On 10 December 2012, the EU Council reached an agreement on a general approach to the European Commission's proposals to reform the public procurement rules. This agreement will form the basis for discussions with the European Parliament. In the coming months, two new public procurement directives are expected to be adopted, for the purpose of simplifying and rendering more flexible the applicable rules in order to improve value for money. Some of the key changes are outlined below.
Following the Single Market Act of October 2010 and a consultation launched in January 2011, the Commission issued, on 20 December 2011, proposals for two new public procurement directives, one[1] to replace the Public Sector Directive (Directive 2004/18/EC) and one[2] to replace the Utilities Directive (Directive 2004/17/EC). The new directives are intended to provide for greater flexibility in and to simplify the applicable procedures, negotiations and time limits.[3]
Greater flexibility and simplification
The proposal for a new Public Sector Directive acknowledges the need for broader access to flexible procedures, namely (1) the competitive procedure with negotiation, (2) competitive dialogue, and (3) the innovation partnership, a new type of procedure for innovative procurement.
The proposals shorten the time limits to participate in and submit offers. They also provide for more flexibility when it comes to distinguishing between, on the one hand, the criteria used in the bidder selection process and, on the other hand, those used to award the contract.
Use of life-cycle costing in award criteria
The proposals suggest that contracts be awarded based on either:
- the lowest cost (rather than the current lowest price criterion); or
- the most economically advantageous tender (MEAT); in that case, price or cost must be included in the criteria used to determine the MEAT, and contracting authorities will not be able to set a fixed budget and exclude price from the award criteria.
The proposals refer to the new concept of life-cycle costing, which describes the phases through which a product passes, from design to marketing and ultimately discontinuation. This concept covers both internal costs (those borne by the authority or other users) and external costs (those attributable to external environmental factors). External costs may be taken into account provided their monetary value can be determined and verified.
Elimination of the distinction between Part A and Part B services
The current rules distinguish between Part A and Part B services. Part A services (or "priority services") must comply with all requirements of the European directives, while Part B services (or "non-priority services", i.e. those less amenable to cross-border competition, such as legal services) are subject to more flexible rules.
The proposals abolish this distinction by suppressing the Part B rules, although they do provide specific rules for the award of public contracts for health and social services as well as for education.
Public-public cooperation
The proposals clarify when contractual relations between public bodies are not subject to the public procurement rules (so-called in-house procurement). These conditions are drawn from European case law: (i) the contracting authority must exercise control over the legal entity concerned similar to that which it exercises over its own departments; (i) more than 90% of the legal entity's activities must be performed for the controlling authority; and (iii) there must be no private participation in the controlled legal entity. The proposals also define when contracting authorities should be deemed to exercise joint control over a legal entity.
Market consultation
The proposals confirm the possibility for contracting authorities, prior to launching a procurement procedure, to conduct market consultation to assess the structure, capability and capacity of the market and to inform economic operators of their plans and requirements.
e-Procurement
The proposals provide for the mandatory transmission of notices in electronic form, the mandatory electronic availability of procurement documents, and a switch to e-submission for all procurement procedures, within a transition period of two years.
Modifications to existing contracts
The new directives are also intended to codify European case law (specifically, C-454/06, Pressetext, and C-91/08, Wall AG), according to which a substantial modification to an existing public contract must be considered a new contract and thus the procurement process must be restarted.
***
The proposals are currently being examined, with agreement needed between the European Parliament and the Council. The latest version of the compromise text of the proposed Public Sector Directive was published on 30 November 2012.[4] However, it is unlikely that the proposals will be adopted before March or April 2013, at the earliest, meaning the revised directives will not be implemented into Belgian law before summer 2014. In this regard, it should be noted that the Belgian Public Procurement Act of 15 June 2006 (replacing the Act of 24 December 1993) is expected to enter into full force and effect in summer 2013 and, in view of the new directives, is likely to be rendered out-of-date more quickly than originally thought.
[1] Proposal for a Directive on public procurement, COM (2011) 896 final.
[2] Proposal for a Directive on procurement by entities in the water, energy, transport and postal services sectors, COM (2011) 895 final.
[3] At the same time, the Commission published a proposal for a new directive to regulate the award of concessions, the Proposal for a Directive on the Award of concession contracts, COM (2011) 897 final. Under the current framework, works concessions are partially subject to the Public Sector Directive, while service concessions are covered only by the general rules of the Treaty on the Functioning of the European Union.
[4] Available at http://register.consilium.europa.eu/pdf/en/12/st16/st16725-re01.en12.pdf
