Expected key changes in the New Directives on Public Procurement

Internal Market Single Market is the nucleus and core economic driving force of the EU Most effective means of responding to the current economic crisis Growth potential not yet fully exploited EU Single Market Act aims to deliver twelve projects on which to relaunch the Single Market for 2012

Single Market Act 1. Access to finance for SMEs 2. Worker mobility in the Single Market 3. Intellectual property rights 4. Consumers: Single Market players 5. Services: strengthening standardisation 6. Stronger European networks 7. Digital Single Market 8. Social entrepreneurship 9. Taxation 10. More social cohesion in the Single Market 11. Regulatory environment for business 12. Public procurement

Single Market Act - Public procurement Public authorities spend some 18-19% of the EU s GDP on goods, services and public works EU and national legislation has opened up public contracts to fair competition, giving citizens better quality at the best price Commission proposes to modernise this legislative framework in order to arrive at a balanced policy sustaining the demand for environmentally friendly socially responsible innovative simpler and more flexible procedures easier access for SMEs goods and services

EUROPE 2020 Strategy for smart, sustainable and inclusive growth Priorities of the Europe 2020 strategy: developing an economy based on knowledge and innovation promoting a low-carbon, resource-efficient and competitive economy fostering a high-employment economy delivering social and territorial cohesion. Public procurement plays a key role as one of the market-based instruments to improve the business environment and conditions for business to innovate and by encouraging wider use of green procurement supporting the shift towards a resource efficient and low-carbon economy. Europe 2020 strategy stresses that public procurement policy must ensure the most efficient use of public funds and that procurement markets must be kept open Union-wide.

Modernisation of the directives

Development 27.01. 2011: Green Paper on the modernisation of EU public procurement policy Towards a more efficient European Procurement Market public consultation and draft directives adoption by the European Parliament in January 2014 decision in the council (not yet) publication in the EUOJ adaption by the member states (~24 month after adoption)

Existing set of rules EU directive 2004/17 procurement in the water, energy, transport and postal services sectors EU directive 2004/18 - procurement - contracts for public works, public supply and public service Directive 2009/81/EC - specific rules for defence and sensitive security procurement Directive 89/665/EEC - common standards for national review procedures Commission interpretative communication on the Community law applicable to contract awards not or not fully subject to the provisions of the Public Procurement Directives Commission staff working paper concerning the application of EU public procurement law to relations between contracting authorities ('public-public cooperation') Buying Green! A Handbook on Green Public Procurement Directive 2006/32/EC on energy end-use efficiency and energy services Directive 2009/33/EC on the promotion of clean and energy-efficient road transport vehicles Buying Social - A Guide to Taking Account of Social Considerations in Public Procurement

NEW Proposal for a directive on procurement by entities operating in the water, energy, transport and postal services sectors, replacing Directive 2004/17 Proposal for a directive on public procurement, replacing Directive 2004/18 Proposal for a directive on the award of concession contracts Communication A strategy for e-procurement

Target of the modernisation simplification of the procedural regime set, less administrative burdens more flexibility for public authorities legal certainty promotion of electronic procurement new rules on concessions

Targets of the new directives ensure greater inclusion of common societal goals in the procurement process - social responsibility, employment, public health include environmental protection, innovation, combating climate change, and other environmental considerations

Targets of the new directives better access to the market for SME s sound procedures governance

simplification flexibility legal certainty

Simplification broader possibilities for negotiation documentation required is reduced mandatory use of means of electronic communication

Distinction between A ( priority ) services and B ( non-priority ) distinction is abolished services new simplified regime is put in place for social, health, cultural and assimilated services new regime will also be applicable to other services (e.g. legal services, hotels and restaurants services, catering/canteen services) current "B" (non-priority") services (e.g. water transport, agricultural and forestry services), will be subject to the full set of rules of the Directives, unless listed in the "new simplified regime" annex to the Directives. All services not explicitly listed fall under the full regime of the Directives.

Simplification of information obligations Art. 57 mandatory acceptance of self-declarations as primafacie evidence for selection purposes production of documentary evidence will be facilitated by a standardised document, the European Single Procurement Document (ESPD - Art. 59) which is a means of proof for the absence of grounds for exclusion.

Limitation on requirements for participation Ann. XII To avoid unjustified barriers in the way of participation by SMEs, the Directive contains an exhaustive list of possible conditions for participation in procurement procedures and states explicitly that any such conditions shall be restricted to those that are appropriate to ensure that a candidate or tenderer has the... capacities and... abilities to perform the contract to be awarded Turnover requirements which are frequently a formidable obstacle to access by SMEs are explicitly limited to three times the estimated contract value, except in duly justified cases Any conditions for participation by groups of economic operators - an instrument of particular relevance for SMEs - must be justified by objective reasons and proportionate.

Direct payment of subcontractors - Art. 71 Member State can provide that subcontractors may request for direct payment by the contracting authority of supplies, works and services provided to the main contractor in the context of the contract performance

Lighter regime for sub-central contracting authorities In line with the WTO Government Procurement Agreement, the proposal provides a simplified procurement regime that applies to all contracting authorities below the central government level, such as local and regional authorities. These purchasers may use a prior information notice as a means of calling for competition. If they make use of this faculty, they don t have to publish a separate contract notice before launching the procurement procedure. They may also set certain time limits in a more flexible way by mutual agreement with participants.

simplification flexibility legal certainty

Toolbox approach Art. 26 ff: Member State systems will provide two basic forms of procedure: open and restricted procedure. They may, in addition, foresee competitive procedure with negotiation competitive dialogue innovation partnership Contracting authorities have at their disposal six specific procurement techniques/tools intended for aggregated and e- procurement: framework agreements central purchasing bodies systems joint procurement - electronic catalogues - dynamic purchasing - electronic auctions

Modernisation of procedures Art. 72: modification of contracts during their term - a specific provision on modification of contracts takes up the basic solutions developed by case-law and provides a pragmatic solution for dealing with unforeseen circumstances requiring an adaption of a public contract during its term

Division into lots Art. 46 contracting authorities will be invited to divide public contracts into - homogeneous or heterogeneous - lots to make them more accessible for SMEs if they decide not do so, they will be obliged to provide a specific explanation

simplification flexibility legal certainty

Sound public procurement procedures clarification of the notion of conflict of interests exclusion grounds are strengthened and extended compulsory exclusion in case of abnormally low tender when it is due to non-compliance of EU law in the field of social and labour law and environmental law and international social and environmental law rules governing the modifications of contracts have been simplified

Conflicts of interest Art. 24 specific provision on conflicts of interest covering actual, potential or perceived conflict of interest situations affecting staff members of the contracting authority or of procurement service providers intervening in the procedure and members of the contracting authority s management who may influence the outcome of a procurement procedure even if they are not formally involved in it

Illicit conduct Art. 57 specific provision against illicit behaviour by candidates and tenderers, such as attempts to improperly influence the decision-making process or entering into agreements with other participants to manipulate the outcome of the procedure have to be excluded from the procedure

Unfair advantages Art. 40 market consultations are a useful instrument to obtain information on the structure, capability and capacity of a market while at the same time informing market actors on public purchasers procurement projects and requirements preliminary contacts with market participants must not result in unfair advantages and distortions of competitions specific provision on safeguards against undue preference in favour of participants who have advised the contracting authority or been involved in the preparation of the procedure

Innovation Art. 31 innovation partnership: a new special procedure for the development and subsequent purchase of new, innovative products, works and services, provided they can be delivered to agreed performance levels and costs proposal improves and simplifies the competitive dialogue procedure and facilitates cross-border joint procurement as important instrument for innovative purchasing

Cooperation between public entities clarification of the conditions under which cooperation between public entities is exempt from the application of the Directives no distortion of competition in relation to private economic operators good balance between freedom of public authorities to organise public services and fair market access for economic operators limitation of activities that may be performed in the open market, i.e. outside the public-public cooperation, to 20 %, and to exclude direct private capital participation in con-trolled entities (except non-controlling and non-blocking forms of private capital required by national law)

Sanctioning violations of mandatory social, labour or environmental law Art. 57 contracting authority can exclude economic operators from the procedure, if it identifies infringements of obligations established by EU legislation in the field of social, labour or environmental law or of international labour law provisions contracting authorities will be obliged to reject tenders if they have established that they are abnormally low because of violations of EU legislation in the field of social, labour or environmental law

Miscellaneous

Thresholds thresholds will remain at their current level due to the international obligations of the EU (see obligations under the WTO Government Procurement Agreement (recently re-negotiated) thresholds have been adapted in accordance with the procedure in force by Regulation (EU) No 1336/2013 of 13 December 2013

Main specific changes for the "utilities" sectors the new Directives clarify and improve the mechanism for exemption from the procurement rules provided for in the current Article 30 of Directive 2004/17/EC. explicit clarification of the notion of special and exclusive rights. They exclude from their scope the exploration for oil and gas

When will the new rules come into force? after formal adoption by the Council, the new rules will enter into force on the twentieth day following that of the publication of the Directives in the EUOJ Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with the Directive within 24 months after its entry into force for implementing e-procurement fully, Member States may extend this period by up to 30 months

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