CIPS WebEx: Hot Topics in Public Procurement. Graeme Young Partner and Head of EU & Competition Thursday, 25 April 2013

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1 CIPS WebEx: Hot Topics in Public Procurement Graeme Young Partner and Head of EU & Competition Thursday, 25 April 2013

2 Top 10 hot topics 1) EU Procurement Reform Package 2) Automatic suspension / remedies 3) Disclosure of evaluation criteria 4) Clarity of evaluation criteria 5) Debriefing requirements 6) Use of framework agreements 7) Contract variations 8) Shared services and Teckal 9) SME and third sector 10) Community benefits

3 1) EU Procurement Reform Package New Public Sector Directive: New Utilities Directive: New Concessions Directive: To be adopted later this year; transposed into national law sometime in 2015

4 2) Automatic suspension / remedies Pre-contract Usually 'standstill challenges' to set aside award decision Automatic suspension (Courts seem minded to lift suspension) Post-award Damages Ineffectiveness order / financial penalties Is procurement challenge risk exaggerated?

5 3) Disclosure of evaluation criteria Award criteria Must disclose (r.30) Weightings of award criteria Must disclose. If appropriate, may express as a range. Where not possible to provide weightings, must give descending order of importance (r.30) Sub-criteria No need to identify expressly as sub-criteria (Varney, para 52); factors in evaluation simply need to be sufficiently brought to the attention of the tenderers so as to satisfy the requirement of transparency (McLaughlin & Harvey, para 23) Weightings of sub-criteria Scoring methodology / model answers No requirement to disclose provided reasonably well-informed and diligent tenderer would have understood likely relative importance of specific factors (Varney, para 46 and McLaughlin & Harvey, para 23) No requirement to disclose unless they introduce new criteria, subcriteria and weightings (Mears, para. 122)

6 4) Clarity of evaluation criteria Healthcare At Home Ltd v The Common Services Agency [2013] Scot CS CSIH 22 The concept of the hypothetically reasonably well-informed and normally diligent tenderer Irish Waste Services Ltd v Northern Ireland Water Ltd & Ors [2013] NIQB 41 Transparency is key

7 Healthcare at Home (1) 'The test is then simply whether the criteria are sufficiently clear that the tenderers can all understand their scope, interpret them "in the same way" and respond accordingly. If the court considers that the manner in which a successful tenderer has responded was in accordance with what the reasonably informed tenderer would have understood from the formulation of the criteria, it will be difficult to argue that the criteria were not transparent. The fact that an unsuccessful tenderer, who may normally be reasonably wellinformed and act diligently, responded in a different way does not, per se, demonstrate that the criteria did not meet the required legal test. (para. 56)

8 Healthcare at Home (2) 'The court's decision will involve it placing itself in the position of the reasonably informed tenderer, looking at the matter objectively, rather than ( ) hearing evidence of what such a hypothetical person might think ( ) Evidence as to what the tenderers themselves thought the criteria required is, essentially, irrelevant' (para. 60) Contrast to: Clinton (t/a Oriel Training Services) v Department for Employment & Learning [2012] NIQB 2

9 Clinton (1) 'There is a discernible emphasis in the decided cases on the requirement that criteria be clearly defined: see, for example, Commission v- French Republic [2004] ECR I-9845, paragraph [34]. In Federal Securities, this court s review of the various authorities impelled to the conclusion that the test to be applied is the following: If the tenderers had known in advance of the relevant information, bearing on the award criteria or the proposed contract, might this have influenced the terms in which they formulated their tenders? ' (para. 30) 'It may be said that the overarching principle in play is the requirement that award criteria be so formulated as to allow all reasonably well informed and normally diligent tenderers to interpret them in the same way (Siac Construction)' (para. 31)

10 Clinton (2) 'The Siac test exhorts the court to attempt, so far as reasonably practicable, to occupy the shoes of the hypothetical tenderer. The test provides some insight into the characteristics and attributes of such a tenderer: well, but not necessarily fully, informed and usually careful and attentive, but not invariably a paragon of diligence. The incorporation of the adjectives reasonably and normally in the test convey the notion of a tenderer who may be vulnerable to a certain (though not excessive) degree of error, inattention and other human weakness. In other words, the Siac hypothetical tenderer is a terrestrial, rather than celestial, being, hailing from earth and not heaven. In its determination of this issue, I consider that the court should approach the matter not as an exercise in statutory construction or as one involving the interpretation of a deed or contract or other legal instrument. To adopt such an approach would not, in my view, be consonant with the Siac test. Rather, the court s attention must focus very much on the industry concerned, in which the professionals and practitioners are not lawyers.' (para. 38)

11 Irish Waste Services Two stage tender process Quality (scored) threshold followed by a price evaluation Not looking at quality and price together, therefore not MEAT? ' They must allow the level of performance offered by each tender to be assessed in the light of the object of the contract, as defined in the technical specifications, and the value of money for each tender to be measured' (recital 55 of Utilities Directive) 'There is nothing objectionable about a contracting authority setting minimum standards for quality which must be attained prior to an evaluation of the price of the bid' (para. 25)

12 5) Debriefing requirements Alcatel letters must include: the award criteria; the scores obtained by both the recipient and the successful bidder; the name of the successful bidder a summary of the reasons why the bidder was unsuccessful including the characteristics and relative advantages of the successful tender; and the date on which the standstill period will end. Minimum 10 day standstill period (where letters sent electronically)

13 Case T 447/10, Evropaïki Dynamiki 'obligation to state reasons ( ), whereby the reasoning followed by the authority which adopted the measure must be disclosed in a clear and unequivocal fashion so as, on the one hand, to enable the persons concerned to ascertain the reasons for the measure and thereby enable them to assert their rights and, on the other, to enable the Court to exercise its power of review'

14 Healthcare at Home 'Looking at the reasons as a whole, they were more than adequate to explain why BUPA had been successful and why their offer was considered to be comparatively better than that of the pursuers. In particular, they detailed, both in terms of numerical scoring and verbal commentary where BUPA had, albeit marginally, outshone the pursuers in terms of quality of service and deliverability' (para. 69)

15 6) Use of framework agreements Still very little case-law on use of framework agreements Considerations when using framework agreements: can I / should I be using them? follow proper procedures governing the award of call-off contracts understand potential risks

16 7) Contract variations Legal issues / risks Current position Pressetext case-law Distortion of competition for public contracts Future proposed position art. 72 of compromise text of new public sector Directive / art. 32 of compromise text on new concessions contracts Directive (and recitals)

17 8) Shared services and Teckal Authority Authority Control Services ( essential part ) Control Shared Service Organisation Private Sector Provider Services ( merely incidental ) Non-Participating Authority Private Sector Customer

18 9) SME and third sector Many ways lawfully to facilitate access to contract opportunities But must not discriminate in favour of SMEs / third sector providers / contractors Concept of 'an economic operator' Rules require authorities to: treat economic operators equally and without discrimination and act in a transparent and proportionate manner (reg. 4(3)) Award criteria must: use criteria linked to the subject matter of the contract to determine that an offer is the most economically advantageous (reg. 30(2))

19 10) Community benefits What are they? Can they be lawfully integrated through public procurement practices? Discriminatory / barrier to competing for contracts in other countries or other regions? Consider appropriateness when: Assessing needs and requirements (pre-procurement) PQQ stage (bidders) Award stage (bids) Contract performance conditions

20 Thank you Graeme Young Partner T: +44 (0) / +44 (0) E: graeme.young@dundas-wilson.com

21 CIPS WebEx: Hot Topics in Public Procurement Graeme Young Partner and Head of EU & Competition Thursday, 25 April 2013