Paul Clarke takes a closer look at what the EU has decided to do with regard to public procurement.

This series usually focuses on EU legislation that is about to come into force in the UK but, in this latest example, the directives under review do not have to be implemented in the Member States until 2016.

The reason for addressing them early is because of an unusual situation where the UK Government not only welcomed the arrival of new European rules, but actively lobbied for them to be introduced, and has promised to begin applying them well ahead of the two-year deadline set by the European Commission. Indeed, reports suggest that implementing the regulations may be in place in the UK by autumn 2014, so it would seem sensible to take a closer look at what the EU has decided to do with regard to public procurement.

Procurement package

The Commission has had a keen interest in the value of public procurement since the 1970s, recognising that the billions of pounds spent every month by public bodies across the Member States forms a vital part of the Single Market. The UK Government alone spends more than £45 billion every year.

Increasing access to, and competition for, those contracts — particularly on a cross-border basis — underpins the legislation that the Commission has put forward in this sector. In March 2014, that legislation was thoroughly overhauled and updated by a package of three directives.

  1. Directive 2014/24/EU on public procurement.

  2. Directive 2014/25/EU on procurement by entities operating in the water, energy, transport and postal services sectors.

  3. Directive 2014/23/EU on the award of concession contracts.

They introduce a new criterion of the “most economically advantageous tender” (MEAT) into the award procedure, which will mean that public bodies will be able to put more emphasis on quality, environmental considerations, employment opportunities or innovation, while still taking into account the price and lifecycle costs of what is procured.

To ensure that workers' rights are respected, the new laws include rules on subcontracting and tougher provisions on “abnormally low bids”. Contractors that do not abide by EU labour laws may be excluded from bidding.

Support from the UK

According to the Government, it fully supports the revised legislation and agrees that it will make the public procurement process simpler, faster, less costly, and more effective for business and procurers alike. Among changes that Ministers argued for are new measures that will remove barriers for market access by small- to medium-sized enterprises (SMEs), including the creation of a standardised document for selection purposes, encouragement for contracting authorities to consider the division of contracts into smaller lots, and a reduction in requirements for participation in the bidding process.

The new rules will also see much simpler and more streamlined procurement processes, with more appropriate time scales in which suppliers have to respond to tenders. The bidding procedure for companies will be simpler, with a standard “European Single Procurement Document” based on self-declarations. Only the winning bidder will have to provide original documentation. This should reduce the administrative burden on companies by more than 80%, the Commission estimates. Local and regional authorities will be able to advertise their contracts via less burdensome, prior-information notices (instead of contract notices). Furthermore, they will be able to agree with the pre-selected bidders on the deadlines in their procurement procedures.

Minister for the Cabinet Office Francis Maude said: “We will seek to transpose these rules into UK law quickly, as the regulations will help British companies win business in other European countries.” He said that the Government plans to consult formally on the draft implementing regulations before they come into force, to confirm that it implements the new rules effectively.

Last reviewed 5 May 2014