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Public Procurement

Local Government Network Conference Warsaw

Thorsten Behnke 26 April 2005

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Overview• Economic impact of public procurement in

Europe

• Core activities of the Commission

• European Public Procurement Law (Legislative Package)

• Particular issues concerning municipalities

• Public-Private Partnerships (PPP) – State of play

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Core activities of the Commission• Legislative proposals

– Review of the Remedies Directive

• Enforcing public procurement law in Member States (e.g. infringement procedures)

• Further development of particular issues – e.g. Public-Private Partnership (PPP)– Interpretative documents

• International negotiations (e.g. GPA)• SIMAP web site• TED Database

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Economic impact of PP

• Market volume: 1,5 trillion Euros = 16% of EU-15 GDP (2002)

• Ca. 34% average price reduction for contracting authorities (i.e. for the taxpayer)

30% tenders via foreign subsidiary

67% domestic tenders 3 % direct

cross-border tenders

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Scope of European PP law („Thresholds“)

According to the new directives (net of V.A.T.):• Supply and services contracts:

– € 154.000 for governmental authorities– € 236.000 for local authorities– € 473.000 for certain utilities (in particular entities providing

or operating a network of public transport, water, sewage or energy, cf. Directive 2004/17/EEC)

• € 5.923.000 for public works (all contracting entities)• Below these amounts (and within the field of “IIB

services” the principles of the EC Treaty apply:– Transparency (appropriate degree of advertisement)– Non-discrimination– Proportionality– Mutual Recognition

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Schematic overview PP proceduresOpen procedure (one round)

Competitive dialogue (three rounds)

Restricted procedure (two rounds)

Selection Award

Selection

Award

Award

Selection

Winner

Dialogue

Negotiated procedure with prior publication (two rounds)

SelectionNegotiations

Winner

Winner

Winner

Award

= company-related

= product-related

= reduction of candidates

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Selected new features of the legislative package

• Competitive Dialogue – Particularly complex projects– Finding a solution co-operatively with the contracting

authority (if necessary, in successive stages)– When solution(s) identified, participants are asked for final

tenders (fine-tuning remains possible)• Dynamic purchasing system

– Open for new participants during its lifetime• Framework agreements

– With one or several* economic operators– Potential tenderers are selected once– “Mini-tenders” during lifetime if appropriate

• Electronic Auction

*(at least three)

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Particular issues concerning municipalities (“in-house”)

• Principle: Every assignment of tasks to a legal entity distinct from the contracting authority is subject to PP directives – regardless if it is a public or private entity

• Exception (“Teckal”) for distribution of tasks to entities which – are subject to a similar control as is being exerted by a

contracting authority over their own departments and– perform their activities mainly for the contracting authority

• Clarification (“Stadt Halle”) that the former criterion is not fulfilled if the entity has a private shareholder

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Selection of candidates

• Personal situation of the candidate– Mandatory exclusion in case of being convicted of

certain crimes– Non-mandatory exclusion e.g. regarding professional

misconduct, non-payment of taxes or social security contributions

• Professional registration• Financial and economic standing• Ability and technical capacity• List of approved candidates (if applicable)

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Award• Weighting of award criteria must now be given in

advance• Best price only or• Economically most advantageous offer

– Price– Quality– Environmental aspects (if applicable)– All criteria must be related to the contract (not to the

tenderer or to general policies)• After award: information of all tenderers• “Standstill period” between award and

conclusion of contract

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Current legal situation of PPPs• Public works or “II A” services contracts

– Directives apply

• Works concessions or “II B” services contracts– Only particular provisions of the Directives apply

• Services concessions– Equality of treatment– Transparency– Proportionality– Mutual Recognition

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Aim of the PPP Green Paper

• Identifying uncertainties regarding the current law• Assessment whether there is a need for clarification

within the EC framework• Outlining avenues of consideration for possible

Community intervention• Initiation of a debate on the future rules • April 2005: Report on the consultation • Autumn 2005: Commission communication• 2006: Follow-up initiative if necessary• http://europa.eu.int/comm/internal_market/publicprocur

ement/index_de.htm

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Main trends from the consultation

• Initiative in the area of concessions – Majority considers EU action necessary– Some contributors in favour of legal instruments– Others in favour of soft law (e.g. communication)

• Initiative in the area of institutionalised PPPs– A majority of contributors favour soft law– Further action on “in-house” appreciated