Procurement regulations – the future

On 24 June 2011, the European Commission published the Evaluation Report: Impact and Effectiveness of EU Public Procurement Legislation. In light of the forthcoming changes to the procurement regulations, the conclusions of that report provide interesting reading.

The conclusions included that whilst the Procurement Directives had helped achieve greater transparency and competition within the EU, direct cross-border procurement had not increased as anticipated. It was felt that many tenderers were deterred from bidding in other member states by a combination of competitive administrative and legal factors. Costs had been reduced by around 4% creating savings of €20 billion. However, the report also suggested that the average tender procedure takes 108 days at a cost of €28,000 – and three-quarters of that cost will be borne by the tenderers. The difference between the quickest and slowest performers is approximately 180 days. Further, the average time necessary to award a contract is 58 days, with a range of 45 to 245 days depending on the complexity of the contract. The report also has interesting conclusions about the different approaches, saying that public procurement:

“is not only about obtaining the lowest price per contract. Qualitative and other performance considerations – including contribution to other policy objectives – may be integral to the procurement outcome. In general, contracting authorities do not focus on the lowest price but look for the economically most advantageous offer overall, taking into account quality or life cycle cost. Indeed 70% of all contract notices (and nearly 80% in terms of value) use the economically most advantageous tender criteria rather than lowest price. Lowest price is used more frequently for smaller contracts and less complicated procedures. The evaluation also finds that the integration of green or socially responsible requirements in tender specifications is effective in ensuring that [the successful tenders] embody these features.”

The report also revealed that many respondents believed that there remained a number of problems with the current legislation. There was also a consensus that streamlining the procedures and making them more flexible and less formal was particularly important. Many thought that there would be a benefit in being able to discuss offers during the tender exercise or that contracting authorities should be able to take into account their experience, if any, with bidders - despite all the attendant non-transparent risks of favouritism and discrimination. Heide Ruehle MEP, spokesperson for the Committee on Internal Market and Consumer Protection, seems to agree. She has said that the procedures are too complex and too bureaucratic. The procurement rules need revision to remove legal uncertainties and the costs of legal challenges. Her solutions1 include:

• make it easier for public procurers and SMEs
• be clear about the messages
• “cheapest possible” criteria must be abandoned
• adopt “most sustainable and economic” criteria including life cycle cost
• more flexibility in procedures.

The EU has said that it intends to use the report findings when it publishes its new legislative proposals at the end of 2011. The revision of EU Public Procurement Directives is one of 12 key actions identified in the Single Market Act, which:

“underpin a balanced policy which fosters demand for environmentally sustainable, socially responsible and innovative goods, services and works. This revision should also result in simpler and more flexible procurement procedures for contracting authorities and provide easier access for companies, especially SMEs.”

We shall see whether that is reflected in the new legislation.

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• 1. eg Magazine - June 1 July 2011.