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Analysis of recent procurement reforms from perspective of flexibility

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This presentation assesses the reform of the EU public procurement rules in 2014 from the perspective of flexibility. It reflects on legal and case law changes in the period 2011-2017.

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Analysis of recent procurement reforms from perspective of flexibility

  1. 1. An analysis of recent procurement reforms from the perspective of flexibility Dr Albert Sanchez-Graells Hankinta- ja logistiikka-alan neuvottelupäivät Helsinki, 1-2 June 2017 2 June 2017 1Session 1: Recent developments and flexibility
  2. 2. Agenda • This first session will focus on the reform of EU procurement rules to achieve more flexibility • It will seek to stress the growing space for the exercise of discretion throughout the procurement process • It will also assess instruments in Dir 2014/24/EU for the control of such discretion Session 1: Recent developments and flexibility 2 2 June 2017
  3. 3. Flexibility as a main feature of the reform of the EU procurement rules in 2011-2014 • The previous generation of EU Directives had been criticised due to lack of flexibility • The 2011 Green paper concentrated on flexibility mainly as synonym of negotiations • “contracting authorities should be allowed to negotiate the terms of the contract with potential bidders”; “give contracting authorities more flexibility to obtain procurement outcomes that really fit their needs” (p 15) Session 1: Recent developments and flexibility 3 2 June 2017
  4. 4. Flexibility as a main feature of the reform of the EU procurement rules in 2011-2014 • The 2011 Proposal for a new Directive expanded the scope of flexibility to other areas (pp 8-9) • Clarification of the scope of application of EU rules • Toolbox approach (negotiations & collaborative procurement) • Lighter regime for sub-central contracting authorities (PINs) • Promotion of e-procurement • Modernisation of procedures (in particular, allowing selection to follow evaluation + clarification of Lianakis; clarifying exclusion + self-cleaning, and modification of contracts) Session 1: Recent developments and flexibility 4 2 June 2017
  5. 5. Flexibility in Directive 2014/24/EU • The recitals of Dir 2014/24/EU mainly emphasise flexibility concerning: • Choice of procedures (rec 42) • Multi-supplier framework agreements (rec 61) • Modification of contracts (rec 109) • However, most of the flexibility-related reforms in the 2011 proposal made it to Dir 2014/24/EU • And some ‘anti-flexibility reforms too’ (eg Art 18(2)) Session 1: Recent developments and flexibility 5 2 June 2017
  6. 6. Clarification of the scope of application • Introduction of the concept of procurement in Art 1(2) Dir 2014/24/EU • “acquisition by means of a public contract of works, supplies or services by one or more contracting authorities from economic operators chosen by those contracting authorities, whether or not the works, supplies or services are intended for a public purpose” • See Falk Pharma, C-410/14, EU:C:2016:399 [increased legal certainty? – for discussion, see a comment here] Session 1: Recent developments and flexibility 6 2 June 2017
  7. 7. Falk Pharma, C-410/14, EU:C:2016:399 • Case on the extent to which ‘user-choice’ systems are excluded from scope of Directives • German system of ‘authorisation’ for the supply of generic drugs in pharmacies, based on set terms, including pre-agreed ‘rebate contract’ • Funding body run open system without limit on number of authorisations (all interested suppliers meeting criteria) • ECJ ruled that choice by pharmacist/doctor excluded consideration of procurement Session 1: Recent developments and flexibility 7 2 June 2017
  8. 8. Clarification of the scope of application • Clarification of rules on ‘anti-circumvention’ calculation of value thresholds • Art 5(2) Dir 2014/24/EU sets special rules for contracting authorities comprised of non-independent separate operational units • Does this create legal certainty? [see outstanding comparative report and fine-tuning proposal by K-M Halonen (2017)] Session 1: Recent developments and flexibility 8 2 June 2017
  9. 9. Clarification of the scope of application • Consolidation of in-house and public-public cooperation exemptions into Dir 2014/24/EU • Will be discussed in detail in Session 2 • Suffice it to indicate here that the new concept of ‘public house’ raises a number of uncertainties, including the limitation of second-tier exemptions—see OAG Campos in LitSpecMet, C-567/15, EU:C:2017:319 (and here) Session 1: Recent developments and flexibility 9 2 June 2017
  10. 10. LitSpecMet, C-567/15, EU:C:2017:319 Session 1: Recent developments and flexibility 10 2 June 2017
  11. 11. Facilitation / encouragement of preliminary market consultations • Clarifies the interpretation of Art X:5 of the revised GPA and encourages contracting authorities to seek early engagement with the market—subject to ensuring level playing field • It is worth noting that Art 41 Dir 2014/24/EU provides specific remedial measures to be implemented before giving any consideration to the exclusion of participating undertakings (under Art 57(4)(f)) Session 1: Recent developments and flexibility 11 2 June 2017
  12. 12. Toolbox approach—more negotiations • Art 26 Dir 2014/24/EU increases scope for use of competitive procedure with negotiations • Overlap with grounds for use of competitive dialogue • (Unnecessary) addition of innovation partnership • Unclear interaction between principle of non-discrimination and negotiations => more procedural transparency? / how to ensure compliance with Dir 2016/943/EU on trade secrets? Session 1: Recent developments and flexibility 12 2 June 2017
  13. 13. Toolbox approach—multi-supplier frameworks & dynamic purchasing systems (+ catalogues) • Increased flexibility in framework agreements to opt for mini-competitions and to include dynamic requirements under a generally-defined umbrella [Art 33(4) & (5) Dir 2014/24/EU] • Reduced requirements for the setup of dynamic purchasing systems (restricted procedure, fully electronic) [Art 34 Dir 2014/24/EU] Session 1: Recent developments and flexibility 13 2 June 2017
  14. 14. Toolbox approach—more collaboration • Significant development of rules on procurement centralisation (Art 37) and on other types of collaboration, including cross- border (Arts 38-39) • There are important uncertainties regarding public law framework for collaborations (cfr BBG-SKI Study (2017); here) • Applicability of competition law an issue of growing relevance as procurement function becomes primary economic activity; including of competition principle (see comment to Finnish case KHO 2016:182 by K-M Halonen here)Session 1: Recent developments and flexibility 14 2 June 2017
  15. 15. Lighter regime for sub-central authorities • Possibility to issue PINs to start tender procedure (except for open procedures; Art 26(5) + 48) • Possibility to establish short submission deadlines by agreement, and reduced time-limits by default (Art 28(4)) • The advantages derived from these flexibility measures are unclear to me, in particular where they apply to competitive procedure with negotiationsSession 1: Recent developments and flexibility 15 2 June 2017
  16. 16. Promotion of e-procurement • Will e-procurement be attained by 18.10.2018? • Lack of implementation of 2014 rules (esp concessions) • The extent to which the transition to e- procurement simplifies procurement seems contestable • Issues with investment and development of solutions • Issues with compliance in case of incompatible systems, in in particular for (cross-border) collaborative procurement Session 1: Recent developments and flexibility 16 2 June 2017
  17. 17. Modernisation of procedures— selection/evaluation and Lianakis issues • Directive now allows for ‘inversion’ of selection and evaluation phases (Art 56(2)) • Directive (unnecessarily) clarifies Lianakis concerning use of experience • Art 58(4) + 63(1), which triggers issues concerning sub- contracting and reliance on third parties • Art 67(2)(b) “quality of the staff … can have a significant impact on the level of performance of the contract” Session 1: Recent developments and flexibility 17 2 June 2017
  18. 18. Modernisation of procedures— exclusion and self-cleaning • Flexible approach to exclusion & self-cleaning • Will be discussed in detail in Session 2 • Increased(?) scope to seek clarifications where documentation is erroneous or missing • The limits will be hard to draw (eg re samples)— see Archus and Gama, C-131/16, EU:C:2017:358 (and here). • ESPD and self-certification • Procurement police? Session 1: Recent developments and flexibility 18 2 June 2017
  19. 19. Archus and Gama, C-131/16, EU:C:2017:358 • The case concerned the possibility of ‘clarifying’ a tender by replacing a sample • The ECJ extended the same criteria developed in Manova and Slovensko for the control of the ways in which contracting authorities can seek clarifications • In my view, this is very problematic because samples are not like documents/certificates and defects are unlikely to be ‘obvious’ to the contracting authority • Cfr C Risvig Hamer, who advocates this approach (in Danish) Session 1: Recent developments and flexibility 19 2 June 2017
  20. 20. Modernisation of procedures— modification (and termination) of contracts • Beyond consolidation of PresseText • Modification clauses • Dangerous catch-alls—see Finn Frogne, C-549/14, EU:C:2016:634 (and comment here) • De Minimis modifications • De facto end to prohibition of pre-award negotiations? • Rules on termination = ineffectiveness? Session 1: Recent developments and flexibility 20 2 June 2017
  21. 21. Finn Frogne, C-549/14, EU:C:2016:634 • Case on termination of a dysfunctional contract through settlement, which changed its nature • ECJ assessed it under its case law on modification of contracts and found the modification substantial (even if it implied a reduction of the scope & value) • ECJ put (too much) stress on the absence/existence of contractual termination clauses allowing for this type of settlement, thus creating pressure for boilerplate clauses Session 1: Recent developments and flexibility 21 2 June 2017
  22. 22. Contract performance clauses— a flexible route to social value? • Directive 2014/24/EU stressed more flexibility for the imposition of compliance requirements through performance clauses (Art 70) • Any significant change vis-à-vis Art 26 Dir 2004/18? • Concerning social/employment clauses, ECJ case-law significantly restricts this possibility, other than in strict compliance with Posted Workers Directives (RegioPost, here) Session 1: Recent developments and flexibility 22 2 June 2017
  23. 23. RegioPost, C-115/14, EU:C:2015:760 • Case concerning the requirement to comply with regional minimum wage legislation (implicitly as a contract compliance clause) • ECJ established that test was derived from Poster Workers Directive (which allowed it to distinguish this case from Rüffert and from the also recent case of Bundesdruckerei) • Excessive formalism? Reverse discrimination Session 1: Recent developments and flexibility 23 2 June 2017
  24. 24. Light-touch regime social & special services • Another area of significant flexibility through limited application of EU rules • Light-touch in Arts 74-76 (and issues with requirements for the transposition of Art 76, e.g. in UK) • Reservation of contracts in Art 77 Dir 2014/24/EU • What is the scope of Spezzino/CASTA and how far can domestic constitutional rules/conventions create an exemption for the third sector? (see comment here) Session 1: Recent developments and flexibility 24 2 June 2017
  25. 25. Spezzino, C-113/13, EU:C:2014:2440 • Challenge to Italian law whereby emergency ambulance services must be awarded on a preferential basis and by direct award, without any advertising, to certain voluntary bodies (such as the Red Cross) • ECJ relied strongly on Italian Constitutional framework • It created a modified Altmark test requiring for the system • “to actually contribute to the social purpose and the pursuit of the objectives of the good of the community and budgetary efficiency” Session 1: Recent developments and flexibility 25 2 June 2017
  26. 26. Checks and balances on increased discretion • Principles-based regulation allowing for (increased) review on basis of proportionality and competition (Art 18(1) Dir 2014/24/EU) • New rules on conflicts of interest (Art 24) • Obligation to keep copies of contracts (Art 83(6)) and adequate records (Art 84(2) Dir 2014/24/EU) Session 1: Recent developments and flexibility 26 2 June 2017
  27. 27. Checks & balances— principles-based regulation & proportionality • Art 18(1) Directive 2014/24/EU has consolidated the general principles of the system • Will be discussed in detail in Session 2 • In my opinion, the principle of competition has a large role to play as an addition to the standard proportionality assessment Session 1: Recent developments and flexibility 27 2 June 2017
  28. 28. Checks & balances— new rules on conflicts of interest • Important definition in Art 24 Dir 2014/24/EU • Relevant link to Art 9(1) UNCAC • Future guidance from the Commission in this area likely to clarify requirements for Member States’ general anti-corruption systems • Need to avoid undertaking-centered remedies (in the sense of concentrating excessively on exclusion) Session 1: Recent developments and flexibility 28 2 June 2017
  29. 29. Checks & balances— Documentary obligations • Contracting authorities need to be careful in the creation of paper trails and systems ensuring their auditability need to be in place • Will trigger issues around litigation / access to documentation and management of confidential information • Should improve procurement data significantly Session 1: Recent developments and flexibility 29 2 June 2017
  30. 30. What about coordination with remedies? • One of the main shortcomings in the review of the EU procurement rules is the discoordination between substantive and remedies rules • Commission has committed to provide guidance on this aspect in the 2017 report to EP and Council (see here) • Increasing justiciability of decisions involving discretion likely, both in view of Art 41 CFREU (see here) and recent ECJ case law on exclusion grounds (Marina del Mediterráneo and Others, C-391/15, EU:C:2017:268, see here) Session 1: Recent developments and flexibility 30 2 June 2017
  31. 31. Marina del Mediterráneo and Others, C-391/15, EU:C:2017:268 • whether Art 2(1) Remedies Directive required permitting a tenderer to challenge a decision by which the contracting authority allowed another economic operator (which should have been excluded) to submit a tender • ECJ confirmed that such challenged must be possible, on the basis that the opposite would reduce the effectiveness of substantive procurement rules Session 1: Recent developments and flexibility 31 2 June 2017
  32. 32. Further reading Session 1: Recent developments and flexibility 32 2 June 2017
  33. 33. Thank you for your attention Be in touch a.sanchez-graells@bristol.ac.uk www.howtocrackanut.com @asanchezgraells Session 1: Recent developments and flexibility 33 2 June 2017

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