1 procurement present and future – the art of the possible procurement present and future – the...
Post on 23-Dec-2015
219 Views
Preview:
TRANSCRIPT
1
Procurementpresent and future – the art of the possible
Procurementpresent and future – the art of the possibleChristopher Brennan, Wragge & Co LLP
Royal Northern College of Music, Oxford Road, Manchester
Thursday 14 June 2012
Christopher Brennan, Wragge & Co LLP
Royal Northern College of Music, Oxford Road, Manchester
Thursday 14 June 2012
Name of Speaker, Position2
Overview of EU procurement law (1): its purpose and origins
A creature of Brussels (and the Single Market imperative)
Regulates the way purchasing must be conducted, to promote competition (and therefore value) within the Single Market
Three branches of this law: one regulates the public sector, another regulates utilities, but with a lighter touch; the third regulates defence and security
The “free movement” rules (free movement of goods; freedom to provide services) are the bedrock of the Single Market (and are enshrined in the Treaty of Rome (now the Treaty on the Functioning of the European Union))
Procurement law is designed to be an enabler of the cross-border trade promoted by the free movement rules
Name of Speaker, Position3
Overview of EU procurement law (2): its legislative make-up Treaty on the Functioning of the European Union (TFEU)
Directive 2004/18 (Public sector)
Equivalent directives for utilities and defence
Directive 2007/66 (dealing with redress)
Case-law of the European courts
The Public Contracts Regulations 2006 (SI 2006/5) (as amended)
Equivalent regulations for utilities and defence
Amending regulations in 2009 (SI 2009/2992) and 2011 (SI 2011/2053) to tighten:
– the rules on getting redress for bad decisions; and
– the time-limits for doing so
Domestic case-law in (England, Northern Ireland, Scotland)
Name of Speaker, Position4
TFEU
- Free movement rules
RULESDirective 2004/18 (Public Sector)
Directive 2004/17(Utilities)P
R
I
N
C
I
P
L
E
S
Equal Treatment
Transparency
Non-discrimination
Mutual recognition
Proportionality
Utilities Contracts
Regulations 2006 Public Contracts
Regulations 2006
Amending Regulations in 2009
(on getting redress for bad decisions)
Amending Regulations in 2011
(on the timescales for doing so)
RULES
Name of Speaker, Position5
Overview of EU procurement law (3): The state of play today In Europe, public authorities spend about 18% of GDP buying goods and
services, and procuring construction works
The European Commission recognises that procurement can be used as a powerful lever for achieving a Single Market fostering growth
But the current rules don’t really address many of the legal and practical issues faced in the context of complex procurements
So a large body of case-law has grown up to fill some of the gaps
And there are proposals to modernise the whole of procurement law, to codify key case-law, and to make the law more flexible - starting with an all-new set of Directives by end 2012 (implementable in all member states by mid-2014)
Name of Speaker, Position6
Basic concepts (1): classification of different types of procurement The procurement rules apply where a public body – a “contracting
authority” – “procures”, i.e. buys, (1) goods, (2) services*, and/or (3) building work/development
The rules apply when the estimated total value of what is being bought exceeds £113,057 (for goods and services*), and £4,348,350 (building work/development)
*THE BIG “BUT”: services are sub-classified into 2 groups – those whose procurement is fully regulated by the rules (“Part A”) and those whose procurement is only partially regulated (“Part B”)
HEALTH/SOCIAL CARE SERVICES ARE PART B, so most of the detailed rules don’t apply when buying those services. Fully regulated (Part A) services include architectural, financial, management consultancy, ICT
So what is there to watch when buying Part B services?
Name of Speaker, Position7
Basic concepts (2): buying Part B services Remember the EU principles of equal treatment, transparency etc? They
are considered to apply when buying Part B services, IF there is likely to be foreign interest in what’s being procured
BUT our own national rules require us to treat candidates equally and in a non-discriminatory way, and to act in a transparent way – regardless of whether there’s any cross-border interest
And the standing orders/SFIs of the commissioner may require it to put purchases out to tender if the estimated contract value exceeds a certain amount (in the SFIs of many commissioners, the threshold here can actually be lower than the applicable EU threshold)
Name of Speaker, Position8
Basic concepts (3): what aren’t Part B services Remember that health and social care services class as Part B; in
essence, these are services to the individual (in other words the services of clinicians, other healthcare/social care professionals and those in allied professions)
So, the following are not Part B services and may be subject to the full procurement rules:
– the purchase of equipment (e.g. a scanner)
– the purchase of software or a software solution
– the purchase of medical devices
Some services may involve a mix of elements - software plus services of clinicians (e.g. teleradiology reporting). Rule: what represents most of the contract value – the software or the service?
Name of Speaker, Position9
Basic concepts (4): Exemptions originating from the European Court Teckal: direct award to an entity specially established by the
commissioner is allowed where:
– the commissioner exercises over that entity a degree of control equivalent to the control it exercises over its own departments, and
– the controlled entity carries out the essential part of its activities for the controlling commissioner
This also applies where more than one commissioner controls the entity (so a “Teckal” JV co)
Hamburg: no procurement needed where commissioners co-operate to carry out their public functions and there is genuine co-operation, carried out in the public interest, no profit is made (there is cost reimbursement only), and there is no private participation in the provision of the services. Here the commissioners are effectively just “helping each other out”
Name of Speaker, Position10
Basic concepts (5): NHS specifics NHS pilots:
– These may be short- or longer-term contracts
– They may involve procurement
– They may involve a mix of Part A/Part B services, or could involve a mix of services/goods (or more)
– How the procurement is classified, and the extent to which the rules apply, depends on what accounts for the greater (or greatest) element in the contract for the pilot
– Not all pilots are procured competitively. This may be intentional, and may be sanctioned by the fact that they class as Part B services
– They may evolve into bigger projects later, which may be procurable
Purchasing for other bodies:
– As agent for a number of health bodies
– With their authority
Name of Speaker, Position11
Basic concepts (6): the procedures (mandatory in procurements other than Part B or below-threshold) Open: contract notice (min. 30 days), tender, evaluation, standstill
(min.10 days), award. Typical timeline: about 2 months
Restricted: contract notice (min. 30 days), selection, tender (min. 40 days), evaluation, standstill (min.10 days), award. Typical timeline: between 3 and 4 months
Competitive dialogue: contract notice (min. 30 days), selection, dialogue (often phased) leading to tender, evaluation, standstill (min.10 days), award. Typical timeline: anything between 8 or 9 months and 3 or 4 years, depending on the complexity of the project
Negotiated: contract notice (min. 30 days), selection, negotiation (leading to “BAFO”), evaluation, standstill (min.10 days), award. Typical timeline: same as competitive dialogue
Name of Speaker, Position12
Basic concepts (7): the procedures, their use and limitations Open: an uncomplicated procedure, for uncomplicated requirements
Restricted: generally regarded as the “default”. Fine when the authority can specify the precise make-up of the project (technical, financial, legal). Allows for NO negotiation at any stage
CD: Used for the procurement of “particularly complex” contracts, where the authority isn’t “objectively able” to specify the make-up of the project and where the open or restricted procedures do not allow the award of the contract. Allows for NO negotiation after dialogue, except to “clarify, specify or fine-tune” tenders (leaving their “basic features” unaltered)
Negotiated: only available for super-complex procurements; otherwise outlawed. Note: the legislative reform proposals, if implemented, will alter this
REMINDER – these procedures only formally apply to fully regulated procurements (so not procurements of health services). But purchasers can adopt the same or similar procedures for those, and it may make for a more demonstrably fair process if they do
Name of Speaker, Position13
Basic concepts (8): Fairness – how candidates can expect to be treated Much of the body of public procurement case-law has arisen out of
complaints about lack of fairness, openness and objectivity on the part of authorities carrying out procurements and making award decisions following evaluation
Notably, and from the perspective of the Treaty Principles, the case-law has highlighted the importance of articulating selection criteria, award criteria, and the weightings of each, at the right time
Case-law has also underlined the importance of an effective system of pre-contract review of award decisions (hence the standstill period), and has resulted in the introduction of a means of having signed contracts declared ineffective in certain situations (in each case recognising that
damages may not be adequate)
Be aware - some of the case-law does come from procurements of Part B
services!
Name of Speaker, Position14
Evaluation: Distinguishing between selection criteria and award criteria (1) Selection Criteria: these are tightly regulated, so their range is limited.
They are basically designed to assess the suitability of candidates to be taken forward to the bid stage of the procurement, and are used at pre-qualification
Award Criteria: these are loosely regulated, and their aim is to identify which candidate should win the contract by being applied in the assessment of the price and quality aspects of each bid
Name of Speaker, Position15
Evaluation: Distinguishing between selection criteria and award criteria (2) Selection Criteria look at ability to perform the contract, based on
– Economic and financial standing
– Skills and technical capacity, based on current credentials and past experience
Name of Speaker, Position16
Evaluation: Distinguishing between selection criteria and award criteria (3) Award Criteria look at the attractiveness of the actual bid, and have to
be used to assess the bid on the basis of one of the following:
– Lowest price, or
– The most economically advantageous tender (“MEAT”) – i.e. price balanced against qualitative aspects of the bid
Name of Speaker, Position17
Evaluation: MEAT criteria and weightings (1)
It is up to the contracting authority to decide what criteria should apply, and what weightings should apply to them
Evaluation methodologies should be prepared (ideally in MS Excel spreadsheet or other workable format) at the same time as the criteria themselves are actually formulated
Name of Speaker, Position18
Evaluation: MEAT criteria and weightings (2)
All award criteria their weightings should be disclosed as early as possible in the procurement process and MUST be disclosed by the time the ITT is issued
Where it is believed that weightings cannot be provided (on objective grounds), authorities MUST disclose award criteria in descending order of importance
Name of Speaker, Position19
Evaluation: MEAT criteria and weightings (3)
Whatever criteria are used, they and their weightings must be CLEAR – and able to be understood in the same way by all candidates (including foreign ones!)
They must be linked to the subject matter of the contract
They must not operate to confer unrestricted freedom of choice on the authority
They must not deprive an incumbent provider of the advantages afforded to that provider
Name of Speaker, Position20
Evaluation: MEAT criteria and weightings (4) Sub-criteria can be used, PROVIDED they are disclosed in advance of
bid preparation, OR (if they are not disclosed) wouldn’t have affected bid preparation if they had been disclosed
Pass-fail criteria: take care when using these!
Weightings: remember that even if the criteria are right, wrong weightings can produce disaster
Remember the Treaty principles – they must be applied throughout
Name of Speaker, Position21
Proposals for modernisation (1): headline stuff To recap: new Directives expected end 2012, new domestic rules in
2014
Big changes:
– Overall simplification
– More scope for negotiation
– New procedure – “innovation partnership” (a negotiated procedure – “we negotiate, you innovate and then we’ll buy”)
– Very light-touch rules for NHS commissioners, CCGs and FTs
Name of Speaker, Position22
Proposals for modernisation (2):Loss of Part A/B services distinction All services to be fully regulated, with a few key exceptions including
health services, and legal services with limited cross-border interest
EUR500,000 threshold for the carved-out services
Contracts estimated to exceed threshold will be subject to an OJEU and Contract Award Notice requirement, but otherwise the only obligation will be to ensure transparency and equal treatment (and some relatively flexible rules around evaluation criteria)
Name of Speaker, Position23
Proposals for modernisation (3):procedural changes Competitive dialogue and negotiated procedure will rank equally in terms
of the ability to choose between them
Electronic availability of procurement docs and transmission of notices will be mandatory
Incentivising division into lots: where contract value falls above threshold but below EUR500,000, a CA will have to justify NOT dividing into lots
New provisions specifically allow pre-procurement consultation with the market
Rules on negotiated procedure are tighter around phased de-selection, explaining reasons for de-selection and allowing adequate time for submissions, and not changing specified aspects during the process
Rules on competitive dialogue are a bit looser: negotiation with preferred bidders is permitted provided essential aspects of tender are not modified and no risk of distortion of competition, or discrimination
REMINDER: the above apply to fully regulated procurements
Name of Speaker, Position24
Proposals for modernisation (4):best of the rest Innovation partnership: “establishing a structured partnership for the
development of innovative products, services or works and the subsequent purchase of the resulting supplies, services or works” (follows NP)
Timescales: all shortened. OP - 40 (elec: 35) (PIN: 25); RP – 30+35 (PIN:15) (elec: knock off 5) (sub-centrals can agree); NP – 30+30; CD – 30+whatever
Teckal codification: note - 90% activity requirement
Hamburg codification: no procurement needed where authorities co-operate and (i) genuine co-operation, (ii) public interest, (iii) no more than 10% open market activity, (iv) cost reimbursement only and (v) no private participation
Pressetext codification: substantial change
Requirement for declarations by candidates of “privileged links” and MSs to impose rules to “prevent, identify and…remedy conflicts of interest”
Requirement for a public oversight body in each member state
Name of Speaker, Position25
Commercial Issues: striking the balance People often want to run a mile from the procurement rules. You can
sometimes avoid them, but when you can’t, you can make them work for you rather than against
It’s all about the art of the possible – they allow surprising amounts of flexibility
Where they don’t, what’s the likelihood of challenge?
Think about market testing/engagement, and commercial risk management
Compare:
– “value for money” requirements; the imperative for savings
– compliance with governance protocols
– “best practice” in procurement
Spotting potential conflicts of interest makes them easier to avoid (or manage)
Getting strategic legal advice early can make all the difference
Name of Speaker, Position26
Thank you
Questions?
christopher_brennan@wragge.com
0121 214 1055
07841 322716
top related