Modernisation of EU Public Procurement Policy - Consultation Response April 2011

Transcription

1 Modernisation of EU Public Procurement Policy - Consultation Response April 2011

2 WLGA response to the GREEN PAPER on the Modernisation of EU Public Procurement Policy - Towards a more efficient European Procurement Market. Introduction The Welsh Local Government Association (WLGA) represents the 22 local authorities in Wales, and the three national park authorities, the three fire and rescue authorities, and four police authorities are associate members. It seeks to provide representation to local authorities within an emerging policy framework that satisfies the key priorities of our members and delivers a broad range of services that add value to Welsh Local Government and the communities they serve. This response has been developed through internal WLGA consultation and discussion with key stakeholders including members of the Welsh Local Government Procurement Officers network. This paper presents the context for Welsh Local Government in terms of the LG Group s response to the GREEN PAPER on the modernisation of EU public procurement policy - Towards a more efficient European Procurement Market. General Context for Wales There is a growing pressure on the supply chain to address the ever broadening requirements of the public sector in attempting to support the achievement of a continuingly diverse array of policy objectives. This adds complication and burden to the procurement exercise. Additionally it leads to over complication to the prequalification process and an unnecessary burden on both the public bodies and supply sides of the procurement equation. Simplification of the prequalification requirements has been an ongoing improvement focus in Wales because of its high proportion of SME s (98%) and very positive work has been undertaken in improving this area. As indicated above, the supplier base in Wales is predominantly SME s, and the suggestion of a passport scheme, whilst laudable, must take account of the relationships developed between the public sector and the supply chains and not undermine the credibility of existing schemes. The public sector in Wales has already engaged in development of a Supplier Qualification Information Database, (SQUID) aimed at improving the prequalification process. The development of SQUID will provide a simplified and standardised set of questions to be used as the basis for prequalification, which will be accessed via a supplier database on the Sell2Wales website. It is important to recognise the variety within the supply markets at various levels. Global International companies and local SMEs are at the extremes of the market but are often being drawn into competing for the same work as a result of inflexible public procurement practices. Developments in ICT, toward e-trading and the use of web portals, may improve processes and access and extend opportunities to an international audience which were previously the foundation of SME business. This, together with the pressure to achieve efficiencies via economies of scale and the aggregation of contracts through large scale frameworks, may also lead towards the disadvantaging of certain supply sectors. Page 1.

3 It may be argued that rather than the procurement rules opening the market up, a combination of the rules, global financial pressures, and the use of ICT, are working to unbalance the equity in the market against the SME. For a number of regions across the EU where the SME supply base comprises a substantial percentage of the market this could have a detrimental effect upon their future economic growth and the stability of their communities. The basic principles underlying the EU Competition Directives and the Treaty on the Functioning of the EU (the Treaty) are toward the development of a single market through adherence to the principles of equity, transparency and non-discrimination. In furtherance with this the WLGA proposes that the focus of the review of the Directives should move away from driving process compliance towards stimulating supply market growth regionally and encouraging more proportionately layered cross boarder trading by extending the principle establish by Article 19 of reserving certain contracts, to apply to SMEs and that a set of simple criteria and guidance be established for its application. Background The EU published a Green Paper on 27 January 2011 seeking views on modernising EU public procurement policy. The consultation will close on 18 April The LG Group have formulated a response to Government s feedback request on the modernisation of EU Public Procurement Directives 2004/18/EC and 2004/17/EC as outlined in OGC Public Procurement Policy Note 21/10 of 6 December A recent LGA survey collated responses from 141 council procurement managers across England and Wales. This, together with findings from previous consultations, highlighted both specific aspects of Directive 2004/18 which are particularly difficult or costly to implement, and opportunities for improvement to the existing legislative framework. The issues addressed in this paper are consistent with the findings, observations and analysis of these previous exercises. The WLGA endorses the response of the LG Group and offers this paper to reiterate and reinforce a number of previously identified issues and highlight some matters of specific context to Wales, and which may be reflected in other EU regions of a similar footprint. Response The following response mirrors the format of the LG Group s main 8 issues: 1. Cost and Efficiency There needs to be greater proportionality on the application of the rules between the level at which real benefits of more open competition accrue, against the burden placed both on the public bodies and supply markets in complying with the requirements. The WLGA agrees with the recommendation expressed by the LG Group of: EU procedural and administrative requirements, particularly detailed award procedures, must be reduced by simplifying the Directive and increasing flexibility for local authorities. The focus at EU level should be to ensure the Treaty principles of equality, transparency and non-discrimination are respected, but not going beyond this with detailed procedural requirements, timescales etc. Page 2.

4 However in achieving this objective the focus should move away from driving process compliance firmly toward stimulating supply market growth regionally and encouraging more proportionately layered cross boarder trading. Consideration should also be given to stimulating growth and competition in the SME market, without creating additional burden. 2. Public-Public Co-operation The potential to collaborate and share services is a fundamental facet for consideration in the progression of the efficiency agenda across Wales as in other Regions of the UK and beyond. Whilst the benefits of achieving a critical mass to release efficiencies may be evident in many cases, collaborations across autonomous bodies can be complex in themselves. Despite recent European Court of Justice Rulings clarity is still needed to exclude such collaborations from the scope of the Directives. 3. Thresholds There is general recognition that the current threshold levels are not proportionate to the higher level at which benefits of more open competition accrue, as compared to the burden placed both on the public bodies and supply markets in complying with the requirements. The basic principles underlying the EU Competition Directives and the Treaty are toward the development of a single market and those of equity, transparency and non-discrimination. These principles can and should be applied to provide a flexible framework at all levels. However it is important to recognise the large diversity within the supply markets. Global international companies, and local small, medium and micro enterprises, including third sector organisation (SMEs), are at the extremes ends of this market and should not be in a position of having to compete against each other to survive in these harsh economic times. The opportunity for SMEs to compete in the global market in order to encourage growth and development should not be underestimated. However their potential competitive edge around flexibility, innovation and specialised focus, is often undermined by the highly objective and mechanistic approaches associated with risk averse public bodies attempts at equitable and transparent evaluation. As already highlighted in previous studies, the extent to which a country awards contracts to companies based abroad is largely related to the size of the country and more precisely the size of its internal market. Thus, in countries such as Malta, Luxemburg or Ireland, the proportion of contracts awarded to foreign based companies reaches 14% to 18%, while in large countries, France, Spain or Poland for example, this proportion is less than 1%. 1 Developments in ICT, toward e-trading and the use of web portals may improve processes and access but can also open opportunities to an international audience which were previously the foundation of SME business. Irrespective of the EU thresholds, this, together with the pressure to achieve efficiencies via economies of 1 GHK Evaluation Of SMEs Access To Public Procurement Markets In The EU - Dg Enterprise And Industry. Final Report. September 2010.( Page 3.

5 scale and the aggregation of contracts through large scale frameworks, may also lead towards the disadvantaging of certain supply sectors. It may be argued that rather than the procurement rules opening the market up, a combination of the rules, global financial pressures, and wider advertising through the use of ICT, are working to unbalance the equity in the market against the SME sector. For a number of regions across the EU where the SME supply base is a substantial percentage of the market this could have a detrimental effect upon their future economic growth and the stability of their communities. Raising thresholds will open a wider bandwidth which is not subject to the Competition directive. However this may equally reduce the band of opportunity to SME s growth and development in the wider market. The EU already recognises the need for specific support in development and regeneration through, for example, its designation of areas to receive Convergence Funding. Arguably interpretation of the current procurement principles and rules may work perversely in such areas particularly where the supply base is proportionately high in SMEs. In such cases additional flexibilities in the Directives should be considered which will support markets at all levels. Consideration should be given to the extending the principle establish by Article 19 of reserving certain contracts, to apply to SMEs and a set of simple criteria and guidance established for its application. 4. Award Procedures The WLGA agrees with the recommendation set out in the LG Group response in respect of award procedures in that; The revision should consider how to reduce costs and timescales involved in all award processes by simplifying or removing award procedure requirements, and introducing a greater ability to freely negotiate contracts. This may require replacing current award procedures with a new srandard negotiated procedure. Public procurement laws need to be enforced equally across member states. 5. Procurement as a Policy Tool The role of Local Authorities in promoting Community Leadership and their duties associated with social, economic and environmental wellbeing, should be recognised in the parallels across broader EU objectives, particularly in respect of sustainable development, and that delivery of these objectives is inherently linked to procurement outcomes. In these circumstances clarity on the best practice solution should be provided to ensure implementation through sustainable procurement is as simple as possible and becomes the norm rather than the exception. Page 4.

6 Case Study 2 : One Welsh local authority road project targeted the achievement of substantial sustainable development benefits through the delivery of scheme by integrating them early in the procurement. These objectives include: Creation of 70 posts and training to a minimum standard of NVQ 2. Creation of 3 jobs targeted toward the employment of prolific offenders (working in partnership with Community Safety Partnership, the probation services and the Prison Service). Facilitate New Start of at least 2 new businesses in the area. Achieve a target of 75% of all subcontracts awarded to local companies in Wales and 75% of supplies sources locally (and to develop and improve those companies through the establishment of a Church Village Business Club). Subcontract opportunities to be advertised on Buy 4 Wales as a pilot with meet the buyer events planned. Provide work experience to 15 pupils sourced from local secondary schools. Provide 100 days of support for the Safety Zone a partnership to provide construction site safety training to 1000s of school children. Work via the Education Business Partnership providing input to the World of Work programme and work with local school to establish an education zone within the visitor centre. This will have interactive displays showing how the team are working hard to minimise their impacts on the local environment, ecology and geology. Eliminate Off-Site disposal of surplus inert material excavated from the work. This includes the re-use of over 500,000 tyres along the route of the site and the resue of 250,000m 3 of earthworks on the site. Achieve CEEQUAL (the environmental standard for road schemes) excellent rating. Segregation of any waste and recycling to approved sources A waste measurement tool to measure the carbon footprint on the scheme and utilisation of state of the art energy efficiency facilities at their site offices. Use Recycled content in materials at a minimum of 50% for the scheme (actual 65% of materials delivered are recycled). Achieve an offsite skip waste disposal of only 1 skip per 1m or project expenditure. The inclusion of matters relating to community social, economic and environmental wellbeing in any sustainable procurement exercise should 2 Community Benefits Delivering Maximum Value for the Welsh Pound Welsh Assembly Government Page 5.

7 however be pertinent to the specific circumstances and therefore remain discretionary. 6. Service Concessions The WLGA agrees with the recommendation set out in the LG Group response in respect of service concessions, in that; There is no need for any new EU regulation governing service concessions. If there must be EU proposals on service concessions should continue to exclude such arrangements from EU award procedures, and should not go beyond a basic prior advertising requirement to ensure transparency. Concessions should be considered as part of the review of Directive 2004/18 and not as a separate directive which would add further to the complex legal framework governing public procurement. 7. Procurement Expertise and Access to Guidance The findings of the LG Group are supported by a recent exercise undertaken in Wales which found: The capability self-assessment exercise conducted in July clearly shows disparity between organisations. 3 An emphasis in Wales is toward consistent modern processes and the development of e-procurement. The XchangeWales project seeks, through the use of ICT, to create more accessibility and transparency, reducing the burden to both procurer and supplier, and freeing up increasingly limited resources. The WLGA therefore agrees with the recommendation set out in the LG Group response in that: Guidance is needed on specific areas and capacity building is necessary. The EU should set up and promote tools for structured knowledge sharing, training and for the promotion of models of good practice. 8. Remedies Directive (not part of the EU s review) Accepting the purpose of the Remedies Directive it is apparent that in some more risk averse public sector organisations it has driven a conservative approach to collaboration and the implementation of highly mechanistic processes, which are not conducive to efficient delivery or supply chain relationships. In Wales conflicting legal interpretation in respect of the Remedies Directive has led to local authorities weighing the risk of challenge in collaborative and consortium arrangements heavily against the achievement of potential benefits, resulting in a failure to engage. Clarity on the interpretation and application of the Remedies Directive should be considered, and consistency provided with any related simplification of the directives. 3 Buying Smarter in Tougher Times - Conclusions and Recommendations of the EIB Procurement Taskforce - February 2011 Page 6.

8 For further information please contact: Paul Charkiw Head of Efficiency & Procurement Welsh Local Government Association Drake Walk Cardiff CF10 4LG Tel: (029) Page 7.