In December of last year the European Commission published its proposals for a new Directive on public procurement. Since then the Commission has been consulting stakeholders on what a new Directive should properly include.
Last week the Cabinet Office published a procurement policy note summarising the latest state of the negotiations and the UK government's current position on some key outstanding issues.
The Commission's proposals for a new Directive
The proposals are lengthy but all have the general aim of simplifying public procurement and making it more flexible together with dealing with some of the grey areas created by or left unaddressed by the current Directive. The new Directive is expected to be adopted at some point in 2013 - member states will then have an 18 month period in which to implement it.
Key features of the proposals include:
- Clearer definitions of 'public works contract' and 'public services contract'
- The so-called 'Teckal exemption' for in-house contracts will be put into statute for the first time
- The Directive will clarify that a public contract will not be created in a situation where two contracting authorities genuinely co-operate in the performance of their public functions
- Two new procedures will be created both recognizing the need for negotiation in some complex contracts while at the same time aiming to ensure a level playing field for bidders. These are:
- The competitive procedure with negotiation
- The innovation partnership
- Shortening of time limits for participation and submission of offers
- Statutory clarification on when a variation or extension of a public contract amounts to a new award requiring a new procurement process to be run
- Use of life-cycle costing as a basis for making an award
- Removing the distinction between Part A & Part B services
- so-called 'Social Services' to include social health and education services will be given their own separate slimmed down regime with high thresholds and only minimal advertising requirements
- however other services which are currently Part B services such as legal services will become subject to the full application of the procurement regime
- Encouraging access by small- and medium sized entities
- including by dividing contracts into lots
The Cabinet Office's work
The Cabinet Office is engaged in negotiations to influence the ultimate shape of the new Directive and has recently issued a procurement policy note detailing progress so far and key interventions:
- There had been plans for each member state to be required to appoint a national body to oversee procurement activity in that state; this was successfully resisted by the UK.
- There had been a proposal for a 'European Procurement Passport' which bidders would be able to present to contracting authorities to demonstrate compliance with selection criteria. However the UK has successfully argued for a new 'self-certification' approach whereby only the winning bidder is required to physically supply documentary evidence that it meets the selection criteria during the award phase. Prior to this point bidders will merely self-certify that they meet the criteria without the actual production of documentary evidence. This new approach makes the European Procurement Passport redundant and it has been dropped.
- The UK has successfully relaxed proposals for mandatory division of contracts into lots for SMEs such that this is now at the discretion of the contracting authority (provided that it can give reasons why such a division is not appropriate in a particular case).
- The UK has campaigned for greater built-in flexibility in procurement procedures 'the current proposals will permit negotiation in all contracts which go beyond mere 'off the shelf' procurements; the government is satisfied with this outcome.
- The government is campaigning to retain the current distinction between Part A and Part B services but acknowledges that this is unlikely to be successful. However the UK will continue if the distinction is indeed abolished to push for a lighter touch regime for those Part B services (such as legal services) which will not become 'Social Services' under the new regime.
- The government supports the new proposal that a bidder's poor performance under previous contracts be made more explicitly a ground for de-selection.
- The proposals currently require the transition to 100% e-procurement to be made within two years of transposition deadline. While it wishes to encourage e-procurement the government will resist this requirement being made absolute as it believes it is unrealistic.
- The UK is seeking an temporary exclusion from the full rigours of the procurement regime for innovative public service delivery bodies such as employee-owned mutuals in order to give such organizations time to become established before they are subject to full competition.
We will continue to monitor and report on the progress of negotiations and the likely timetable for implementation of the new rules.