Out-Law News 2 min. read
22 Dec 2011, 1:30 pm
The changes will mean public bodies will have to take into account issues such as life-cycle costs or the integration of vulnerable and disadvantaged persons into projects, rather than simply choosing the cheapest bid.
The reform of European public procurement laws is one of the twelve priority actions set out in the Single Market Act adopted by the EU in April 2011, the Commission said in a statement. Calls for tender published in the Official Journal of the European Union amounted to approximately €420 billion in 2009, according to Commission figures. Published tenders only represent 19% of state expenditure on public works, goods and services as smaller-value contracts do not need to be published.
European Internal Market Commissioner Michael Barnier described the reform as "necessary, ambitious and realistic".
"Directives must move with the times. I would like to make sure that the public procurement directives become simpler and more effective and that they make life easier for those whose daily work involves public procurement," he said.
In a formal statement of its position earlier in the year, the European Parliament said that price issues should no longer be the "determining" factor when choosing to award a contract. It suggested that the default position should be the most "economically advantageous" tender, taking into account economic, social and environmental benefits over the entire life-cycle of the project.
However, the lowest price should remain the deciding factor "in the case of highly standardised goods or services", it said.
The proposed new directive (246-page / 736KB PDF) aims to cut the administrative burden for companies involved in the procurement process, including reducing the number of documents required by allowing bidders to 'self declare' that they fulfil preconditions for tendering and promoting the use of electronic communication methods. The Commission said it would aim for full electronic communication in the public procurement process within two years after the deadline for implementing the new directive.
The Commission also hopes to encourage small and medium sized enterprises (SMEs) to bid on contracts by offering incentives to divide tenders into smaller 'lots' and limit the amount of money companies will have to have in the bank before submitting a bid. Businesses in the EU qualify as SMEs if they have less than 250 employees and either a turnover of less than €50 million or no more than €43m on their balance sheet.
Member states will have to appoint a single national authority which will be responsible for monitoring, performing and checking public contracts to ensure that the new rules are being properly applied.
The modernisation programme also includes a new directive on concessions (168-page / 509KB PDF), which until now have only been partially regulated at European level. This will cover agreements between public bodies and businesses where the private company takes on the risk of maintaining or developing the project.
"The proposed directive represents the completion of the single market for public procurement and will, I hope, allow substantial gains in terms of the efficiency of public expenditure and economic growth in the years to come," Barnier said.
The new rules will clearly set out the public body's role and duties where a concession exists, as well as guaranteeing effective access to the market for all European businesses including SMEs, the Commission said.
However, the new rules will only apply to large concessions involving an obvious cross-border interest, it said.
Under the Single Market Act, the Commission aims to adopt the draft directives by the end of 2012. The new laws will have to be implemented by individual states by 30 June 2014.
