Public procurement: getting ready for the new rules

Public procurement: getting ready for the new rules

Published:

Author: Michael Rainey

The public procurement rules are changing, and the Government is keen to implement these changes as soon as it can.

The following update highlights some of the key points for bidders and procurers to note as they get ready for the changes, considers the remaining steps in the implementation process and explores the likely impact of the changes going forward.

On 15 January, the European Parliament adopted the three new procurement directives. From the EU's perspective, the new directives will change the public procurement rules to achieve three main objectives: simplification, flexibility and legal certainty.

In the UK, the Government has welcomed the changes, which it considers will boost small and medium enterprises, reduce 'red tape' and enhance flexibility.

What to do now - get up to speed and get ready

The impact of the directives in the UK will depend largely on how the implementing regulations are drawn. In any event, until these come into force, there is no change to the current rules. While the new directives clearly represent the focus and priorities of the EU and the Member States, until implementation they do not impact on the interpretation or application of the existing law.

Nevertheless, procurers and bidders should consider taking the following steps to ensure that they are ready for the new regulations:

  1. Procurers should ensure that key procurement staff are up to speed with the changes through training and raising awareness. Bidders should do the same with their bid and negotiation teams. As the Government intends to 'copy out' many of the provisions straight from the directives, that process can usefully start now.
  2. The new directives include a power to exclude a potential bidder due to significant or persistent poor performance of another public contract. Procurers should begin (or continue) to keep detailed records of their contractors' performance against key indicators to ensure that they have the evidential basis to exercise this power. Bidders should bear this in mind when discharging any ongoing contractual obligations.
  3. Full 'e-procurement' will soon be mandatory. Procurers should consider identifying a suitable electronic platform and developing the necessary expertise in procurement staff. Bidders should undertake a similar upskilling of bid teams.

Implementing the changes in the UK - transposition

The directives must still complete their slow progress through the machinery of the EU institutions. This involves Council approval and publication in the Official Journal. 20 working days after publication, the directives come into force. This is expected in March 2014.

After that, and within a maximum of two years, each EU Member State must transpose the new directives into its national law through implementing regulations. In the UK, it is the Government's stated intention to transpose the directives early so that the perceived benefits are available to procurers and bidders in the UK as soon as possible. More generally, the Government has committed to transposing EU law without 'gold-plating' and by 'copy-out' where possible, and this should help speed up the drafting of the regulations.

After implementation - adjustment

In terms of the EU's three objectives, perhaps inevitably it is legal certainty that takes precedence over simplification and flexibility within the new directives. Compared to the current position, there is greater codification and increased prescription and there are more decisions for procurers to make. There is, quite simply, more law.

However welcome the changes, there are numerous new rules to get used to, which will add complexity and uncertainty to procurement processes as procurers and bidders (and courts) adjust to the new regime.

After adjustment - back to the courts?

The new directives have sought to codify recent decisions of the EU courts in a number of key areas. These include co-operation between public bodies and the 'in house' exemption, the modification of existing contracts and the definitions of 'public works contract' and 'concession' (in the new, separate Concessions directive).

While this may help to enhance legal certainty initially, experience from the 2004 directives suggests that the most valuable court judgements deal with matters outside the strict wording of the directives. This is because most challenges arise where procurers (and, often, their preferred contracting partner) seek to avoid the application of the rules rather than to apply them. However flexible the new rules prove to be, this is unlikely to change. It will be interesting to see where the market spots gaps and opportunities within the new texts, and how the EU courts respond. As now, the procurement rules will continue to evolve.