As previously published in Construction News, Spring 2006
The EU rules governing placing of contracts for works, supplies and services by public sector bodies has now taken effect in English Law. Implemented in the on , this single EC Directive on public sector procurement (2004/18/EC) will now govern all public sector contracts above the financial thresholds. The aim of the directive is to simplify, clarify and update the existing EC rules and improve competition throughout the marketplace.
The main changes are:
Substituting the three directives previously in operation for works
- Putting supplies and services into one directive
Clarifying the rules by incorporating case law (principally the “Alcatel” case)
Addressing modern means of conducting business such as electronic procurement
Addressing the issue of framework agreements
There is now provision for:
Electronic auctions
Framework agreements
Inclusion of new competitive dialogue procedure
Requirement for weighting of award criteria
Clarification of the scope to take account of environmental and social issues
Definition of central purchasing bodies (CPB’s)
Framework Agreements
For the first time these are addressed and regulated. The EU has made frameworks permissible for public sector contracts and introduced rules to ensure that they are not used anti-competitively. The general rule is that the framework should not exceed four years and that the terms of any framework agreement or call-off contract agreed at the outset should not be changed substantially.
In the case of call-off contracts, these should either be awarded in accordance with the terms of the framework agreement itself, or by having a mini competition.
Competitive dialogue
A new procedure has been introduced to operate alongside existing procedures (open, restricted and negotiated) to be used in complex contracts where technical solutions are difficult to define or to ensure development of the best solution. Using the competitive dialogue and negotiated procedure, the number of solutions or bidders with whom the contracting body is in dialogue or negotiation can be reduced . to a mini of three. The procedure can take place in successive stages (which must be clearly advertised).
Central Purchase Bodies
The new rules recognise CPB’s conducting public procurement on behalf of other contracting authorities or public bodies. The CPB must qualify as a contracting authority to be within the rules of the directive, which excludes private companies from setting up as CPBs.
Electronic Purchasing
Electronic purchasing will apply to the open procedure. Bidding companies that fulfil selection criteria and that have submitted an indicative or provisional offer are admitted to an electronic purchasing enabling them to improve their offers continuously. This system can also be used for renewed calls on bids on a framework agreement, and the establishment of a list of pre-qualified enterprises.
Specification of Award Criteria
Contracting authorities must now publish their full criteria for the most economically advantageous tender whilst notifying what the relative weighting is for each criterion. If this is not possible, the reward criteria must be indicated in descending order.
Notifying Unsuccessful Tenderers
The new directive recognises previous EU case law which requires contracting authorities to notify all tenderers of the decision on contract award in writing, allowing a’ standstill’ period of at least ten calendar days between the date of notification and the date of the proposed contract. If a tenderer makes a request in time, the contracting authorities must debrief that tenderer during the ‘standstill’ period. A further three working days between the debriefing and the end of the standstill period must be allowed. This follows the ruling in the case of “Alcatel”.
Summary
There are a number of other detailed changes and we can advise on exactly what these mean and how they affect the tendering process. Broadly speaking we welcome the directive, as there is now only one (albeit one hundred and twenty-seven pages long) directive governing tendering. Although the rules have not changed significantly, public sector bodies must be aware of the changes, in particular where letting framework agreements.
