23568714.1 Implementation of the 2014 procurement directives across EU Member States June 2016
CONTENTS THE 2014 EU PROCUREMENT DIRECTIVES 1 Public Contracts Directive (2014/24/EU) 1 Utilities Contracts Directive (2014/25/EU) 2 Concessions Directive (2014/23/EU) 3 Implementation 3 EU DIRECTIVES IMPLEMENTATION TRACKER 4 INFRINGEMENT PROCEEDINGS 6 APPLICATION OF DIRECTIVE PENDING IMPLEMENTATION 7 DLA Piper is a global law firm operating through various separate and distinct legal entities. For further information please refer to www.dlapiper.com. June 2016 23568714.1 DLA Piper
THE 2014 EU PROCUREMENT DIRECTIVES As part of its "Europe 2020" strategy for smart, sustainable and inclusive growth, the EU: revised Directive 2004/18/EC on the procurement of public contracts, revised Directive 2004/17/EC on the procurement of utilities contracts; and introduced a new directive to regulate the procurement of both services and works concessions. All this was done with a view to increasing the efficiency of public spending, facilitating participation of SMEs in public procurement, and enabling procurers to promote common environmental and societal goals within their purchasing processes. The outcome of the review was three new Directives. An outline of each Directive is set out below. Public Contracts Directive (2014/24/EU) In the spirit of the 2020 Strategy, the Public Contracts Directive introduces shorter time limits for requests to participate and receipt of tenders, and early disclosure (at contract notice stage) of procurement documentation. Further efficiency is achieved through phased introduction of fully electronic communication during a procurement process. This includes the European Single Procurement Document (ESPD), which standardises the process for requesting pre-qualification information from bidders. Bidders must now "self-certify" that they comply with required selection criteria; certificates and other evidence of compliance being stored on e-certis, a freely accessible data base developed by the EU Commission. To assist SMEs the Directive includes policy choices (see below) on dividing contracts into separate lots. New discretionary grounds for exclusion from a procurement process include significant poor performance on previous public contracts, and conflicts of interest not remediable by other means. New mandatory grounds for exclusion include non-payment of taxes and social security contributions, involvement in child labour/human trafficking and terrorist offences including terrorist financing. In support of the principle of proportionality, provisions on "self-cleaning" require procuring authorities to take into account evidence from bidders that steps have been taken to remedy mandatory and/or discretionary grounds for exclusion, and to put in place measures which will prevent them happening again. There is now clarity on the period for which bidders will be excluded from procurement processes - Member States must specify a period ;not more than five years where grounds for mandatory exclusion exist, and not more than three years where discretionary grounds exist. There are three new procurement procedures. The Competitive Procedure with Negotiation is a restricted/negotiated procedure hybrid, and the Innovation Partnership promotes development and launching of new processes/products, which are not otherwise available in the market. The distinction between Part A and Part B services has been abolished, and instead a specific procedure (the "light touch" regime) has been introduced for health and social services with an estimated contract value in excess of Euro 750,000. Improvements have been made to procedures which use dynamic June 2016 23568714.1 DLA Piper 1
purchasing systems. Contracting authorities have the option to continue to use the negotiated procedure without advertisement. Other policy choices which Member States were invited to make, include: Whether to include standard approaches to evaluating groups of economic operators/consortia against prescribed selection criteria economic and technical capability? mandating the use of specific electronic tools, such as building information electronic modelling (BIM) for the purposes of public works contracts or design contests? Whether certain procurements should be made by recourse to central purchasing bodies? Whether it should be mandatory to divide certain contracts into lots? In open procedure procurements whether procuring authorities should be entitled to examine bids, before verifying whether respective bidders satisfy the qualification criteria for the procurement? Choosing maximum mandatory and discretionary exclusion periods (see above). Whether overriding public interest concerns should excuse bidders from mandatory exclusion. Scoping the procedure to be followed in "light touch" procurements. The Directive clarifies best practice concepts such as preliminary market engagement and conflict of interest. It also codifies existing case law in areas such as material changes to signed contracts (Pressetext and related case law) and the extent to which public: public contracts should be excluded from the procurement rules (Teckal and related case law).. Utilities Contracts Directive (2014/25/EU) Some of the key changes from Directive 2004/17/EC include : In terms of defining a "Utility" the definition of "special or exclusive rights" now makes it clear that any right/licence obtained pursuant to a publicised procurement process (which followed objective award criteria), will not be considered special or exclusive, and in such a scenario, although an organisation pursues one of the regulated Utility activities, it will not be caught by the procurement rules. Grounds for making a direct award remain substantially the same, save that the argument that only one contractor can be approached because competition is absent for technical reasons, or to protect exclusive rights, is now caveated by an obligation to show that "no reasonable alternative or substitute exists and the absence of competition is not the result of the artificial narrowing down of the parameters of the procurement." Directive 2014/25/EU now offers utilities the option to use a Competitive Dialogue (CD) procedure (already used for complex projects in the public sector), although the negotiated procedure (with or without advertisement) continues to be available, so it is not expected that CD will be widely used. The "competitive conditions" exemption can still be applied for, and any "article 30" exemptions previously agreed with the EU Commission will remain in place. June 2016 23568714.1 DLA Piper 2
Otherwise much of the Utilities Contracts Directive reflects changes also included in the new Public Contracts Directive ; most importantly - codification of contract variation (Pressetext), conflict of interest and preliminary market engagement case law, the introduction of the innovation partnership procedure and the "light touch" procedure, improvements to dynamic purchasing systems, revised exclusion criteria and the introduction of life cycle costing award criteria. Concessions Directive (2014/23/EU) The substantive change introduced by the new Concessions Directive is that service concessions are now subject to procurement law - previously only works concessions have been regulated. The Euro 5,186,000 financial threshold at which the Concessions Directive will bite is however high - and will apply to both works and services concessions. The format of the Concessions Directive "procedural guarantee" procurement process is left to the discretion of the "concession granter", as are the selection and award criteria - provided that the exercise of that discretion will ensure effective competition. This is potentially more appealing than following the structured procedures set out in the Public Contracts Directive, although in practice any competition compliant process will follow similar rules, to ensure transparency and impartiality. There is likely to be much debate on codification in the Concessions Directive of case law analysis of when (for the purposes of defining a concession) there can be said to be real transfer of operating risk to the concessionaire, or "real exposure to the vagaries of the market, such that any potential estimated loss incurred by the concessionaire is not merely nominal or negligible". Implementation The last date for each EU Member State to implement each Directive was 18 April 2016. Therefore with effect from 18 April 2016, the old procurement Directives were repealed, and: 2004/17/EC was replaced by 2014/25/EU 2004/18/EC was replaced by 2014/24/EU Provisions in Directive 2004/18/EC regulating public works concessions were replaced by the new approach in Directive 2014/23/EU, which also regulates public service concessions for the first time. The table in the next section of this paper tracks implementation progress across Europe. June 2016 23568714.1 DLA Piper 3
EU DIRECTIVES IMPLEMENTATION TRACKER Member State Public Contracts Utilities Contracts Concessions Austria at 6 June 2016) at 6 June 2016) at 6 June 2016) Belgium at 20 June 2016) at 20 June 2016) at 20 June 2016) Bulgaria at 6 June 2016) Croatia Cyprus Czech Republic Denmark Implemented 1 January 2016 Implemented date unknown Implemented date unknown Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxembourg June 2016 23568714.1 DLA Piper 4
Member State Public Contracts Utilities Contracts Concessions Malta Netherlands Poland Portugal Romania Slovakia Slovenia Spain Sweden United Kingdom Code Implemented by 18/04/16 Implemented after 18/04/16 Not yet implemented June 2016 23568714.1 DLA Piper 5
INFRINGEMENT PROCEEDINGS The Treaty on the Functioning of the European Union (TFEU) gives the European Commission the power to take legal action against a Member State that is not respecting its obligations under EU law. The infringement procedure begins with a request for information (a "Letter of Formal Notice") to the Member State concerned, which must be answered within a specified period, usually two months. If the Commission is not satisfied with the information and concludes that the Member State in question is failing to fulfil its obligations under EU law, the Commission may then send a formal request to comply with EU law (a "Reasoned Opinion"), calling on the Member State to inform the Commission of the measures taken to comply within a specified period, usually two months. If a Member State fails to ensure compliance with EU law, the Commission may then refer the Member State to the Court of Justice. However, in around 95% of infringement cases, Member States comply with their obligations before they are referred to the Court. If the Court rules against a Member State, the Member State must then take the necessary measures to comply with the judgment. In the specific case of Member States that have failed to implement directives within the prescribed deadline, the Commission may request the Court to impose a financial penalty on the Member State concerned. On 26 May 2016 (for failing to notify transposition of the 2014 EU Procurement Directives fully into national law by 18 April 2016) the European Commission issued "formal notices" to: Austria; Belgium Bulgaria Croatia the Czech Republic Cyprus Estonia Ireland Greece Latvia Lithuania Luxembourg Malta the Netherlands Poland Portugal Romania Slovenia Finland Spain Sweden Some of the formal notices issued will go no further. We know for example that Ireland implemented all three of the new Directives on 1 May 2016, but this has yet to be reflected in the Commission's statistics. Equally implementing legislation was passed in the Netherlands on 21 June, and the "political will" is that the legislation should be in force by 1 July 2016. DLA Piper will track developments in relation to the infringement proceedings. If there are specific EU Member States in relation to which you would like more information as to the status of their implementing legislation, do not hesitate to contact your local DLA Piper contact. June 2016 23568714.1 DLA Piper 6
APPLICATION OF DIRECTIVE PENDING IMPLEMENTATION EU directives are often described as having "direct effect". Certain provisions in directives may be relied on by private individuals (for example companies which submit tenders in a procurement procedure) against public authorities where the state has failed to implement the directive into domestic law by the end of the prescribed period or where it has failed to implement the directive correctly. This is on the basis that a state must not be able to take advantage of its own failure to comply with EU law, but applies only to those provisions which : are clear and unconditional, and do not give the Member States substantial discretion as to how they should be implemented. Direct effect can only be invoked for the benefit of an individual and not by the state. We are aware that for example the Spanish Government, knowing that it would not be in a position to implement the 2014 EU Procurement Directives until after government elections in June 2016, has issued a Recommendation to procuring authorities providing an indication of which provisions in Directive 2014/24/EU and Directive 2014/23/EU should be treated as having direct effect. Similar guidance has been issued by the Polish Government. Ultimately, whether or not any provision of an unimplemented directive can be relied upon must be determined on a case-by-case basis, potentially by reference to the European Court of Justice. June 2016 23568714.1 DLA Piper 7
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