New EU Procurement Directive New EU Procurement Directive

1313thth March 2012 March 2012

Passion for... People Performance Procurement Partnering

IntroductionIntroduction

• Proposed revisions published by ECProposed revisions published by EC• UK Government now negotiating UK Government now negotiating • Review changes/impactReview changes/impact

1. Pre Qualification1. Pre Qualification

• 6-monthly ‘European Procurement Passport’• Deals with offences/insolvency• More restriction on financial questions (3 years t/o, balance sheet bank reference) – Big Risk!• Minimum turnover no more than x3 of contract value (unless specific risk stated)•More flexibility in selection – any criteria can be used as long as transparent and fair

1. Pre Qualification1. Pre Qualification

• ‘‘Self-Declaration’ by bidders – not checked until pre-award (risk – what if fail at end?)•Easier to reject based on poor performance on previous contracts

Pros – more flexibilityCons – financial risks, risk of challenges?

2. Lots2. Lots

• Works contracts over threshold and services over 500,000 Euros reasons stated for NOT splitting • More emphasis on scoping – state rationale• Ability to limit number of Lots awarded to bidder(s) – must be stated in Notice

Pros – easier to control Lots, positive for SMEs Cons – must have rationale for not splitting

3. Group Structures - exemption3. Group Structures - exemption

• Exemption from tendering between Contracting Authorities and their subsidiaries as long as: - Parent controls subsidiary in same way as rest of organisation - >90% of activity is for parent - No external ownership of subsidiary

Pros – WOS can deliver all works Cons – Must pass ‘Teckal’ test

4. Group Structures – Shared Services4. Group Structures – Shared Services

• Allows Shared Services agreements (where 2 or more CA’s jointly control subsidiary) as long as: - Parent controls subsidiary (e.g. Business Plan etc.) - Each subsidiary carries out >90% of activity is for parent/other group members

Pros – easier for DLOs if they are divisionCons – less flexible if DLO is separate entity

5. Quantification of ‘Changes’5. Quantification of ‘Changes’

Substantial (Re-Tender)

•Change of Contractor (except successor following insolvency or restructure of original)•Any change that would have meant different winner•Extension (cited as ‘considerable’) of scope (e.g. additional works not covered)•Change in ‘economic balance’ in favour of contractor

5. Quantification of ‘Changes’5. Quantification of ‘Changes’

Not Substantial (No need to Re-Tender)

•Transfer to successor following insolvency or restructure•Price variation of less that 5% on contract price (and below threshold)•Price increase up to 50% due to ‘unforeseen circumstances’ and not overall change

Pros – successor body provides comfortCons – definition of ‘unforeseeable’ on 50%

6. New ‘Services’ added – Full rules apply6. New ‘Services’ added – Full rules apply

•Legal Services •Agency and Temporary Staff•Grounds Maintenance •Only Social Services, Education and Leisure outside

Pros – many Clients already procuring through OJEU Cons – how many currently procuring these through OJEU

7. e-Procurement7. e-Procurement

•Will be compulsory•All ‘procurement documents’ available on internet from Notice•By 30/6/2016 procurement must be fully electronic – including online submissions

Pros – all documents must be ready at Award (more reason for CD?)Cons – IT capability (time stamping, encryption etc.)

8. Prior Information Notice (PIN)8. Prior Information Notice (PIN)

•Can publish an annual PIN•Draw down each as separate Lot•Suppliers express an interest and are sent invitation to confirm interest as each commences

Pros – potential saving time (less Notices) Cons – Must have programme quantified, must be managed carefully – we suggest not!

9. New model – Competitive with Negotiation9. New model – Competitive with Negotiation

•Replaces the ‘Negotiated Procedure’•Similar to CD (and same circumstances – i.e. complex)•Tenders from minimum of 3 bidders•Negotiate to ‘improve content of their offers’•Final tender stage

Pros – Bidders choose whether they want to improve bid at BAFO Cons – Other than above, no diff from CD

10. New model – Innovation Partnership10. New model – Innovation Partnership

•This is a brand new procedure•Allows bidder to propose ‘innovative product, service or works’•Procurement then follows CD process

Pros – Encourages more innovation from suppliersCons – Unlikely to be used on R&M, only works with CD

11. New Timescales 11. New Timescales

•Restricted reduced to 35 days (e-tendering 30)•Can be reduced if ALL bidders agree (minimum 10 days)•Minimum 40 days under Open procedure

Pros – Will speed up process (Note all docs now front-loaded)Cons – Pressure on bidders

11. New Governance 11. New Governance

•UK must set up a governance body•Overview of EU Rules and power to review procurement decisions•Likely to be alternate route of challenge•Works contracts over 10m euros and supplies and services over 1m euros must be submitted•Set aside clauses if in breach of Directives

Pros – may make challenging small value viableCons – ditto!

DiscussionDiscussion

•What do we think?What do we think?•Opportunity to lobbyOpportunity to lobby

What happens next?What happens next?

• Currently under consultationCurrently under consultation• Cabinet Office has invited feedback:Cabinet Office has invited feedback:

Service Desk: 0845 000 4999Service Desk: 0845 000 4999Servicedesk@cabinet-office.gsi.gov.ukServicedesk@cabinet-office.gsi.gov.uk

3030thth June 2014 implementation date June 2014 implementation date

Thanks