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EU procurement for non procurement professionals


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APM Presentation on the EU procurement for non-procurement professionals held at Lend Lease, London

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EU procurement for non procurement professionals

  1. 1. Liz Wilson-Lamb EU Services Manager 1st July2014
  2. 2. © 2013 Achilles Group Limited Confidential 2 Introductions  Introductions  Who?  What?  EU tendering experience?  Expectations from the day?  Housekeeping  Timescales  Information packs  Themis
  3. 3. © 2013 Achilles Group Limited Confidential 3 Programme  Introduction to sources of law  Reasons why we have them  Treaty Principles  Key risks  Specifications  Selection of quotations/suppliers  Assessing the bid  Frameworks  How do we communicate with suppliers  Remedies – what happens when suppliers challenge?  New Directives  Questions and answers
  4. 4. © 2013 Achilles Group Limited Confidential 4 Setting the scene  Current climate
  5. 5. © 2013 Achilles Group Limited Confidential 6 Sources of Law - Hierarchy  Treaty Principles  EU Directives  UK legislation  Courts will review cases under the UK legislation
  6. 6. © 2013 Achilles Group Limited Confidential 7 What are the ‘EU’ rules?  Principles and detailed procedures to be applied by ‘contracting authorities’ (e.g. local government) and certain ‘utilities’ such as transport companies  Reflecting the risk that such companies might favour national/local suppliers in their procurement  Such preferences breach the EU Treaty obligations of free movement of goods, services, people and capital (‘the four freedoms’)  EU Directives set out the procedures and set the framework of the rules, legislation implemented the UK, courts will review the legislation, court cases and Treaty principles
  7. 7. © 2013 Achilles Group Limited Confidential 8 Aims and Principles  The EU Directive and the Treaty aim to open up supplier opportunities  Principles (often applied by the courts)  Equal treatment  Non-discrimination  Mutual recognition  Proportionality  Transparency
  8. 8. © 2013 Achilles Group Limited Confidential 9 Requirement for competition  Importance of competition  Limited scope for no competition  Who makes this decision?  Who can take part?  What must we consider for less regulated procurement?
  9. 9. © 2013 Achilles Group Limited Confidential 10 The process outlined
  10. 10. © 2013 Achilles Group Limited Confidential 11 Financial thresholds 2014-2015  What are the EU thresholds and why do you need to know?  How do they work?  Supplies and services  £172,514 - Public Sector  £345,028 - Utilities  Works  £4,322,012  Changed 1st January 2014  Every 2 years
  11. 11. © 2013 Achilles Group Limited Confidential 12 Valuing the requirement  How do we determine the value of a contract?  The requirement not the contract  Lots and options  Aggregation  Extension of contracts  Frameworks  How much discretion do we have?
  12. 12. © 2013 Achilles Group Limited Confidential 14 Definition  What is a Specification ?  A specification is the key part of the Tender documentation, it should be clear, accurate, and give a complete description of the supplies, services or works required.  The Specification defines the requirements to fulfil the contract.  A poor description of the requirement may mean that the product or service is not delivered to the standards required, and later changes to the requirements may result in a ‘material change’ and abortive costs.  Preparing a specification requires in-depth research and accuracy.
  13. 13. © 2013 Achilles Group Limited Confidential 15 Pre-market engagement  Research the market by talking to suppliers, other purchasers, industry associations, etc. to identify possible solutions, indicative costs and delivery time-scales  Look for diversity and Innervation from possible new entrants  New Directive now provides for Pre-market engagement.  Be mindful of issues regarding discrimination  Use of Prior Information Notice – manage risk  Identify the scope of the contract and the range of goods, services or works that the supplier will be asked to deliver
  14. 14. © 2013 Achilles Group Limited Confidential 16 Stakeholder Engagement  Who should produce the specification ?  Procurement ?  The end user / stakeholder ?  The persons who knows the most about the needed commodity or service  Ensure that there is a clear understanding of what is required.  If producing a specification for another party, identify and agree the stakeholders requirements and again, ensure that they are fully understood  May work with the market  conflicts of interest
  15. 15. © 2013 Achilles Group Limited Confidential 17 Specifications and Standards  Technical specification must not lead to discrimination  Where relevant EU standard exists, must refer to it or to performance/functional specification – cannot mandate the standard  Bespoke specifications must not be discriminatory • E.G Built around a particular supplier’s approach  Trade names can only be used where absolutely necessary, and accompanied by the words ‘or equivalent’  The contract notice must contain the scope of the notice and this will often necessitate understanding the specification
  16. 16. © 2013 Achilles Group Limited Confidential 19 Selection criteria principles  Selection criteria  To assess supplier capacity not the offer it might make  Information usually obtained using PQQ  Disclosure of criteria  All suppliers assessed equally  How should the criteria be set out?  Relevant to the contract  Proportionate
  17. 17. © 2013 Achilles Group Limited Confidential 20 Award criteria  The evaluation criteria that will be used to assess the bids should be developed at the same time as the specification. The evaluation criteria must link to the subject matter of the contract.  Therefore the specification must be correct, if not the criteria will be flawed resulting in deficient outcomes  Can not have random criteria it must be relevant, quantifiably measurable, proportionate, linked to the specification.  If the bid received does not meet the specification it can not be accepted – even if it offers great innovation and VFM  Post tender negotiation?
  18. 18. © 2013 Achilles Group Limited Confidential 21 Award criteria principles  Applied to tenders and any subsequent negotiations – Procurement responsible?  Most economically advantageous tender (MEAT) or lowest price  Criteria must be  Relevant to the contract  Measureable  Assessed professionally  Assessed equally  Disclosed to suppliers before they tender  West Coast Trains – lessons learnt?
  19. 19. © 2013 Achilles Group Limited Confidential 22 The distinction between selection and award criteria  Supplier’s capacity v supplier’s offer  Why it matters  Who does what in the tender?  Timescales for the competitive process
  20. 20. © 2013 Achilles Group Limited Confidential 24 What are frameworks?  A framework is a form of ‘quasi-contract’ which is ‘awarded’ in the same way as a ‘proper’ contract  Are not a supply contract, a works contract or a service contract in themselves  Can be between one or more contracting authority or entity and one or more economic operators  Which establish the terms (in particular the terms as to price and where appropriate, quality)  Under which the economic operator will enter into one or more contracts with an authority in the period during which the framework agreement applies
  21. 21. © 2013 Achilles Group Limited Confidential 25 Who can use a framework?  Transparency requires disclosure of the contracting authority or authorities that may use the framework  At least generic reference (provided adequately detailed e.g. updated list of central government departments as shown in a maintained list)  To allow immediate identification of user authorities  If users known they should be disclosed  Note need to identify expected maximum expenditure under the framework in the notice  See OGC PPN 15-10
  22. 22. © 2013 Achilles Group Limited Confidential 26 Key rules  Framework duration limited to 4 years normally  “save in exceptional circumstances, in particular circumstances relating to the subject of the framework agreement” (Reg 19(10))  Minimum 3 providers – multi supplier framework  Where 3 or more meet selection/award requirements (Regulation 19 (6))  Prohibition of ‘improper use’ and use of framework in such a way to ‘hinder, prevent, limit or distort competition’  Translation: “anything we have not thought about that the courts might think is a breach of the rules is also forbidden”?  E.g. a framework which effectively allows single tender purchase from a multi-supplier framework based on preference or non-objective criteria
  23. 23. © 2013 Achilles Group Limited Confidential 27 Awarding contract under framework agreements  Where framework includes sufficient information (single supplier and some multi supplier)  By applying the terms in the framework  Possible methods of awarding the contract:  “Cascade” (ranking)  Virtual catalogue  Rotation?
  24. 24. © 2013 Achilles Group Limited Confidential 28 Awarding contract under framework agreements  Where framework does not include sufficient information to determine the winning supplier the contract should be awarded by ‘mini competition’  All capable providers invited  Framework documents should make it clear which firms are qualified for which type of order  Bids in writing including electronic methods (no explicit timescales)  Bids must not be opened until all received (no faxed tenders)  Contract must be awarded on the basis of application of the criteria set out in the contract documents based on those in framework agreement.
  25. 25. © 2013 Achilles Group Limited Confidential 30 Supplier notification  Notification at selection stage  Pre-qualification  Non-compliant bids  Award decision notification to tenderers and concerned candidates (those not already notified)  Standstill (cooling off) period of 10 or 15 days
  26. 26. © 2013 Achilles Group Limited Confidential 31 Supplier notification  How much information is enough and how should we respond to debriefing requests? Who would deal with this?  Mermec UK v Network Rail Infrastructure  How are your comments useful?
  27. 27. © 2013 Achilles Group Limited Confidential 33 Deciding not to hold a call for competition  When can we directly award contracts?  Extending contracts – what does this mean?  How much scope do we have to change contracts?
  28. 28. © 2013 Achilles Group Limited Confidential 34 Changes to contracts post award  Applies where a contract has been changed to such an extent that a new contract arises – from pressetext case  Risk of ineffectiveness arises from the failure to advertise this “new” contract  New directive makes clear the indicators in that case and provides some comfort as to changes that would not lead to a new contract arising
  29. 29. © 2013 Achilles Group Limited Confidential 35 When does modification lead to new contract?  Modification is substantial where it renders the agreement materially different from the original  New conditions would have allowed for selection of different candidates or acceptance of different offer or would have attracted additional participants  The modification changes the economic balance in favour of the contractor  The modification extends the scope considerably
  30. 30. © 2013 Achilles Group Limited Confidential 37 How does a legal challenge arise?  Any decision can be challenged by supplier with ‘standing’ in the UK courts  In most cases (except for ineffectiveness) supplier must start proceedings within 30 days from date of knowledge of the breach  i.e. the date on which the supplier first knew or ought to have known that grounds for proceedings had arisen  Court has discretion to extend up to a total of 3 months from date of knowledge  Effect of CJEU cases  Challenge often follows supplier notification and largest volume of complaints about selection and award criteria – West Coast Trains
  31. 31. © 2013 Achilles Group Limited Confidential 38 Remedies regime  Suspension  Set aside  Damages  Ineffectiveness (for certain breaches)  Civil financial penalties (have to accompany ineffectiveness)  Penalties must be ‘effective, proportionate and dissuasive’  Contract shortening
  32. 32. © 2013 Achilles Group Limited Confidential 39 Ineffectiveness  Provides for termination of a contract on application by a supplier  Applies only to certain breaches  Illegal direct award of a contract (‘single tender’)  Failure to observe standstill requirements (if accompanied by a breach of other rules that might damage supplier’ rights)  Illegal award of a contract under a framework  Applies only prospectively – any rights or obligations from the contract prior to the order unaffected  Ineffectiveness must be accompanied by a ‘civil penalty’ (determined by the courts - “proportionate and dissuasive”)
  33. 33. © 2013 Achilles Group Limited Confidential 40 When would the court waive ineffectiveness?  The court would only waive ineffectiveness in exceptional cases  In general the court has a duty to make a contract ineffective if the grounds arise  There is an exception where ‘overriding reasons in general interest’ require waiver  However economic reasons would only be accepted in exceptional circumstances
  34. 34. © 2013 Achilles Group Limited Confidential 41 When would the court waive ineffectiveness?  Specifically not allowed would be costs of:  Delay  New procedures  A change in supplier  Any legal obligations on the purchaser  Even where ineffectiveness were waived court would still be required to shorten the contract, impose a civil penalty or both
  35. 35. © 2013 Achilles Group Limited Confidential 42 Time limits for ineffectiveness  Default is 6 months from award  Can remove threat altogether with a Voluntary Ex Ante Transparency (VEAT) notice after 10 days from date of publication (for direct award)  30 days from publication of contract award notice (for direct award)
  36. 36. © 2013 Achilles Group Limited Confidential 44 Part B Services  Abolition of Part B services  No longer two separate ‘types’ of service  Residual services to fall under full coverage of the directives  Majority now have cross- border interest  Certain exemptions remain  Recognition that some services will require national delivery  E.g. Health and Social care  Specific rules surround their award  Specific thresholds for these categories - €750,000
  37. 37. © 2013 Achilles Group Limited Confidential 45  Contracting Authorities ‘encouraged’ to break high value contracts (> €500,000) into lots  Where not divided into lots – justification to be given in notice  Turnover requirements explicitly limited to 2x contract value  Proportionality  Exception for duly justified cases relating to special risks  Must accept self-declarations of status relating to exclusions and financial/technical position at the time of making a request to participate or submitting a tender Increase support for involvement of SME’s
  38. 38. © 2013 Achilles Group Limited Confidential 46 Changes  More relaxed view of justifications for competitive dialogue and competitive negotiated procedures  Innovation Partnerships – phased approach to buying product developments  Shorter minimum timescales  Sub-central bodies able to use the Prior Information Notice as a call for competition  Abnormally low tenders defined and obligation to exclude tender if low due to non-compliance with EU law (social, environmental etc.)  Life cycle costs can include environmental impact of product creation provided it can be monetised and monitored  Separate Directive on works and services concessions
  39. 39. © 2013 Achilles Group Limited Confidential 47 Clarifications  Pre-market/Pre-procurement engagement expressly provided for- subject to protection of competition  Award criteria can include whole lifecycle costs and the merits of staff assigned to the contract (experience issue)  Exclusion and selection criteria clarified  Evidence of poor past experience as an exclusion ground  Material Change defined
  40. 40. © 2013 Achilles Group Limited Confidential 49 Achilles EU Team Liz Wilson-Lamb EU Services Manager Debbie Metcalfe EU Procurement Advisor and Trainer Kate Pucci EU Procurement Advisor and Trainer Emily Strange THEMiS Product Manager Daniel Bremner Sector Account Manager Sally Griffin Sector Account Manager Jayne Wellman Administrator Associates Professor Sue Arrowsmith Legal Expert Susie Smith Lawyer and Consultant Steve Kay EU Advisor
  41. 41. © 2013 Achilles Group Limited Confidential 50 Thank you. Contact details: T: +44 (0)1235 838115 Achilles Information Limited