Explanatory Memorandum to COM(2011)896 - Public procurement - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2011)896 - Public procurement. |
|---|---|
| source | COM(2011)896  |
| date | 20-12-2011 |
· Grounds for and objectives of the proposal
The Europe 2020 strategy for smart, sustainable and inclusive growth [COM(2010) 2020] is based on three interlocking and mutually reinforcing priorities: developing an economy based on knowledge and innovation; promoting a low-carbon, resource-efficient and competitive economy; and fostering a high-employment economy delivering social and territorial cohesion.
Public procurement plays a key role in the Europe 2020 strategy as one of the market-based instruments to be used to achieve these objectives by improving the business environment and conditions for business to innovate and by encouraging wider use of green procurement supporting the shift towards a resource efficient and low-carbon economy. At the same time, the Europe 2020 strategy stresses that public procurement policy must ensure the most efficient use of public funds and that procurement markets must be kept open Union-wide.
In the face of these challenges, the existing public procurement legislation needs to be revised and modernised in order to make it better suited to deal with the evolving political, social and economic context.
In its communication of 13 April 2011 on ‘The Single Market Act: Twelve levers to boost growth and confidence’, the Commission included among its twelve key priority actions to be adopted by the EU institutions before the end of 2012, a revised and modernised public procurement legislative framework to make the award of contracts more flexible and enable public contracts to be put to better use in support of other policies.
This proposal has two complementary objectives:
· Increase the efficiency of public spending to ensure the best possible procurement outcomes in terms of value for money. This implies in particular a simplification and flexibilisation of the existing public procurement rules. Streamlined, more efficient procedures will benefit all economic operators and facilitate the participation of SMEs and cross-border bidders.
· Allow procurers to make better use of public procurement in support of common societal goals such as protection of the environment, higher resource and energy efficiency, combating climate change, promoting innovation, employment and social inclusion and ensuring the best possible conditions for the provision of high quality social services.
· General context
Public procurement plays an important role in the overall economic performance of the European Union. In Europe, public authorities spend around 18 % of GDP on supplies, works and services. Given the volume of purchases, public procurement can be used as a powerful lever for achieving a Single Market fostering smart, sustainable and inclusive growth.
The current generation of public procurement Directives — Directives 2004/17/EC i and 2004/18/EC i — are the product of a long evolution that started in 1971 with the adoption of Directive 71/305/EEC. By guaranteeing transparent and non-discriminatory procedures, these Directives principally aim to ensure that economic operators from across the Single Market benefit fully from the basic freedoms in competing for public contracts.
A comprehensive economic evaluation has shown that the public procurement Directives have achieved their objectives to a considerable extent. They have resulted in greater transparency and higher levels of competition while achieving measurable savings through lower prices.
Stakeholders have nevertheless voiced demand for a review of the public procurement directives to simplify the rules, increase their efficiency and effectiveness and make them better suited to deal with the evolving political, social and economic context. Streamlined, more efficient procedures will increase flexibility for contracting authorities, benefit all economic operators and facilitate the participation of SMEs and cross-border bidders. Improved public procurement rules will also allow contracting authorities to make better use of public procurement in support of common societal goals, such as the protection of the environment, higher resource and energy efficiency and combating climate change, promoting innovation and social inclusion, and ensuring the best possible conditions for the provision of high quality social services. These orientations were confirmed by the results of a consultation of stakeholders conducted by the Commission in spring 2011, where a very large majority of stakeholders supported the proposal to review the public procurement Directives in order to adapt them better to the new challenges faced by public procurers and economic operators alike.
· Existing provisions in the area of the proposal
Together with the proposed new utilities Directive, the proposal will replace Directives 2004/17/EC and 2004/18/EC as the core elements of the European Union public procurement legislative framework.
The Directive will be complemented by the further elements of that legislative framework:
· Directive 2009/81/EC sets specific rules for defence and sensitive security procurement,
· Directive 89/665/EEC i establishes common standards for national review procedures to ensure that rapid and effective means of redress is available in all EU countries in cases where bidders consider that contracts have been awarded unfairly.
· Consistency with the other policies and objectives of the Union
This initiative implements the Europe 2020 strategy for smart, sustainable and inclusive growth [COM(2010) 2020] and the Europe 2020 Flagship Initiatives on a Digital Agenda for Europe [COM(2010) 245], the Innovation Union [COM(2010) 546], an Integrated Industrial Policy for the Globalisation Era [COM(2010) 614], Energy 2020 [COM(2010) 639] and a Resource Efficient Europe [COM(2011) 21]. It also implements the Single Market Act [COM(2011) 206], in particular its twelfth key action ‘Revised and Modernised Public Procurement Legislative Framework’. It is a CWP 2011 strategic initiative.
· Consultation of interested parties
The Commission published on 27 January 2011 a Green Paper on the modernisation of EU public procurement policy — Towards a more efficient European Procurement Market launching a broad public consultation on options for legislative changes to make the award of contracts easier and more flexible and enable public contracts to be put to better use in support of other policies. The purpose of the Green Paper was to identify a number of key areas for reform and ask for stakeholders’ views on concrete options for legislative change. Among the issues covered were the needs for simplifying and flexibilising procedures, strategic use of public procurement to promote other policy objectives, improving access of SMEs to public contracts and combating favouritism, corruption and conflicts of interest.
The public consultation closed on 18 April 2011 and met with a high response. In total, 623 replies were received, coming from a wide variety of stakeholder groups including central Member State authorities, local and regional public purchasers and their associations, undertakings, industry associations, academics, civil society organisations (including trade unions) and individual citizens. The majority of replies originated from the United Kingdom, Germany, France and, to a lesser degree, Belgium, Italy, the Netherlands, Austria, Sweden, Spain and Denmark.
The results of the consultation were summarised in a synthesis paper i and presented and discussed at a public conference on 30 June 2011.
A very large majority of stakeholders appreciated the initiative of the Commission to review the current public procurement policy. Amongst the different subjects discussed in the Green Paper, stakeholders put a particularly strong emphasis on the need to simplify procedures and make them more flexible. For instance, a clear majority of all stakeholder groups supported the idea of allowing greater use of a competitive procedure with negotiation. There was also strong support for measures to alleviate administrative burdens related to the choice of bidder.
On the strategic use of public procurement to achieve the societal goals of the Europe 2020 strategy, stakeholders’ opinions were mixed. Many stakeholders, especially businesses, showed a general reluctance to the idea of using public procurement in support of other policy objectives. Other stakeholders, notably civil society organisations, were strongly in favour of such strategic use and advocated far-reaching changes to the very principles of the European Union public procurement policy.
· Collection and use of expertise
In addition to the Green Paper consultation, the Commission conducted in 2010/2011 a comprehensive evaluation of the impact and effectiveness of EU public procurement legislation drawing on an extensive body of evidence and new independent research. The studies assessed mainly the cost and effectiveness of procurement procedures, issues of cross border procurement, SMEs’ access to public procurement markets and the strategic use of public procurement in Europe.
The findings of the evaluation showed clearly that the public procurement Directives 2004/17/EC and 2004/18/EC have helped to establish a culture of transparency and outcome-driven procurement, generating savings and improvements in the quality of procurement outcomes that far exceed the costs, for public purchasers and suppliers, of running those procedures. The evaluation has also found that differences in implementation and application of the Directives have led to different outcomes in different Member States. The time taken to complete procedures and the cost to public purchasers vary widely across Member States.
· Impact assessment
The impact assessment and its executive summary give an overview of the different options for each of the five groups of basic problems (administrative organisation, scope, procedures, strategic procurement and access to procurement markets). Based on an analysis of the advantages and disadvantages of the different options, a package of preferred options was identified that should optimise the synergies between the different solutions allowing savings due to one type of action to neutralise related costs caused by another (e.g. possible increased procedural requirements caused by strategic procurement actions could partially be neutralised by savings related to the improved design of procurement procedures). These preferred options form the basis of the present proposal.
The draft Impact Assessment report was scrutinised by the Impact Assessment Board, who asked for amendments concerning in particular the identification of the specific elements of the legislative framework to be addressed, the description of the options under discussion, a more in-depth cost-benefit analysis of the selected headline actions and the systematic integration of stakeholder views, both in the problem definition and to complement the analysis of impacts. These recommendations for improvement were integrated in the final report. The opinions of the Impact Assessment Board on the report are published together with this proposal, as well as the final Impact Assessment report and its executive summary.
Contents
- Legal elements of the proposal
- Budgetary implication
- 2. Consultation of interested parties and impact assessment
- Consultation methods, main sectors targeted and general profile of respondents
- Summary of responses and how they have been taken into account
- 5. Additional information
- 1) Simplification and flexibilisation of procurement procedures
- 2) Strategic use of public procurement in response to new challenges
- 3) Better access to the market for SMEs and Start-ups
- 4) Sound procedures
- 5) Governance
· Legal basis
The proposal is based on Articles 53 i, 62 and 114 of the Treaty on the Functioning of the European Union (TFEU).
· Subsidiarity principle
The subsidiarity principle applies insofar as the proposal does not fall under the exclusive competence of the EU.
The objectives of the proposal cannot be sufficiently achieved by the Member States for the following reason:
The coordination of procedures for public procurement above certain thresholds has proven an important tool for the achievement of the Internal Market in the field of public purchasing by ensuring effective and equal access to public contracts for economic operators across the Single Market. Experience with Directives 2004/17/EC and 2004/18/EC and the earlier generations of public procurement Directives has shown that European-wide procurement procedures provide transparency and objectivity in public procurement resulting in considerable savings and improved procurement outcomes that benefit Member States’ authorities and, ultimately, the European taxpayer.
This objective could not be sufficiently achieved through action by Member States which would inevitably result in divergent requirements and possibly conflicting procedural regimes increasing regulatory complexity and causing unwarranted obstacles for cross-border activities.
The proposal therefore complies with the subsidiarity principle.
· Proportionality principle
The proposal complies with the proportionality principle since it does not go beyond what is necessary in order to achieve the objective of ensuring the proper functioning of the Internal Market through a set of European-wide coordinated procurement procedures. Moreover, the proposal is based on a ‘tool box’ approach, allowing Member State a maximum of flexibility in adapting the procedures and tools to their specific situation.
Compared to the current public procurement Directives, the proposal will considerably reduce administrative burden related to the conduct of the procedure both for contracting authorities and economic operators; where new requirements are foreseen (for instance, in the context of strategic procurement), these will be compensated by the removal of constraints in other areas.
· Choice of instruments
Since the proposal is based on Articles 53 i, 62 and 114 TFEU the use of a Regulation for the provisions applying both to the procurement of goods and services would not be permitted by the Treaty. The instrument proposed is therefore a Directive.
During the impact assessment process, non-legislative options were discarded for reasons set out in detail in the impact assessment.
The proposal has no budgetary implications.
· Repeal of existing legislation
The adoption of the proposal will lead to the repeal of existing legislation (Directive 2004/18/EEC).
· Review/revision/sunset clause
The proposal contains a review clause concerning the economic effects of the threshold amounts.
· Transposition measures and explanatory documents
The proposal concerns an area where Union legislation has a coordination purpose, with a significant impact on a wide range of national legal sectors. Notwithstanding the coordination purpose, many provisions constitute full harmonisation and the proposal includes a large number of legal obligations. Member States supplement Union rules with national additional provisions so as the whole system becomes operational.
In this context, the Commission has identified a number of factors which render explanations by Member States necessary both for the correct understanding of transposing measures and for the functioning of the whole picture of procurement rules at national level:
– transposing and implementing measures are adopted at different institutional levels (national / federal, regional, local);
– in addition to the different regulatory layers, in many Member States rules are also established according to the sector involved or the type of procurement concerned;
– administrative measures of general or specific nature complement and in some cases overlap the main legal framework.
Only Member States can explain how the different measures transpose the Union directives in the public procurement sector and how the same measures interact each with the others.
For these reasons, the communication of documents explaining the relationship between the various parts of this directive and the corresponding parts of national transposition measures should be communicated together with the transposing measures, in particular concordance tables, which constitute an operational tool for the analysis of the national measures.
· European Economic Area
The proposed act concerns an EEA matter and should therefore extend to the European Economic Area.
· Detailed explanation of the proposal
The proposed Directive provides for a simplification and flexibilisation of the procedural regime set by the current public procurement Directives. For this purpose, it contains the following measures:
Clarification of scope: The basic concept of ‘procurement’ which appears also in the title of the proposed Directive has been newly introduced in order to better determine the scope and purpose of procurement law and to facilitate the application of the thresholds. The definitions of certain key notions determining the scope of the Directive (such as body governed by public law, public works and service contracts, mixed contracts) have been revised in the light of the case-law of the Court of Justice. At the same time, the proposal endeavours to keep continuity in the use of notions and concepts that have been developed over the years through the Court’s case-law and are well known to practitioners. In this context, it should be noted that minor deviations from the wording and presentation known from the previous Directives do not necessarily imply a change of substance, but may be due to simplification of texts.
The traditional distinction between so-called prioritary and non-prioritary services (‘A’ and ‘B’ services) will be abolished. The results of the evaluation have shown that is no longer justified to restrict the full application of procurement law to a limited group of services. However, it became also clear that the regular procurement regime is not adapted to social services which need a specific set of rules (see below).
Toolbox approach: Member State systems will provide two basic forms of procedure, open and restricted procedure. They may, in addition, foresee, subject to certain conditions, the competitive procedure with negotiation, the competitive dialogue and/or the innovation partnership, a new form of procedure for innovative procurement (see below).
Contracting authorities will furthermore have at their disposal a set of six specific procurement techniques and tools intended for aggregated and electronic procurement: framework agreements, dynamic purchasing systems, electronic auctions, electronic catalogues, central purchasing bodies and joint procurement. Compared to the existing Directive, these tools have been improved and clarified with a view to facilitating e‑procurement.
Lighter regime for sub-central contracting authorities: In line with the WTO Government Procurement Agreement, the proposal provides a simplified procurement regime that applies to all contracting authorities below the central government level, such as local and regional authorities. These purchasers may use a prior information notice as a means of calling for competition. If they make use of this faculty, they don’t have to publish a separate contract notice before launching the procurement procedure. They may also set certain time limits in a more flexible way by mutual agreement with participants.
Promotion of e-procurement: The use of electronic communications and transaction processing by public purchasers can deliver significant savings and improved procurement outcomes while reducing waste and error. The proposal aims at helping Member States to achieve the switchover to e-procurement enabling suppliers to take part in online procurement procedures across the Internal Market. For this purpose, the proposed Directive provides for the mandatory transmission of notices in electronic form, the mandatory electronic availability of the procurement documents and imposes the switch to fully electronic communication, in particular e-submission, in all procurement procedures within a transition period of two years. It streamlines and improves Dynamic Purchasing Systems and electronic catalogues, fully electronic procurement tools that are particularly adapted to highly aggregated procurement done by Central Purchasing Bodies. The e-procurement instrument would also enable contracting authorities to prevent, detect and correct errors generally due to wrong understanding or interpretation of public procurement rules.
Modernisation of procedures: The proposal provides a more flexible and user-friendly approach for certain important features of procurement procedures. Time-limits for participations and submission of offers have been shortened, allowing for quicker and more streamlined procurement. The distinction between selection of tenderers and award of the contract which is often a source of errors and misunderstandings has been made more flexible, allowing it for contracting authorities to decide on the most practical sequencing by examining award criteria before selection criteria and to take into account the organisation and quality of the staff assigned to performing the contract as an award criterion.
The grounds for exclusion of candidates and tenderers have been reviewed and clarified. Contracting authorities will be entitled to exclude economic operators which have shown significant or persistent deficiencies in performing prior contracts. The proposal provides also for the possibility of ‘self-cleaning’: contracting authorities may accept candidates or tenderers in spite of the existence of an exclusion ground if they have taken appropriate measures to remedy the consequences of any illicit behaviour and effectively prevent further occurrences of the misbehaviour.
The modification of contracts during their term has become an increasingly relevant and problematic issue for practitioners. A specific provision on modification of contracts takes up the basic solutions developed by case-law and provides a pragmatic solution for dealing with unforeseen circumstances requiring an adaption of a public contract during its term.
The proposed Directive is based on enabling approach providing contracting authorities with the instruments needed to contribute to the achievement of the Europe 2020 strategic goals by using their purchasing power to procure goods and services that foster innovation, respect the environment and combat climate change while improving employment, public health and social conditions.
Life-cycle costing: The proposal gives public purchasers the possibility to base their award decisions on life-cycle costs of the products, services or works to be purchased. The life cycle covers all stages of the existence of a product or works or provision of a service, from raw material acquisition or generation of resources until disposal, clearance and finalisation. The costs to be taken into account do not only include direct monetary expenses, but also external environmental costs if they can be monetised and verified. Where a common European Union methodology for the calculation of life-cycle costs has been developed, contracting authorities have to make use of it.
Production process: Contracting authorities may refer to all factors directly linked to the production process in the technical specifications and in the award criteria, as long as they refer to aspects of the production process which are closely related to the specific production or provision of the good or service purchased. This excludes requirements not related to the process of producing the products, works or services covered by the procurement, such as general corporate social responsibility requirements covering the whole operation of the contractor.
Labels: Contracting authorities may require that works, supplies or services bear specific labels certifying environmental, social or other characteristics, provided that they accept also equivalent labels. This applies for instance to European or (multi-)national eco-labels or labels certifying that a product is free of child-labour. The certification schemes in question must concern characteristics linked to the subject-matter of the contract and be drawn up on the basis of scientific information, established in an open and transparent procedure and accessible to all interested parties.
Sanctioning violations of mandatory social, labour or environmental law: Under the proposed Directive, a contracting authority can exclude economic operators from the procedure, if it identifies infringements of obligations established by Union legislation in the field of social, labour or environmental law or of international labour law provisions. Moreover, contracting authorities will be obliged to reject tenders if they have established that they are abnormally law because of violations of Union legislation in the field of social, labour or environmental law.
Social services: The evaluation on the impact and effectiveness of EU public procurement legislation has shown that social, health and education services have specific characteristics which make them inappropriate for the application of the regular procedures for the award of public service contracts. These services are typically provided within a specific context that varies widely between Member States due to different administrative, organisational and cultural circumstances. The services have, by their very nature, only a very limited cross-border dimension. Member States should therefore have large discretion to organise the choice of service providers. The proposal takes account of this by providing a specific regime for public contracts for these services, with a higher threshold of EUR 500 000 and imposing only the respect of basic principles of transparency and equal treatment. A quantitative analysis of the values of contracts for the relevant services awarded to economic operators from abroad has shown that contracts below this value have typically no cross-border interest.
Innovation: Research and innovation play a central role in the Europe 2020 strategy for smart, sustainable and inclusive growth. Public purchasers should be enabled to buy innovative products and services promoting future growth and improving efficiency and quality of public services. The proposal provides for this purpose the innovation partnership, a new special procedure for the development and subsequent purchase of new, innovative products, works and services, provided they can be delivered to agreed performance levels and costs. In addition, the proposal improves and simplifies the competitive dialogue procedure and facilitates cross-border joint procurement which is an important instrument for innovative purchasing.
Small and medium-sized enterprises (SMEs) have a huge potential for job creation, growth and innovation. Easy access to procurement markets can help them unlock this potential while allowing contracting authorities to broaden their supplier base, with positive effects of higher competition for public contracts. In order to make public contracts as accessible as possible to SMEs, the Commission published in 2008 the ‘European Code of Best Practices facilitating access by SMEs to public procurement contracts’[8]. The proposal builds on this work and provides concrete measures to remove barriers for market access by SMEs.
Simplification of information obligations: The general simplification of information obligations in procurement procedures will greatly benefit SMEs. The proposal provides for the mandatory acceptance of self-declarations as prima-facie evidence for selection purposes. The actual production of documentary evidence will be facilitated by a standardised document, the European Procurement Passport which is a means of proof for the absence of grounds for exclusion.
Division into lots: Contracting authorities will be invited to divide public contracts into — homogeneous or heterogeneous — lots to make them more accessible for SMEs. If they decide not do so, they will be obliged to provide a specific explanation.
Limitation on requirements for participation: To avoid unjustified barriers in the way of participation by SMEs, the proposed Directive contains an exhaustive list of possible conditions for participation in procurement procedures and states explicitly that any such conditions shall be restricted ‘to those that are appropriate to ensure that a candidate or tenderer has the ... capacities and ... abilities to perform the contract to be awarded’. Turnover requirements which are frequently a formidable obstacle to access by SMEs are explicitly limited to three times the estimated contract value, except in duly justified cases. Finally, any conditions for participation by groups of economic operators — an instrument of particular relevance for SMEs — must be justified by objective reasons and proportionate.
Direct payment of subcontractors: In addition, Member State can provide that subcontractors may request for direct payment by the contracting authority of supplies, works and services provided to the main contractor in the context of the contract performance. This offers subcontractors which are often SMEs an efficient way of protecting their interest in being paid.
The financial interests at stake and the close interaction between the public and the private sector make public procurement a risk area for unsound business practices such as conflict of interest, favouritism and corruption. The proposal improves the existing safeguards against such risks and provides for additional protection.
Conflicts of interest: The proposal contains a specific provision on conflicts of interest covering actual, potential or perceived conflict of interest situations affecting staff members of the contracting authority or of procurement service providers intervening in the procedure and members of the contracting authority’s management who may influence the outcome of a procurement procedure even if they are not formally involved in it.
Illicit conduct: The proposal contains a specific provision against illicit behaviour by candidates and tenderers, such as attempts to improperly influence the decision-making process or entering into agreements with other participants to manipulate the outcome of the procedure have to be excluded from the procedure. Such illicit activities violate basic principles of European Union result and can result in serious distortions of competition.
Unfair advantages: Market consultations are a useful instrument for contracting authorities to obtain information on the structure, capability and capacity of a market while at the same time informing market actors on public purchasers’ procurement projects and requirements. However, preliminary contacts with market participants must not result in unfair advantages and distortions of competitions. The proposal contains therefore a specific provision on safeguards against undue preference in favour of participants who have advised the contracting authority or been involved in the preparation of the procedure.
National oversight bodies: The evaluation has shown that not all Member States are consistently and systematically monitoring the implementation and functioning of the public procurement rules. This compromises the efficient and uniform application of European Union law. The proposal provides therefore that Member States designate a single national authority in charge of monitoring, implementation and control of public procurement. Only a single body with overarching tasks will ensure an overview of main implementation difficulties and will be able to suggest appropriate remedies to more structural problems. It will be in the position to provide immediate feedback on the functioning of the policy and the potential weaknesses in national legislation and practice, thus contributing to the quick identification of solutions and the improvement of the procurement procedures.
Knowledge centres: In many cases, contracting authorities do not have the internal expertise to deal with complex procurement projects. Appropriate and independent professional support by administrative structures could considerably improve procurement outcomes by expanding the knowledge base and the professionalism of public procurers and delivering assistance to businesses, notably SMEs. The proposal obliges therefore Member States to provide support structures offering legal and economic advice, guidance, training and assistance in preparing and conducting procurement procedures. Support structures or mechanisms exist already at national level, although organised in very different manners and covering different areas of interest for contracting authorities. Member States will therefore be able to use these mechanisms, build on their expertise and promote their services as an appropriate and modern tool capable to provide appropriate support to contracting authorities and economic operators.
To reinforce the fight against corruption and favouritism, contracting authorities will be obliged to transmit the text of concluded contracts to the oversight body, which will thus be able to scrutinize these contracts for suspicious patterns, and give access to these documents to interested persons to the extent that legitimate public or private interests are not jeopardized. However, the creation of disproportionate administrative burden must be avoided; the obligation to transmit the full text of concluded contracts should therefore remain limited to relatively high value contracts. The thresholds proposed would strike the right balance between increasing administrative burden and ensuring greater transparency: with a threshold of 1 000 000 EUR for supplies and services, and of 10 000 000 EUR, this obligation would apply to 10 - 20 % of all procurement published in the Official Journal.
It is not foreseen that requirements concerning oversight bodies and knowledge centres will generate overall additional financial burden for Member States. If some costs are expected to re-organise or fine tune the activities of existing mechanisms and structures, they will be neutralised by a reduction of litigation costs (both for contracting authorities and business), costs related to delays in the attribution of contracts, due to misapplication of public procurement rules or to the bad preparation of the procurement procedures, as well as costs related to the fact that advice to contracting authorities is currently provided in a fragmented and inefficient manner.
Administrative cooperation: The proposal provides also for effective cooperation allowing national oversight bodies to share information and best practices and to cooperate through the Internal Market Information System (IMI).