More on the EU proposed procurement regulation changes – part 2

Here is Part 2 of our series on the proposed changes to EU regs (part 1 was here). And the Cabinet office is inviting comment on the proposals here if you’d like to throw in your three-ha’pence worth.

ISSUE – An easier life for local Government?

"Lighter regime for sub-central contracting authorities: In line with the WTO Government Procurement Agreement, the proposal provides a simplified procurement regime that applies to all contracting authorities below the central government level, such as local and regional authorities. These purchasers may use a prior information notice as a means of calling for competition. If they make use of this faculty, they don’t have to publish a separate contract notice before launching the procurement procedure. They may also set certain time limits in a more flexible way by mutual agreement with participants".

Comment – interesting. This could mean an easier time for local authorities but we’ll have to see what this means in practice. I’m not sure I agree with it philosophically; it is still public money whether it is being spent by Whitehall or Westminster council, so I can’t really see why they should be treated differently. And we will have to make sure budget holders don’t see this as an excuse to avoid competition.

 ISSUE – Life-cycle costing is a good thing

"Life-cycle costing: The proposal gives public purchasers the possibility to base their award decisions on life-cycle costs of the products, services or works to be purchased. The life cycle covers all stages of the existence of a product or works or provision of a service, from raw material acquisition or generation of resources until disposal, clearance and finalisation. The costs to be taken into account do not only include direct monetary expenses, but also external environmental costs if they can be monetised and verified".

Comment -this formalises what better organisations probably did already – use life cycle rather than simple upfront cost in assessments. But “monetising” external environmental costs will be an interesting challenge!

ISSUE – caution on pre-procurement consultations (take note Mr Maude)

"Unfair advantages: Market consultations are a useful instrument for contracting authorities to obtain information on the structure, capability and capacity of a market while at the same time informing market actors on public purchasers’ procurement projects and requirements. However, preliminary contacts with market participants must not result in unfair advantages and distortions of competitions. The proposal contains therefore a specific provision on safeguards against undue preference in favour of participants who have advised the contracting authority or been involved in the preparation of the procedure".

Comment  - interesting because Francis Maude has been going on about pre-procurement consultation and what a good idea it is – and of course he’s right. However, the EU is pointing out here that if it isn’t done properly it can lead to unfairness and even corruption. I wonder whether this is in response to what Maude has been saying?

 ISSUE – Lots of lots please!

"Division into lots: Contracting authorities will be invited to divide public contracts into — homogeneous or heterogeneous — lots to make them more accessible for SMEs. If they decide not do so, they will be obliged to provide a specific explanation".

Comment  - this wasn’t a move that the UK Government proposed and goes against the grain of much of the collaborative procurement activity we’ve seen in the last few years. It would be a real positive for smaller firms however. BUT..this is toothless the way it is written – you just have to explain why you haven’t used Lots in the contract notice. But if you do sub-divide, and use that mechanism, you can state a maximum number of lots which a supplier can win, which has been a tricky issue previously.

ISSUE – Lets innovate… 

"Innovation: Research and innovation play a central role in the Europe 2020 strategy for smart, sustainable and inclusive growth. Public purchasers should be enabled to buy innovative products and services promoting future growth and improving efficiency and quality of public services. The proposal provides for this purpose the innovation partnership, a new special procedure for the development and subsequent purchase of new, innovative products, works and services, provided they can be delivered to agreed performance levels and costs. In addition, the proposal improves and simplifies the competitive dialogue procedure and facilitates cross-border joint procurement which is an important instrument for innovative purchasing".

Comment  - sounds good, but the devil will be in the detail of the “innovation partnership”.  Often the issue is finding someone with a budget to pay for “innovative products” of course but this move is to be welcomed.

ISSUE – Simplifying selection and award criteria – good news

"Modernisation of procedures:  The distinction between selection of tenderers and award of the contract which is often a source of errors and misunderstandings has been made more flexible, allowing it for contracting authorities to decide on the most practical sequencing by examining award criteria before selection criteria and to take into account the organisation and quality of the staff assigned to performing the contract as an award criterion.

Comment  - this will seem arcane to private sector types, but this is an important issue and this change will really help public procurers. There have been many challenges in the last few years around this issue – the separation of “selection” and “award” criteria could tie you up in knots and lead to situations where (for example)  buyers couldn’t ask sensible questions at tender stage because they should have been posed at PQQ! More freedom here is good news.

More in part 3 next week.

First Voice

  1. Dr Gordy:

    Thanks Pete, really useful. To me this presents a justification for some sort of CIPS methodology for addressing externalities in procurement and also pre-procurement consultations/negotiations/discussions.

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