Towards a more efficient European Procurement Market Response to European Commission Green Paper COM(2011) 15

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1 Towards a more efficient European Procurement Market Response to European Commission Green Paper COM(2011) April 2011 Introduction This is JANET(UK) s response to the European Green Paper on the modernisation of EU public procurement policy Towards a more efficient European Procurement Market. JANET(UK) is the operator of the JANET network that connects the UK s universities, colleges, research organisations and regional schools networks to each other, to research and education networks elsewhere in the world and to the public Internet. As a publicly-funded organisation JANET(UK) conducts procurement according to EU public procurement Directives as incorporated into UK procurement regulations, and therefore welcomes the opportunity to respond to the Green Paper. Questions or requests for further information relating to this response should be directed to: Sue Weston Sue.Weston@ja.net Head of Procurement post: Lumen House JANET(UK) Library Avenue Harwell Oxford Didcot Oxfordshire OX11 0SG United Kingdom General Points JANET(UK) believes that the overall aim of any modernisation of public procurement policy should be to ensure and improve good practice in procurement. The priority for public procurement policy should therefore be value for money, open and transparent competition and procurement efficiency. It is also important that the costs of procurement can be minimised wherever possible whilst meeting these priorities. Additional objectives such as environmental impact should be addressed elsewhere and not bundled into any changed procurement Directive. We believe that the existing procurement legislation is already over-complex and that any additional regulation should be avoided unless justified in terms of increasing procurement efficiency. By the nature of its business JANET(UK) is a widely recognised aggregator of demand in the procurements it undertakes. Therefore we would welcome any moves to make these aspects of public procurement easier to achieve. We believe that aggregation reduces the costs of procurement to both contracting authorities and to tenderers, whilst at the same time driving a more competitive market with more innovative products and pricing. We purchase below-threshold goods and services via framework agreements where possible and would not welcome further regulation for below-threshold purchases. We have ourselves established a number of framework agreements for core business needs and has scoped these to include other relevant contracting authorities to which we provide services. These frameworks are welcomed by other contracting authorities as reducing the costs of procurement so they would therefore also not welcome additional regulation. Page 1 of 5

2 JANET(UK) is responding in detail to only a subset of the specific questions asked in the consultation, where it has a particular view to express. Public contracts 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? We believe the thresholds under which the procurement regulations apply should be reviewed upwards in order that the cost of running procurements is not excessive in comparison to the expected value of the subsequent contract. Modernise procedures 22. Do you think that it would be appropriate to provide simplified procedures for the purchase of commercial goods and services? If so, what forms of simplification would you propose? 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? We find that the current procedure of a two stage procurement works well. At selection stage we assess the capacity and suitability of the economic operator. At the contract award stage we examine the offer and chooses the best offer based on objective criteria relating to the quality of products and services proposed. Given the current economic environment, we would prefer to have the opportunity to retest the capacity and suitability of the economic operator at award stage especially using the criteria of economic and financial standing. 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? 25. Do you think the Directive should explicitly allow previous experience with one or several tenderers to be taken into account? If yes, what safeguards would be needed to prevent discriminatory practices? We would welcome the opportunity to take account of previous experiences that it has had with the performance of tenderers. If we were able to take this into account then this could provide useful pointers to the quality of the tenderer and its future work. We recognise that this could lead to unfair discrimination. One solution could be that formal records of the performance of a tenderer could be disclosed to the tenderer as part of normal contract management. This would be one way of ensuring that the records kept fairly reflect the performance of the tenderer, and that the tenderer has had the opportunity to address poor performance in those contracts. Public-public cooperation 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 would be the important elements of such a concept? Page 2 of 5

3 We believe that public-public cooperation is a key means of reducing procurement costs (for contracting authorities and for tenderers), of producing higher-quality outcomes (via sharing of expertise), and of reducing subsequent contract management costs. We believe this also extends to the use of special-purpose vehicles set up and controlled by two or more contracting authorities as a means of effecting these types of cooperation. We believe also that procurement regulations should explicitly recognise these types of activity and should not produce any barriers to their implementation, for example by requiring one contracting authority to regard another as an economic operator competing with the rest of the market when the latter has already procured under the regulations services that can be shared with other contracting authorities. 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. Although we would not in general welcome specific rules as these are likely to lead to inflexibility and stifle innovative procurement, we nevertheless believe that the Teckal case law that has now been built up at European and national level needs to become part of procurement regulations. Broadly, we believe that Teckal case law provides a reasonable framework for regulating public-public cooperation via a special-purpose vehicle, albeit a degree more flexibility would be welcome as to what the vehicle might do provided it is in the interests of its publicly funded owners. But it is now so widely relied upon that it should not remain as case law alone. And it also needs to be recognised that cooperation between contracting authorities where one authority acts on behalf of others will not fit into the controlling interest test of Teckal. This needs to be allowed for in any regulation. Appropriate tools for aggregation of demand/joint procurement 34. In general are you in favour of a stronger aggregation of demand/more joint procurement? What are the benefits and drawbacks in your view? We are strongly in favour of demand aggregation. We believe that apart from reducing procurement costs for contracting authorities and tenderers, it also drives a more competitive market by allowing tenderers to put forward solutions that can be reused, rather than designing and delivering many bespoke solutions. We see no significant drawbacks. 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? Broadly, we find the existing Directives sufficient. However, we would also welcome a means of updating the list of suppliers in the framework agreements it uses and lets, during the period of the framework. This should include the possibility of adding one or more new suppliers if they have entered the market during this period, or of removing a supplier if it persistently and materially fails to perform in call-off contracts under the framework. We do not regard the Dynamic Purchasing procedure as adequate to achieving these aims. This might better be achieved by a mid-term refresh of the framework, or similar. Page 3 of 5

4 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 minimised? There are clearly a risk of restricting ongoing competition should aggregation become so extensive that a single winner of a contract becomes in effect a monopoly supplier. We believe that it is the responsibility of the contracting authorise concerned to mitigate these risks, for example by letting contracts to more than one supplier to ensure some competition remains in effect, and by avoiding lengthy contract periods. There will always be a balance between such measures and the need to obtain the best pricing, but these must be managed on a case-by-case basis and not be EU-level regulation. There is also a risk of hampering access by SMEs, but this must be managed by contracting authorities in the same manner. It can be argued that aggregation assists SMEs as it reduces the costs of having to provide multiple tenders, and this can be put into best practice by procurement regulations that minimise the administrative burden of tendering. Some of our comments in the rest of this response indicate areas where this might be done. Address concerns relating to contract execution 39. Should the public procurement Directives regulate the issue of substantial modifications of a contract whilst it is still in force? Is so, what elements of clarification would you propose? We would welcome a clarification to set out the conditions under which a modification of the contract requires a new tender procedure and the consequence of such modifications. The main elements would be possibilities for extending a services contract in time or value due to changes in circumstances that could not reasonably be foreseen at the time of original tender, or which are otherwise outside the reasonable control of the contracting authority. Where a contract is running satisfactorily and the costs of change to another supplier would be substantial, there is arguably no public interest in incurring the costs of another procurement when it is unlikely that a change of supplier would result. 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? A more flexible procurement procedure for tendering any amended contract would also be welcome, where procurement action is required. This should recognise that the contracting authority is unlikely to award the contract to other than the incumbent unless there is a compelling economic reason to do so. A procedure that can quickly establish whether this is likely to be the case, and allow the amended contract to be awarded by negotiation with the small number of tenderers involved (and perhaps only the incumbent) might be appropriate. A full retendering process is unlikely to meet the aim of keeping costs to a minimum. 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? We would welcome the opportunity to exclude subcontracting completely or at least for essential parts of the contract if appropriate. Subcontracting should only be agreed as part of contract management. We would welcome the opportunity to oblige the tenderer to give indications on envisaged subcontracting in such a way that it could be taken into account as part of the selection and award processes. Page 4 of 5

5 Ensuring fair and effective competition 57. How would you propose to tackle the issue of language barriers? Do you take the view that contracting authorities should be obliged to draw up tender specifications for highvalue contracts in a second language or to accept tenders in foreign languages? In the course of our business we receive tenders from non UK suppliers. None has ever expressed any issues with receiving tender specifications in English, nor indicated that they wish to respond in a foreign language. We feel therefore that this would be unnecessary in the environment that we work in and would add costs to the procurement process. It seems unhelpful to make contracting authorities to write documents in a foreign language, and to receive responses in a foreign language and have the expense of translating the response. There is also an issue of subsequent contract performance. If a contractor is unable to deliver its tender accurately and comprehensibly in the native language of the contracting authority this would at least raise a question as to the likelihood of a successful ongoing relationship whilst the contract is being managed. Therefore the ability for a contracting authority to specify that tenders are delivered in a specified language is an important part of the selection process. How to buy in order to achieve the Europe 2020 objectives 69. What would you suggest as useful examples of technical competence or other selection criteria aimed at fostering the achievement of objectives such as protection of environment, promotion of social inclusion, improving accessibility for disabled people and enhancing innovation? We do not believe that these aims are appropriate to procurement regulation. Any attempt to use procurement regulation as a means of implementing social or other policies, other than the development of an open and competitive market, serve mainly to increase procurement cost, and can distort the market in favour of larger operators who are more resourced to respond to such requirements. We naturally encourage innovation, but that in our view is more likely to be encouraged by keeping the market open, particularly to SMEs. Avoiding unfair advantages 110. Do you think that the problem of possible advantages of incumbent tenderers needs to be addressed at EU level and, if so, how? We recognise this as a difficult subject and believes that it is unlikely that it can be addressed fairly at EU level. The circumstances pertaining to an incumbent tenderer will be specific to each re-tendering and must be dealt with on a case-by-case basis by contracting authorities. The principles of fairness and transparency already enshrined in the Directives provide sufficient guidance to contracting authorities in this task. Page 5 of 5