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A Review Of The EU Procurement Green Paper:

How Will Proposed EU Public Procurement Changes Affect You?

Will proposed changes to public procurement regulations at EU level, make it easier, or more difficult to win public sector contracts? Well, the answer is it could do both.
In this article we review the various changes to public procurement that are presently being considered. We identify 5 ways in which future changes to EU rules could help you win more public contracts. But, don't get too excited, it's not all good news. We have also pulled together a list of the 5 ways in which proposed changes could make selling to the public sector more difficult.

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What's Next For Public Procurement?


Before examining the impact of proposed changes, let's set the context. There is much discussion at present regarding the future of public procurement within the European Union. It is motivated by two factors: The drive to maximize the effectiveness and the efficiency of public procurement resulting in better procurement outcomes at a lower cost The drive to maximize European competitiveness and innovation something that procurement rules can have a major bearing on. Early in 2011 the EU Commission published a green paper on the modernisation of EU public procurement regulations. Titled 'Towards a more efficient European Procurement Market' the document began a process of discussion on proposed changes under a total of 24 different headings from the 'modernisation of procedures' to the promotion of 'innovation' through procurement. With a little background set, let's examine how the proposals are likely to affect you. We will start with the positive first, then moving on to the other side of the picture.

Having A Go At EU Procure-o-crats! The Green Paper served as the basis for a process of consultation whereby interested parties were invited to respond to specific questions raised by the Commission. The irony of a process of simplifying EU procurement starting with what was effectively a questionnaire of 120 questions was not lost on many! However it is all too easy to 'have a go at' EU procure-o-crats. In our view the Green Paper and the manner in which its consequent consultation has been managed demonstrate an earnest attempt by the Commission to modernise procurement. Far from being straight-forward that is something that entails a difficult balance between international treaty obligations, the requirements of maintaining an open market and the demands of Europe's economy.

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5 Changes That Would Help You Win More Public Contracts


Various reviews of the impact and performance of the Union's public procurement regime have highlighted disappointingly low levels of access to public spending among smaller enterprises, as well as low cross border access to public contracts generally. This is one of the key factors in putting the issues of greater flexibility and reduced administrative costs (for both buyer and seller) on the EU procurement agenda. In short the Commission is concerned to make it easier to bid for public projects. Some of the ways in which this could benefit you are listed below.

1. 'Let's Sit Down And Talk...'


One of the key proposals offering the promise of greater flexibility is the more widespread use of the Negotiated Procedure. In this model the purchaser selects one or more potential bidders with whom to negotiate the terms of the contract (in most cases following an OJEU ad). Presently the negotiated procedure is applied to approx. one fifth of advertised EU public procurement tendering. While there are concerns that the expansion of this procedure might restrict access and result in favouritism, there are clearly situations where a 'let's sit down and talk' makes more sense than the more rigid approach to tenders. Specifically contracts where the requirements are complex and evolving, or where smaller sums are involved. If you would prefer a return to the more traditional approach to selling a rise in the use of negotiated procedures is likely to be welcome.

2. Shorter Sales Cycles


A proposal to collapse the two-stage EU public procurement process could help you win more public sector business. In particular it has the potential to accelerate public sector sales cycles and reduce tendering costs.

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Today's procurement rules stipulate that procurement decisions must involve two clearly distinct steps: The supplier selection/short-listing (based exclusively on appropriate supplier eligibility criterion) The award decision (based only on relevant product-service criterion). Merging, or confusing these steps and their respective criterion results in the purchase process being fatally flawed. For example, a buyer cannot consider supplier capability criterion at the award stage - it is too late! Only product / service-specific criterion can be applied in making the final decision. The law has been interpreted to allow for the selection and award stages to happen concurrently, once they remain distinct. However, the reality is that this rarely happens, which means that the time and administration involved in the procurement exercise can in many cases be doubled. The Commission's proposal to collapse the two stages would enable greater speed and flexibility in decision making. That is something that could benefit the seller as well as the buyer.

3. Paperwork Only On Winning


Related to the two stage process, the Commission has suggested tackling the issue of the proof of capability / certification requirements at the supplier selection stage. This could greatly reduce the tendering burden. The proposal is that while all bidders would have to declare that they meet the certification criterion, actual proof, or documentary evidence of; certification need only be produced by the winning bidder. Thus unsuccessful bidders would be spared some of the paperwork and documentation burden. There is also a proposal for greater standardisation of not just certification, but also pre-qualification criterion EU wide. These measures if successful could reduce the amount of time and money required by sellers to tender.

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4. 'We Have Other Advantages To...'


The EU faces new challenges, including the environment and innovation, to name just two. It would seem logical therefore that these goals should be reflected in how it spends money, right? Well, reconciling new goals with the original objectives of an open and fair market in public spending, is problematic. One of the major problems is that the inclusion of decision making criterion or technical specifications that are not 'subject-matter related' is not allowed. Here are two examples offered in the Green Paper: While carbon and green are a priority, current rules dont allow for any requirement that does not relate to the manufacturing of the product and is not reflected in the product's characteristics. Public authorities may claim that for environmental and health related reasons, certain products should, or must be sourced locally. However, this represents an infringement of EU law if it results in 'unjustified direct, or indirect discriminations between suppliers'

So, although as a supplier your proposition may be in support of the environment, innovation, or another aspect of the public good in most cases this cannot be a factor in the procurement decision. EU rules prevent arbitrary award decisions, by requiring that any criterion used must meet the following conditions: Is linked to the subject-matter of the contract Is expressly mentioned in tender documents May not confer an unrestricted freedom of choice.

So it is that the best and best priced widget from an eligible supplier wins. The fact that no trees have been cut down in the process, or you have won an international award for innovation makes no difference. That means some of your supposed competitive advantages are set to nought.

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If your advantages extend beyond the immediate good, or service you provide then breaking the absolute requirement that all criteria direct relate to the subject matter could help you win more business. It means that when you say 'we have other advantages too' the buyer may be able to listen.

5. Clarification & Simplification


Many aspects of procurement are prone to confusion among both buyers and sellers. So, it is good news that the Commission is exploring ways to clarify, standardize, or simplify many aspects of public procurement. Some examples include: Simplifying definitions, including grouping part 1 and part 2 services and the definition of works contracts Revisiting and clarifying the scope of the rules, including; whether regulations apply beyond public purchases to other spheres of public activity, public-private partnerships, below threshold contracts, local and regional authorities, utilities and social services Clarifying and standardizing how many areas are to be treated, including; disqualification grounds and procedures, conflicts of interest, cross border projects, sub-contracting and contract termination

If you find aspects of public procurement confusing, then a simplification and clarification of those areas most prone to confusion, is sure to be welcome.

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5 Changes That Could Hinder You In Winning More Public Contracts


When it comes to the proposals of the Commission it is not all good news for sellers. Here are some of the changes that if implemented could make it more difficult to win public sector business:

1. The Incumbency Advantage


The Commission is drawing attention to the risk of an unfair advantage being conferred on an incumbent supplier. That includes the possibility of favouritism where a bidder has had a previous relationship, or has been involved in designing the specification. One of the proposals is to require the publication to all bidders of any knowledge, or information to which an incumbent supplier has unique access. If you are the incumbent supplier you won't welcome this proposal, however practical or impractical it may be.

2. Business As Usual!
If the public buyer makes significant contract changes following the award, a return to the tendering process is typically required. This is also likely to be required for changes that occur on the contractor side (internal re-organisation, bankruptcy, loss of crucial staff, etc.). The result is a zero tolerance approach to amending the contract, or its implementation. It is an area that can however give rise to confusion and one which the Commission proposes to clarify. The commission is also addressing the issues as to whether in an environment of fast change, some modifications in contracts once awarded should be accommodated. In a related issue the commission has highlighted the absence of regulations on subcontracting by the successful tenderer. This introduces an element of uncertainty into project delivery.

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Presently regulations enable contracting authorities to require that tenderers give notice of likely or planned sub-contracting. However the court has stipulated that a tenderer is generally entitled to sub-contract and can only be prohibited where the contracting authority has been unable to verify the technical and economic capabilities of the subcontractor. | The grounds on which contracts can be terminated, as well as the procedures involved are also up for discussion. These measures to give buyers greater flexibility to adapt and respond in the contract implementation stage may not be welcomed by sellers.

3. You Are Disqualified!


EU directives require the disqualification of bidders convicted of certain listed offences (notably corruption), as well as for other unsound business practices (including 'grave professional misconduct'). However confusion can arise, particularly in the context of various national standards and safeguards. Now the commission proposes a more rigorous exclusion regime. It proposes that actions, such as; corruption, or deliberately undeclared conflicts of interest should be subject to more severe sanction. It also proposes to mandate disqualification for attempts to gain access to confidential information, or to unduly influence the tendering process. If the EU Commission's proposals are accepted then more sellers are likely to face exclusion and disqualification.

4. Central Buying
Newer regulations have facilitated centralized buying and the use of framework agreements. However the Commission is considering whether the measures now in place go far enough. If more provisions for aggregated demand (including cross border aggregation) are implemented the result is likely to be a concentration of business

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among fewer suppliers.

5. More Centralized Control


Many of the changes up for discussion could have the result of generating more rules and increasing the administrative burden involved for both buyer and seller. Examples include: Standardizing anti-corruption measures The strategic use of procurement to achieve other goals Preventing conflicts of interest Regulating unfair advantages Sellers know that clarification and standardisation, typically means more rules and regulations.

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