Modernisation of EU public procurement policy. Proposals for EU procurement Directives (replacing Directives 2004/18/EC and 2004/17/EC)

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1 Modernisation of EU public procurement policy Proposals for EU procurement Directives (replacing Directives 2004/18/EC and 2004/17/EC)

2 I. Results of preparatory works (Evaluation, Green Paper consultation, Impact Assessment) II. Objectives of the reform and concrete measures: 1. Simplification of procedures 2. Strategic use of public procurement 3. Better access (SMEs) 4. Sound procedures 5. Governance III. Discussion

3 Evaluation results (1) Low direct cross-border trade; significantly higher indirect cross-broder; higher import penetration in private sector: Potential for more cross border procurement Savings outweigh costs total costs 5.3 billion (EU and non-eu related costs) > less than 1.3% of total estimated spent above EU thresholds average savings typically % of contract value compared with the initial estimate Average cost per procedure scope for improving balance of costs and benefits particularly for small contracts?

4 Evaluation results (2) Divergences in application Significant discrepancies in efficiency amongst Member States importance of enhancing correct and smart application of the rules Costs (person-days) Best Worst Difference Authorities Firms Duration of procedure (authorities + firms) Duration of procurement procedures (dispatch of contract notice to the award) Average EEA 30: 108 days Very large differences between countries: days

5 100% Green Paper replies (1) Simplification 80% 60% 40% 20% 0% Increase thresholds Allow more negociation Simplify evidence for qualification of bidders Clarify public-public exemption Clarify rules on substantial modifications Member States Businesses Public authorities Civil society Average

6 100% Green Paper replies (2) Strategic use 80% 60% 40% 20% 0% Introducing "what to buy" obligations Abandoning link with subject-matter Specific regime for social services Promote innovation Specific problems for cross border joint procurement Member States Businesses Public authorities Civil society Average

7 Green Paper replies (3) - SMEs 100% 80% 60% 40% 20% 0% Mandatory division into lots Introduction of a turnover cap Member States Businesses Public authorities Civil society Average

8 Problems identified in the IA PROBLEMS RESULT Insufficient cost-efficiency of procurement Missed opportunities for society 1 2 The best value for money not achieved Internal Market is not achieving its full potential for public procurement National rather than EU public procurement market 3

9 Options considered* in the IA Problem groups No change options (NC) Soft law options (SOFT) Legislative generally within current framework Scope (SCO) SCO. NC SCO. SOFT SCO.LEGI.TARGET (clarify boundaries) Procedures (PRO) PRO. NC PRO. SOFT PRO.LEGI.DESIGN (improve definitions and design) Strategic (STR) STR. NC STR. SOFT STR.LEGI.FACILIT (facilitate strategic public procurement ) Access (ACC) ACC. NC ACC. SOFT ACC.LEGI.FACILIT (facilitate access) Governance (GOV) GOV. NC GOV. SOFT GOV.LEGI.TARGET (optimise the use of resources). Legislative new or significant change SCO.LEGI.REDUCE (significant re-scoping) PRO.LEGI.FLEXIB (increase choice, increase e-proc) STR.LEGI.ENFORC (enforce strategic public procurement) ACC.LEGI.ENFORC (enforce tools for access) GOV.LEGI.ENHANC (enhance control & responsibility) * preferred options marked in grey

10 Objectives for the reform 1. Simpler/ more flexible procedures 2. Strategic use 4. Sound procedures 3. Better access (SMEs, cross-border trade) 5. Governance / professionalization of procurement

11 1 st objective: Simplification More flexible procedures Step up e-procurement Cutting red tape

12 Simplification More flexible procedures General possibility to make use of a competitive tender procedure with negotiation (with appropriate safeguards) Art. 27

13 Simplification Step up e-procurement Mandatory full electronic availability of tender documents Art. 51 Procedures of CPBs fully electronic Art Fully electronic communication will become mandatory 2 years after transposition deadline Art Improve e-tools: simplification of DPS (Art. 32), more exhaustive rules on e-catalogues (Art. 34) and e- signatures (Art. 19.5) Empowerment for COM to adopt interoperability standards (Art. 19.3)

14 Simplification Cutting red tape Reduce documentation: self-declarations (Art. 57); European procurement passport (Art. 59), e-certis (Art. 58) Publication alleviations (PIN) for sub-central contracting authorities (Art. 46.2) General shortening of deadlines (Art ); deadlines in mutual agreement for sub-central contracting authorities (Art. 26.4, 27.1 in fine)

15 2 nd objective: Strategic use Ambitious, «enabling» approach No abandoning of link with the subject matter, but softening (production process, externalities Art. 66, 67) Facilitate handling of social and environmental requirements through labels (Art. 41) Violation of EU social and environmental standards as exclusion ground (Art. 54.2; Art a; Art. 69.4, 2nd subpara; Annex XI) Specific measures on innovation Special regime for social services Sheltered workshops

16 Strategic use Production process Allow production process as award criterion (Art. 66) and in the technical specifications (Art. 40). This allows contracting authorities to set up requirements related to human resources (e.g. working conditions), to the extent they are directly involved in the production/ provision of the purchased good or service

17 Strategic use Life-cycle costing (Art. 67) Clarify concept of life-cycle costing, allowing to take into account externalities if verifiable and monetisable (Art b) Wherever common EU methodology exists, use of this methodology becomes mandatory (Art. 67.4)

18 Strategic use Labels (Art. 41) Possibility for contracting authorities to request a specific label, provided that the requirements are linked to the subject-matter of the product Equivalent labels must be accepted as well Possibility for economic operators to provide alternative evidence where they do not have access to the label in due time

19 Strategic use Innovation Innovation partnership: new procedure for developing products and services not yet available on the market (Art. 29) Competitive dialogue: extend scope of application, better protection of innovative solutions (Art. 28) Rules on cross-border joint procurement (Art. 38)

20 Strategic use Social services Higher threshold EUR (Art. 4.d) Member States free to decide on procedures, only requirement: ex-ante (and ex-post) publication in the OJ + nondiscrimination (Art. 76.1) Member States must allow contracting authorities to take into account quality criteria (Art. 76.2)

21 3 rd objective: Better access - SMEs Exhaustive list of requirements for selection criteria (Art. 56.1) Self-declarations, winning-bidder only; submission of certificates only once to the same CA (Art. 57) Turnover cap (Art. 56.3) Mandatory splitting into lots (Art. 44) Possibility for Member States to foresee direct payments to subcontractors (71) Reporting obligation with «soft target» (apply or explain) of 50% SME success (Art. 84.2)

22 4 th objective: Sound procedures Minimum safeguards against conflicts of interest and other illicit behaviour (Art. 21, 22) Avoid unfair advantages because of prior association (Art. 39) Strenghten exclusion grounds, include self-cleaning (Art. 55) Strengthen rules on abnormally low tenders (Art. 69) Introduce clear rules for contract modications during execution (Art. 72)

23 5 th objective: Better Governance Creation of national oversight body (Art. 84), tasked with: Monitoring of structural problems Legal advice and guidance Alerting national authorities on violations and systemic problems Examining complaints Liason with COM Issuing implementation report, including analysis of SME participation and sustainable procurement (green, social, innovation)

24 5 th objective: Better Governance Require that Member States ensure appropriate assistance to contracting authorities and business, especially for cross-border tendering - «knowledge centers» (Art. 84) Reinforce mutual assistance and information echange amongst Member States, using the Internal market information system (Art. 88)

25 Utilities (Directive replacing Directive 2004/17/EC) The Utilities Directive regulates procurement by public authorities, public companies and private companies that are active in the water, transport, energy and postal sectors. Addressees of this Directive are also private undertakings, whose purchasing logic follows commercial practice - need for even greater flexibility than classic contracting authorities Modernisation measures of Directive replacing 2004/18 transposed into the future Utilities Directive insofar as compatible with the need for additional flexibility A few specific changes to the Utilities: Improved mechanism for exemption ex- Article 30 (Art ) Clarification of the notion of special and exclusive rights (Art. 4.2) Exclusion of exploration for oil and gas from the scope (this sector has consistently been found to be directly exposed to competition)

26 Discussion

The Reform of EU Directives on Public Procurement: Towards more Flexibility

The Reform of EU Directives on Public Procurement: Towards more Flexibility Proposals of the Commission for Directives on Public Procurement (replacing Directives 2004/18/EC and 2004/17/EC) 20 December