Introduction to Public Procurement Julie Nazerali Partner Beachcroft

Introduction to Public Procurement Julie Nazerali Partner, Beachcroft LLP, Brussels and London 5 June 2009 1

Today’s Menu § 1. EU Procurement Regime § 2. Public Private Partnerships and Competitive Dialogue § 3. Key issues § 4. Trends 2

1. EU Procurement Regime So why procurement rules? § EC Treaty: Common Market between all Member States § Breach of public procurement rules acts as a barrier to trade § Total public procurement estimated at about 16% of EU GDP or £ 1000 billion § Increase of cross-border competition and improvement of prices 3

1. EU Procurement Regime The General Regime § Directive 2004/18/EC (Works, Supply and Services) § Directive 2004/17/EC (Utilities) § Directive 2007/66/EC (Remedies) 4

1. EU Procurement Regime What thresholds apply? Type of contract Threshold Supplies §Central Authorities §Other Authorities € 133, 000 € 206, 000 Services §Part A Central Authorities §Part A Other Authorities §Part B All Authorities € 133, 000 € 206, 000 Works §Works/Concessions € 5, 150, 000 5

1. EU Procurement Regime Procedures § Open = All bidders invited § Restricted = Only certain bidders invited § Negotiated = Allows discussion/negotiation § Competitive Dialogue = Allows discussion 6

1. EU Procurement Regime Common principles Transparency / Equal treatment § § § § Advertise intention to procure Hold a competition between interested firms Exclude firms only for justified reasons Respect minimum time-limits for all participants Award contract based on results of the competition Provide information on decisions to interested parties 10 day standstill period between award decision and conclusion of contract 7

1. EU Procurement Regime Rules applying to Part B services or below threshold contracts §Part B services: Health, education and cultural services §Full procurement rules don’t apply §When a contract is of “cross-border interest”: § EC principles apply: non-discrimination and equal treatment, transparency, proportionality § Sufficient degree of advertising, eg. Internet § Fair competition must be respected §Relevant factors to be considered: value/subject matter of the contract, size/structure of the sector concerned 8

1. EU Procurement Regime What happens if things go wrong? Complaint to the Commission § Informal procedure – “a friendly settlement”? § Formal procedure: § Letter of infringement to Member State § Reasoned opinion § Proceedings before ECJ § Complainant does not receive damages Proceedings before a national court Now § Injunction proceedings § Damages 9

2. Public Private Partnerships (PPPs) § PPPs deliver a project/service traditionally provided by the public sector § How? : Through concessions, JVs and partial privatisations § Contract awarded to a PPP vehicle does not need to be tendered, if: § The private partner was chosen in a fair and transparent tender exercise § The nature and scope of the contract was covered when tendering for the private partner § PPPs often used for road and rail infrastructure projects 10

2. Competitive Dialogue (CD) Used for “Particularly Complex Contracts” § Came into operation in 2006 § Negotiated procedure can only be used in limited cases and not for CD § Used where open/restricted procedures not available; and § Not possible to define technical specifications; or § The legal and/or financial make up of the project 11

2. Competitive Dialogue How does it work? OJEU Notice Pre-qualification Questionnaire Select/shortlist participants Invitation to tender All procedures apart from open procedure Evaluation of tenders End Dialogue and invite final Tenders Dialogue Phase – Successive stages possible Competitive Dialogue/Negotiated procedure Award contract Observe 10 day standstill Contract Signature 12

2. Competitive Dialogue § Allows for discussions on all aspects of the contract during the dialogue stage § Authority can discuss each bidder’s individual solution § Allows for flexibility as to the setting/disclosure of evaluation criteria § Allows for limited post-tender discussions with preferred bidder 13

3. Key issues The new Remedies Directive: four areas of reform § Introduction of “ineffectiveness”: contracts may be set aside for serious breaches of procurement rules (eg. contract notice not published in the OJEU) § Harmonisation of standstill provisions: § 10/15 days before the conclusion of the contract § Contracting authorities must send reasons with the award decision § New time limits for seeking ineffectiveness in Court: 30 days for published award decisions / 6 months if bidders were notified of the award decision or where OJEU contract award notice not published § New rules bring in a defacto injunction procedure 14

3. Key issues The new Remedies Directive: some further info § Court may not render a contract ineffective if it finds that there are good reasons for doing so, ie. reasons relating to a “general interest of non-economic nature” § Alternative remedies: contract shortening and fines applied as § An alternative to using the ineffectiveness principle, and/or § In addition to prospective ineffectiveness § Does not apply to Part B services or below threshold contracts § To be implemented by December 2009 15

3. Key issues Disclosure of Award Criteria/Weightings - what must be disclosed? § Award criteria and respective weightings: + § Sub-criteria and respective weightings: (+) if they could have had an impact on the preparation of bids § Other evaluation elements (scoring matrix etc. ): (+) if they could have had an impact on the preparation of bids 16

3. Key issues Exception to procurement rules: In-house contracts § A Contracting Authority (CA) can award a contract to another public body without holding a tender exercise, if: § § § The CA exercises control over the entity that is similar to the control it exercises over its own department, and The entity carries out the essential part of its activities for the CA Eg. the ECJ ruled that the transfer of the operation of a local authority’s cable TV network to a co-operative could be done without a tender exercise since the latter was controlled by a Board composed of representatives of the public authority (Coditel Brabant, Case C-342/07) 17

4. Trends § Watch out for the Remedies Directive! § Bidders are becoming much more litigious § CAs must ensure robust procurement compliance § Still many grey areas in procurement law (eg. in-house awards, land transactions, change of award criteria in CD procedures, social award criteria, post-contract changes). 18

Q&A Please don’t hesitate to ask questions! Julie Nazerali, Partner, Beachcroft LLP, Brussels +32/ (0)2 541 85 82 jnazerali@beachcroft. com 19