EC Public Procurement Directives Significant Changes arising from the new Public Sector and...

EC Public Procurement Directives

Significant Changes arising from the new Public Sector and Utilities

Directives

© Queen's Printer and Controller of HMSO - 2004

2

Use of the Slide Set

The slide set, tutor notes and case studies are intended for use by those with experience in public procurement training. All or selected slides may be used but users may not adapt the slides.

The material is intended for presentation to experienced procurement practitioners familiar with existing EC procurement directives.

Only significant changes to the current directives are addressed.

OGC accepts no liability whatsoever for any loss, damage or expense caused by the use or presentation of this material by others.

3

Agenda

History and summary of changes Thresholds, buyer profiles and timescales Framework agreements Central purchasing bodies Sustainability issues and technical specifications Selection of tenderers and award criteria

Competitive dialogue procedure and comparison with the negotiated procedure

Electronic auctions Dynamic purchasing systems New reports Utilities directive

4

History of the New Directives

Commission Green Paper 1996

Commission sets out initial ideas 1998

Commission proposals 2000

European Parliament (EP) amendments 2003

Adoption by Council and EP 2004

Published in OJEU April 2004

Transpose into national legislation by 31 Jan 2006

5

Use of the Directives

The new directives provide a framework within which public procurement must be conducted. Provisions are widely drawn to cater for 25 Member States.

Member State regulations provide further clarification

Practical applications for some new provisions (e.g. e-procurement) have yet to be developed. Practice and usability will evolve.

6

When can I use the New Provisions?

Provisions which are currently used, and where such use has been accepted by the European Commission, can now follow the procedure set out in the new directive. Examples are: Frameworks and electronic auctions Central purchasing bodies Contract award criteria and sustainability issues

New provisions, such as the competitive dialogue procedure, must await publication of new UK regulations

7

Summary of Changes (1)

Consolidation to single Directives: one for the public sector and one for the utilities More consistent treatment of common issues Comprehensive index provided in each directive

Refinements of existing provisions Simplified thresholds expressed in Euros

Sterling figure fixed for two years in the UK

Encouragement to use performance specifications and more emphasis on ‘equivalence’

Requirement to publish the relative importance of contract award criteria

Environmental and social issues addressed Electronic means of communication

8

Summary of Changes (2)

Significant additions The ‘competitive dialogue’ procedure Framework agreements Central purchasing bodies Electronic auctions Dynamic purchasing systems Exit criteria for utilities operating in open and

competitive markets Some changes in coverage of Utilities Directive

The Public Sector Directive

Significant Changes

10

Thresholds

The thresholds set out in the text of the new directives have altered.

Sterling equivalent thresholds will be revised again to take account of currency fluctuations before January 2006.

Up to date rates will be available on the OGC website from January 2006

Before that date, current thresholds (see the OGC website) should be used.

11

Buyer Profiles

Purchasers’ websites providing procurement information to suppliers encompassing, for example: PIN notices (provided the European Commission is

informed prior to publication on the buyer profile)Reduces minimum timescales

Copies of all other notices required by the directive Tender specifications and additional documents Future procurement requirements The purchaser’s procurement process Contact details

Article 35

Timescales

13

Minimum Timescales

New ways in which minimum timescales can be reduced are:

For electronic notices (in the SIMAP format), timescales for open procedure ‘tender receipt’ and ‘requests to participate’ in other procedures may be reduced by 7 days.

For electronic access to all contract documentation, timescales for open and restricted procedure ‘tender receipt’ may be reduced by 5 days.

Article 38

14

Open ProcedureMinimum Timescales

Contract Notice(Call for Competition))

Receipt of RequestsTo Participate

Invitation toTender

Receipt ofTenders

ContractAward

Contract AwardNotice

•52 or 36 days with Prior Information Notice (PIN)•Reduce to 45 days for electronic contract notice or 29 days with PIN•Further reduce to 40 days for electronic tender documentation 48 days

•Electronic communication – 7 day reduction for electronic notices5 day reduction for electronic tender docs

•All timescales must be reasonable

Article 38

15

Restricted ProcedureMinimum Timescales

Contract Notice(Call for Competition)


Invitation toTender

Receipt ofTenders

ContractAward


Accelerated

•37 days•Reduce to 30 days for electronic contract notice

•40 days or 36 days if PIN issued•Reduce to 35 days for electronic tender docs

48 days

•15 days•Reduce to 10 days for electronic notice

10 days

•Electronic communication – 7 day reduction for electronic notices5 day reduction for electronic tender docs


Article 38

16

Competitive DialogueMinimum Timescales



Invitation toTender

Receipt ofTenders

ContractAward



Not Specified

48 days

•EC = electronic communication – 7 day reduction for electronic notices


Article 38

17

Negotiated ProcedureMinimum Timescales

Accelerated



48 days

Not Specified



Invitation toTender

Receipt ofTenders

ContractAward


•EC = electronic communication – 7 day reduction for electronic notices


Article 38

Framework Agreements and Central Purchasing Bodies

19

Framework Agreements (1) Article 1(5) defines a framework as:

‘An agreement between one or more contracting authorities and one or more economic operators, the purpose of which is to establish the terms governing contracts to be awarded during a given period, in particular with regard to price and, where appropriate, the quantity envisaged’

i.e. the framework establishes the terms and conditions that will apply to subsequent contracts (call offs) but does not create rights and obligations

A ‘call off’ contract which creates rights and obligations (e.g. where work and response times are guaranteed) is not a ‘framework’ as defined in the Directive.

Frameworks can cover supplies, works and services and can be used in conjunction with the open, restricted, competitive dialogue and negotiated procedures

Article 32

20

Framework Agreements (2)

Maximum duration is four years unless, exceptionally, a longer period can be justified

Call offs may extend beyond the life of the framework

Where a single appointment is not made then the minimum number of framework suppliers is three or the number passing the selection criteria if less

Article 32

21

Framework Agreements (3)

For each call off, either: Award to the single supplier Award to the supplier who offers best value for

money based on the framework award criteria Hold a mini competition which takes account of

the particular issues related to the call offMust not substantially change the original framework terms. Award to the supplier offering the best bid on the basis of the published framework award criteria.

Article 32

22

Framework Agreements (4A)

Framework agreements are agreements with one or more suppliers which set out terms and conditions for subsequent procurements

Does the agreement include a commitment by the procurer to buy something?

This is a framework agreement for which contracts subject to the EC rules are formed only when call offs are made under the framework

Is the total value of all call offs over the framework lifetime estimated to fall below the relevant EC threshold? Or is otherwise not covered by the full rules?

Apply the EC rules to advertising and awarding the framework as if it was a contract. Apply the specific framework rules to the call offs under the framework

This is a framework contract and should be treated as any other contract under the EC rules

Only the EC Treaty provisions and Treaty based principles, including non discrimination apply, together with the value for money policy

Yes Yes

No No

Article 32

23

Framework Call Off Stage (4B)

Is there only one framework supplier?

Where there are several suppliers in the framework, are the terms agreed in setting up the framework precise enough for the best supplier to be identified for the particular need?

Hold a mini competition between those suppliers in the framework capable of meeting the particular need using the original terms supplemented or refined as necessary

Award the call off to the supplier who can provide the supplies, works or services using the refined terms and the published framework award criteria

Call off the relevant supplies, works or services using the terms agreed when the framework was set up

NoNo

Yes

Yes

Article 32

Refined terms may be needed, eg to understand how the particular

requirements of a consultancy call off would be met.

New terms requiring office cleaning services through a framework intended for accountancy advice would clearly be

beyond a reasonable definition of ‘refinement’.

Case Study 1 The Training & Consultancy

Agreement

25

Central Purchasing Bodies

Article 1(10) defines a central purchasing body as a contracting authority which: ‘acquires supplies and/or services intended for

contracting authorities’ or ‘awards public contracts or concludes framework

agreements for works, supplies or services intended for contracting authorities’

Purchases may be managed through a central purchasing body (CPB) and organisations are deemed to have complied with the Directives in so far as the CPB has complied

Article 11

26

Central Purchasing Bodies Some Examples

OGC Buying Solutions Local Authority purchasing consortia e.g.

West Mercia Supplies Central Buying Consortium

Higher and Further Education purchasing consortia North West Universities Purchasing Consortium

Article 11

Sustainability Issues and Technical Specifications

28

Sustainability Issues (1) Sustainability requirements may be specified but

must be sufficiently precise to allow bidders to understand the requirement and to allow award of the contract

Green production standards and relevant aspects of eco labels can be specified but alternatives which demonstrate equivalence must be considered

Special (including environmental and social) conditions relating to the performance of a contract may be specified if: Compatible with Community law Mentioned in the contract notice or in the specification

Articles 23 & 26

29

Sustainability Issues (2)

At the selection stage, assessment of capability to undertake works and services contracts may, where appropriate, include: Assessment of environmental management

measures relevant to the performance of the contract

Certificates attesting compliance with environmental management standards may be requested but proof of equivalence must be accepted

Articles 48 & 50

30


Use of variants enables purchasers to compare different standards of environmental (and other) performance where related to the subject matter of the contract

Purchasers may allow variant bids where award is based on most economically advantageous tender (MEAT) criteria

Minimum requirements, including environmental (and other) criteria, must be specified

Variants, such as higher environmental performance or a specific production process, may then be specified

Article 24

31


Relevant contracts may be limited to ‘sheltered workshops’ employing mostly disabled people unable to gain normal employment – must be stated in the contract notice

A supplier may be excluded for proven non compliance with environmental and social legislation relating to professional misconduct or for a poor track record on previous contracts involving environmental or social requirements

Articles 19, 45 & 48

32


Contract award criteria may include environmental characteristics provided these are linked to the subject matter of the contract and looked at from the point of view of the contracting authority e.g. running costs, energy costs and additional environmental quality (toxic emissions) etc.

Article 53

33

Technical Specifications

Purchasers are encouraged to use performance specifications

Reaffirms existing case law on need to accept standards equivalent to those specified and other offers which meet underlying needs. Bidders must demonstrate equivalence. Reasons for a decision of non equivalence must be given

Whenever possible account should be taken of access arrangements for disabled people or design for all users e.g. design of works

Article 23

Selection of Tenderers and Award Criteria

35

Selection of Tenderers

Minimum number of bidders is 5 for the restricted procedure and 3 for the negotiated (with publication of a contract notice) and competitive dialogue procedures

Minimum number must be stated in the contract notice and must be sufficient to ensure genuine competition

Those found guilty of organised crime, corruption offences or fraud must be excluded

Articles 44 & 45

36

Award Criteria Contracts continue to be awarded on the basis of lowest

price or most economically advantageous tender (MEAT)

Contract notices or contract documents must provide the relative weighting given to each criterion used to judge the most economically advantageous tender.

Where this is not feasible, award criteria must be stated in descending order of importance

MEAT award criteria may include environmental characteristics (e.g. energy savings, disposal costs) provided these are linked to the subject matter of the contract

Article 53

Competitive Dialogue and comparison with Negotiated

Procedure

38

Competitive Dialogue (1)

Article 1 (11c) defines competitive dialogue: ‘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.’

Article 29(1) describes its use: For particularly complex contracts where use of the

open or restricted procedures will not allow the award of the contract

Article 29

39


Enables dialogue with selected suppliers to identify and define solutions to meet the need

Award only on the most economically advantageous basis

All candidates and tenderers must be treated equally and commercial confidentiality must be maintained unless the candidate agrees that information may be passed to others

Dialogue may be conducted in successive stages. Those unable to meet the need or provide VFM (as measured against the published award criteria) may drop out or be dropped. Possibility must be noted in the contract notice.

Article 29

40


Final tenders are invited from those remaining on the basis of the identified solution or solutions

Assessment is based on criteria stated in the Contract Notice or accompanying descriptive document (outlining broad needs)

Clarification of bids can occur pre and post assessment provided this does not distort competition

Purchasers may specify payments to be made to participants in the dialogue

Article 29

41


NO

Is it difficult to assess what would be the best technical, legal, or financial solution, due to the market or need being complex?

Proceed with contract notice, specifying that the competitive dialogue procedure will be used and stating award criteria (must be MEAT)

-

Conduct a dialogue with selected suppliers to identify acceptable solutions (to meet needs)

Having declared that the dialogue is concluded, suppliers are invited to submit tenders. The award criteria stated in the notice must be used to evaluate the tender returns -

This is a contract for supply, services or works subject to the open, restricted or (exceptionally) the negotiated procedures Competitive Dialogue is not appropriate

-

-

YES

Article 29

42

Competitive Dialogue Negotiated Procedures

All types of contract where open or restricted not workable

Restricted to specified circumstances for each type of contract. Intended as a fall back when other procedures will not work.

Used to help define the means of achieving broad objectives

Used to allow negotiation when:

Competition is not viable or appropriate

Other procedures have not produced an acceptable tender

Works are needed for R&D purposes

Prior overall pricing is not possible

Services cannot be specified sufficiently precisely for use of open or restricted procedures

(1)

Note – for these services contracts, either procedure could be used but competitive dialogue should be first choice.

Differences between

&

Articles 29-32

43

Competitive Dialogue Negotiated Procedures

Always involves competitive tender and can only use the ‘most economically advantageous’ award criterion (MEAT)

Competitive tender not required. Can use ‘MEAT’ or lowest price and, in specified and limited circumstances, can negotiate with a single supplier.

Dialogue may embrace all aspects of the contract for the purpose of identifying one or more solutions which meet the purchaser’s needs before seeking bids from those remaining in the dialogue.

Negotiation following advertisement is intended to adapt tenders received in order to better meet the purchaser’s specified needs

(2)Differences between

&

Articles 29-32

Case Study 2The Construction Project

Electronic Auctions

46

Electronic Auctions (1)

Article 1(7) defines an electronic auction as: ‘A repetitive process involving an electronic device for the

presentation of new prices, revised downwards, and/or new values concerning certain elements of tenders, which occurs after an initial full evaluation of the tenders, enabling them to be ranked using automatic evaluation methods’

i.e an electronic system enabling suppliers to adjust specified elements of their initial bid and which shows consequent changes in rank immediately

Auctions may be based on price or a combination of quality and price (MEAT award criteria)

Article 54

47


Auctions may be used in conjunction with: Open or restricted procedures In circumstances where the open, restricted or

competitive dialogue procedures cannot be brought to a satisfactory conclusion and the negotiated procedure (with a contract notice if new suppliers are sought) is utilised

Mini competitions within a framework Competition for contracts to be awarded through a

dynamic purchasing system In all cases, use of an electronic auction must be

stated in the contract notice

Article 54

48


Evaluate tenders in accordance with the procedure adopted using the award criteria published in the Contract Notice or tender documents

Invite (electronically) competent bidders to participate in the auction stating: Full initial evaluations of the tenders Details of the mathematical ranking formula to be

adopted Connection details, date and time of the auction Number of phases and timescale if relevant Conditions of bidding particularly minimum differences

required for a new bid

Article 54

49


Quality issues may be addressed as part of the initial evaluation and through the auction phase

If included in the auction phase, each ‘quality’ aspect of the bid must be expressed as a single value (figure or percentage) within the published assessment formula

Specification must state any limits to values (arising from the specification) included in the auction

Article 54

50


Tenders are ranked on the basis of the initial evaluation.

Some features are carried forward to the auction phase

During the auction, sufficient information must be communicated to bidders to show relative ranking on those aspects subject to auction

The initial evaluation of those aspects not subject to auction is combined with changes arising from the auction to identify the winning bid.

Article 54

51

Electronic Auctions (6) The auction may be closed when:

Time and date specified at invitation stage is reached

Prices/ values submitted do not meet minimum difference criteria

e.g. insufficient improvement on the last value submitted

Specified phases are complete

The overall ranking is based on the initial evaluation adjusted in line with changes to the values subject to auction

Article 54

52

Electronic Auctions (7A)

Open, restricted or competitive dialogue procedures have been implemented but cannot be brought to a satisfactory conclusion and the negotiated route with a contract notice is adopted

Mini competition within a framework if e-auctions were stated in the contract notice

-

-

Competition for contracts to be awarded through a dynamic purchasing system if stated in the contract notice.

Circumstances when an electronic auction may be used

Open or restricted procedures stating use of an auction

Article 54

53

Electronic Auctions (7B)

Conduct the auction

-

-

Contract awarded on lowest price or most economically advantageous offer as stated in the contract notice or specifications. In the case of the latter, ‘quality’ features of the tender, where included in the auction phase, must be capable of being expressed as a single value within the assessment formula. The initial evaluation is combined with changes to values subject to auction to identify the winning bid

Using an electronic auction

Invitations to participate, communicated electronically, include the initial evaluation (if based on MEAT), the assessment formula, details of process and conditions of bidding

Full initial evaluation of tenders using the award criteria specified in the contract notice or tender documents. Admissible bids proceed to the auction phase.

Expressions of interest invited in accordance with the selected procedure. Contract notice states that an electronic auction will be used

Close the auction at the time and date specified, when prices/values submitted do not meet minimum difference criteria or when specified phases are complete

Article 54

Case Study 3The Paging Agreement

Dynamic Purchasing Systems

56

Dynamic Purchasing System (1)

Article 1(6) defines a dynamic purchasing system as: ‘A completely electronic process for making commonly

used purchases, the characteristics of which, as generally available on the market, meet the requirements of the contracting authority, which is limited in duration and open throughout its validity to any economic operator which satisfies the selection criteria and has submitted an indicative tender that complies with the specification’

Article 33

57


Dynamic purchasing systems are a kind of electronic framework agreement where Indicative Bids to enter the framework can be made at any time and each call off is subject to competitive tender

The open procedure must be used to invite Indicative Bids to join the system.

The contract notice must state the intention to use a dynamic purchasing system and where to obtain bid documents

Article 33

58


Indicative bid documents and subsequent documentation must be communicated electronically and be available throughout the life of the system

All those who have submitted a compliant indicative bid and satisfy the selection criteria must be admitted to the system

Indicative bids may be submitted or improved at any time throughout the life of the system and must be assessed within 15 days, or longer if tenders have not been invited for a ‘call off’

Article 33

59


Each contract (call off) is subject to competitive tender preceded by a simplified contract notice (for the benefit of suppliers who may not be aware of the system)

Bids for call off contracts cannot be invited until all Indicative Bids received by the deadline have been evaluated

All admitted suppliers must be invited to bid for each contract within the time specified by the purchaser

Award must be based on the criteria stated in the contract notice which may be refined for the specific bid

Article 33

60


Contract award notices must be despatched within 48 days of the award

The system cannot last longer than four years unless, exceptionally, justified

Suppliers or other parties cannot be charged for establishing and operating the system

Article 33

61

Dynamic Purchasing Systems (6)

The open procedure must be used and the system must be advertised in the Official Journal through a contract notice providing the web site at which tender documents may be consulted

Suppliers may at any time during the system’s operation submit ‘Indicative Bids’ for the product or service required and may be admitted to the system or not on the basis of this submission. Bids must usually be assessed within 15 days.

When a specific requirement arises for the products covered by the system, the purchaser must conduct the following process

-

-

Give 15 days for responses to be submitted

Publish a further simplified notice advertising the requirement

Invite final tenders from all admitted suppliers once any new suppliers responding to the simplified notice have also been evaluated

Award must be based on the criteria stated in the contract notice which may be refined for the specific bid (call off)

Article 33

Case Study 4The Stationery Contract

63

New Reports

For frameworks and dynamic purchasing systems, contracting authorities must compile reports covering: Contract details Selection decisions Justification for use of the selected procedure Name of successful tenderer Reasons for selection

Report to be provided to the Commission upon request

Article 43

The Utilities Directive

Significant Changes

65

Changes common to both Directives

Many new provisions apply to both Public Sector and Utilities Directives: Central purchasing bodies Electronic auctions Dynamic purchasing systems Technical specifications Award criteria Ways in which sustainability can be taken into account

Identical rules apply across the Directives for these provisions

66

Change of Coverage

Telecomms sector is not subject to the new directive in view of the introduction of effective competition within this sector

Postal services will over time move to the Utilities Directive and away from the stricter regime of the public sector directives Reflects increased competition in the postal sector

67

Exit Criteria (1)

If the utility activity is directly exposed to competition in markets to which there is free access, then the utility activity is not subject to the Directive

Direct exposure to competition is decided on grounds, such as: Characteristics of the goods or services concerned Existence of alternative goods or services Prices and the actual or potential presence of more than

one supplier

Article 30

68

Exit Criteria (2)

Access to the market is presumed to be unrestricted if relevant listed community legislation has been implemented and applied by the member state.

Where free access cannot be presumed the member state must demonstrate that access is free

Article 30

69

Exit Process (1)

Where a member state considers that there is direct exposure and free access, it informs the European Commission of all the relevant facts (laws etc and competitive position) and where appropriate the view of an independent and competent national authority

Where implementing legislation allows, utilities can ask the European Commission to establish whether there is direct exposure to competition. The Commission is required to inform the member state of the request

Article 30

70

Exit Process (2)

The European Commission has 3 months from the first working day on which it receives the request to decide (plus extensions of up to 3 months for additional info etc)

Where free access to a market can be presumed and an independent and competent national authority has established that there is direct exposure to competition, the directive will not apply unless the European Commission decides to the contrary, usually within 3 months

Article 30

71

Exit Provisions - Summary

No

Is access to markets presumed free on the basis of Community legislation opening up markets and which has been adopted by the member state?

Has a competent independent national authority confirmed that the utility activity is directly exposed to competition?

Utility activity is not subject to the Directive provided the European Commission has not decided otherwise within the required timescale

Member state or utility (national law permitting) may seek a decision from the European Commission on the degree of exposure to competition in markets to which there is free access. Supporting evidence must be provided

European Commission decides within 3 months which may be extended by up to 3 months where justified

No decision within required timescale

Utility activity is subject to the Directive

YesNo

Yes Agree

Disagree

Article 30

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EC Public Procurement Directives

Changes arising from the new Public Sector and Utilities

Directives

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