The new EU directives on public procurement and concessions Māris Pūķis, Dr.oec., Dr.phys., Senior adviser Latvian Association of Local and Regional Governments

2 Terms of implementation ∗ The Member States have until April 2016 to transpose the new rules into their national law (except with regard to e-procurement, where the deadline is September 2018) 2

Basic principles of public procurement legislation Original interest of EU: To ensure free movement of goods and services To facilitate this freedom by establishing honest competition among private bidders from all member states for public contracts of services and goods To achieve this goal for the contracts, significant for single market

4 Derived principles: equal treatment, non-discrimination, mutual recognition, proportionality transparency 4

5 Groups of interest, deforming original idea Each of those groups lobby several additional features in order to achieve their goals Private interests are expressed by ideological or economical doctrines Main ideological groups with large impact are: environmentalists socialists protectionists neo-liberals centralists 5

6 Impact of environmentalists Preferences for bidders, who protect environment Preferences for bidders, who better ensure requirements of sustainable development 6

7 Impact of socialists Preferences for bidders, ensuring social responsibility employment public health other social benefits 7

8 Impact of protectionists Speaking about protectionism is “tabu” In reality protectionism is popular in the political agenda of EU (relating third countries), national governments (relating management of structural reforms), regional and local governments to ensure facilitating of local economic activities In hidden form tools of protectionism are different allowed activities 8

9 Impact of neo-liberals Behind economical doctrine are interests to privatise national, regional or local property Decreasing of threshold amounts for public contracts, therefore including in competition rules small scale activities 9

10 Impact of centralists Introduction of complicate procedures Normativism Concentration of management Centralisation of financial resources During the World Economic Crisis there were strong shift to centralisation in the policy of all EU countries 10

11 Main problems for local governments: Existing Public procurement rules have dual nature - positive and negative impact on local economy: Positive - increase competition for public contracts Negative - increase time of implementation, decrease efficiency and effectiveness, lead to squandering of public money 11

12 Triangle of intents t 12 Increasing of competition among private entrepreneurs Fighting corruption Ensureing of fairness

13 Role of governments EU Commission: try to ensure freedom of movement and competition and to give preferences for EU policy priorities National governments: try to add conditions for more controlling and spread area of public procurement rules Self governments: try to protect local interests in order to increase local entrepreneurship 13

14 Main lessons of Crisis Absence of flexibility Too much bureaucratic burden Opportunity for loosers of bidding to postpone beginning of projects or supplying goods and services Benefits for banking sector Ineffective using of public money in order to fight crisis 14

15 Main directions of reform Simplification of procedures Value for money instead of minimal price Greater inclusion of common society goals (environmental, social,innovation, combating climate change, employment etc.) Inclusion of concessions 15

16 Facilitating SME involvement Contracting authorities are encouraged to break contracts into lots to facilitate SME participation Decreasing of turnover cups 16

17 Selection of suppliers A much simpler process of assessing bidders’ credentials, involving greater use of supplier self- declarations, and where only the winning bidder should have to submit various certificates and documents to prove their status. Poor performance under previous contracts is explicitly permitted as grounds for exclusion. 17

18 Procedure changes Preliminary market consultations between contracting authorities and suppliers are encouraged, which should facilitate better specifications, better outcomes and shorter procurement times. More freedom to negotiate. Constraints on using the competitive procedure with negotiation have been relaxed, so that the procedure will generally be available for any requirements that go beyond “off the shelf” purchasing. A new procedure, the “Innovation Partnership” procedure, has been introduced. This is intended to allow scope for more innovative ideas. The supplier bids to enter into a partnership with the authority, to develop a new product or service. 18

19 Five award procedures instead of previous four: the open procedure, under which all those interested may respond to the advertisement in the OJEU by submitting a tender for the contract; the restricted procedure, under which a selection is made of those who respond to the advertisement and only they are invited to submit a tender for the contract. the competitive dialogue procedure, under which a selection is made of those who respond to the advertisement and the contracting authority enters into dialogue with potential bidders, to develop one or more suitable solutions for its requirements and on which chosen bidders will be invited to tender. 19

20  the competitive procedure with negotiation under which a selection is made of those who respond to the advertisement and only they are invited to submit an initial tender for the contract. The contracting authority may then open negotiations with the tenderers to seek improved offers. The new Public Contracts Directive provides greater freedom to use this procedure than the existing rules (see below).  the innovation partnership procedure, under which a selection is made of those who respond to the advertisement and the contracting authority uses a negotiated approach to invite suppliers to submit ideas to develop innovative works, supplies or services aimed at meeting a need for which there is no suitable existing ‘product’ on the market. The contracting authority is allowed to award partnerships to more than one supplier. 20 Five award procedures instead of previous four:

21 Conclusion Reform fits to interests of local government Main problems will arise, when national governments introduce additional requirements in order to achieve additional goals to main procurement policy 21

22 Thank you for attention! Barcelona, 18 June of