eu procurement for non procurement professionals

Liz Wilson-Lamb

EU Services Manager

1st July2014

http://www.achilles.com/

© 2013 Achilles Group Limited Confidential 2

Introductions

Introductions

Who?

What?

EU tendering experience?

Expectations from the day?

Housekeeping

Timescales

Information packs

Themis



Programme

Introduction to sources of law Reasons why we have them

Treaty Principles

Key risks

Specifications

Selection of quotations/suppliers

Assessing the bid

Frameworks

How do we communicate with suppliers

Remedies – what happens when suppliers challenge?

New Directives

Questions and answers



Setting the scene

Current climate



Sources of Law - Hierarchy

Treaty Principles

EU Directives

UK legislation

Courts will review cases

under the UK legislation



What are the ‘EU’ rules?

Principles and detailed procedures to be applied by ‘contracting authorities’

(e.g. local government) and certain ‘utilities’ such as transport companies

Reflecting the risk that such companies might favour national/local suppliers

in their procurement

Such preferences breach the EU Treaty obligations of free movement of

goods, services, people and capital (‘the four freedoms’)

EU Directives set out the procedures and set the framework of the rules,

legislation implemented the UK, courts will review the legislation, court

cases and Treaty principles



Aims and Principles

The EU Directive and the Treaty aim to open up supplier opportunities

Principles (often applied by the courts)

Equal treatment

Non-discrimination

Mutual recognition

Proportionality

Transparency



Requirement for competition

Importance of competition

Limited scope for no competition

Who makes this decision?

Who can take part?

What must we consider for less regulated procurement?



The process outlined



Financial thresholds 2014-2015

What are the EU thresholds and why do you need to know?

How do they work?

Supplies and services

£172,514 - Public Sector

£345,028 - Utilities

Works

£4,322,012

Changed 1st January 2014

Every 2 years



Valuing the requirement

How do we determine the value of a contract?

The requirement not the contract

Lots and options

Aggregation

Extension of contracts

Frameworks

How much discretion do we have?



Definition

What is a Specification ?

A specification is the key part of the Tender documentation, it should be

clear, accurate, and give a complete description of the supplies, services or

works required.

The Specification defines the requirements to fulfil the contract.

A poor description of the requirement may mean that the product or service

is not delivered to the standards required, and later changes to the

requirements may result in a ‘material change’ and abortive costs.

Preparing a specification requires in-depth research and accuracy.



Pre-market engagement

Research the market by talking to suppliers, other purchasers, industry

associations, etc. to identify possible solutions, indicative costs and delivery

time-scales

Look for diversity and Innervation from possible new entrants

New Directive now provides for Pre-market engagement.

Be mindful of issues regarding discrimination

Use of Prior Information Notice – manage risk

Identify the scope of the contract and the range of goods, services or works

that the supplier will be asked to deliver



Stakeholder Engagement

Who should produce the specification ?

Procurement ?

The end user / stakeholder ?

The persons who knows the most about the needed commodity or service

Ensure that there is a clear understanding of what is required.

If producing a specification for another party, identify and agree the

stakeholders requirements and again, ensure that they are fully understood

May work with the market

conflicts of interest



Specifications and Standards

Technical specification must not lead to discrimination

Where relevant EU standard exists, must refer to it or to

performance/functional specification – cannot mandate the standard

Bespoke specifications must not be discriminatory

• E.G Built around a particular supplier’s approach

Trade names can only be used where absolutely necessary, and

accompanied by the words ‘or equivalent’

The contract notice must contain the scope of the notice and this will often

necessitate understanding the specification



Selection criteria principles

Selection criteria

To assess supplier capacity not the offer it might make

Information usually obtained using PQQ

Disclosure of criteria

All suppliers assessed equally

How should the criteria be set out?

Relevant to the contract

Proportionate



Award criteria

The evaluation criteria that will be used to assess the bids should be

developed at the same time as the specification. The evaluation criteria

must link to the subject matter of the contract.

Therefore the specification must be correct, if not the criteria will be flawed

resulting in deficient outcomes

Can not have random criteria it must be relevant, quantifiably measurable,

proportionate, linked to the specification.

If the bid received does not meet the specification it can not be accepted –

even if it offers great innovation and VFM

Post tender negotiation?



Award criteria principles

Applied to tenders and any subsequent negotiations – Procurement

responsible?

Most economically advantageous tender (MEAT) or lowest price

Criteria must be

Relevant to the contract

Measureable

Assessed professionally

Assessed equally

Disclosed to suppliers before

they tender

West Coast Trains – lessons learnt?



The distinction between selection and award criteria

Supplier’s capacity v supplier’s offer

Why it matters

Who does what in the tender?

Timescales for the competitive process



What are frameworks?

A framework is a form of ‘quasi-contract’ which is ‘awarded’ in the same way

as a ‘proper’ contract

Are not a supply contract, a works contract or a service contract in

themselves

Can be between one or more contracting authority or entity and one or more

economic operators

Which establish the terms (in particular the terms as to price and where

appropriate, quality)

Under which the economic operator will enter into one or more contracts

with an authority in the period during which the framework agreement

applies



Who can use a framework?

Transparency requires disclosure of the contracting authority or authorities

that may use the framework

At least generic reference (provided adequately detailed e.g. updated list of

central government departments as shown in a maintained list)

To allow immediate identification of user authorities

If users known they should be disclosed

Note need to identify expected maximum expenditure under the framework

in the notice

See OGC PPN 15-10



Key rules

Framework duration limited to 4 years normally

“save in exceptional circumstances, in particular circumstances relating

to the subject of the framework agreement” (Reg 19(10))

Minimum 3 providers – multi supplier framework

Where 3 or more meet selection/award requirements (Regulation 19 (6))

Prohibition of ‘improper use’ and use of framework in such a way to ‘hinder,

prevent, limit or distort competition’

Translation: “anything we have not thought about that the courts might think

is a breach of the rules is also forbidden”?

E.g. a framework which effectively allows single tender purchase from a

multi-supplier framework based on preference or non-objective criteria



Awarding contract under framework agreements

Where framework includes sufficient information (single supplier and some

multi supplier)

By applying the terms in the framework

Possible methods of awarding the contract:

“Cascade” (ranking)

Virtual catalogue

Rotation?



Awarding contract under framework agreements

Where framework does not include sufficient information to determine the

winning supplier the contract should be awarded by ‘mini competition’

All capable providers invited

Framework documents should make it clear which firms are qualified for

which type of order

Bids in writing including electronic methods (no explicit timescales)

Bids must not be opened until all received (no faxed tenders)

Contract must be awarded on the basis of application of the criteria set out

in the contract documents based on those in framework agreement.



Supplier notification

Notification at selection stage

Pre-qualification

Non-compliant bids

Award decision notification to tenderers and concerned candidates (those

not already notified)

Standstill (cooling off) period of 10 or 15 days



Supplier notification

How much information is enough and how should we respond to debriefing

requests? Who would deal with this?

Mermec UK v Network Rail Infrastructure

How are your comments useful?



Deciding not to hold a call for competition

When can we directly award contracts?

Extending contracts – what does this mean?

How much scope do we have to change contracts?



Changes to contracts post award

Applies where a contract has been changed to such an extent that a new

contract arises – from pressetext case

Risk of ineffectiveness arises from the failure to advertise this “new”

contract

New directive makes clear the indicators in that case and provides some

comfort as to changes that would not lead to a new contract arising



When does modification lead to new contract?

Modification is substantial where it renders the agreement materially

different from the original

New conditions would have allowed for selection of different candidates

or acceptance of different offer or would have attracted additional

participants

The modification changes the economic balance in favour of the

contractor

The modification extends the scope considerably



How does a legal challenge arise?

Any decision can be challenged by supplier with ‘standing’ in the UK courts

In most cases (except for ineffectiveness) supplier must start proceedings

within 30 days from date of knowledge of the breach

i.e. the date on which the supplier first knew or ought to have known

that grounds for proceedings had arisen

Court has discretion to extend up to a total of 3 months from date of

knowledge

Effect of CJEU cases

Challenge often follows supplier notification and largest volume of

complaints about selection and award criteria – West Coast Trains



Remedies regime

Suspension

Set aside

Damages

Ineffectiveness (for certain breaches)

Civil financial penalties (have to accompany ineffectiveness)

Penalties must be ‘effective, proportionate and dissuasive’

Contract shortening



Ineffectiveness

Provides for termination of a contract on application by a supplier

Applies only to certain breaches

Illegal direct award of a contract (‘single tender’)

Failure to observe standstill requirements (if accompanied by a

breach of other rules that might damage supplier’ rights)

Illegal award of a contract under a framework

Applies only prospectively – any rights or obligations from the contract prior

to the order unaffected

Ineffectiveness must be accompanied by a ‘civil penalty’ (determined by the

courts - “proportionate and dissuasive”)



When would the court waive ineffectiveness?

The court would only waive ineffectiveness in exceptional cases

In general the court has a duty to make a contract ineffective if the grounds

arise

There is an exception where ‘overriding reasons in general interest’ require

waiver

However economic reasons would only be accepted in exceptional

circumstances



When would the court waive ineffectiveness?

Specifically not allowed would be costs of:

Delay

New procedures

A change in supplier

Any legal obligations on the purchaser

Even where ineffectiveness were waived court would still be required to

shorten the contract, impose a civil penalty or both



Time limits for ineffectiveness

Default is 6 months from award

Can remove threat altogether with a Voluntary Ex Ante Transparency

(VEAT) notice after 10 days from date of publication (for direct award)

30 days from publication of contract award notice (for direct award)



Part B Services

Abolition of Part B services

No longer two separate ‘types’ of service

Residual services to fall under full coverage of the directives

Majority now have cross- border interest

Certain exemptions remain

Recognition that some services will require national delivery

E.g. Health and Social care

Specific rules surround their award

Specific thresholds for these categories - €750,000



Contracting Authorities ‘encouraged’ to break high value contracts (>

€500,000) into lots

Where not divided into lots – justification to be given in notice

Turnover requirements explicitly limited to 2x contract value

Proportionality

Exception for duly justified cases relating to special risks

Must accept self-declarations of status relating to exclusions and

financial/technical position at the time of making a request to participate or

submitting a tender

Increase support for involvement of SME’s



Changes

More relaxed view of justifications for competitive dialogue and competitive

negotiated procedures

Innovation Partnerships – phased approach to buying product

developments

Shorter minimum timescales

Sub-central bodies able to use the Prior Information Notice as a call for

competition

Abnormally low tenders defined and obligation to exclude tender if low due

to non-compliance with EU law (social, environmental etc.)

Life cycle costs can include environmental impact of product creation

provided it can be monetised and monitored

Separate Directive on works and services concessions



Clarifications

Pre-market/Pre-procurement engagement expressly provided for- subject to

protection of competition

Award criteria can include whole lifecycle costs and the merits of staff

assigned to the contract (experience issue)

Exclusion and selection criteria clarified

Evidence of poor past experience as an exclusion ground

Material Change defined



Achilles EU Team

Liz Wilson-Lamb EU Services Manager

Debbie Metcalfe EU Procurement Advisor and Trainer

Kate Pucci EU Procurement Advisor and Trainer

Emily Strange THEMiS Product Manager

Daniel Bremner Sector Account Manager

Sally Griffin Sector Account Manager

Jayne Wellman Administrator

Associates

Professor Sue Arrowsmith Legal Expert

Susie Smith Lawyer and Consultant

Steve Kay EU Advisor



Thank you.

Achilles.com/LinkedIn Twitter.com/Achillesltd

www.achilles.com

Contact details:

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T: +44 (0)1235 838115

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