Public procurement is to enter another period of change with both the Scottish Government and European Commission announcing proposals to reform public procurement processes. These reforms are intended to improve current practice in the challenging economic climate. This article will provide a brief overview of these key proposals and the impact that these will have upon the award of public contracts within both a Scottish and European context.
The first quarter of 2012 has seen a wide range of announcements in the area of public procurement. The first policy announcement earlier this year focused on improving access to new contracts for small and medium sized enterprises (SMEs). This was quickly followed by the announcement that a new set of procurement regulations - the Public Contracts (Scotland) Regulations 2012 (“the 2012 Regulations”) – were soon to be introduced. In addition, the Government has proposed a wider review of procurement within the construction industry with a view to improving efficiencies. This section will examine these proposals in more detail.
A key aim of recent proposals has been to strengthen the rights of firms to access information relating to the award of public contracts and then challenge those decisions which businesses believe have been arrived at unfairly. This proposal reflects the broader objective of ensuring that the award of public contracts is fair and open to review. In addition, recent proposals have highlighted the need for all contracts to be advertised via Public Contracts Scotland which it is hoped will assist local businesses in identifying contract opportunities and then successfully bidding for these. The Government has explicitly acknowledged its focus on transparency by announcing that reform will aim to ensure that public bodies adopt “transparent, streamlined and standardised procurement processes”. It is unclear at this stage how this aspiration will translate into practical reform given that some procurement contracts can be highly specific. Is it possible to streamline a process for the sheer range of procurement contracts that are in existence? If introduced, there is a real danger that such a move will pre-empt the next raft of procurement challenges and actually add to the bureaucratic red-tape of the current process.
It is unsurprising therefore that these policy aspirations are notably missing from the recently published 2012 Regulations which came into effect on 1 May 2012. The Regulations consolidate the Public Contracts (Scotland) Regulations 2006 as amended and also put forward a series of new proposals. These include updating the grounds under which an economic operator can be denied a contract award to include offences under the Bribery Act 2010. Further, the time limit within which individuals can start court proceedings in terms of the 2012 Regulations has been changed to 30 days from the date on which the ground for these proceedings becomes known, or ought to have been known, unless there is a sufficient reason for the court to extent this timescale for a period of up to three months. This amendment removes the uncertainty which arose as a result of the Uniplex decision which had determined that a number of the time limits under the 2006 framework were incompatible with EU law.
Finally, the Government has identified a need to completely review current procurement processes within the construction industry given the particular challenges being faced within this sector. The focus of review is to drive improvements in efficiencies by maximising opportunities for collaboration and identifying best practices which can then be standardised across the industry. The review will also seek to promote sustainability through a reduction in carbon and energy consumption and the adoption of both new and existing skills and technologies. It remains to be seen whether these aspirations will result in substantive legislative reform.
A New European Directive
The European Commission has set out its proposals for the new Procurement Directive which is intended to be adopted by the end of 2012 and then implemented on 30 June 2014. The overarching principle behind these proposals is to simplify and add certainty to the procurement process. One key proposal is the removal of the current distinction between Part A and Part B services. Part A services are categorised as those services which are deemed as a “Priority” and include such wide-ranging services as maintenance and repair, transport of passengers, freight and mail, and advertising. Part B services relate to “Non-priority” services which includes education, health and recreation. Currently only the former are subject to the full statutory regime. Under new proposals, this distinction will be abolished and a new regulatory framework will be introduced for health, education and social services. Further, a less burdensome set of obligations are proposed for local and regional authorities and, again, it is hoped that this reduced volume of documentation will simplify the procurement process.
As with domestic reform, the European Commission is keen to improve opportunities for SMEs to access new public contracts. This objective is to be achieved by removing unjustified barriers to SMEs, relaxing the scope of initial information requirements and dividing contract opportunities into specified lots.
The proposals also seek to simplify the procurement process itself and provide for a greater emphasis on the negotiation process within the competitive dialogue procedure in order to allow contractors and suppliers to best achieve specified aims and objectives. In addition, the European Commission has acknowledged the increasing reliance on electronic communication by proposing that the procurement process should be fully electronic by June 2016. It is anticipated that this will streamline the process and further reduce timescales.
The recent proposals announced by the Scottish Government and European Commission outline the vision of both with regards to further procurement reform. The rhetoric underpinning Scottish reform focuses on driving transparency and improving efficiencies and best practice, although the amendments introduced by the 2012 Regulations do not fully tackle such aspirations. Conversely, the European Commission has made simplification of the procurement process and the removal of ‘red-tape’ a key objective. Time will tell whether either stays true to these aspirations or if the practical result will be a legislative compromise positioned somewhere within the middle ground. However, the fact that there is such a difference in approach between the two begs the question as to why the Scottish Government has not taken more account of the European Commission’s proposals and could indicate both a lack of perspective and joined up thinking.