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Public Procurement Rules Revisited

Author: Stuart J Cairns | Date Added : 13-Apr-05

Public Procurement Rules Revisited

Time for change? - Stuart Cairns discussed the proposed amendments to the EU's Public Procurement Regime.

Public Procurement Rules Revisited

Public Procurement is the process of the acquisition (usually by means of contractual arrangement after public competition) of goods, services, works and other supplies by a public sector body. A great range of public sector bodies are covered by the EU public procurement regime including central government, local government and health and education bodies (including universities and further education establishments).

The Current Position

The current procurement regime, which governs the process leading up to the award of a contract, currently draws on three distinct areas of law: the Treaty of Rome, EU Directives and the EU Procurement Regulations (together the "Rules").

Having determined that the Rules apply to a particular authority, the following questions must be addressed before a procurement can be commenced:

(1) Does the contract value exceed the relevant financial threshold?

(2) Will the contract fall into the Public Supply, Public Works, Public Services Contracts Regulations or the Utilities Regulations?

(3) Which of the three award procedures is to be adopted? (i.e. open, restricted or negotiated).

Finally, as the Rules dictate that all tenders must be assessed in accordance with one of two criteria, a choice must be made at the outset on whether the successful supplier will be the bidder who offers:

the lowest price; or
the most economically advantageous tender (this is the criteria most often adopted).
The Proposals

For many years, the current regime has been viewed as cumbersome, out of date and on occasions, difficult to understand. Accordingly, a new Combined Procurement Directive is currently in its final stage of implementation at EU level. Whilst these changes are not imminent (the UK will be given time to implement the Directive once the EU legislative process is complete), contracting authorities and relevant businesses will need to prepare themselves for the changes.

The intention is that the new directive will be easier to follow. Unnecessary differences between supplies, works and services will disappear. There will be clearer provisions on issues on which doubts have previously arisen such as the procedures, technical specifications, award criteria and financial thresholds. The new scope for e-communications will shorten deadlines and provide better data for suppliers.

Perhaps the most controversial change concerns the criteria for awarding contracts. Under the new directive, factors such as environmental and social considerations can be taken into account. As a result, contracting authorities could, for example, specify environmentally friendly production methods or reserve certain contracts for disabled employees. This does not mean however that authorities will have unrestricted freedom to reject a tender on subjective grounds.

A new Competitive Dialogue procedure is to be implemented which will in practice amount to a more regulated version of the negotiated procedure. This will provide that the public body and the bidders will be able to discuss the best way to satisfy the needs of the public body whilst always preserving equality of treatment between bidders. Further provision is to be made regarding framework agreements in order to make the Rules more flexible. At present, only the Utilities Directive mentions framework agreements even though they have now become a recognised feature in public procurement; the amendment will merely reflect current practice. Framework agreements are in essence non-binding agreements between contracting authorities and short-listed suppliers, setting out the terms and conditions upon which future purchases can be made.

Conclusion

Whilst the modernisation of the old Rules should be welcomed, many believe that the new legislation does not yet go far enough to address the current issues emerging within today's procurement market. Indeed, the 4Ps recently produced a "know-how" paper discussing the proposals. In its conclusion, whilst welcoming a number of the amendments, it highlights concerns that "the dynamic purchasing arrangements and the restricted duration of framework agreements may prove, in practice, to be cumbersome, time consuming and costly". It will be interesting to see how, when implemented in the UK, these changes impact on procurement as a whole.

Stuart Cairns is an Associate in the firm's Corporate Department. Stuart can be contacted at stuart.cairns@lestrangeandbrett.com

Quote: Current regimeout of date

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Public Procurement Rules Revisited