Introduction To EU Procurement Rules October 2011


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Introduction To EU Procurement Rules October 2011

  1. 1. Introduction to EU Procurement Rules Michael Johnston, Associate October 2011
  2. 2. What is the purpose of the Rules? <ul><li>To open up the public procurement market and to ensure the free movement of supplies, services and works within the EU in a non-discriminatory manner </li></ul><ul><li>The aim is to create a single market by removing all discrimination against or in favour of bidders located in different EU member states </li></ul><ul><li>Note that the Government Procurement Agreement (GPA) extends compliance to certain countries outwith the EU, including e.g. Switzerland and Canada </li></ul><ul><li>The rules are enforced through Member States’ courts and the European Court of Justice </li></ul>
  3. 3. The background to the Rules <ul><li>The primary legislation is contained in various EU Directives </li></ul><ul><li>These EU Directives have been implemented into Scots law via: </li></ul><ul><ul><li>the Public Contracts (Scotland) Regulations 2006 </li></ul></ul><ul><ul><li>the Utilities (Scotland) Regulations 2006 </li></ul></ul><ul><ul><li>(separate, but similar, Regulations implement the Directives into English law) </li></ul></ul><ul><li>However, the procurement rules also comprise: </li></ul><ul><ul><li>ECJ and national case law interpreting the Directives / Regulations </li></ul></ul><ul><ul><li>The EU Treaty-based principles </li></ul></ul>
  4. 4. When do the Rules apply? <ul><li>Whenever a “Contracting Authority” seeks to enter into a contract for the acquisition of services, supplies or works (e.g. civil engineering or building work) with a monetary value above the relevant threshold </li></ul><ul><li>When the rules apply, the Contracting Authority must advertise the contract in the Official Journal of the European Union (OJEU) and follow a particular procurement procedure </li></ul><ul><li>The obligation to advertise the contract in the OJEU is designed to ensure that all interested economic operators in the EU can tender for contracts in other EU member states </li></ul>
  5. 5. Who is a Contracting Authority? <ul><li>Defined by the EU Directives into four separate categories: </li></ul><ul><ul><li>The State </li></ul></ul><ul><ul><ul><li>e.g. central government departments </li></ul></ul></ul><ul><ul><li>Local and regional authorities </li></ul></ul><ul><ul><ul><li>e.g. local authority </li></ul></ul></ul><ul><ul><li>“ bodies governed by public law ” </li></ul></ul><ul><ul><ul><li>e.g. registered social landlords </li></ul></ul></ul><ul><ul><li>Associations formed by the above </li></ul></ul><ul><ul><ul><li>e.g. public sector purchasing consortiums </li></ul></ul></ul>
  6. 6. What contracts do the Rules apply to? <ul><li>Public Works Contract </li></ul><ul><ul><li>“ Works” are activities listed in the Regulations </li></ul></ul><ul><ul><li>It also covers a contract for procuring “by any means” a complete work to the Authority’s specified requirements </li></ul></ul><ul><li>Public Supply Contract </li></ul><ul><ul><li>Acquisition of products (by purchase or lease etc.) </li></ul></ul><ul><li>Public Service Contract </li></ul><ul><ul><li>All services that are not “works” or “supply” contracts </li></ul></ul><ul><ul><li>Separated into “Part A” and “Part B” Services. Part B Services are not subject to the full scope of the Regulations </li></ul></ul><ul><li>Mixed Contracts </li></ul><ul><ul><li>Combinations of “works”, “supplies” and/or “services” </li></ul></ul>
  7. 7. Public Works Contract <ul><li>Means a contract, in writing, for consideration (whatever the nature of the consideration: </li></ul><ul><ul><li>for the carrying out of a work or works for a contracting authority, or </li></ul></ul><ul><ul><li>under which a contracting authority engages a person to procure by any means the carrying out for the contracting authority of a work corresponding to specified requirements. </li></ul></ul>
  8. 8. Monetary Thresholds <ul><li>The full scope of the procurement rules only apply to a contract if the estimated value of that contract exceeds certain financial thresholds: </li></ul><ul><li>The current thresholds are: </li></ul><ul><ul><li>£3,927,260 for works contracts </li></ul></ul><ul><ul><li>£101,323 and £156,442 for supplies contracts; and </li></ul></ul><ul><ul><li>£101,323 and £156,442 for services contracts. </li></ul></ul><ul><li>Aggregation rules apply to establish whether or not the value exceeds the relevant threshold </li></ul><ul><li>It is unlawful to artificially ‘split’ a contract to get around the threshold rules </li></ul>
  9. 9. Excluded Contracts <ul><li>Certain types of contract are expressly excluded from the application of Regulations & Directives </li></ul><ul><li>e.g. </li></ul><ul><ul><li>where the protection of the essential interests of security of the United Kingdom require it </li></ul></ul><ul><ul><li>contracts for the acquisition of land, including existing buildings and other structures, land covered with water, and any estate, interest, easement, servitude or right in or over land </li></ul></ul><ul><li>Other contracts are subject to a lesser degree of regulation: </li></ul><ul><ul><li>below threshold contracts </li></ul></ul><ul><ul><li>Part B Service contracts e.g. legal services, health services </li></ul></ul><ul><li>These exceptions are very strictly construed </li></ul>
  10. 10. The EU Treaty Principles <ul><li>The EU Treaty based principles apply to all tender processes including below threshold contracts and Part B Services: </li></ul><ul><ul><li>Non-discrimination </li></ul></ul><ul><ul><li>Equal treatment </li></ul></ul><ul><ul><li>Transparency </li></ul></ul><ul><ul><li>Mutual recognition </li></ul></ul><ul><ul><li>Proportionality </li></ul></ul><ul><li>For example, the principle of Transparency means a below threshold contract is still subject to a degree of advertising </li></ul><ul><li>The Regulations and Directives are only a framework </li></ul>
  11. 11. Choice of procurement procedure <ul><li>The Regulations provide for four separate award procedures to be used by a Contracting Authority: </li></ul><ul><ul><li>Open Procedure </li></ul></ul><ul><ul><li>Restricted Procedure </li></ul></ul><ul><ul><li>Competitive Dialogue Procedure </li></ul></ul><ul><ul><li>Negotiated Procedure </li></ul></ul>
  12. 12. Open & Restricted Procedures <ul><li>Open Procedure </li></ul><ul><ul><li>the most basic procedure </li></ul></ul><ul><ul><li>any interested economic operator is entitled to submit a tender </li></ul></ul><ul><ul><li>all compliant tenders must thereafter be evaluated by the Contracting Authority </li></ul></ul><ul><li>Restricted Procedure </li></ul><ul><ul><li>any economic operator may request to participate but only those economic operators invited by the Contracting Authority may proceed to submit a tender </li></ul></ul><ul><ul><li>a two stage process involving a Pre-Qualification (PQQ) Stage and then a formal Tender stage </li></ul></ul><ul><ul><li>allows Contracting Authorities to avoid having to evaluate an overwhelmingly large number of compliant tenders. </li></ul></ul><ul><li>Authorities have a free choice to follow the Open Procedure or the Restricted Procedure for any contract </li></ul>
  13. 13. Competitive Dialogue & Negotiated <ul><li>Competitive Dialogue </li></ul><ul><ul><li>“ a procedure in which any economic operator may request to participate and whereby the contracting authority conducts a dialogue with the candidates admitted to that procedure, with the aim of developing one or more suitable alternatives capable of meeting its requirements, and on the basis of which the candidates chosen are invited to tender” </li></ul></ul><ul><ul><li>may only be used for “complex” procurements e.g. PPP projects </li></ul></ul><ul><li>Negotiated Procedure </li></ul><ul><ul><li>procedure where the contracting authorities consult the economic operators of their choice and negotiate the terms of the contract with on or more of these </li></ul></ul><ul><ul><li>may be done without an OJEU contract notice in exceptional circumstances </li></ul></ul>
  14. 14. Stages in the Procurement Process <ul><li>Prior Information Notice (PIN) </li></ul><ul><li>OJEU Notice </li></ul><ul><li>PQQ Stage (not open procedure) </li></ul><ul><ul><li>Bidder Selection </li></ul></ul><ul><li>ITT / ITPD Stage </li></ul><ul><li>Final Tender submission </li></ul><ul><ul><li>Award Stage </li></ul></ul><ul><li>Contract Award </li></ul><ul><li>10 Day ‘Alcatel’ Standstill Period </li></ul><ul><li>Contract Signature </li></ul>
  15. 15. Selection and Award criteria <ul><li>Bidder Selection (PQQ stage) </li></ul><ul><ul><li>Involves the rejection or selection of economic entities based upon: </li></ul></ul><ul><ul><ul><li>mandatory exclusions (e.g. criminal convictions) </li></ul></ul></ul><ul><ul><ul><li>their economic and financial standing </li></ul></ul></ul><ul><ul><ul><li>their technical capacity and ability </li></ul></ul></ul><ul><li>Award Stage </li></ul><ul><ul><li>The award criteria are either: </li></ul></ul><ul><ul><ul><li>Lowest Price </li></ul></ul></ul><ul><ul><ul><li>Most Economically Advantageous Tender taking into account all relevant factors linked to the subject matter of the contract </li></ul></ul></ul><ul><ul><li>Complex restrictions apply as to the type of award criteria that a Contracting Authority may use </li></ul></ul>
  16. 16. What do we do? <ul><li>We advise Contracting Authorities on the application of the EU procurement rules, including: </li></ul><ul><ul><li>providing advice on overall procurement strategy </li></ul></ul><ul><ul><li>reviewing or co-ordinating the tender processes and tender documentation to ensure compliance with procurement rules </li></ul></ul><ul><ul><li>‘ tailoring’ the procurement process to deliver the desired result </li></ul></ul>
  17. 17. What do we do? <ul><li>We advise private sector bidding contractors, including in connection with: </li></ul><ul><ul><li>reviewing the validity of a tender process they have been a party to </li></ul></ul><ul><ul><li>challenging an unlawful tender process </li></ul></ul>
  18. 18. Why do you need to bother? <ul><li>If you are acting for the Contracting Authority: </li></ul><ul><ul><li>Is the contract subject to the procurement rules? </li></ul></ul><ul><ul><li>Has the Authority taken internal / external procurement advice? </li></ul></ul><ul><ul><li>Is the Authority relying upon an exemption from application of the Regulations? </li></ul></ul><ul><ul><li>Don’t assume the Authority is correct! </li></ul></ul><ul><li>If acting for the private sector party: </li></ul><ul><ul><li>Should the contract have in fact be tendered? </li></ul></ul><ul><ul><li>Is your client protected from a procurement challenge? </li></ul></ul>