European government procurement
policy and experience
Rita Beuter
Senior Expert, European Policies, EIPA, Maastricht (NL)
[email protected]
© EIPA – 2008
Facts on Procurement
Procurement represents about 17% of EU GDP,
about Euro 2000 billion
16 % (in value) was published in 2002 at EU
level; publication in the Official Journal (OJ) in 23
languages; Tenders Electronic Daily (TED)
estimated aggregated value of procurement
contracts published in the OJ increased from 59
billion (1993) to 270 billion Euros in 2004
cross-border procurement accounted for 10%,
but indirect procurement is relevant
European rules apply to 30 countries, the EU,
Norway, Iceland, Liechtenstein
Legal Framework/Basis - Public
International Treaties and Agreements
 WTO: Government Procurement Agreement (GPA) plurilateral
 Agreements with Third countries
EC Treaties: no definition
 Primary EC law (Internal Market, fundamental
 European rules apply to the European Economic Area
 Secondary EC law: Procurement Directives
National Law
Objective of Public Procurement
Policy/European Procurement
open up public procurement to competition
buy goods and services of a better quality
and a better price, value for money
anti-corruption tool
tool for stimulating innovation
tool for stimulating sustainable development
establishment of a single market
Principles in the Treaty applying to
public contracts and Fundamental
non- discrimination on grounds of nationality
free movement of goods
freedom of establishment
freedom to provide services
equality of treatment
obligation of transparency
mutual recognition
The Rules in Public Procurement
Legislative Package 31 January 2006:
“Classic“ or “Public Sector“ Directive
- Directive 2004/18/EC on the coordination of
procedures for the award of public works contracts,
public supply contracts and public service contracts
“Utilities” Directive
- Directive 2004/17/EC coordinating the procurement
procedures of entities operating in the water, energy,
transport and postal services sector
The Rules in Public Procurement
Remedies Directives
- 89/665/EEC, public supplies and public
- 92/13/EEC, public utilities
- amending remedies directive: Directive
2007/66/EC amending Council Directives
89/665/EEC and 92/13/EEC with regard to
improving the effectiveness of review
procedures concerning the award of public
Structure of the Public Sector
Directive 2004/18/EC
Preamble- Recitals
Title I Definitions and general principles
Title II Rules on public contracts
-scope of application (thresholds, specific situations,
excluded contracts, special arrangement)
-arrangements for public service contracts
-technical specifications
-procedures (open, restricted, negotiated, competitive
-framework agreements, dynamic purchasing systems
-advertising and transparency
-time limits
-selection of contractors
-award of contracts
directive provides legal basis for carrying out
electronic procurement at European level
definition of electronic means and their use
shortening of time-limits
covers electronic communications
covers new tools available:
- dynamic purchasing systems
- electronic auctions (reverse electronic
auctions) as a tool for the award
Definition Contract
concluded in writing; for pecuniary interest; for works,
supplies or services
Which contracts are affected?
 Contracts which exceed certain financial thresholds
 Contracts which are not excluded in accordance with the
exceptions provided for in the directive
Contracts below the relevant threshold level:
fundamental principles apply,transparency (degree of
advertising), cross-border interest
Excluded contracts – Some examples
Contracts declared secret or requiring special
security measures
contracts awarded pursuant to international
specific exclusions (employment contracts,
arbitration & conciliation services, etc)
service concessions
Definition of contracting authorities
the State, regional or local authorities, bodies
governed by public law, or associations
formed by one or more such authorities or
bodies governed by public law
It includes bodies of any kind which
contracting authorities create by law,
regulation or administrative action
“the State” encompasses legislative, executive
and judicial bodies
Definition of contracting authorities
Bodies governed by public law:
3 cumulative criteria:
 established for… meeting needs in the general
interest, not having an industrial or
commercial character
 having legal personality; and
 financed, or supervised or appointed, for the
most part, by the State, regional, local, other
Thresholds as of 1 January 2008
EUR 133 000
supplies/services - central level
Annex V list of products awarded by contracting
authorities in the field of defence
EUR 206 000
supplies/services - sub-central level
Annex B services/non-GPA services
subsidised service contracts
products not covered in Annex V
EUR 5 150 000
Defence Procurement
Directive applies to public contracts awarded
by contracting authorities in the field of
defence (defence ministries are covered),
subject to Article 296 of the Treaty
problem: exemption used extensively by the
Member States
initiative at European level for a Directive in
the field of Defence and Security
Central Purchasing Bodies
contracting authority, which acquires supplies
and/or services intended for other contracting
authorities or awards public contracts or
concludes framework agreements for works,
supplies or services intended for other
contracting authorities
examples: CONSIP (Italy), OGC Buying
Solutions (UK), UGAP (France)
Public Sector Directive
special arrangements (reserved
contracts) – social consideration
arrangements for public service
contracts – distinction between
Part A Services and Part B Services
Technical Specifications
to be set out in contract documentation
(notices, contract documents, etc)
take into account accessibility for people with
should provide equal access for tenderers
reference to technical specifications, “or
performance or functional requirements
(environmental characteristics)
or mixture
not to refer to specific make, source,
particular process, trade marks, patent, etc
Public Sector Directive
variants (only possible award criteria: most
economically advantageous tender), stimulate
subcontracting in order to stimulate SME
conditions for performance of contracts,
social and environmental considerations
New procedures/provisions/systems
- competitive dialogue
- framework agreements
- dynamic purchasing systems
Open procedure (all potential suppliers / contractors /
service providers)
Restricted procedure (only selected potential
suppliers/contractors/service providers, two-stage
procedure) (minimum of 5 must be invited to tender)
Competitive dialogue contracting authority enters into
dialogue with bidders following an OJ notice (only for
complex contracts)
Negotiated procedure (direct negotiation with chosen
suppliers/contractors/service providers; only in
exceptional circumstances; burden of proof on contracting
authority; justification)
negotiated procedure with prior publication
negotiated procedure without prior publication
Accelerated restricted/negotiated (for use only in
exceptional circumstances of urgency not due to fault of
contracting authority)
Competitive Dialogue
new procedure for particularly complex
contracting authority considers that the open
or restricted procedure will not allow the
award of the contract
“a flexible procedure ...which preserves not
considerably used in France and the UK
only competition between economic operators
but also the need for contracting authorities
to discuss all aspects of the contract with
each candidate”
Framework Agreements
Def.: Agreement between one or more contracting
authority and one or more economic operators to
establish the terms governing contracts during a
certain period
 framework duration 4 years, exceptions
 for contracts based on a framework agreement,
- all terms are laid down (single economic
operator/versus several economic operators, at least 3)
not all terms laid down: mini-round of competition
in practice: framework agreements are frequently used
Dynamic Purchasing Systems (DPS)
“A ‘dynamic purchasing system’ is a
completely electronic process for making
commonly used purchases... 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.”
-a new system which has hardly been used in practice
-could be seen as an open electronic framework, similar
system for below threshold applied in CONSIP
Publication of notices
prior information notice (PIN) or
information on buyer profile (to make
known intended total procurement after
beginning of fiscal year) not compulsory
contract notices
notices for design contests (services)
notices for works concessions (works)
contract award notice (CAN)
Debriefing – informing candidates
and tenderers
Contracting authority must inform candidates and
tenderers of decisions reached:
a) award of contracts, conclusion of framework, admittance to dps
b) discontinuation of procedure and grounds
c) to restart a procedure or implement a dps
written information must be given after request to the c.a.
After written request, contracting authority must inform
a) unsuccessful candidates/tenderers of reasons for rejection of
b) admissible tenderer of characteristics and relative advantages of
selected tender, name of tenderer / parties to framework
This information must be given within 15 days after receipt of
Selection Criteria
Suppliers, contractors or service providers
must meet specific objective criteria:
good repute, professional qualifications, economic
and financial standing, technical knowledge, ability
mandatory exclusion of tenderers/candidates (i.e.
criminal organisation, fraud, corruption, etc.)
tenderers/candidates may be excluded: bankrupt,
grave professional misconduct, etc
indication of environmental management measures in
appropriate cases
Award criteria
the lowest price only,
the most economically advantageous
choice for the contracting authorities
depends on the subject matter of the contract
Most economically advantageous
non-exhaustive list of criteria mentioned in the directive, for
technical merit
aesthetic and functional characteristics
environmental characteristics
running costs
after-sales service and technical assistance
delivery date and delivery period or period of completion
security of supplies
Most economically advantageous
award criteria must be linked to the subjectmatter of the contract
criteria of most economically advantage
tender from the point of view of the
contracting authority
Most economically advantageous
the contracting authority shall state in the
contract notice/contract
documents/descriptive document the
relative weighting which it gives to each of
the criteria (range)
if not possible: descending order of
Some experiences from the Member
Italy: in the past, the use of the most economic
advantageous criterion was not allowed for public
works contracts. Following a judgement by the
European Court of Justice this limitation was
UK: most economically advantageous tender is used
in most procurement as award criteria
Austria: lowest price only allowed if quality standard
can be described with precision
Ireland: for more complex projects the most
economically advantageous tender award criterion is
the most commonly used
trend towards life-cycle costing and sustainability
Some experiences from the Member
States – most economically advantageous
tender – evaluation committees
Italy: a committee must be established
for evaluation of tenders (maximum 5
members, experts in the specific sector,
no conflict of interest)
UK: in general a committee, for
strategic contracts external experts,
academics, no conflict of interest
not determined by European directives
Award decision and conclusion of
contracting authority is obliged to inform
tenderers of its award decision prior to
conclusion of contract
standstill period between award decision
and signature of the contract
decision to award a contract must in all
cases be open to review procedures prior to
the conclusion of the contract
different systems and levels/degrees in the Member
States (centralised/semi-centralised/decentralised
procurement structures)
Italy: Public Procurement Code provides for an
independent authority, focus on EC principles and
fair and efficient use of public funds, complaint to
Court of Auditors
“new” Member States: central procurement offices
have strong monitoring and control functions
(Poland, Czech Republic, Hungary, Estonia, etc)
France: key institution DAJ (advise) and public
procurement observatory
National audit offices and courts of auditors
European Commission can ask for report and
monitoring of practices; for Member States
Dealing with complaints
Body responsible for appeal/mediation procedures
must be indicated in the contract notice
aim of EC remedies: rapid and effective remedies;
current reform tackles “race to signature” and illegal
direct awards
divergence in national remedies, different legal
systems in the Member States (courts, tribunals,
arbitration, etc)
complaints to the European Commission
infringement proceedings by the European
Procurement training
Some experiences
professional training in UK: Chartered
Institute of Purchasing & Supply
NEVI in the Netherlands
some countries: the central procurement
office; other countries: hardly any training
national training institutes for the public
University level
private providers of training
For further information
EIPA website on public procurement
Rita Beuter
Tel. 0031 – 43 – 3296240
[email protected]

Recent Developments in EU Procurement Policy