This presentation assesses the reform of the EU public procurement rules in 2014 from the perspective of flexibility. It reflects on legal and case law changes in the period 2011-2017.
An introduction to Indian Contract Act, 1872 by Shraddha Pandit
Analysis of recent procurement reforms from perspective of flexibility
1. An analysis of recent procurement
reforms from the perspective of flexibility
Dr Albert Sanchez-Graells
Hankinta- ja logistiikka-alan neuvottelupäivät
Helsinki, 1-2 June 2017
2 June 2017
1Session 1: Recent developments and flexibility
2. Agenda
• This first session will focus on the reform of EU
procurement rules to achieve more flexibility
• It will seek to stress the growing space for the
exercise of discretion throughout the
procurement process
• It will also assess instruments in Dir 2014/24/EU
for the control of such discretion
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3. Flexibility as a main feature of the reform of
the EU procurement rules in 2011-2014
• The previous generation of EU Directives had
been criticised due to lack of flexibility
• The 2011 Green paper concentrated on flexibility
mainly as synonym of negotiations
• “contracting authorities should be allowed to negotiate the
terms of the contract with potential bidders”; “give
contracting authorities more flexibility to obtain procurement
outcomes that really fit their needs” (p 15)
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4. Flexibility as a main feature of the reform of
the EU procurement rules in 2011-2014
• The 2011 Proposal for a new Directive expanded
the scope of flexibility to other areas (pp 8-9)
• Clarification of the scope of application of EU rules
• Toolbox approach (negotiations & collaborative procurement)
• Lighter regime for sub-central contracting authorities (PINs)
• Promotion of e-procurement
• Modernisation of procedures (in particular, allowing selection
to follow evaluation + clarification of Lianakis; clarifying
exclusion + self-cleaning, and modification of contracts)
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5. Flexibility in Directive 2014/24/EU
• The recitals of Dir 2014/24/EU mainly emphasise
flexibility concerning:
• Choice of procedures (rec 42)
• Multi-supplier framework agreements (rec 61)
• Modification of contracts (rec 109)
• However, most of the flexibility-related reforms
in the 2011 proposal made it to Dir 2014/24/EU
• And some ‘anti-flexibility reforms too’ (eg Art 18(2))
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6. Clarification of the scope of application
• Introduction of the concept of procurement in
Art 1(2) Dir 2014/24/EU
• “acquisition by means of a public contract of works, supplies
or services by one or more contracting authorities from
economic operators chosen by those contracting authorities,
whether or not the works, supplies or services are intended for
a public purpose”
• See Falk Pharma, C-410/14, EU:C:2016:399 [increased legal
certainty? – for discussion, see a comment here]
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7. Falk Pharma, C-410/14, EU:C:2016:399
• Case on the extent to which ‘user-choice’
systems are excluded from scope of Directives
• German system of ‘authorisation’ for the supply of generic
drugs in pharmacies, based on set terms, including pre-agreed
‘rebate contract’
• Funding body run open system without limit on number of
authorisations (all interested suppliers meeting criteria)
• ECJ ruled that choice by pharmacist/doctor excluded
consideration of procurement
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8. Clarification of the scope of application
• Clarification of rules on ‘anti-circumvention’
calculation of value thresholds
• Art 5(2) Dir 2014/24/EU sets special rules for contracting
authorities comprised of non-independent separate
operational units
• Does this create legal certainty? [see outstanding
comparative report and fine-tuning proposal by
K-M Halonen (2017)]
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9. Clarification of the scope of application
• Consolidation of in-house and public-public
cooperation exemptions into Dir 2014/24/EU
• Will be discussed in detail in Session 2
• Suffice it to indicate here that the new concept of ‘public
house’ raises a number of uncertainties, including the
limitation of second-tier exemptions—see OAG Campos in
LitSpecMet, C-567/15, EU:C:2017:319 (and here)
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11. Facilitation / encouragement of
preliminary market consultations
• Clarifies the interpretation of Art X:5 of the
revised GPA and encourages contracting
authorities to seek early engagement with the
market—subject to ensuring level playing field
• It is worth noting that Art 41 Dir 2014/24/EU provides specific
remedial measures to be implemented before giving any
consideration to the exclusion of participating undertakings
(under Art 57(4)(f))
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12. Toolbox approach—more negotiations
• Art 26 Dir 2014/24/EU increases scope for use of
competitive procedure with negotiations
• Overlap with grounds for use of competitive dialogue
• (Unnecessary) addition of innovation partnership
• Unclear interaction between principle of non-discrimination
and negotiations => more procedural transparency? / how to
ensure compliance with Dir 2016/943/EU on trade secrets?
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13. Toolbox approach—multi-supplier frameworks
& dynamic purchasing systems (+ catalogues)
• Increased flexibility in framework agreements to
opt for mini-competitions and to include
dynamic requirements under a generally-defined
umbrella [Art 33(4) & (5) Dir 2014/24/EU]
• Reduced requirements for the setup of dynamic
purchasing systems (restricted procedure, fully
electronic) [Art 34 Dir 2014/24/EU]
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14. Toolbox approach—more collaboration
• Significant development of rules on
procurement centralisation (Art 37) and on
other types of collaboration, including cross-
border (Arts 38-39)
• There are important uncertainties regarding public law
framework for collaborations (cfr BBG-SKI Study (2017); here)
• Applicability of competition law an issue of growing relevance
as procurement function becomes primary economic activity;
including of competition principle (see comment to Finnish
case KHO 2016:182 by K-M Halonen here)Session 1: Recent developments and flexibility 14
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15. Lighter regime for sub-central authorities
• Possibility to issue PINs to start tender
procedure (except for open procedures; Art
26(5) + 48)
• Possibility to establish short submission
deadlines by agreement, and reduced time-limits
by default (Art 28(4))
• The advantages derived from these flexibility measures are
unclear to me, in particular where they apply to competitive
procedure with negotiationsSession 1: Recent developments and flexibility 15
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16. Promotion of e-procurement
• Will e-procurement be attained by 18.10.2018?
• Lack of implementation of 2014 rules (esp concessions)
• The extent to which the transition to e-
procurement simplifies procurement seems
contestable
• Issues with investment and development of solutions
• Issues with compliance in case of incompatible systems, in in
particular for (cross-border) collaborative procurement
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17. Modernisation of procedures—
selection/evaluation and Lianakis issues
• Directive now allows for ‘inversion’ of selection
and evaluation phases (Art 56(2))
• Directive (unnecessarily) clarifies Lianakis
concerning use of experience
• Art 58(4) + 63(1), which triggers issues concerning sub-
contracting and reliance on third parties
• Art 67(2)(b) “quality of the staff … can have a significant
impact on the level of performance of the contract”
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18. Modernisation of procedures—
exclusion and self-cleaning
• Flexible approach to exclusion & self-cleaning
• Will be discussed in detail in Session 2
• Increased(?) scope to seek clarifications where
documentation is erroneous or missing
• The limits will be hard to draw (eg re samples)—
see Archus and Gama, C-131/16, EU:C:2017:358 (and here).
• ESPD and self-certification
• Procurement police?
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19. Archus and Gama, C-131/16, EU:C:2017:358
• The case concerned the possibility of ‘clarifying’
a tender by replacing a sample
• The ECJ extended the same criteria developed in Manova and
Slovensko for the control of the ways in which contracting
authorities can seek clarifications
• In my view, this is very problematic because samples are not
like documents/certificates and defects are unlikely to be
‘obvious’ to the contracting authority
• Cfr C Risvig Hamer, who advocates this approach (in Danish)
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20. Modernisation of procedures—
modification (and termination) of contracts
• Beyond consolidation of PresseText
• Modification clauses
• Dangerous catch-alls—see Finn Frogne, C-549/14,
EU:C:2016:634 (and comment here)
• De Minimis modifications
• De facto end to prohibition of pre-award negotiations?
• Rules on termination = ineffectiveness?
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21. Finn Frogne, C-549/14, EU:C:2016:634
• Case on termination of a dysfunctional contract
through settlement, which changed its nature
• ECJ assessed it under its case law on modification of contracts
and found the modification substantial (even if it implied a
reduction of the scope & value)
• ECJ put (too much) stress on the absence/existence of
contractual termination clauses allowing for this type of
settlement, thus creating pressure for boilerplate clauses
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22. Contract performance clauses—
a flexible route to social value?
• Directive 2014/24/EU stressed more flexibility
for the imposition of compliance requirements
through performance clauses (Art 70)
• Any significant change vis-à-vis Art 26 Dir 2004/18?
• Concerning social/employment clauses, ECJ case-law
significantly restricts this possibility, other than in strict
compliance with Posted Workers Directives (RegioPost, here)
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23. RegioPost, C-115/14, EU:C:2015:760
• Case concerning the requirement to comply with
regional minimum wage legislation (implicitly as
a contract compliance clause)
• ECJ established that test was derived from
Poster Workers Directive (which allowed it to
distinguish this case from Rüffert and from
the also recent case of Bundesdruckerei)
• Excessive formalism? Reverse discrimination
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24. Light-touch regime social & special services
• Another area of significant flexibility through
limited application of EU rules
• Light-touch in Arts 74-76 (and issues with requirements for
the transposition of Art 76, e.g. in UK)
• Reservation of contracts in Art 77 Dir 2014/24/EU
• What is the scope of Spezzino/CASTA and how far can
domestic constitutional rules/conventions create an
exemption for the third sector? (see comment here)
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25. Spezzino, C-113/13, EU:C:2014:2440
• Challenge to Italian law whereby emergency ambulance
services must be awarded on a preferential basis and by
direct award, without any advertising, to certain
voluntary bodies (such as the Red Cross)
• ECJ relied strongly on Italian Constitutional framework
• It created a modified Altmark test requiring for the system
• “to actually contribute to the social purpose and the pursuit of the
objectives of the good of the community and budgetary efficiency”
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26. Checks and balances on increased discretion
• Principles-based regulation allowing for
(increased) review on basis of proportionality
and competition (Art 18(1) Dir 2014/24/EU)
• New rules on conflicts of interest (Art 24)
• Obligation to keep copies of contracts (Art 83(6))
and adequate records (Art 84(2) Dir 2014/24/EU)
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27. Checks & balances—
principles-based regulation & proportionality
• Art 18(1) Directive 2014/24/EU has consolidated
the general principles of the system
• Will be discussed in detail in Session 2
• In my opinion, the principle of competition has a
large role to play as an addition to the standard
proportionality assessment
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28. Checks & balances—
new rules on conflicts of interest
• Important definition in Art 24 Dir 2014/24/EU
• Relevant link to Art 9(1) UNCAC
• Future guidance from the Commission in this
area likely to clarify requirements for Member
States’ general anti-corruption systems
• Need to avoid undertaking-centered remedies (in the
sense of concentrating excessively on exclusion)
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29. Checks & balances—
Documentary obligations
• Contracting authorities need to be careful in the
creation of paper trails and systems ensuring
their auditability need to be in place
• Will trigger issues around litigation / access to
documentation and management of confidential
information
• Should improve procurement data significantly
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30. What about coordination with remedies?
• One of the main shortcomings in the review of
the EU procurement rules is the discoordination
between substantive and remedies rules
• Commission has committed to provide guidance on this
aspect in the 2017 report to EP and Council (see here)
• Increasing justiciability of decisions involving discretion likely,
both in view of Art 41 CFREU (see here) and recent ECJ case
law on exclusion grounds (Marina del Mediterráneo and
Others, C-391/15, EU:C:2017:268, see here)
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31. Marina del Mediterráneo and Others,
C-391/15, EU:C:2017:268
• whether Art 2(1) Remedies Directive required
permitting a tenderer to challenge a decision by
which the contracting authority allowed another
economic operator (which should have been
excluded) to submit a tender
• ECJ confirmed that such challenged must be possible, on the
basis that the opposite would reduce the effectiveness of
substantive procurement rules
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33. Thank you for your attention
Be in touch
a.sanchez-graells@bristol.ac.uk
www.howtocrackanut.com
@asanchezgraells
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