eu procurement and remedies changes masterclass session peter andrews – october 2009

EU Procurement andRemedies Changes

Masterclass session

Peter Andrews – October 2009

better value | best answers | less hassle

Outline (1)

The first session • Common mistakes bidders notice• Why are bidders challenging? What are they after?• Why are the remedies rules changing?• When are they changing?


Outline (2)

• New standstill (“Alcatel”) provisions • New limitation periods• When can a contract be “torn up”?• What happens then?• When can you be fined?• Framework call-offs, Part B services and below

thresholds• Summing up...


Outline (3)

The second session…(briefly)

• Part B services and flexibility • Shared services • Competitive Dialogue • Development agreements after the Roanne case

Common mistakes


Top 5 mistakes

• Mixing up selection and award• Award criteria and weightings• End stages of competitive dialogue• Frameworks:

– Illegal access– Illegal call-off, including amends to terms

• Moving goalposts, renegotiating• “Negotiating” in restricted procedure

Current position...

Why are bidders challenging and what are they after?


Why are bidders challenging?

• Recession

• Greater knowledge

• More feeling of “formality”

• Less fear of “rocking the boat”


Bidder tactics

• Nasty letter

• Threatened legal action

• Exploiting uncertainty

• Ultimate aim, currently?– Pre-conclusion– Post-conclusion


Defence tactics

• Getting it right in the first place

• What are they after?

• Are they well advised?

• Will they go the distance?

• Can you safely call their bluff?

Why are the Rules changing, and when?


Changes – why, and when?

• Commission fear...– Lack of teeth– Alcatel period– Many cases in some countries, very few in others– “Race to contract”


When?

• Response– Remedies Directive 2007/66/EC – Must be implemented by 20 December 2009– OGC consultation processes

• Transitional...– New rules apply to “new” processes after 20 Dec– What about framework call-offs?

Changes to standstill provisions


Standstill (“Alcatel”) provisions

• Only a few changes.

• Send Reg 32(1) notice, must include:– Award criteria

– Name of winner and score

– Receiving bidder’s score

– Summary of reasons

– Summary of standstill period rules.


Standstill provisions (2)

• Additional information request in writing by midnight of second working day following sending of notice? (Reg 32(4) notice)...

– Send reasons 3 working days before end of standstill period

– If later, can’t conclude contract until at least three days after info is provided



• Can’t conclude contract until...– Midnight at end of 11th (calendar) day following “relevant

sending date” [if sent electronically]

– Midnight at end of 16th (calendar) day following “relevant

sending date” [if sent otherwise]

• Cannot conclude if legal proceedings are issued (Reg

47G)



• Note, no mandatory standstill for:– Part B contracts

– Where no OJEU notice required

– Framework call offs

• But for each, note “choice” later.

New limitation periods


Limitation periods

• Currently– “Promptly and in any event within three months

from when grounds for bringing proceedings first arose”

• Change...– “Promptly” never to mean <10-15 days


Limitation periods (2)

• Special limitation period for “ineffectiveness”:

– Where award noticed published, and includes justification of why contract was not “OJEU” in first place, 30 days after award notice

– Where there was a tender, and all bidders were told, 30 days after the date on which they were told

– Otherwise, 6 months from contract conclusion

When can a contract be “torn up”?


“Ineffectiveness” generally• Significant change

• Court obliged to declare ineffective where...

• One of the three “grounds” apply,– Where OJEU notice required– Award during standstill period– Framework call-offs

• UNLESS “public interest” exception applies


Ground #1 : Reg.47K(1) • Award without an OJEU contract notice,

where there should have been one.

• Does not apply if...– CA believes no notice required (e.g. Part B, £,

exception)– CA has published “voluntary transparency” notice– AND contract not signed for 10 days.

• Aim?


Ground #2 : Reg.47K(4) • Signing during standstill period, where:

– Other, substantive, breach of the Rules – Causes bidder serious harm

• Aim?


Ground #3 : Reg.47K(7)

• Call-off under framework where:

– Call-off illegal (flawed competition, or changes)– Value of call-off over advertising thresholds

– UNLESS

• CA has run a voluntary standstill period.


Public interest exception • Court discretion where “over-riding reasons in

general interest”.

• Economic interests generally not included, unless “exceptional”.

• Where Court exercises discretion, it must– Shorten the contract and / or– Fine the contracting authority

What happens if the Court “tears up” the contract?


What happens then?

• Three issues:– Existing contract– Procuring a new contract– Fines


Contract issues

• Ineffectiveness “prospective”.

• Court discretion over:– Who gets paid what– Work already done? Funds already committed?– Extension to allow re-procurement?

• Must have regard to “pre-nuptual” agreement


Fines / contract shortening

• Where :– “over-riding interest” exception; or– CA has concluded during standstill period, but no

substantive breach

• Then Court must:– Impose “dissuasive” fine on CA; and / or– Reduce the contract term.

Clarifying a few points


Frameworks

• No obligation to run-standstill, but voluntary standstill will fend-off “ineffectiveness”

• Framework pre-Dec 09 and call-off after?– OGC prefer to apply “old” rules (consulting)

• If the “framework” is ineffective, what happens to existing “call-offs”?– OGC prefer they “stand” unless Ct says so (consulting)


Part B and below thresholds

• No standstill obligation

• No ground for ineffectiveness, unless should actually have been “OJEU”d fully.

• To protect against risk, could issue “voluntary” transparency notice and wait 10 days.

Summing up


Summing up

• Will this make a difference?

• What does it mean for you?

• Consider:- Pre-nuptual wording- Voluntary transparency notices on Part B and <£- Voluntary standstill on some framework call-offs


Part B and below – threshold procurement


Part B: Outline (1)

• The obligatory health-warning• Part B focus

• (1) Introduction

– Part A vs Part B services and to tell which is which– How Part B services used to be treated– How this changed


Part B - Outline

• (2) How to procure Part B contracts– (a) Market-testing? – (b) Advertising : where? and what do I need

to say?– (c) Pre-qualification– (d) The award phase– (e) How do I treat the incumbent?– (f) Standstill period and debriefing?


Part A vs Part B services

• Why the difference?

• How to tell which is which?– Sch 3 of the Regs

– CPV (see http://simap.europa.eu/)

– What you buy, not who you are

• What if I have a “mixed” contract?


Part B – the old attitude

• Only a few bits of the Regs apply…

– Award notice (technically)

– Rules on technical specs.

• So people used to…


Part B: How this changed

• Case-law on basic Treaty principles…– Transparency…– Equal treatment / non-discrimination– Proportionality

• Early 2000s on…

• Commission Guidance (2006)= “diet” version of the rules


1(c): How this changed

Part A services > GBP 139k : full Regs apply

In between : Part A & Part B services : “diet” rules apply

No cross-border interest : Part A & Part B : neither Regs nor “diet” rules apply

V

A

L

U

E


Part B: Advertising

• Do I need to advertise?– Two or three quotes from select list not enough– Advertisement where?– Website, portals always ok– Local / trade press?– OJEU? [take care!]


Part B: what should the advert say?

• No need for massive detail

• Short description of:– contract details– tender procedure– Invitation to contact authority

• Information “reasonably needed to make a decision”


Part B: Pre-qualification

• Do I want to do it?• If so…

– What are you allowed to consider at this stage– Best to focus on bidder, not bid– Setting out the rules – transparency

• In practice – PQQs & marking


Part B: The bid phase

• What is this?• The ITT document • Clarity vs flexibility• Describing / specifying the service• Be clear about “must have” vs “nice to have”• Describing the tender process• Can I short-list / fine-tune / interview?• Timescales


Part B: The bid phase

• Award criteria• What are they?• The Newham case:

– What is it?– Does it apply here?

• What to do in practice?


Part B: Standstill period?

• What is it?• Do I need one for Part B services? [No]• Should I include one anyway?

• Debriefing– Legal duty?– Not under Regs, under transparency?– A good idea?


Shared Services


Shared services: Overview

• Current context• Is the arrangement a “public contract”?

– Procurement vs “inter-municipal co-operation”?– In-house?– Exceptions?

• Some shared service models• Practical risk assessment, incl. remedies


Shared services: Current context

• Drive for efficiency savings

• The “C word”

• A “good thing” = room for flexibility?


• Part A service contract, full OJEU and regulated tender if:– value > GBP 139k– not “in-house”– no exceptions apply

• Part B service contracts and below – threshold contracts are regulated, but more lightly (see 2006 Commission notice).

Shared Services: Traditionally…


Shared Services traditionally…(2)• NB: joint buying is different

• Sharing a chief executive?

• Shared services = sourcing services outside own authority?

• No exception for buying from another public body.

• Perception?


THE LANDKREISE CASE C-480/06, June 2009

Facts

AG said…


Court said Rules don’t apply.

No Teckal, but distinguish:

– “Intermunicipal co-operation” on public service tasks; vs

– Normal procurement

Reasoning:

– Agreement purely between public bodies, in public interest

– Teckal would have applied if they’d set up a company to do it

– Didn’t prejudice the actual commercial procurement

THE LANDKREISE CASE (2)


Commission case-closure : 8 October 2009

– Dortmund agreed to provide IT services to Bocum. [Fee?]

– Zweckverband Kommunale Datenverarbeitungszentrale Rhein-Erft-Rur (KDVZ) conluded agreement for supply and operation of the software to Kweckverband Kommunales Rechenzentrum Miden-Ravensburg (KRZ)

– In both cases, contracts “involved solely the transfer of public tasks between public entities”...”co-operation governed solely by considerations relating to pursuit of objectives in the public interest”

– Applied Landkreise, cases closed.



• Commission case-closure : 8 October 2009:

– Public-public co-operation for waste treatment in Rhine Palatinate

– Agreements between various public bodies re co-operation in waste

– “Solely on considerations and requirements relating to pursuit of objectives in the public interest”

– Applied Landkreise case, and closed file



Where does this leave us?

Inter-municipal co-operation vs commercial procurement

“Straight” buying services from another LA?

Arrangements between LAs, with one to go to market?

Pooling functions?

Case-closures suggest liberal interpretation?



TECKAL…

If body is “in-house”, no need to tender

Teckal (paraphrasing)– As much control as over one of your own departments – Does most of its work for you [or other public bodies].


Any private sector equity is a problem– Stadt Halle (C-26/03)– Setco (c-573/07) (existing)

Shared ownership w. other public sector bodies is ok– Cabotermo (C-340/04); ASEMFO (C-295/05)– Even if stake is very small – ASEMFO (C-295/05)

TECKAL…(2)


Control through committee of member LAs is ok– Coditel (C-324/07)– Setco (C-573/07) - solely LA directors

Narrow focus activities for public owners is helpful– Setco (C-573/07)

TECKAL…(3)


THE BRENT CASE

The facts

Court of Appeal (same day as Landkreise)

LAML not a Teckal Co because…– Board had extensive powers– Directors have duty to LAML, not LAs– Power of 75% of owners to direct board not enough– Overall appearance of 3rd party


JOINT COMMITTEES S.101 LGA 1972

What are they?

Public contract?– Delegate function– vs providing service

Messy…


SUMMING UP…

So need to ensure arrangements:– Are “inter-municipal co-operation”; or– Are technically “in-house”; or– Are procured properly by you; or – Have been properly procured by someone else (and are open to you).


Competitive Dialogue


Competitive Dialogue Outline

• The “political” background

• When is it available?

• Quick run-through

• The difficult areas


“Political” background

• Why does this matter?• Commission unhappy with UK use of

negotiated procedure• UK insistence on flexibility for PFI• Some compromise• Some issues “parked” through ambiguity


CD: When is it available?

• “Particularly complex contracts”:

- Technical- Legal or financial

• In reality:

- Negotiated?- Restricted?


A quick run-through

- See separate sheet


“Difficult” areas (1): Confidentiality

• What’s the issue?• Reg 18 (21)(c)• Express agreement to disclosure?• Implied agreement to disclosure? (See

Commission Guidance)• Deal with at start of dialogue phase


(2) Completeness of final tenders• Reg 18 (25)(b)• “… all elements required for the performance of the

contract.”• But, note clarification, specification, fine-tuning etc.• How do bidders react?• How to deal in practice?• OGC: - affordability and approval at an early stage

- contractual terms and risk allocation during competitive stage


(3):Post-tender discussion

• Reg 18(26)– Clarify, specify, fine-tune a tender… provided no

changes to basic features, ……. no distortion of completion… no discriminatory effect.”

• Not negotiation, but what is it?• OGC view• Commission view• Practice


(4): Discussion with preferred bidder

• Reg 18(28):– “clarify, confirm commitments, …. provided this does not

have the effect of modifying substantial aspects.. and does not risk distorting competition or causing discrimination.”

• Again, not negotiation, but what is it?• OGC view: design, funder due diligence,

finalise contract• Commission view• Practice: reason for change?


OGC practical guidance

- Undertake thorough assessment of CA’s needs and objectives- Ensure affordability and approvals

consideration addressed at early stage- Ensure process conducted to minimise bidder

costs whilst maintaining competition- Ensure contractual terms and risk allocation

settled during the competitive stage


Competitive Dialogue: confidentiality of bidders’ information

- Regulation 18(21)(c)- No “cherry-picking”- However scope for sharing information and solutions - provided agreement to

disclosure- Sharing information: Address the issue at the outset of the dialogue phase- See Commission guidance: Consent to disclosure may be implied in ITPD• Duty of Confidence

Inline LRT v The Mayor Express Medical Varec

• Freedom of Information Act


Development Agreements


Development Agreements

• Why be concerned?• Issues:

– Are works being procured?– Extent of public element? “La Scala” decision – Specification & control? “Jean Auroux” decision Why be concerned?

• Best Practice• HCA framework

Questions?

eu procurement and remedies changes masterclass session peter andrews – october 2009

Documents

boatbetter value best

gbetter value

providedbetter value

hasslestandstill provisions

new rules

standstill period rules

new processes

mandatory standstill