experiences with procurement policy in the eu

Experiences with procurement policy in the EU

Procurement Seminar Delhi, 11-12 May 2006Georg RoeblingDG TRADEEuropean Commission

12 May 2006Georg Roebling, DG Trade

Delhi Seminar on Gov. Procurement

Overview

Introduction Objectives Principles EU procurement framework International dimension Current topics Conclusions



Introduction - 1

EU – internal market of 25 Member States, 21 official languages

Accession of Romania, Bulgaria in 2007-08 At the heart of European integration since

1957: Internal Market in procurement: markets were fragmented ensure that any company in the EU can effectively compete for any public contract.



Introduction - 2

Federalism vs. Uniformity Striking a reasonable balance:

- EU Framework laws (“Directives”) = need transposition in all EU MS to fit into national/regional/local legal systems

- Only above the thresholds

1 procurement market KEY: Central electronic gateway – TED



Introduction - 3

Some figures Volume of EU-25 procurement market: 1,600

billion Euros (16% GDP) >200,000 procuring entities 33% cross border procurement In terms of success rate, domestic and firms

from other EU MS compete on a par Cost Savings: 30% (substantially more?)



Objectives – 1

Economic / Fiscal Companies can tap into larger market, reap

economies of scale and can specialise efficiency gains to be passed on to public (if competitive tendering environment!)

Enormous savings potential from transparent, open and competitive tendering more resources available for education, health, infrastructure…

Access to finance, expertise, technologies and managerial know how of private sector, incl. public-private partnerships (PPPs)



Objectives – 2

Competitiveness Public service gets access to best products Businesses: learn to compete to become

competitive which in turn drives innovation and efficiency and thus generates welfare gains for society

Protect efficient markets Anti-cartel (bid-rigging) inflated prices



Objectives - 3

Non-discrimination Base for EU action Market, not State, should pick the winner: no

cosy relationship with favourite suppliers

Accountability Anti-corruption – opaque practices more

difficult in transparent, competitive environment



Principles - 1

Transparency Throughout the tendering procedure, i.e.

from tender notice via qualification and award criteria to information on award decision

Effective review mechanisms, including interim measures and compensation

Getting the incentives right for stakeholders



Principles - 2

Open and competitive tendering Non-discrimination – actionable fundamental right Structuring the process to facilitate market entry – no

unnecessary barriers to entry¿¿ heavy-handed (pre-) qualification procedures

¿¿ Focusing too early on selected bidders

¿¿ Uncertainty as to the rules of the game

Excessive red tape tends to facilitate collusive practices (bid rigging)



EU procurement framework - 1

Rules 2 substantive Directives, on classic and

‘special’ sectors (= utilities), revised in 2004, implementation by Member States: Jan 2006

2 Remedies Directives (1989 / 1992), currently being reviewed




Entities Public authorities at EU, national, regional

and local level, incl. utilities Public undertakings, incl. utilities Undertakings over which public authorities

still exercise decisive influence



EU procurement framework – 3

Thresholds Goods and Services:

SDR 130,000 – central entitiesSDR 200,000 – sub central entitiesSDR 400,000 - utilities

Public Works ContractsSDR 5 million




Types of contracts Public supply / services / works contracts Works Concessions Framework Agreements (periodical supplies) Dynamic Purchasing Systems (completely

electronic process; open to any supplier meeting the selection criteria)

Electronic auctions




Procurement methods (procedures) Open tendering, Restricted tendering – all

suppliers invited to express interest Negotiated procedure (usually with prior

contract notice) only in well-defined exceptional circumstances

New: Competitive Dialogue for part. complex contracts – conduct transparent dialogue




Qualification and specification issues “permanent lists of qualified suppliers” – no

encouraging experiences - increasingly abandoned – too high administrative costs, out of date, not specific enough; potential barrier to entry esp. for SMEs

Tender specifications on international standards, performance-related criteria; use “or equivalent” (pro innovation)




Review Mechanisms Empowerment of suppliers to look after their

own rights – “private agents in the public interest to foster compliance with rules”

Key: info on award results – platform for action

Including interim measures and right to compensation if supplier’s rights infringed




Review Mechanisms - continued No reason for alarm – surprising (or not…?) absence

of much propensity to litigate in procurement BUT: mere threat of action already induces

compliance (“risk of sanctions sharpens the mind”) In parallel: complaints to European Commission

which can take Member States to the European Court of Justice for violations of EU rules



International dimension - 1

EU is Member of the GPA Coverage in the GPA is subject to (bilateral)

negotiations; in practice, coverage varies depending on market access offered

Generally, EU has wide-ranging coverage commitments



International dimension - 2

Now standard policy to include comprehensive procurement chapter in FTAs

Increased recognition of links between trade and development

Bilateral procurement deals allow for more flexibility, i.e. less stringent procedural rules

Bilateral procurement deal can be “GPA-plus” if reciprocal level of ambition

Model character of EU-Chile FTA



International dimension – 3

EU is prepared to consider extensive requests from Developing Countries for differential treatment if – well-justified– objective– digressive and – verifiable



Current topics - 1

Electronic procurement Potentially large savings, esp. on transaction

costs, but technically complex – no new barriers to entry!

In 2004 in EU, still 90% of tender notices received on paper



Current topics - 2

Public Private Partnerships (PPPs) Key tool to attract private sector finance and

expertise, esp. for infrastructure projects (transport, public health, public safety, waste management, water distribution)

Complex technical, legal and financial arrangements sometimes call for negotiation to identify and develop best solutions



Current topics - 3

Public Private Partnerships (PPPs) Can be concessions (risk/benefit of

exploitation), can be institutionalised PPPs (i.e. public service undertaking jointly held by a private and a public partner)

Flexibility vs. procedural straightjacket (to ensure transparency and non-discrimination)



Conclusions

Benefits of transparent, open and competitive tendering

Costs of introducing such a system (administrative, political)

Not incompatible with social policy objectives Getting the balance right - using the tools

offered by procurement policy carefully and skilfully

experiences with procurement policy in the eu

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