EC Public Procurement Directives

EC Public Procurement Directives
Significant Changes arising from the new Public Sector and Utilities Directives © Queen's Printer and Controller of HMSO

Use of the Slide Set The slide set, tutor notes and case studies are intended for use by those with experience in public procurement training. All or selected slides may be used but users may not adapt the slides. The material is intended for presentation to experienced procurement practitioners familiar with existing EC procurement directives. Only significant changes to the current directives are addressed. OGC accepts no liability whatsoever for any loss, damage or expense caused by the use or presentation of this material by others. Note

Agenda History and summary of changes
Thresholds, buyer profiles and timescales Framework agreements Central purchasing bodies Sustainability issues and technical specifications Selection of tenderers and award criteria Competitive dialogue procedure and comparison with the negotiated procedure Electronic auctions Dynamic purchasing systems New reports Utilities directive Notes This slide gives an overview of the content of the training.

History of the New Directives
Commission Green Paper Commission sets out initial ideas Commission proposals European Parliament (EP) amendments 2003 Adoption by Council and EP Published in OJEU April 2004 Transpose into national legislation by 31 Jan 2006 Notes This slide gives an overview of the process and timescales involved in the establishment of the new directives. Of particular note are the last two points, which show that the new directives have now been published and the latest date for their transposition into national legislation.

Use of the Directives The new directives provide a framework within which public procurement must be conducted. Provisions are widely drawn to cater for 25 Member States. Member State regulations provide further clarification Practical applications for some new provisions (e.g. e-procurement) have yet to be developed. Practice and usability will evolve. Note The new directive amendments can be split into two categories: Simplification and Significant Additions Simplification: Restructuring and Refinement of the Directive There are some inconsistencies between the three current public sector Directives. These inconsistencies were not justified by the specific features of the respective Directives and many have been removed. By making the texts more consistent, the Directives will be understood and applied more easily Simplification involves eliminating inconsistencies as far as is possible and restructuring the existing texts to produce a public sector directive and a utilities directive, each covering supplies, works and services.

When can I use the New Provisions?
Provisions which are currently used, and where such use has been accepted by the European Commission, can now follow the procedure set out in the new directive. Examples are: Frameworks and electronic auctions Central purchasing bodies Contract award criteria and sustainability issues New provisions, such as the competitive dialogue procedure, must await publication of new UK regulations Note Other significant wholly new provisions which must await publication of the UK regulations are: Dynamic purchasing systems New thresholds Reduced timescales for electronic communication Utilities directive – exit criteria

Summary of Changes (1) Consolidation to single Directives: one for the public sector and one for the utilities More consistent treatment of common issues Comprehensive index provided in each directive Refinements of existing provisions Simplified thresholds expressed in Euros Sterling figure fixed for two years in the UK Encouragement to use performance specifications and more emphasis on ‘equivalence’ Requirement to publish the relative importance of contract award criteria Environmental and social issues addressed Electronic means of communication Note

Summary of Changes (2) Significant additions
The ‘competitive dialogue’ procedure Framework agreements Central purchasing bodies Electronic auctions Dynamic purchasing systems Exit criteria for utilities operating in open and competitive markets Some changes in coverage of Utilities Directive Note Significant Additions These have been made in response to: Modernisation - to take account of new technologies and changes in the economic environment Court of justice case law and emergent understanding on processes such as frameworks and consortia Criticism of the rigidity of current procedures and a desire for more flexibility which meets the needs of public purchasers. Gradual withdrawal of the State from certain economic activities The ‘Utilities Directive’ 93/38/EEC, which coordinates the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors, has been amended to enable utilities operating within open and competitive markets to withdraw from compliance with the directive. In view of the introduction of effective competition, the telecoms sector is no longer subject to the Utilities Directive. As a result of increased competition, the postal sector will gradually transfer from the public sector to the Utilities Directive

The Public Sector Directive
Significant Changes

Thresholds The thresholds set out in the text of the new directives have altered. Sterling equivalent thresholds will be revised again to take account of currency fluctuations before January 2006. Up to date rates will be available on the OGC website from January 2006 Before that date, current thresholds (see the OGC website) should be used. Note The new thresholds are close to the euro equivalent figures in the current directives and ensure compliance with our international obligations in respect of the World Trade Organisation Government Procurement Agreement (WTO GPA) thresholds. The new thresholds have also been simplified by removing all references to the equivalent in euro of SDR (Special Drawing Rights, the IMF “currency” used by the WTO GPA) and stating all thresholds in euro.

Article 35 Buyer Profiles Purchasers’ websites providing procurement information to suppliers encompassing, for example: PIN notices (provided the European Commission is informed prior to publication on the buyer profile) Reduces minimum timescales Copies of all other notices required by the directive Tender specifications and additional documents Future procurement requirements The purchaser’s procurement process Contact details Note Provision for ‘Buyer Profiles’ is intended to stimulate electronic communication and, generally, to improve communication between purchasers and suppliers. Regarding official notices, only the Prior Information Notice (PIN) may be published exclusively on the buyer profile provided the European Commission is informed (in a prescribed format) of the publication before or at the same time.

Timescales

Article 38 Minimum Timescales New ways in which minimum timescales can be reduced are: For electronic notices (in the SIMAP format), timescales for open procedure ‘tender receipt’ and ‘requests to participate’ in other procedures may be reduced by 7 days. For electronic access to all contract documentation, timescales for open and restricted procedure ‘tender receipt’ may be reduced by 5 days. Note The Commission’s amendments include explicit provisions to state that communications and exchange of information may take place through various means, including electronic means according to the choice of the purchaser. Where notices are compiled and transmitted electronically, timescales for the open procedure receipt of bids and the restricted, competitive dialogue and negotiated (with a contract notice) procedures request to participate may be shortened by 7 days. A reduction of 5 days to the time limit for receipt of tenders in the open and restricted procedures can be made where unrestricted electronic access to all contract documentation is provided (web site details to be provided in contract notice). Emphasise that in the restricted procedure this applies only to the tender period not receipt of requests to participate. Reductions also apply to the competitive dialogue procedure which follows the timescales for the restricted procedure.

Open Procedure Minimum Timescales
Article 38 Open Procedure Minimum Timescales Contract Notice (Call for Competition)) Receipt of Requests To Participate Invitation to Tender Receipt of Tenders Contract Award Contract Award Notice 52 or 36 days with Prior Information Notice (PIN) Reduce to 45 days for electronic contract notice or 29 days with PIN Further reduce to 40 days for electronic tender documentation 48 days Note Use this slide to reinforce knowledge and summarise timescales. The table illustrates the minimum timescales applicable to the open procedure. It is worth emphasising here new ways in which timescales can be shortened: 7 day reduction for electronic notices Further 5 day reduction for electronic tenders as illustrated Emphasise also the requirement to ensure that timescales are reasonable in relation to the nature of the purchase. Electronic communication – 7 day reduction for electronic notices 5 day reduction for electronic tender docs All timescales must be reasonable

Restricted Procedure Minimum Timescales
Article 38 Restricted Procedure Minimum Timescales Contract Notice (Call for Competition) Receipt of Requests To Participate Invitation to Tender Receipt of Tenders Contract Award Contract Award Notice 37 days Reduce to 30 days for electronic contract notice 40 days or 36 days if PIN issued Reduce to 35 days for electronic tender docs 48 days Accelerated 15 days Reduce to 10 days for electronic notice 10 days Note Use this slide to reinforce knowledge and summarise timescales. The table illustrates the minimum timescales applicable to the restricted procedure. Again emphasise that the new provisions allow timescales to be shortened: 7 day reduction for electronic notices Further 5 day reduction for electronic tenders as illustrated Emphasise also the requirement to ensure that timescales are reasonable in relation to the nature of the purchase. Electronic communication – 7 day reduction for electronic notices 5 day reduction for electronic tender docs All timescales must be reasonable

Competitive Dialogue Minimum Timescales
Article 38 Competitive Dialogue Minimum Timescales Contract Notice (Call for Competition) Receipt of Requests To Participate Invitation to Tender Receipt of Tenders Contract Award Contract Award Notice 37 days Reduce to 30 days for electronic contract notice 48 days Not Specified Note Use this slide to reinforce knowledge and summarise timescales. The table illustrates the minimum timescales applicable to the competitive dialogue procedure. Note shortened timescales for: 7 day reduction for electronic notices Note the requirement to ensure that timescales are reasonable in relation to the nature of the purchase. EC = electronic communication – 7 day reduction for electronic notices All timescales must be reasonable

Negotiated Procedure Minimum Timescales
Article 38 Negotiated Procedure Minimum Timescales Contract Notice (Call for Competition) Receipt of Requests To Participate Invitation to Tender Receipt of Tenders Contract Award Contract Award Notice 37 days Reduce to 30 days for electronic contract notice 48 days Not Specified Accelerated 15 days Reduce to 10 days for electronic contract notice Note Use this slide to reinforce knowledge and summarise timescales. The table illustrates the minimum timescales applicable to the negotiated procedure with publication of a contract notice. Note shortened timescales for: 7 day reduction for electronic notices Note the requirement to ensure that timescales are reasonable in relation to the nature of the purchase. EC = electronic communication – 7 day reduction for electronic notices All timescales must be reasonable

Framework Agreements and Central Purchasing Bodies

Framework Agreements (1)
Article 32 Framework Agreements (1) Article 1(5) defines a framework as: ‘An agreement between one or more contracting authorities and one or more economic operators, the purpose of which is to establish the terms governing contracts to be awarded during a given period, in particular with regard to price and, where appropriate, the quantity envisaged’ i.e. the framework establishes the terms and conditions that will apply to subsequent contracts (call offs) but does not create rights and obligations A ‘call off’ contract which creates rights and obligations (e.g. where work and response times are guaranteed) is not a ‘framework’ as defined in the Directive. Frameworks can cover supplies, works and services and can be used in conjunction with the open, restricted, competitive dialogue and negotiated procedures Note Framework agreements are used, in the case of repetitive purchases, to choose suppliers who, when the time comes, will be able to meet the purchaser's needs. This form of "agreement" between purchasers and suppliers is common in the UK but is not specifically addressed by existing directives. The new consolidated directive formalises the understanding reached with the Commission on the use of frameworks and introduces some new detailed provisions. Frameworks, in the context of the Directives, are agreements to agree i.e. they set out terms applicable to contracts formed at the call off stage. If the framework establishes rights and obligations by, for example, guaranteeing a volume of work to a supplier, it is a works, supply or services contract. Emphasise the potential to use frameworks in conjunction with all of the procedures.

Article 32 Framework Agreements (2) Maximum duration is four years unless, exceptionally, a longer period can be justified Call offs may extend beyond the life of the framework Where a single appointment is not made then the minimum number of framework suppliers is three or the number passing the selection criteria if less Note New provisions are detailed above. Frameworks may contain one or three or more suppliers provided, in the latter case, more than three pass the selection criteria. Emphasise the need to apply a test of reasonableness to the extension of call offs beyond the framework agreement. This can be done but the duration of the call off commitment should be consistent with the trend established throughout the life of the framework.

Article 32 Framework Agreements (3) For each call off, either: Award to the single supplier Award to the supplier who offers best value for money based on the framework award criteria Hold a mini competition which takes account of the particular issues related to the call off Must not substantially change the original framework terms. Award to the supplier offering the best bid on the basis of the published framework award criteria. Note Emphasise the fact that mini competitions are not mandatory. They are intended to be used in circumstances where the original framework terms are not adequate e.g. a purchase which is consistent with the scope of the framework but where the detailed terms are not adequately covered by the generic framework terms. A situation where a mini competition might be necessary is a consultancy framework where there is a need to see how each provider would meet the requirements of a particular call off.

Framework Agreements (4A)
Article 32 Framework Agreements (4A) Framework agreements are agreements with one or more suppliers which set out terms and conditions for subsequent procurements Does the agreement include a commitment by the procurer to buy something? This is a framework agreement for which contracts subject to the EC rules are formed only when call offs are made under the framework Is the total value of all call offs over the framework lifetime estimated to fall below the relevant EC threshold? Or is otherwise not covered by the full rules? Apply the EC rules to advertising and awarding the framework as if it was a contract. Apply the specific framework rules to the call offs under the framework No No Yes Yes This is a framework contract and should be treated as any other contract under the EC rules Only the EC Treaty provisions and Treaty based principles, including non discrimination apply, together with the value for money policy Note Use this slide to reinforce knowledge and summarise the framework procurement process. Emphasise the point that framework arrangements can be formulated as contracts which create rights and obligations for both parties. However, in the context of the directive, frameworks are an administrative mechanism to enable repeat purchases to take place over a defined timescale where contracts are formed for each purchase.

Framework Call Off Stage (4B)
Article 32 Framework Call Off Stage (4B) Is there only one framework supplier? Where there are several suppliers in the framework, are the terms agreed in setting up the framework precise enough for the best supplier to be identified for the particular need? Hold a mini competition between those suppliers in the framework capable of meeting the particular need using the original terms supplemented or refined as necessary Award the call off to the supplier who can provide the supplies, works or services using the refined terms and the published framework award criteria No No Yes Call off the relevant supplies, works or services using the terms agreed when the framework was set up Yes Refined terms may be needed, eg to understand how the particular requirements of a consultancy call off would be met. New terms requiring office cleaning services through a framework intended for accountancy advice would clearly be beyond a reasonable definition of ‘refinement’. Note Use this slide to reinforce knowledge and summarise the call off purchase. Point out that mini competitions need only be used in situations where the original framework terms are not sufficiently precise for a particular purchase (‘call-off’). Emphasise the need to take care to anticipate future requirements when drafting framework terms and to segregate distinct requirements in order to avoid unmanageable numbers of suppliers having to be included in mini competitions at ‘call-off’ stage.

Case Study 1 The Training & Consultancy Agreement

Central Purchasing Bodies
Article 11 Central Purchasing Bodies Article 1(10) defines a central purchasing body as a contracting authority which: ‘acquires supplies and/or services intended for contracting authorities’ or ‘awards public contracts or concludes framework agreements for works, supplies or services intended for contracting authorities’ Purchases may be managed through a central purchasing body (CPB) and organisations are deemed to have complied with the Directives in so far as the CPB has complied Note The new directive reflects UK current practice. A new provision but no significant change.

Central Purchasing Bodies Some Examples
Article 11 Central Purchasing Bodies Some Examples OGC Buying Solutions Local Authority purchasing consortia e.g. West Mercia Supplies Central Buying Consortium Higher and Further Education purchasing consortia North West Universities Purchasing Consortium Note Must be contracting authorities. Not to be confused with using a private sector body as an agent for a contracting authority. That is still permissible.

Sustainability Issues and Technical Specifications

Sustainability Issues (1)
Articles 23 & 26 Sustainability Issues (1) Sustainability requirements may be specified but must be sufficiently precise to allow bidders to understand the requirement and to allow award of the contract Green production standards and relevant aspects of eco labels can be specified but alternatives which demonstrate equivalence must be considered Special (including environmental and social) conditions relating to the performance of a contract may be specified if: Compatible with Community law Mentioned in the contract notice or in the specification Note Relevant environmental and social requirements may be specified but requirements must be sufficiently precise to allow tenderers to understand the requirement and to allow award of the contract. Eco labels can be referenced as one way to demonstrate conformity with relevant criteria covered by them but alternatives which demonstrate equivalence must be reviewed. These provisions formalise current arrangements. Sustainability guidance is included within the ‘Achieving Excellence in Construction’ suite of guidance documents available on the OGC website: Relevant documents are: Achieving Sustainability in Construction Achieving Excellence Guide 7 – Whole Life Costing Achieving Excellence Guide 11 – Sustainability (under development) Further guidance on environmental issues in public procurement (joint DEFRA/OGC note) is available on the OGC and DEFRA websites. Similar guidance on social issues is being prepared.

Articles 48 & 50 Sustainability Issues (2) At the selection stage, assessment of capability to undertake works and services contracts may, where appropriate, include: Assessment of environmental management measures relevant to the performance of the contract Certificates attesting compliance with environmental management standards may be requested but proof of equivalence must be accepted Note Assessment of technical and professional ability for works and services contracts may, where appropriate, include assessment of environmental management measures relevant to performance of the contract. This formalises current understanding. Relevant EMAS (Community eco management and audit scheme) etc certificates may be requested but proof of equivalence must be accepted. This is consistent with the provisions relating to technical specifications.

Article 24 Sustainability Issues (3) Use of variants enables purchasers to compare different standards of environmental (and other) performance where related to the subject matter of the contract Purchasers may allow variant bids where award is based on most economically advantageous tender (MEAT) criteria Minimum requirements, including environmental (and other) criteria, must be specified Variants, such as higher environmental performance or a specific production process, may then be specified Note The new directive incorporates Commission interpretative communications regarding environmental and social aspects of public procurement issued in 2001. The use of variants to compare different standards of environmental and social performance was highlighted in respect of both environmental and social aspects.

Articles 19, 45 & 48 Sustainability Issues (4) Relevant contracts may be limited to ‘sheltered workshops’ employing mostly disabled people unable to gain normal employment – must be stated in the contract notice A supplier may be excluded for proven non compliance with environmental and social legislation relating to professional misconduct or for a poor track record on previous contracts involving environmental or social requirements Note The ability to reserve contracts to sheltered workshops is new although this is currently practised for contracts below the EC threshold. Work to clearly define ‘sheltered workshop’ is underway. The second bullet point simply makes it clear that, in terms of the directive, issues of professional misconduct embrace non compliance with environmental legislation.

Article 53 Sustainability Issues (5) Contract award criteria may include environmental characteristics provided these are linked to the subject matter of the contract and looked at from the point of view of the contracting authority e.g. running costs, energy costs and additional environmental quality (toxic emissions) etc. Note Contract award criteria – both cost and quality criteria when using the most economically advantageous assessment option may include environmental characteristics provided these are linked to the subject matter of the contract. This formalises current understanding.

Technical Specifications
Article 23 Technical Specifications Purchasers are encouraged to use performance specifications Reaffirms existing case law on need to accept standards equivalent to those specified and other offers which meet underlying needs. Bidders must demonstrate equivalence. Reasons for a decision of non equivalence must be given Whenever possible account should be taken of access arrangements for disabled people or design for all users e.g. design of works Note The rules on technical specifications have not changed substantially but purchasers are encouraged to use performance specifications and are required to consider equivalence to specified standards. This is intended to open up competition and encourage innovation. Emphasise the requirement for the supplier to demonstrate equivalence to specified standards. This should be related to the level of risk from the purchaser’s perspective and the test of reasonableness from the supplier’s perspective. Advice on the drafting of specifications is contained in the OGC Successful Delivery Toolkit ™ available on the OGC website: OGC Successful Delivery Toolkit ™ is a Trade Mark of the Office of Government Commerce

Selection of Tenderers and Award Criteria

Selection of Tenderers
Articles 44 & 45 Selection of Tenderers Minimum number of bidders is 5 for the restricted procedure and 3 for the negotiated (with publication of a contract notice) and competitive dialogue procedures Minimum number must be stated in the contract notice and must be sufficient to ensure genuine competition Those found guilty of organised crime, corruption offences or fraud must be excluded Note Minimum numbers of bidders has not changed. The requirement to exclude those found guilty of organised crime, fraud and corruption is new and is there to support Community efforts to tackle these issues. Further guidance on this provision will be issued by OGC in due course.

Article 53 Award Criteria Contracts continue to be awarded on the basis of lowest price or most economically advantageous tender (MEAT) Contract notices or contract documents must provide the relative weighting given to each criterion used to judge the most economically advantageous tender. Where this is not feasible, award criteria must be stated in descending order of importance MEAT award criteria may include environmental characteristics (e.g. energy savings, disposal costs) provided these are linked to the subject matter of the contract Note Two award options remain – price only or MEAT. The current provisions concerning MEAT award criteria stipulate that these criteria must be listed in the contract notice or in the contract documents, "where possible" in descending order of the importance attached to them by the contracting authority. The new directive requires the relative weighting of each award criterion to be stated in the contract notice or tender documents. This is intended to ensure transparency of decision making so that it can be taken into account during the preparation of bids. The new directive makes it explicit that MEAT is to be judged ‘from the point of view of the contracting authority’. The current directives are silent on this, although the UK Regulations do make reference to the contracting authority.

Competitive Dialogue and comparison with Negotiated Procedure

Competitive Dialogue (1)
Article 29 Competitive Dialogue (1) Article 1 (11c) defines competitive dialogue: ‘A procedure in which any economic operator may request to participate and whereby the contracting authority conducts a dialogue with the candidates admitted to that procedure, with the aim of developing one or more suitable alternatives capable of meeting its requirements, and on the basis of which the candidates chosen are invited to tender.’ Article 29(1) describes its use: For particularly complex contracts where use of the open or restricted procedures will not allow the award of the contract Note

Article 29 Competitive Dialogue (2) Enables dialogue with selected suppliers to identify and define solutions to meet the need Award only on the most economically advantageous basis All candidates and tenderers must be treated equally and commercial confidentiality must be maintained unless the candidate agrees that information may be passed to others Dialogue may be conducted in successive stages. Those unable to meet the need or provide VFM (as measured against the published award criteria) may drop out or be dropped. Possibility must be noted in the contract notice. Note In the case of particularly complex contracts, purchasers may be well aware of their needs but do not know in advance what is the best technical, legal or financial solution for satisfying those needs. The contracting authorities may also want to allow innovative solutions or may be unable, objectively, to assess what the market has on offer. Discussion of the contract and dialogue between purchasers and suppliers is therefore necessary. Such a dialogue is not allowed under the current open and restricted procedures. A case in point is when a contracting authority is unable, objectively, to assess in advance whether the most economically advantageous solution would involve public funding, a risk-sharing model or a purely private sector solution. The Commission views the competitive dialogue procedure as a suitable vehicle for contractually based Private Public Partnership arrangements such as Private Finance Initiative (PFI) contracts

Article 29 Competitive Dialogue (3) Final tenders are invited from those remaining on the basis of the identified solution or solutions Assessment is based on criteria stated in the Contract Notice or accompanying descriptive document (outlining broad needs) Clarification of bids can occur pre and post assessment provided this does not distort competition Purchasers may specify payments to be made to participants in the dialogue Note The aim of the provision is to enable a dialogue to take place in a single award procedure which results in the contract being carried out; this incorporates a phase during which specifications are established on the basis of dialogue with the selected participants. Tenders are then invited from participants remaining at the end of the dialogue. The contract is awarded to the participant submitting the most economically advantageous tender.

Article 29 Competitive Dialogue (4) Is it difficult to assess what would be the best technical, legal, or financial solution, due to the market or need being complex? Proceed with contract notice, specifying that the competitive dialogue procedure will be used and stating award criteria (must be MEAT) Conduct a dialogue with selected suppliers to identify acceptable solutions (to meet needs) Having declared that the dialogue is concluded, suppliers are invited to submit tenders. The award criteria stated in the notice must be used to evaluate the tender returns YES - - NO This is a contract for supply, services or works subject to the open, restricted or (exceptionally) the negotiated procedures Competitive Dialogue is not appropriate - Note Use this slide to reinforce knowledge and summarise the competitive dialogue process. Emphasise its use for complex procurement and the restriction to use only the most economically advantageous award criterion. -

(1) & Differences between Competitive Dialogue Negotiated Procedures
Articles 29-32 Differences between (1) Competitive Dialogue & Negotiated Procedures All types of contract where open or restricted not workable Restricted to specified circumstances for each type of contract. Intended as a fall back when other procedures will not work. Used to help define the means of achieving broad objectives Used to allow negotiation when: Competition is not viable or appropriate Other procedures have not produced an acceptable tender Note – for these services contracts, either procedure could be used but competitive dialogue should be first choice. Note Contract strategy advice is provided in the OGC Successful Delivery Toolkit ™ available on the OGC website. OGC Successful Delivery Toolkit ™ is a Trade Mark of the Office of Government Commerce Works are needed for R&D purposes Prior overall pricing is not possible Services cannot be specified sufficiently precisely for use of open or restricted procedures

(2) Differences between Competitive Dialogue & Negotiated Procedures
Articles 29-32 Differences between (2) Competitive Dialogue & Negotiated Procedures Always involves competitive tender and can only use the ‘most economically advantageous’ award criterion (MEAT) Competitive tender not required. Can use ‘MEAT’ or lowest price and, in specified and limited circumstances, can negotiate with a single supplier. Dialogue may embrace all aspects of the contract for the purpose of identifying one or more solutions which meet the purchaser’s needs before seeking bids from those remaining in the dialogue. Negotiation following advertisement is intended to adapt tenders received in order to better meet the purchaser’s specified needs Note Emphasise, finally, that the competitive negotiated procedure (with prior issue of a contract notice) is intended to be used only in circumstances specified in the Directive. It is expected that the competitive dialogue procedure will be used in many circumstances for which the negotiated procedure would previously have been considered.

Case Study 2 The Construction Project

Electronic Auctions

Electronic Auctions (1)
Article 54 Electronic Auctions (1) Article 1(7) defines an electronic auction as: ‘A repetitive process involving an electronic device for the presentation of new prices, revised downwards, and/or new values concerning certain elements of tenders, which occurs after an initial full evaluation of the tenders, enabling them to be ranked using automatic evaluation methods’ i.e an electronic system enabling suppliers to adjust specified elements of their initial bid and which shows consequent changes in rank immediately Auctions may be based on price or a combination of quality and price (MEAT award criteria) Note Emphasise the difficulty of dealing with quality issues through an auction. All tenders are evaluated in full before the e-auction phase, taking account of all the cost and quality criteria. The auction then deals with price and any quantifiable whole life cost and quality aspects and the contract is awarded on the basis of the combined outcome of both stages.

Article 54 Electronic Auctions (2) Auctions may be used in conjunction with: Open or restricted procedures In circumstances where the open, restricted or competitive dialogue procedures cannot be brought to a satisfactory conclusion and the negotiated procedure (with a contract notice if new suppliers are sought) is utilised Mini competitions within a framework Competition for contracts to be awarded through a dynamic purchasing system In all cases, use of an electronic auction must be stated in the contract notice Note

Article 54 Electronic Auctions (3) Evaluate tenders in accordance with the procedure adopted using the award criteria published in the Contract Notice or tender documents Invite (electronically) competent bidders to participate in the auction stating: Full initial evaluations of the tenders Details of the mathematical ranking formula to be adopted Connection details, date and time of the auction Number of phases and timescale if relevant Conditions of bidding particularly minimum differences required for a new bid Electronic Auctions (continued…) Tenders will be invited in accordance with one of the allowable procedures and a full initial evaluation will be made using the award criteria specified in the contract notice or tender documents. The contract notice must state that an electronic auction will be used. Following this initial evaluation, competent tenderers shall be invited simultaneously by electronic means to participate in the auction to update those features which are quantifiable and which can be expressed in figures or percentages. Connection details, date and time of the auction shall be stated in the invitation but the auction cannot start sooner than 2 working days after transmission of the invite. Where the auction is to be conducted in phases, the invitation to participate must state the number of phases and associated timetable. Specifications must state the information to be provided during the auction and when this will be available (electronically); relevant information about the auction process; conditions of bidding, particularly minimum differences required for a new bid; relevant details concerning equipment and connection facilities.

Article 54 Electronic Auctions (4) Quality issues may be addressed as part of the initial evaluation and through the auction phase If included in the auction phase, each ‘quality’ aspect of the bid must be expressed as a single value (figure or percentage) within the published assessment formula Specification must state any limits to values (arising from the specification) included in the auction Note The invitation to participate must be accompanied by the outcome of a full initial evaluation of the tender and the mathematical formula to be used in the auction to determine automatic re-rankings for the price and quality values subject to auction. The formula must be based on the declared weightings which, if initially expressed as a range, must be reduced to a single value. Separate formulae must be provided for variants where these are permitted. The award, including the auction phase, must be based on lowest price or most economically advantageous offer as stated in the contract notice or specifications. In the case of the most economically advantageous offer, ‘quality’ features of the tender which are taken forward into the auction phase, must be capable of being expressed as a value (figure or percentage) which can be incorporated within a formula. Limits to quality values arising from specification requirements must be stated in the specification.

Article 54 Electronic Auctions (5) Tenders are ranked on the basis of the initial evaluation. Some features are carried forward to the auction phase During the auction, sufficient information must be communicated to bidders to show relative ranking on those aspects subject to auction The initial evaluation of those aspects not subject to auction is combined with changes arising from the auction to identify the winning bid. Note The full initial evaluation will produce a ranked list of tenderers. The published mathematical formula incorporates values (with the published weightings) for those features carried forward to the auction phase. During each phase of the auction, sufficient information to enable tenderers to ascertain their relative ranking in respect of those aspects subject to auction must be communicated instantaneously. Other prices and values may also be communicated provided this is stated in the specification. Number of participants in a phase may be announced at any time but the identity of tenderers cannot be revealed at any time. On completion, the initial evaluation of aspects not subject to auction is combined with changes in values arising from the auction to determine the winning bid

Article 54 Electronic Auctions (6) The auction may be closed when: Time and date specified at invitation stage is reached Prices/ values submitted do not meet minimum difference criteria e.g. insufficient improvement on the last value submitted Specified phases are complete The overall ranking is based on the initial evaluation adjusted in line with changes to the values subject to auction Note The auction outcome, as measured by the published formula, is combined with the initial evaluation to produce the final ranking.

Electronic Auctions (7A)
Article 54 Electronic Auctions (7A) Open or restricted procedures stating use of an auction - Open, restricted or competitive dialogue procedures have been implemented but cannot be brought to a satisfactory conclusion and the negotiated route with a contract notice is adopted Circumstances when an electronic auction may be used Mini competition within a framework if e-auctions were stated in the contract notice - Note Use this slide to reinforce knowledge and summarise the auction process. Competition for contracts to be awarded through a dynamic purchasing system if stated in the contract notice.

Electronic Auctions (7B)
Article 54 Electronic Auctions (7B) Expressions of interest invited in accordance with the selected procedure. Contract notice states that an electronic auction will be used Contract awarded on lowest price or most economically advantageous offer as stated in the contract notice or specifications. In the case of the latter, ‘quality’ features of the tender, where included in the auction phase, must be capable of being expressed as a single value within the assessment formula. The initial evaluation is combined with changes to values subject to auction to identify the winning bid - Full initial evaluation of tenders using the award criteria specified in the contract notice or tender documents. Admissible bids proceed to the auction phase. Using an electronic auction Invitations to participate, communicated electronically, include the initial evaluation (if based on MEAT), the assessment formula, details of process and conditions of bidding - Note Use this slide to reinforce knowledge and summarise the auction process. Close the auction at the time and date specified, when prices/values submitted do not meet minimum difference criteria or when specified phases are complete Conduct the auction

Case Study 3 The Paging Agreement

Dynamic Purchasing Systems

Dynamic Purchasing System (1)
Article 33 Dynamic Purchasing System (1) Article 1(6) defines a dynamic purchasing system as: ‘A completely electronic process for making commonly used purchases, the characteristics of which, as generally available on the market, meet the requirements of the contracting authority, which is limited in duration and open throughout its validity to any economic operator which satisfies the selection criteria and has submitted an indicative tender that complies with the specification’ Note Recital (13)1 introducing the new directive states ‘In view of the rapid expansion of electronic purchasing systems, appropriate rules should now be introduced to enable contracting authorities to take full advantage of the possibilities afforded by these systems. Against this background, it is necessary to define a completely electronic dynamic purchasing system for commonly used purchases, and lay down specific rules for setting up and operating such a system in order to ensure the fair treatment of any economic operator who wishes to take part therein’. There may be a number of ways of creating a dynamic purchasing system. The Directive sets out rules of conduct covering all such systems. The Directive does not seek to define how such systems will be established and will operate although, clearly, the ‘Buyer Profile’ website could be the communication portal. 1 Recitals explain the Commission’s reasoning and can be found at the front of the Directive

Article 33 Dynamic Purchasing System (2) Dynamic purchasing systems are a kind of electronic framework agreement where Indicative Bids to enter the framework can be made at any time and each call off is subject to competitive tender The open procedure must be used to invite Indicative Bids to join the system. The contract notice must state the intention to use a dynamic purchasing system and where to obtain bid documents Note Use the framework analogy to give a simple description of the way in which the dynamic purchasing system works.

Article 33 Dynamic Purchasing System (3) Indicative bid documents and subsequent documentation must be communicated electronically and be available throughout the life of the system All those who have submitted a compliant indicative bid and satisfy the selection criteria must be admitted to the system Indicative bids may be submitted or improved at any time throughout the life of the system and must be assessed within 15 days, or longer if tenders have not been invited for a ‘call off’ Note The system is intended in the words of the Commission to provide the purchaser with a: ‘particularly broad range of tenders as a result of the electronic facilities available, and hence to ensure optimum use of public funds through broad competition.’

Article 33 Dynamic Purchasing System (4) Each contract (call off) is subject to competitive tender preceded by a simplified contract notice (for the benefit of suppliers who may not be aware of the system) Bids for call off contracts cannot be invited until all Indicative Bids received by the deadline have been evaluated All admitted suppliers must be invited to bid for each contract within the time specified by the purchaser Award must be based on the criteria stated in the contract notice which may be refined for the specific bid Note Emphasise the requirement for competition for each purchase, the requirement to advertise and the need to assess new indicative bids prior to inviting specific bids.

Article 33 Dynamic Purchasing System (5) Contract award notices must be despatched within 48 days of the award The system cannot last longer than four years unless, exceptionally, justified Suppliers or other parties cannot be charged for establishing and operating the system Note Emphasise the requirement for the system to be funded by the purchaser.

Dynamic Purchasing Systems (6)
Article 33 Dynamic Purchasing Systems (6) The open procedure must be used and the system must be advertised in the Official Journal through a contract notice providing the web site at which tender documents may be consulted Publish a further simplified notice advertising the requirement - Give 15 days for responses to be submitted When a specific requirement arises for the products covered by the system, the purchaser must conduct the following process Suppliers may at any time during the system’s operation submit ‘Indicative Bids’ for the product or service required and may be admitted to the system or not on the basis of this submission. Bids must usually be assessed within 15 days. Invite final tenders from all admitted suppliers once any new suppliers responding to the simplified notice have also been evaluated - Use this slide to reinforce knowledge and summarise the dynamic purchasing system process. Award must be based on the criteria stated in the contract notice which may be refined for the specific bid (call off)

Case Study 4 The Stationery Contract
Note

Article 43 New Reports For frameworks and dynamic purchasing systems, contracting authorities must compile reports covering: Contract details Selection decisions Justification for use of the selected procedure Name of successful tenderer Reasons for selection Report to be provided to the Commission upon request Note These are new reports but they do not form part of the organisation’s annual return. They are intended to be filed for future reference.

The Utilities Directive
Significant Changes Note Changes to the Utilities Directive are limited but significant. Thresholds have been simplified but remain very similar to current values and are substantially higher than public sector thresholds for services and supplies. Provision for frameworks is unchanged so that timescales and call off arrangements are not prescribed in the directive. No provision has been made for a Competitive Dialogue procedure in the Utilities Directive on the basis that there is much greater freedom to use the negotiated procedure. Changes common to the Public Sector and Utilities Directives are shown on the following slide.

Changes common to both Directives
Many new provisions apply to both Public Sector and Utilities Directives: Central purchasing bodies Electronic auctions Dynamic purchasing systems Technical specifications Award criteria Ways in which sustainability can be taken into account Identical rules apply across the Directives for these provisions Note

Change of Coverage Telecomms sector is not subject to the new directive in view of the introduction of effective competition within this sector Postal services will over time move to the Utilities Directive and away from the stricter regime of the public sector directives Reflects increased competition in the postal sector Note Increased competition in the telecommunications sector in recent years is sufficient to justify removal of the need to comply with public procurement legislation. The gradual increase in competition and the emergence of new suppliers in the postal sector has also justified phased transfer from the Public Sector Directive to the Utilities Directive. This will enable postal service providers to take advantage of the greater freedom offered by the Utilities Directive.

Article 30 Exit Criteria (1) If the utility activity is directly exposed to competition in markets to which there is free access, then the utility activity is not subject to the Directive Direct exposure to competition is decided on grounds, such as: Characteristics of the goods or services concerned Existence of alternative goods or services Prices and the actual or potential presence of more than one supplier Note A two stage test is applied to determine whether or not a utility activity (perhaps only a part of an organisation’s total activity) is subject to sufficient competition to justify removal of the need to comply with the directive. Firstly the utility activity must be directly exposed to competition. Secondly, access to that market must not be restricted.

Article 30 Exit Criteria (2) Access to the market is presumed to be unrestricted if relevant listed community legislation has been implemented and applied by the member state. Where free access cannot be presumed the member state must demonstrate that access is free Note If a member state has adopted Community legislation opening up markets, then access to markets will be deemed not to be restricted for the purpose of making the above assessment. Where this is not the case, member states must demonstrate open access by other means.

Article 30 Exit Process (1) Where a member state considers that there is direct exposure and free access, it informs the European Commission of all the relevant facts (laws etc and competitive position) and where appropriate the view of an independent and competent national authority Where implementing legislation allows, utilities can ask the European Commission to establish whether there is direct exposure to competition. The Commission is required to inform the member state of the request Note

Article 30 Exit Process (2) The European Commission has 3 months from the first working day on which it receives the request to decide (plus extensions of up to 3 months for additional info etc) Where free access to a market can be presumed and an independent and competent national authority has established that there is direct exposure to competition, the directive will not apply unless the European Commission decides to the contrary, usually within 3 months Note The European Commission is expected to adopt a position within 3 months of being asked in most circumstances. This may be extended by a further 3 months where justified but this extension period is reduced to 1 month where an independent competent national authority has established that the utility activity is subject to the required level of competition. If free access to a utility market can be presumed on the basis that relevant listed community legislation has been implemented and an independent and competent authority believes there to be direct exposure to competition, then the directive will not apply unless challenged by the European Commission.

Exit Provisions - Summary
Article 30 Exit Provisions - Summary Start Is access to markets presumed free on the basis of Community legislation opening up markets and which has been adopted by the member state? Member state or utility (national law permitting) may seek a decision from the European Commission on the degree of exposure to competition in markets to which there is free access. Supporting evidence must be provided No No Yes Has a competent independent national authority confirmed that the utility activity is directly exposed to competition? No decision within required timescale European Commission decides within 3 months which may be extended by up to 3 months where justified Agree Yes Use this slide to reinforce knowledge and summarise the exit process. Utility activity is not subject to the Directive provided the European Commission has not decided otherwise within the required timescale Disagree Utility activity is subject to the Directive

EC Public Procurement Directives
Changes arising from the new Public Sector and Utilities Directives The End

EC Public Procurement Directives

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EC Public Procurement Directives

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