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Go-ahead for new public procurement rules

Posted by Nick Prag at 16 January 2014, 14:35 CET |
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Better quality and value for money when public authorities buy or lease works, goods or services are promised in new EU rules on public procurement and concession contracts, which received the green light in the European Parliament this week.

The European Commission says the rules will make public procurement "more efficient and more strategic", and respect principles of transparency and competition - which will benefit both public purchasers and economic operators.

The legislation overhauls current EU public procurement rules, For the first time, it sets common EU standards on concession contracts, designed to boost fair competition and to ensure best value for money. These introduce new award criteria that place more emphasis on quality, environmental considerations, social aspects and innovation.

Overhauling procurement rules has been a key priority for the EU. Public procurement is a key driver of Europe's economy. Public authorities spend around 19% of European GDP on works, goods and services, and public procurement is therefore a powerful lever for achieving specific societal goals.

The procurement rules govern the way public authorities buy goods, works and services by establishing the criteria for awarding contracts. They ensure that public purchases are made in a transparent manner so as to ensure fair competition and that contracting authorities get the best value for taxpayers' money.

The new public procurement package has been one of 12 priorities in the "Single Market Act I" which aims to unlock the growth potential of the single market and is a key component of the EU 2020 strategy for smart, sustainable and inclusive growth.

Value for money has been a key objective in the package. Thanks to a new criterion of the "most economically advantageous tender" (MEAT) in the award procedure, public authorities will now be able to put more emphasis on quality, environmental considerations, social aspects or innovation while still taking into account the price and life-cycle-costs of what is procured.

"The new criteria will put an end to the dictatorship of the lowest price and once again make quality the central issue," says Parliament's rapporteur for procurement, Marc Tarabella.

Promoting innovative solutions has been a priority for the direction of Europe's economy. MEPs successfully championed the introduction of an entirely new procedure to strengthen innovative solutions in public procurement. The new "Innovation Partnership" will allow public authorities to call for tenders to solve a specific problem without pre-empting the solution, thus leaving room for the contracting authority and the tenderer to come up with innovative solutions together.

A reduction in red tape will make it easier for smaller companies to access the bidding procedure. Bidding will be simpler, with the introduction of a standard "European Single Procurement Document" based on self-declarations. Only the winning bidder will have to provide original documentation. It is hoped this will reduce the administrative burden on companies by over 80%, according to the Commission's estimates. The new rules also encourage the division of contracts into lots, again making it easier for smaller firms to bid.

The new laws also include rules on subcontracting and tougher provisions on "abnormally low bids". The tougher rules mean that contractors that do not abide by EU labour laws could be excluded from bidding.

The deal on new EU rules for concessions stresses that Member States remain free to decide how they want public works or services to be performed - in-house or outsourced to private companies. The new directive "does not require the privatisation of public enterprises providing services to the public", the text adds.
In addition, there is an acknowledgement of the special nature of water as a public good and therefore accepted the exclusion of this sector from the scope of the new rules.

Local local and regional authorities will be anmong the first to benefit from the general simplification measures. They will be able to advertise their contracts via less burdensome prior-information notices (instead of contract notices). They will also be able to agree with the pre-selected bidders on the deadlines in their procurement procedures.

The new rules will also help smaller firms, which drive growth in the economy. And they send a strong signal to the public, which has the right to see that public money is used effectively. 

The directives will now enter into force 20 days after publication in the Official Journal of the European Union. Member States will then have another 24 months to implement the provisions of the new rules into national law.

Revision of Public Procurement Directives
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Nick Prag

Nick Prag

Nick Prag is founder and managing editor of EUbusiness.com. Prior to EUbusiness, he was senior editor at Europe Online SA in Luxembourg, where he played a major part in the launch of Europe Online International.