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The EU Public Procurement Directive

Mark Robinson, the EU representative in Brussels on UK public sector procurement and enterprise matters, says the new directive on the issue has big implications.

2012 has got off to a cautious start with predictions of yet more economic hardship arising as a result of the continuing Eurozone debt crisis. One fruitless high level political summit seems to follow another, with very little being achieved to address the potential economic collapse of member states and reinstate the confidence of investors and the financial institutions alike.

All this continues to grab the headlines, but a more encouraging move that’s perhaps not quite under the same spotlight is the fact that a particular EU initiative actually looks set to make easier the UK’s ability to do better business.

Many PSE readers may not be fully aware of the implications of a new EU Public Procurement Directive that was launched for consultation towards the end of December.

Working as I do for Scape, a local authority controlled company that delivers cost and time savings to public sector construction projects across the UK, my hope was that the directive would aim to reduce red tape and bureaucracy. There has to be a balance between achieving the aims of the procurement directives and making sure that the public sector can buy in goods and services efficiently across the EU marketplace in the current climate.

That’s the message that Scape has sent to the EU Commission, in its role as procurement lead for the Partnership of Public Employers. Others, including the Local Government Association and the UK Government, have expressed similar views. Our analysis of the proposed changes to the current Procurement Directive indicates that the Commission has listened, which naturally, we’re delighted at. The suggested reforms will make public sector procurement easier, less bureaucratic and, in some cases, quicker. The draft directive also clarifies some of the more complex areas that have previously caused confusion and litigation.

There are a number of other changes that are for the better. Small and medium sized enterprises, for example, will be free to bid for public sector work without having to submit each time complex paperwork proving their suitability. Procurement of social, health and education service schemes or projects valued at less than €500,000 won’t be subject to EU rules at all. And con-tracting authorities can be more flexible in adapting a contract without having to go through a new award process if external and unforeseen circumstances arise.

Further benefits include the mandatory use of electronic resources to accelerate application procedures. Contracting bodies will also be able to assess life cycle costs when assessing the financial aspects of bids rather than the traditional price only criterion. Contracting authorities will have the option to use the negotiated procedure when they want to, and a new tender procedure to procure innovative partnerships has also been incorporated.

All that has got to be good news for the many state funded organisations across the UK who continue to grapple with budget cuts and a reduced headcount that’s affecting in-house procurement teams. We believe that this situation will result in there being limited expertise within teams across local councils, health, police and housing authorities to grapple with the rules and run legally compliant procurements.

As always with these things though, the devil is in the detail. Many Eurosceptics will, of course, still hold the view that the changes don’t go far enough, wanting higher thresholds before the full rules apply, for example. The Cabinet Office has certainly expressed concern that the proposals don’t contain a temporary exemption for employee-led organisations or mutuals. There have also been some doubts about the requirement on contracting authorities to justify why contracts above €500,000 have not been divided into lots and about the requirement to make direct payments to subcontractors on request.

It’s also unfortunate that there’s a significant time lag between the draft directive being issued and the backstop date for implementation into national law – that’s 30 June 2014, if the directive’s adopted at EU level by the end of this year. This means that the economic impact on the local supply chain won’t be immediate and, therefore, isn’t particularly beneficial in the current climate when industry and the workforce needs an instant stimulus. On the upside, there will be a series of negotiations before any amendments become permanent.

Of course, only time will tell how these proposed changes will play out, as the draft rules are negotiated, then tested in practice and by case law. But we’re quietly confident, however, that the Commission now recognises that the proposals had to take into account the current fragility of the Eurozone economy and that there was a real need to make the rules more flexible, clearer and easier to understand and abide by.

Mark Robinson is chief executive of Scape and is also the country’s EU representative in Brussels on UK public sector procurement and enterprise matters. Scape’s shareholders are Derby City, Derbyshire County, Gateshead, Nottingham City, Nottinghamshire County and Warwickshire County councils. The company aims to make building and refurbishment projects more efficient through standardised designs and strategic procurement arrangements. 

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