EU procurement rules clarified
Published: 22 March, 2016
Consternation and uncertainty are the hallmarks of the EU Procurement rules as far as suppliers and buyers in municipal fleet management sector are soncerned, writes Phil Williams, director at specialist consultancy Procurement Partners
The current EU Directive (2014/24/EU) covering public procurement is 178 pages long. Even the document covering the UK's implementation of this directive stretches to 127 pages (Statutory Instrument 2015 No. 102).If this wasn't difficult enough to understand, additional layers of complexity are added whenever judgments reached by courts across Europe lead to a different interpretation of the rules.
So it understandable that, for many people who have infrequent involvement with EU procurement, there is a lack of knowledge and anxiety about the process. There are, however, some fundamental points that can reduce the mystery of public procurement for both suppliers and public sector employees.
Purpose of the rules All public procurement must adhere to key principles of the EC Treaty of Rome, which include non-discrimination, free movement of goods, freedom to provide services and the freedom of establishment. Ensuring these principles are met is a key focus of the procurement rules. In order to do so, the law is shaped so that public procurement activity is open, transparent, proportionate and non-discriminatory.
Remembering these elements and the overarching principles of the treaty is critical in any procurement process. For suppliers, when you believe any of these elements are being broken by a procurement process, clarification should be sought from the contracting authority as soon as possible.
Current thresholds Understanding if the full obligations of the procurement rules apply is the first step and this is primarily based upon the value of the contract to beawarded. Currently the EU thresholds which define when the rules apply are:
When expenditure is above these thresholds, the Public Contracts Regulations 2015 (in England and Wales) and Public Contracts (Scotland) Regulations 2015 (from 18th April 2016) apply. When considering if a contract is above the threshold, purchasers must remember that requirements can not be split up or disaggregated to avoid the rules. It is important to remember that even if a contract is below these thresholds, the overarching principles of the treaty still apply. Procurement processes have to be non-discriminatory, open and transparent.
Even if accessing a framework or using professional support, the onus for compliance with the rules rests with the authority awarding the contract. Remembering some of the following points can help ensure your contract award doesn't attract a challenge from a bidding organisation:
Authorities have free reign to set the award criteria and the weightings of those criteria. However, these must not favour any individual organisation. Setting them so that one organisation has a clear advantage discriminates against other organisations.
Also, in all circumstances, the award criteria used in the evaluation of bids must be related to the nature of the proposed contract. The criteria and any weightings used must be proportionate. A simple example of this could be having an 80% weighting for the warranty element of an item that will be used once: this could be a disproportionate weighting for a disposable item.
The European Commission says transparent practices when awarding contracts are a proven safeguard against corruption and favouritism. Therefore, criteria used to make the award decision should be disclosed to the organisations bidding on the proposed contract.
Ensuring the award criteria and weightings are disclosed should ensure equal treatment of tender submissions. It is not permissible to introduce or apply weightings/sub-criteria during evaluation that have not previously been disclosed. Disclosure of criteria and weightings should be accompanied with any marking methodology and – if necessary – worked examples.
The opportunity should be subject to a suitable level of advertisement. For contracts above the EU threshold, this means the publishing a notice in the Official Journal of the European Union and in England the opportunity must also be published on Contracts Finder (www.contractsfinder.service.gov.uk).
However, the EU principles also extend to activity below the EU threshold.An interpretative communication (2006/C 179/02) issued by the Commission in 2006 made it clear that even these contracts should be subject to a degree of advertisement when there maybe cross-border interest.
For contracting authorities in England and Wales, the need to advertise and open up sub-threshold contracts to competition has been increased in the Public Contracts Regulations 2015. Central government opportunities worth more than £10,000 and wider public sector opportunities of more than £25,000 should be advertised via Contracts Finder – unless the contracting authority is satisfied that it is lawful not advertise the opportunity at all.
These are the key factors to consider in a procurement exercise. However, if public sector procurers constantly challenge whether their process is sufficiently open, transparent, proportionate and non-discriminatory, they will reduce the risk of challenge.
Useful information for suppliers For suppliers involved in replying to public sector tenders, here are some important things to remember regarding EU and general public sector procurement activity:
- The current Public Contracts Regulations expressly permit contracting authorities to engage in preliminary market consultations. This includes seeking advice and guidance from the market and informing suppliers of plans. However, this activity must not result in any violation of the principles of non-discrimination and transparency.
Feedback should always be provided by the contracting authority and for activity above the EU threshold, this is a legal requirement – as is a ten-day standstill period to allow for further queries or potential challenges. For EU
level tenders, when a notification of an award decision is issued, a particular set of points must be provided:
- The identity and score obtained by successful submission(s)
- A breakdown of the scores awarded to your submission against all criteria evaluated. This should also include an explanation of the characteristics and/or advantages of the winning submission(s) and why they scored more highly. This information should be bespoke and tailored for each submission
- When the standstill period will cease, including any information as to how the period may be impacted
- The date before which the contract and/or framework will not commence.
Do not hesitate to raise queries with a contracting authority and, if necessary, challenge it. The regulations limit challenges to 30 days from dateof-knowledge, so be prompt with any action. Date-of-knowledge is the point at which you first knew or ought to have known of grounds for a challenge.
Any issues with tender documentation, supporting information and award criteria used should be raised with the contracting authority as soon as possible. Do not wait until after the submission deadline. If you wait until after the tender deadline, you may be out of time to challenge.
Contracting authorities are required to pay suppliers within 30 days from when they deem the invoice to be valid and undisputed. And contracts awarded must also include provisions for any sub-contracts awarded to also include terms for payment within 30 days.
Suppliers can claim statutory interest based on the Bank of England baserate (+8%) for late payments after the 30 day period. The Late Payment of Commercial Debts Regulations 2013 provides more information – and often a mention of the regulations will speed up payment without having to resort to further action.
For procurement activity below the EU threshold, pre-qualification questionnaires (PQQ) are no longer allowed. Low-value procurements must be a one-stage process but suitability assessment questions are permitted as part of the procurement process. Suppliers should not hesitate to clarify with contracting authorities when they are required to complete a PQQ as part of a non-EU level tender process.
Phil Williams, is in charge of the The Procurement Partners, and has extensive public sector procurement experience. The Procurement Partners is a new procurement consultancy division for TPPL, (The Procurement Partnership). This division has been set up to achieve value for money from procurement activity. With a purchasing background in blue chip fast moving consumer goods companies, Phil has worked in and with the public sector since 2003. His experience has been diverse, with clients ranging from local authorities through to registered providers and the contractors and suppliers to the public sector.