case law of the Court of Justice 4 and the Commission s Interpretative Guidance on contract awards not or not fully subject to the Directives 5, and are therefore well-established. In accordance with Principle 4 above, we would support reliance on Treaty principles only to ensure that contracting authorities who procure for B-services act in a transparent way and treat all potential providers equally. Thresholds 6. Would you advocate that the thresholds for the application of the EU Directives should be raised, despite the fact that this would entail at international level the consequences described above? 4 The relevant principles include non-discrimination, equal treatment, and transparency. 5 Brussels, , COM.

5 5 Whilst we agree that the Directives should focus on contracts that are above a materiality threshold, we do not find that the thresholds are the main difficulty with the current legal framework. We do not think that a general raising of the thresholds would in itself achieve any of the objectives of modernisation of the Directives. Exclusions 7. Do you consider the current provisions on excluded contracts to be appropriate? Do you think that the relevant section should be restructured or that individual exclusions are in need of clarification? See our response to question 8 below. 8. Do you think that certain exclusions should be abolished, reconsidered or updated? If yes, which ones? What would you propose? We agree that there are certain contracts that the Directives should not apply to and we do not think that any exclusion should be abolished. Our general view is that the application of Treaty principles to excluded contracts, as outlined in the Court of Justice case law and the Commission s Interpretative Guidance on contract awards not or not fully subject to the Directives 6, guarantees that fair processes are followed in tendering for excluded contracts. However, further clarification of the definition of a service concession could be helpful. A fuller explanation of the right to exploit the service, including detail on (i) the level of risk that must be transferred to the provider (as specified in the Court of Justice case law 7 ), and (ii) how the exception applies where the provider is a public-private partnership and the risk and revenue of the service concession are divided between the partners, would give public authorities and bidders greater clarity as to the intended scope of this exception. Public purchasers 9. Do you consider that the current approach in defining public procurers is appropriate? In particular, do you think that the concept of body governed by public law should be clarified and updated in the light of the ECJ case-law? If so, what kind of updating would you consider appropriate? Given the increasing variety of organisation structures in the public sphere and the seriousness of the potential consequences of misinterpretation of the definition 6 Brussels, , COM. 7 Eurawasser, Case C-206/08 of 10 September

6 6 (particularly in light of the increased sanctions under the new Remedies Directive 8 ) it is essential that there is an unambiguous bright line definition of the bodies that are subject to the Directives. Our experience is that the concept of a body governed by public law does not meet this standard. There can be doubt as to its scope and more generally the effect of this provision is that it can be a catch all to bring bodies funded or controlled by government within the Directives, even though they may already operate in an open market. 9 In our view, the first limb of the current definition ( needs in the general interest, not having an industrial or commercial character ) is especially problematic. Describing the needs served by any entity is extremely difficult, particularly where it serves a number of different purposes or needs, and there is insufficient guidance available on the circumstances in which an activity can be considered to have an industrial or commercial character. In any event, application of the Directives should turn on the supply-side market environment rather than the nature of demand for an organisation s services. We would therefore favour a review of this definition and the development of a precise and simple definition of a public purchaser, reflecting the overall aim of including bodies that are not already exposed to normal commercial or competitive pressure, in accordance with Principles 1, 3, and 4 for modernisation of the Directives. Public utilities 10. Do you think that there is still a need for EU rules on public procurement in respect of these sectors? Please explain the reasons for your answer. If yes: Should certain sectors that are currently covered be excluded or, conversely, should other sectors also be subject to the provisions? Please explain which sectors should be covered and give the reasons for your answer. See our response to question 12 below. 11. Currently, the scope of the Directive is defined on the basis of the activities that the entities concerned carry out, their legal statute (public or private) and, where they are private, the existence or absence of special or exclusive rights. Do you consider these criteria to be relevant or should other criteria be used? Please give reasons for your answer. See our response to question 12 below. 8 Directive 2007/66/EC. 9 For example, Registered Social Landlords who operate in an open market were confirmed to be public purchasers by a 2004 decision of the Commission (Commission v France (Case 237/99)).

7 7 12. Can the profit-seeking or commercial ethos of private companies be presumed to be sufficient to guarantee objective and fair procurement by those entities (even where they operate on the basis of special or exclusive rights)? We would favour a more selective approach to EU regulation of utilities procurement that centres on whether sufficient competition exists in a relevant market for there to be presumption that the commercial objectives of market participants will guarantee fair procurement. Many UK utilities sectors are now liberalised to such an extent that the participating private companies have no incentive to do otherwise than procure on a best value basis. Traditional assumptions about the incentives of utilities procurers are also displaced by the fact that there is a significant level of cross-border investment in the utilities sectors. In respect of private companies included in Directive 2004/17, we think that the current focus on the mere existence of special or exclusive rights does not accurately reflect the rationale for making procurers subject to the Directive. In particular, we do not think that the fact that a utility may hold a monopoly position is a reason for applying the Directive, where its exercise of monopoly powers is already regulated by sectoral regulators and general competition law. Furthermore, the concept of a special right is uncertain and difficult to apply. For the reasons stated above, we suggest including a clear criteria based on whether a utility has the incentive to behave any differently to other private companies in nonregulated sectors in a new definition of a contracting authority for the purposes of Directive 2004/17. The definition would then be more aligned with the regime s overall aim of regulating those who weigh up different incentives from those of managers of a private business who bear the risk of losses and are directly controlled by market forces (paragraph 1 of Green Paper). 13. Does the current provision in Article 30 of the Directive constitute an effective way of adapting the scope of the Directive to changing patterns of regulation and competition in the relevant (national and sectoral) markets? We think that Article 30 of Directive 2004/17 has been a helpful development but does not, in our view, constitute an effective way of adapting the Directive s scope to changing patterns of regulation and competition in utilities markets. The test included in Article 30(1) requires an activity (i) to be directly exposed to competition and (ii) for access to the market not to be restricted. As regards the first requirement, we question whether the existence of competition is the relevant factor for this assessment (given the role of general competition law and the existence of businesses in other sectors that for whatever reason are not exposed to full competition and are not subject to the public procurement rules). We also believe that the latter element of the definition is potentially misleading, in that it could be interpreted to mean that the existence of a licensing regime (restricting market access) may prevent the test being satisfied. A licensing regime is not synonymous with a significant barrier to entry because licences in respect of some activities are relatively easy to obtain. We would

8 8 therefore support clarification that the mere existence of a licensing regime does not prevent the requirement for unrestricted market access from being satisfied. As stated in our response to question 12 above, we think that a utility should only be included in Directive 2004/17 where it has the incentive to procure differently to other private companies in non-regulated sectors. For consistency, we believe that Article 30(1) should also apply this test. In this way, the new definition of a contracting authority would exclude those who clearly already procure in a fully commercial manner and Article 30(1) would act as a tie-break procedure for less clear-cut cases where the Commission s confirmation that the utility satisfies the test is required. Finally, Article 30(5) only permits utility companies themselves to apply for an exemption where this is permitted by Member State legislation. We believe that the default position should be that utility companies and Member States are equally entitled to submit applications to the Commission.

9 9 Section 2: Improve the Toolbox for Contracting Authorities 14. Do you think that the current level of detail of the EU public procurement rules is appropriate? If not, are they too detailed or not detailed enough? We believe that the current rules are overly detailed. Focus should be placed on achieving optimal procurement outcomes rather than crafting complex and detailed rules that are resource-consuming to understand and apply, in line with Principle 2 and Principle 3 above. Particularly in light of the Court of Justice having elaborated Treaty principles relevant to public procurement, there is a mismatch in approach between the Directives and the case law. While the Directives are focused on procedures (such as deadlines for each stage of a process and the required content of notices), the principles emerging from case law look at substantive effects (e.g. Commission v Ireland 10, where it was held that determining the weighting of an award criteria post-submission of tenders was not unlawful since this sequence of events did not in fact disadvantage the bidders). Expanding on the no disadvantage principle applied in the case law, we would like to see express flexibility in the Directives for contracting authorities to address issues that may arise with a tender process by looking at the substance of a case and having flexibility to find a solution without unwinding the whole tender process, provided that they can do so without substantive disadvantage to any bidder (for example, by unwinding a process by one or two stages rather than re-starting the whole tender). Overall, we believe that the Directives should be less procedurally prescriptive and more flexible, while relying more heavily on Treaty principles to achieve fair procurement outcomes, in accordance with Principle 4 above. Modernise procedures 15. Do you think that the procedures as set out in the current Directives allow contracting authorities to obtain the best possible procurement outcomes? If not: How should the procedures be improved in order to alleviate administrative burdens/reduce transaction costs and duration of the procedures, while at the same time guaranteeing that contracting authorities obtain best value for money? See our response to question 17 below. 16. Can you think of other types of procedures which are not available under the current Directives and which could, in your view, increase the cost-effectiveness of public procurement procedures? 10 Case C-226/09, Judgment of the Court of Justice on 18 November 2010.

10 10 See our response to question 17 below. 17. Do you think that the procedures and tools provided by the Directive to address specific needs and to facilitate private participation in public investment through public-private partnerships (e.g. dynamic purchasing system, competitive dialogue, electronic auctions, design contests) should be maintained in their current form, modified (if so, how) or abolished? We believe that the current procedures lack flexibility and therefore do not enable procurements of complex projects to be conducted in as efficient and cost-effective a way as possible. In our view, the available procedures either mandate too many or too few procedural stages, and therefore prevent contracting authorities from awarding contracts in a similar way to private companies in competitive markets. In particular, we do not find that the competitive dialogue process, which has its own procedural complexities, has delivered as much as might be possible in terms of a flexible process for major contracts. Rigid procedures are not in our view required to secure that contracting authorities generate the greatest possible competition for public contracts and achieve best value in their purchasing. Furthermore, inflexible procedures can facilitate technical challenges to completed tenders on the basis of a procedural error that did not lead to any lessening of competition or any breach of Treaty principles. Challenges of this nature decrease the efficiency of public spending and are inconsistent with the objective of legislating for procurement outcomes, as outlined at Principle 2. We would therefore be in favour of allowing contracting authorities flexibility to conduct negotiations with individual bidders during a tender competition, insofar as the overall fairness of the process is not comprised. This approach would be in line with the Principle 2 - that the Directives should legislate for outcomes more than procedures and therefore allow some flexibility. 18. On the basis of your experience with the use of the accelerated procedure in 2009 and 2010, would you advocate a generalisation of this possibility of shortening the deadlines under certain circumstances? Would this be possible in your view without jeopardizing the quality of offers? Yes. We would support making the accelerated procedure more widely available for major public projects. In our experience, the number and quality of offers presented in a tender using the procedure during 2009/10 were not negatively impacted by the tighter timescales involved. More negotiation 19. Would you be in favour of allowing more negotiation in public procurement procedures and/or generalizing the use of the negotiated procedure with prior publication? Yes. See our response to question 21 below.

11 In the latter case, do you think that this possibility should be allowed for all types of contracts/all types of contracting authorities, or only under certain conditions? See our response to question 21 below. 21. Do you share the view that a generalised use of the negotiated procedure might entail certain risks of abuse/ discrimination? In addition to the safeguards already provided for in the Directives for the negotiated procedure, would additional safeguards for transparency and non-discrimination be necessary in order to compensate for the higher level of discretion? If so, what could such additional safeguards be? We are in favour of allowing increased use of the negotiated procedure in public procurement, on the basis that the Directives should focus on outcomes and allow for some flexibility, as outlined at Principle 2 above. More specifically, this possibility should be allowed for complex contracts where the existing procedures are most likely to prove burdensome, inefficient, and expensive in practice. We believe that application of Treaty principles can ensure that tender processes are conducted fairly under the negotiated procedure. Commercial goods and services 22. Do you think that it would be appropriate to provide simplified procedures for the purchase of commercial goods and services? If so, which forms of simplification would you propose? Yes. We would be in favour of providing for a simplified procedure for the purchase of commercial goods and services because these contracts can be precisely defined and therefore offers can be easily compared. On the basis that the Directives should be as clear and simple as possible, as noted at Principle 3 above, any new approach must not make the Directives more difficult to interpret or apply. In particular, an unambiguous definition of commercial goods and services would be required. In terms of the form of simplification, we would be in favour of shortening the mandatory time periods that apply to these tenders. This approach would be appropriate on the basis that the time limit set for the receipt of tenders under Article 28 of Directive 2004/18 must consider the complexity of the contract. Selection and award 23. Would you be in favour of a more flexible approach to the organisation and sequence of the examination of selection and award criteria as part of the procurement procedure? If so, do you think that it should be possible to examine the award criteria before the selection criteria?

12 12 Yes. We would be in favour of allowing more flexibility to purchasers on the timing for evaluation of particular criteria. On the basis that the policy objective is separate consideration of two matters, we see no reason why the selection and award criteria need be considered in a particular order. In this respect, we refer to Principle 2 above - that the Directives should legislate for outcomes more than procedures and therefore allow some flexibility. The current lack of flexibility can increase the costs of participating in a tender process. More specifically, it can be burdensome for a bidder in a market where there are frequent tenders to have to supply extensive information at a stage when it may not have a realistic prospect of being short-listed. 24. Do you consider that it could be justified in exceptional cases to allow contracting authorities to take into account criteria pertaining to the tenderer himself in the award phase? If so, in which cases, and which additional safeguards would in your view be needed to guarantee the fairness and objectivity of the award decision in such a system? Yes. We consider that it should be possible to take account of characteristics of a tenderer (e.g. his CV) at the award stage where: (i) previous experience and qualifications are important for a contact, and (ii) the contracting authority can provide justifiable reasons for any weighting given to such a criterion. We do not believe that introduction of this measure of flexibility would require any additional safeguards. General principles would provide the necessary framework to assess any claim of procedural unfairness arising from the procurer s consideration of the characteristics of a tenderer. Taking past performance into account 25. Do you think the Directive should explicitly allow previous experience with one or several bidders to be taken into account? If yes, what safeguards would be needed to prevent discriminatory practices? Yes. In our view, it should be expressly permitted for details of past performance (e.g. performance on time and expertise shown during contracts with the contracting authority or other contractors) to be taken into account as part of the award criteria. It is, in our view, artificial to expect procurers to disregard information on actual performance of a tenderer. We do not see any issue of incumbency advantage in taking account of previous experience with a bidder. Although an incumbent will have insight into the details of the contract, his standard of prior performance is a separate point, which may or may not be advantageous on the facts. As regards the safeguards that would be advisable, alongside reliance on Treaty principles, we would support requiring contracting authorities to have justifiable reasons for any weighting afforded for past performance. This approach would further the

13 13 objective of streamlining the Directives with Treaty principles, as described at Principle 4 above. Specific tools for utilities 26. Do you consider that specific rules are needed for procurement by utilities operators? Do the different rules applying to utilities operators and public undertakings adequately recognise the specific character of utilities procurement? Yes. Given that utilities may operate in liberalised markets that are becoming competitive, we are in favour of providing them with a more flexible procurement regime that allows for free choice of the negotiated procedure, in addition to the options of using qualification systems and periodic indicative notices. Flexibility is required to enable utilities to procure in as efficient and inexpensive a manner as possible, while complying with Treaty principles. Small contracting authorities 27. Do you think that the full public procurement regime is appropriate or by contrast unsuitable for the needs of smaller contracting authorities? Please explain your answer. See our response to question 28 below. 28. If so, would you be in favour of a simplified procurement regime for relatively small contract awards by local and regional authorities? What should be the characteristics of such a simplified regime in your view? We are in favour of simplification of the public procurement rules as a whole, as outlined in Principle 3. The complexity of the current rules does cause issues for smaller contracting authorities who may not have the time and resources to invest, but to the extent that the system can be improved, simplified rules should be made available to all, on the basis that difficulties faced by smaller authorities are equally relevant to large contracting authorities. As outlined in our response to question 19 above, we would in particular recommend lightening the procedural requirements for all contracting authorities by allowing more discretion to use the negotiated procedure. Awards below the thresholds 29. Do you think that the case-law of the Court of Justice as explained in the Commission Interpretative Communication provides sufficient legal certainty for the award of contracts below the thresholds of the Directives? Or would you consider that additional guidance, for instance on the indications of a possible

14 14 cross-border interest, or any other EU initiative, might be needed? On which points would you deem this relevant or necessary? We would support further elaboration of the criterion of cross-border interest in the Commission s Interpretative Communication. 11 In particular, we would recommend including the following: (i) guidance on the degree of certainty required in respect of the likelihood of cross-border interest ( may be of interest / certain interest ), (ii) contract value thresholds below which the Commission applies a presumption of no cross-border interest, (iii) a list of factors which may cause disapplication of the foregoing presumption (e.g. proximity of contract location to a state border), and (iv) more detailed guidance on what, in the view of the Commission, constitutes sufficient advertising where cross-border interest applies. Public-public co-operation 30. Do you consider it useful to establish legislative rules at EU level regarding the scope and criteria for public-public cooperation? See our response to question 33 below. 31. Would you agree that a concept with certain common criteria for exempted forms of public-public cooperation should be developed? What would in your view be the important elements of such a concept? See our response to question 33 below. 32. Or would you prefer specific rules for different forms of cooperation, following the case-law of the ECJ (e.g. in-house and horizontal cooperation)? If so, please explain why and which rules they should be. See our response to question 33 below. 33. Should EU rules also cover transfers of competences? Please explain the reasons why. We would be in favour of introducing legislative provisions on the scope for public-public cooperation outside of the Directives. The case law of the Court of Justice 12 has elaborated the different forms of public-public cooperation that are not covered by the Directives. In accordance with Principle 5, that guidance on the Commission s interpretation of relevant case law should be included in the Directives, further guidance should be provided on this issue. 11 Brussels, , COM. 12 See e.g. Teckal, case C0107/98; Coditel, case C324/07; and Sea Srl. v. Comune di Ponte Nossa, case C-573/07.

15 15 We would support inclusion of a common criteria for all potential forms of public-public cooperation outside of the Directives, including in-house transfers and transfers of competence, drawing on the principles developed by case law (e.g. no private capital, not market orientated, not a commercial relationship). In addition, the Directives should provide guidance on (i) what level of control over the transferee body is required, and (ii) how complete a transfer of responsibility must be in order for a transfer of competence to be deemed equivalent to an in-house transfer. In our experience there is currently some confusion over these issues. Joint procurement 34. In general, are you in favour of a stronger aggregation of demand/more joint procurement? What are the benefits and/or drawbacks in your view? We are broadly in favour of joint procurement of contracts in competitive markets due to the cost savings that are likely to arise from aggregation of demand. In our view, the tools that are currently available (central purchasing bodies and framework contracts) adequately provide for joint procurement, although it might be helpful for there to be more general guidance on how these existing mechanisms can be used. We would therefore question whether additional EU level principles to encourage joint procurement are necessary. 35. Are there in your view obstacles to an efficient aggregation of demand/joint procurement? Do you think that the instruments that these Directives provide for aggregating demand (central purchasing bodies, framework contracts) work well and are sufficient? If not, how should these instruments be modified? What other instruments or provision would be necessary in your view? No. We think that the current procedures adequately provide for joint procurement, as stated in our response to question 34 above. 36. Do you think that a stronger aggregation of demand/ joint procurement might involve certain risks in terms of restricting competition and hampering access to public contracts by SMEs? If so, how could possible risks be mitigated? No. 37. Do you think that joint public procurement would suit some specific product areas more than others? If yes, please specify some of these areas and the reasons. 38. Do you see specific problems for cross border joint procurement (e.g. in terms of applicable legislation and review procedures)? Specifically, do you think that your national law would allow a contracting authority to be subjected to a review procedure in another Member State?

16 16 We are not aware of any specific problems in respect of cross border joint procurement. Contract execution / changes in contractor / sub-contracting 39. Should the public procurement Directives regulate the issue of substantial modifications of a contract while it is still in force? If so, what elements of clarification would you propose? In accordance with Principle 5, the key findings of case law on the issue of substantial modifications of a contract while it is still in force should be codified in the Directives. Specifically, we would favour codification of the principle elaborated in the Pressetexte 13 decision that material amendments will give rise to a new contract. In this respect, we would support inclusion of the three situations given by the Court in Pressetexte as part of a definition of material changes, namely where the amendment (i) would have allowed for the participation or the success of other tenderers, (ii) extends the scope of the contract to include new services, or (iii) changes the economic balance in a way not provided for by the contract. In light of the finding of the Court of Justice in Wall 14 that a change of sub-contractor may be material in exceptional circumstances, notwithstanding the fact that such a change was envisaged by the contract in question, it would be helpful to have additional guidance on the Commission s interpretation of this principle. For further discussion of this issue, see our response to question 41 below. 40. Where a new competitive procedure has to be organised following an amendment of one or more essential conditions would the application of a more flexible procedure be justified? What procedure might this be? Yes. We would support the making of provision for a simplified post-amendment procedure whereby it would be possible (i) to re-open competition only to the tenderers that participated in the original procedure, and (ii) to use the negotiated procedure to conduct discussions with these tenderers. There may be a case for restricting the availability of this simplified procedure to changes in a contract that take place within a relatively short time from award of the original contract (when it is unlikely that there have been material changes to the market position). 41. Do you think that EU rules on changes in the context of the contract execution would have an added value? If so, what would be the added value of EU-level rules? In particular, should the EU rules make provision for the explicit obligation 13 Pressetext Nachrichtenagentur GmbH v Republik Österreich, Case C-454/ Wall AG v City of Frankfurt, Case C-91/08.

17 17 or right of contracting authorities to change the supplier/ terminate the contract in certain circumstances? If so, in which circumstances? Should the EU also lay down specific procedures on how the new supplier must/ may be chosen? We would like the Directives to provide clear guidance on contracting authorities rights in respect of changes in a supplier or subcontractor. Currently there is some uncertainty on this issue because, as outlined in our response to question 39 above, case law has held that exceptionally a change of subcontractor may be considered a material amendment to the contract that would require it to be re-opened, but has not clearly defined the nature of an exceptional situation. 15 The Directives should not in our view be concerned with the price and other terms of a contract. The identity of the supplier will not be relevant to the decision to award a contract except in the most limited circumstances. In particular, the Directives should expressly state that substitution of a new supplier or subcontractor does not lead to a material change where substitution in the relevant circumstances has been provided for in the contract. In our view, there should also only be an extremely limited number of cases (e.g. bankruptcy) where an authority can re-open competition based on a change in the status (rather than the identity) of the chosen supplier. We are not in favour of there being a broader right under the Directives to re-open competition, for example, where there are changes in the personnel of the chosen supplier. It is of course open to the contracting authority to make provision for this in the terms of the contract if this is a concern on the facts of a particular case. In the case of bankruptcy, and possibly other cases where the contract unexpectedly terminates before it has been fully performed, we are in favour of providing authorities with the option of appointing a new contractor by either (i) commencing a negotiated procedure with the tenderers from the initial process only, or (ii) automatically offering of the contract to the second best applicant from the original process. 42. Do you agree that the EU public procurement Directives should require Member States to provide in their national law for a right to cancel contracts that have been awarded in breach of public procurement law? No. In our view it would be overly complicated, and in any event unnecessary, for the Directives to regulate national remedies. 43. Do you think that certain aspects of the contract execution and which aspects - should be regulated at EU level? Please explain. 15 Wall AG v City of Frankfurt, Case C-91/08.

18 18 No. We do not believe that tenderers have encountered a sufficient level of difficulty in following national procedural requirements to justify EU level regulation of contract execution standards. 44. Do you think that contracting authorities should have more possibilities to exert influence on subcontracting by the successful tenderer? If yes, which instruments would you propose? No. As we explained in our response to question 41 above, the Directives should only be concerned with the identity of the supplier in exceptional circumstances and therefore the permissibility of restrictions on sub-contracting should not be addressed at EU level.

19 19 Section 3: A More Accessible European Procurement Market 45. Do you think that the current Directives allow economic operators to avail themselves fully of procurement opportunities within the Internal Market? If not: Which provisions do you consider are not properly adapted to the needs of economic operators and why? We see the greatest obstacle within the public procurement regime to economic operators availing themselves fully of procurement opportunities within the Internal Market as being the current lack of alignment between the Directives and the principles described at 2.3 above, which results in participation in procurement being costly and time-consuming. As explained in our answer to question 46 below, we do not think that the Directives are less accommodating to any particular category of economic operator. Better access for SMEs 46. Do you think that the EU public procurement rules and policy are already sufficiently SME-friendly? Or, alternatively, do you think that certain rules of the Directive should be reviewed or additional measures be introduced to foster SME participation in public procurement? Please explain your choice. We believe that the public procurement regime can accommodate SMEs equally as well as any other category of tenderer. We think that the current regime is sufficient because the Commission s Code of Best Practices 16 provides comprehensive guidance on the flexibility needed from contracting authorities, and sufficient structures to implement the required degree of flexibility are available under the Directives (e.g. joint bids, division into lots). Whilst we agree that contracting authorities should be encouraged to have regard to the impact of a tender specification on SMEs, we do not see any justification for special treatment of SMEs under the Directives. If there is scope to increase flexibility in the Directives, it should be allowed to all economic operators. Furthermore, including SME-specific options for contracting authorities would hold a danger of increasing the complexity and rigidity the Directives, an approach that would conflict with Principle 2 and Principle Would you be of the opinion that some of the measures set out in the Code of Best Practices should be made compulsory for contracting authorities, such as subdivision into lots (subject to certain caveats)? 16 SEC(2008) 2193, dated 25 June 2008.

20 20 No. We think that this approach would unduly restrict the freedom of contracting authorities. 48. Do you think that the rules relating to the choice of the bidder entail disproportionate administrative burdens for SMEs? If so, how could these rules be alleviated without jeopardizing guarantees for transparency, nondiscrimination and high-quality implementation of contracts? As described in our response to question 46, if any flexibility is to be allowed in respect of the administrative burden of participating in a tender, it should be offered to all economic operators. 49. Would you be in favour of a solution which would require submission and verification of evidence only by short-listed candidates/ the winning bidder? See our response to question 50 below. 50. Do you think that self-declarations are an appropriate way to alleviate administrative burdens with regard to evidence for selection criteria, or are they not reliable enough to replace certificates? On which issues could selfdeclarations be useful (particularly facts in the sphere of the undertaking itself) and on which not? We do not see the administrative burden of providing evidence for selection criteria as a SME-specific issue. Any new and more flexible approach in this respect should therefore be allowed to all economic operators. Insofar as the flexibility is offered to all bidders, we would be in favour of the Directives permitting self-declarations of the selection criteria at the first stage, with verification evidence only being requested from short-listed bidders. This approach could make procurement processes more efficient, by saving a significant amount of time and effort that is currently wasted by unsuccessful tenderers, as described in our response to question 23 above. 51. Do you agree that excessively strict turnover requirements for proving financial capacity are problematic for SMEs? Should EU legislation set a maximum ratio to ensure the proportionality of selection criteria (for instance: maximum turnover required may not exceed a certain multiple of the contract value)? Would you propose other instruments to ensure that selection criteria are proportionate to the value and the subject-matter of the contract? No. Excessively strict requirements for proving financial capacity can be problematic for all economic operators. We would not support codification of a maximum ratio in respect of the financial standing requirements as this would unduly restrict the freedom of contracting authorities.

21 21 We would not be in favour of introducing measures to ensure that selection criteria are proportionate to the value and the subject-matter of a tender. Such an approach would be likely to increase the complexity and rigidity the Directives, in conflict with Principle 2 and Principle What are the advantages and disadvantages of an option for Member States to allow or to require their contracting authorities to oblige the successful tenderer to subcontract a certain share of the main contract to third parties? We think that it would unduly restrict the freedom of contracting authorities to allow Member States to require that a certain percentage value of their awarded contracts be subcontracted to third parties. In practice, such a prescriptive approach might be likely to restrict, rather than enhance, the level of competition generated for tenders. Potential bidders for a main contract might be discouraged from participating by the additional burden of finding a potential subcontractor at the start of a tender process, when the bidder might not even be shortlisted for the tender. This outcome would conflict with Principle 1 for modernisation of the Directives. 53. Do you agree that public procurement can have an important impact on market structures and that procurers should, where possible, seek to adjust their procurement strategies in order to combat anti-competitive market structures? We agree that public procurement can have an important impact on market structures and that procurers should be made aware of the risk of consolidating oligopolistic structures through their procurement decisions. However, we think that it is outside of the scope of the Directives, as described at Principle 1 above, directly to challenge market structures. Community-wide awareness of the relevant risk can be achieved through publication of guidance documents. Ensuring fair and effective competition 54. Do you think that European public procurement rules and policy should provide for (optional) instruments to encourage such pro-competitive procurement strategies? If so, which instruments would you suggest? No. See our response to question 59 below. 55. In this context, do you think more specific instruments or initiatives are needed to encourage the participation of bidders from other Member States? If so, please describe them. No. See our response to question 59 below. 56. Do you think the mutual recognition of certificates needs to be improved? Would you be in favour of creating a Europe-wide pre-qualification system?