Public procurement directives - Professor Arrowsmith proposes one directive instead of four
Directives on public procurement - new proposal introduces new and burdensome requirements for Member States
Professor Arrowsmith proposes: we should only have one directive instead of four. The following is a summary of her proposal and of how it would achieve real simplification and flexibility. We are not asking you here to indicate agreement to all the details in that paper, which may be a matter for future debate, but merely to the basic approach put forward in the summary below of having one directive which will be based largely on the current Utilities Directive (2004/17). If you are in agreement with the basic approach we invite you to indicate this by showing your support.
Summary
Modernising the EU’s Public Procurement Regime: a Blueprint for Real Simplicity and Flexibility
1. The basic principle: a single directive based on the procedural rules of the Utilities Directive
On 20 December 2011 the Commission published its proposals for two new procedural directives on public procurement - one to replace Public Sector Directive 2004/18 and one to replace Utilities Directive 2004/17, with the stated aims of “simplification” and “flexibilisation” (sic) of the rules - and for a separate new directive to regulate the award of concessions.
Whilst the proposals provide for some additional flexibility, the changes in this respect are limited. (Indeed some points presented as involving greater flexibility in fact arguably merely confirm existing possibilities under the Directive, and also subject them to greater restrictions). In addition, the new proposal introduces new and burdensome requirements for Member States.
Furthermore, the proposals will result in four distinct sets of procedural rules: for public procurement in general (the new Public Procurement Directive; currently Directive 2004/18); for utilities; for defence and security contracts (Directive 2009/81); and for concessions. These regimes will not actually differ much in a lot of their detail. They will all contain many complexities, both internally and as regards their relationship with each other
A simple alternative blueprint for reforming the directives is a single directive for all regulated contracts that is based on the rules for awarding Utilities. This will:
1. Provide for real simplicity; and
2. Provide for additional flexibility.
At the same time, such an approach will ensure continued compliance with the EU’s international obligations, notably those under the Government Procurement Agreement of the WTO.
The rules in the Utilities Directive are suitable for all contracts that the EU regime wishes to regulate, and not merely for utilities. Thus for the public sector in general they can provide for an appropriate degree of flexibility whilst at the same time preserving the essential principles on which the directives are based. For defence and security contracts the differences are already limited, since the negotiated procedure is freely available anyway in that sector, just as it is for utilities. The Utilities Directive procedures are also suitable for concessions. Whilst the Commission’s proposal on concessions suggests that the proposed concessions regime is different because the usual award procedures (open, restricted, negotiated, competitive dialogue) do not apply, this is not the case in reality: although the proposal does not mention the procedures by name all the significant rules of those procedures are in fact applied to concessions.
2. Simplification
A single directive based on the Utilities Directive will greatly simplify the current regime.
Simplification will arise from:
i) The fact that the rules of the Utilities Directive are less complex and detailed than those of the Public Sector Directive.
ii) The fact that there will be only one set of rules, rather than four (plus variations within the four)
The existence of just one set of rules will make it easier to understand and operate the rules. This is important particularly for entities, economic operators, and advisors entities whose activities are subject to more than one regime
A single set of rules will also remove some legal uncertainties and confusion that arises over the relationship between the rules of the different regimes, which do not always fit together in a coherent and logical manner. (Examples are the inconsistent treatment of competitive dialogue in the Utilities Directive and Defence and Security Directive, and the uncertainty over whether the confidentiality issues expressly mentioned in the Defence and Security Directive but not in the other directives can be taken into account when operating those other directives).
A single directive could also enhance simplicity by reducing the complex rules that set the boundaries between different directives. This would be the case, in particular, if a single uniform regime were established with a single set of rules on exclusions, entities covered, and thresholds. This can easily be achieved for the Defence and Security Directive and the Public Sector Directive. With regard to the Utilities Directive and the other two directives there is no justification for differences on exclusions. Whether the entities covered by the Utilities Directive and the thresholds should be assimilated with those of the Public Sector Directive needs more debate. However, it can be argued that this is appropriate and that it should be the rules of the Public Sector Directive that apply in these respects. This would not change much the scope of entities covered in the utility sectors since the wide interpretation given to the concept of a “contracting authority” means that it now covers many entities that were originally thought to be covered by the utility rules as “public undertakings”. Further, a case can be made for excluding from regulation private entities with special or exclusive rights (which are not covered by most other trade agreements, including the GPA). This change would then make it more acceptable to apply the thresholds of the Public Sector Directive 2004/18 to all activities, including utility activities, especially since many of the contracts that would be brought under the directive are anyway covered by Treaty requirements on transparency. A distinction between “utility” activities and others would then be unnecessary.
3. Flexibility
The change proposed above would, first, achieve the flexibility goal of the current reform programme, specifically by giving much greater flexibility to Member States for contracts currently covered by the general Public Sector Directive.
In this respect it would, first, provide for more flexibility for Member States to pursue value for money in the way best suited to their own situations – which are quite different.
In particular, the Utilities Directives allows a free choice over whether to use the open procedure, restricted procedure and negotiated procedure with a notice. Negotiations can help ensure value for money for various reasons; and adopting this approach for all regulated procurement would enable Member States to provide negotiation for their own procuring entities in all situations in which it is useful. (It also gives Member States the possibility to remove the uncertainty that applies in the current Public Sector Directive over when negotiations are possible. This arises both from uncertainty over when the negotiated procedure and competitive dialogue are available, and uncertainty over the extent to which negotiations are permitted in the different procedures e.g. to allow corrections to errors in tenders).
The Utilities Directive also allows use of general notices and notices of qualification systems to advertise a procurement, rather than requiring a notice of each specific procurement, which can reduce the costs of procurement. It also, significantly, allows use of mandatory “qualification systems” (that is, it allows access to procurements to be restricted to those on qualification systems), provided that certain rigorous conditions are observed regarding transparency (in various aspects) of the systems. Qualification systems can be very valuable both in enhancing value for money (for example, by allowing procuring entities to work closely with its best suppliers to improve products and services) and reducing costs and delays in procurement.
It should be stressed that it should be for Member States themselves to make the choice of whether or not to allow their entities use of these new flexibilities, taking account of their own circumstances.
The Defence and Security Directive already provides for some of the flexibility offered by the Utilities Directive, notably in the possibility it gives, like the Utilities Directive, for using the negotiated procedure with a notice for any procurement. However, it does not provide for the other important flexibilities, some of which could be of special value in the defence sector. The approach suggested would also allow use of the open procedure which was not included apparently because it was considered unsuitable for defence and security procurement. However, that is not always the case and it is surprising that this directive does not explicitly include a procedure that might be useful in some cases for Member States to obtain value for money and which also is the most transparent in the directives.
A fuller version of the arguments of Professor Arrowsmith
- is forthcoming in (2012) 21 Public Procurement Law Review and
- is available at http://www.nottingham.ac.uk/pprg/publications/index.aspx . This contains some further suggestions as to how the Utilities Directive rules might be appropriately modified.
See also, Committee of the Municipalities and Regions: 21/03/2012 - Provisions of proposal for new public procurement directive contrary to need for simplification
If you are in agreement with the basic approach we invite you to indicate this by:
1) Showing your support in the following linkedin discussion groups: Procurement in Government and Public Sector or European Public Procurement Network
2) Showing your support in this facebook group or
3) Sending an email to info@ptcs.fi
You may also add comments you have here below, on this page.
Julkaistu: 3.4.2012
Kommentit / Comments
150
5.4.2012 09:06 - Pauliina Karinkanta
I agree with the general approach, but I think that the issue concerning thresholds requires further debate.
139
7.4.2012 12:04 - Kari Tossavainen
I agree with professor Arrowsmith’s sound proposal: “we should only have one directive instead of four”.
Why? Surely one set of rules (a single directive) instead of four set of rules (4 directives) is an objective, which should be open to discussion. I welcome all proposals, which will provide simplicity and flexibility in the complex field of public procurement. Thus I support professional and documented debate over the proposal.
Further debate: I’d like to draw the attention of the debaters to public procurement principles and reference provisions. How the principles in single directive include the Defence and Security Directive and its Treaty-based derogation the exception of Article 346 TFEU? How the complexity of reference provisions is settled in single directive?
”Simplify as much as possible, but no further.” Albert Einstein (1879-1955).
138
7.4.2012 12:38 - Dr. Baudouin Heuninckx
I entirely agree with the proposed approach. One single set of rules would make life much easier for the practicioner. We are currently having long discussions concerning the border between the Defense and Security Directive and the Public Sector Directive, and this proposal would make life much easier.
153
10.4.2012 15:40 - Dominic Rowles
I agree with Sue Arrowsmith's proposal and was certainly hoping for a far bolder simplification than the 246 pages of proposals for the public sector directive proposed by the European Commission.
The Local Government Association (UK) has produced a good paper showing where things could be simplified from the point of view of local authorities:
http://www.local.gov.uk/web/guest/eu-improvement-procurement-and-public-services/-/journal_content/56/10161/3510320/ARTICLE-TEMPLATE
126
22.4.2012 12:40 - Bernard vanHaeften
I too agree with Professor Arrowsmith's proposal that a single set of rules should cover all public procurements and that potentially the Utilities Directive could be the appropriate blueprint.
However, the Utilities Directive as it stands does not include Competitive Dialogue as a defined procedure. While it is possible to apply Competitive Dialogue principles and stages to the Utilities Negotiated Procedure doing so is not straight forward.
If the purpose of a single set of rules is to provide both flexibility and simplicity, I think that it would be a mistake not to include Competitive Dialogue in the new harmonising process.
144
11.5.2012 14:07 - Robert Alexanderson
I definetly agree with proffessor Arrowsmith´s view that increased simplification and flexibility could be achieved with one directive based on the provisions in the Utilities Directive.
The proposal from the Commission will not make life any easier for us practicioners or help us get better value for money. It will only benefite lawyers looking for more business.