Public Procurement Reform in EU

Two new Directives on public procurement have been adopted on 11 February 2014. The Directive 2014/24/ EU of the European Parliament and of the Council of 26 February 2014 on public procurement and Directive 2014/25/EU of the European Parliament and of the Council of 26 February 2014 on procurement by entities operating in the water, energy, transport and postal services sectors aim to make the rules simpler and more efficient for public purchasers and companies and secondly to provide the best value for money for public purchases, while respecting the principles of transparency and competition.

The rules simplify public procurement procedures and make them more flexible, which will benefit both public purchasers and businesses, particularly small and medium-sized companies. Some of the amendments include provisions which ascertain public purchaser to negotiate the terms of contracts with companies to obtain the service that best suits their needs, specify shorter minimum deadlines for procedures. The new rules specify that only the winning company needs to submit all the documentation proving that it qualifies for the contract in question. Additionally, for a company to participate in the procedure, it will be sufficient to submit a self-declaration that it fulfils these conditions, drastically reducing the volume of documents required for selecting companies.

Under the reform public procurement is becoming a policy strategy instrument. Thus, public authorities will be able to base their decision on the best life cycle cost of the goods offered. Here, the CO2 footprint of products could be a decisive factor. The same will apply to the process by which the work, services and supplies purchased are produced: employing the most vulnerable or disadvantaged people or using non-toxic substances may be a decisive factor in selecting the winning bidder.

A new, clearer definition will require Member States to take steps to effectively prevent, identify and correct ‘conflicts of interest’. Anyone attempting to influence a public purchaser or making false statements may be excluded from public procurement procedures. It will be also easier to identify cases where a contract could be modified after it is awarded, without a new call for tenders and finally, public purchasers must reject any bid that comes at an abnormally low price because the company concerned is violating EU or international social, environmental and labour laws.

It is also specified that social, cultural and health services and certain others, such as legal, hospitality, catering and canteen services listed in the Directives, will benefit from the new simplified arrangements. These arrangements apply to contracts worth more than EUR 750 000 (compared with EUR 200 000 for other services). Public purchasers may award contracts to tenders that meet all quality criteria such as the accessibility, continuity and sustainability of the services offered, which they consider critical to the service concerned. Apart from the obligation to treat all companies equally and provide adequate publicity to the call for tenders and award of contracts, only national rules will apply to the relevant procedures.

Both Directives enter into force on the twentieth day following that of its publication in the Official Journal of the European Union and Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with the Directive by 18 April 2016.

Directive 2014/24/ EU repeals Directive 2004/18/EC and Directive 2014/25/ EU repeals Directive 2004/17/EC.