1. Introduction

The new procurement directives were published in the Official Journal of the European Union on Friday 28th March 2014.

There are three new procurement directives as follows:-

  • Directive 2014/23/EU of the European Parliament and of the Council of 26 February 2014 on the award of concession contracts (the Concessions Directive)
  • Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC (the Public Procurement Directive)
  • Directive 2014/25/EU of the European Parliament and of the Council of 26 February 2014 on procurement by entities operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC (the Utilities Directive)

The Directives will come into force on 17 April 2014 and there will be a two year period for implementation into national law. Member States may choose to implement the Directives earlier.

  1. Key Changes

Thresholds: There are no changes to the current thresholds. There are new thresholds for social and other specific services i.e. €750,000 under the Public Procurement Directive and €1m under the Utilities Directive. The threshold for application of the Concessions Directive is €5,186,000.

Abolition of Part A/Part B distinction: The distinction between priority and non-priority services is abolished. A light procurement regime is established for contracts for social and other specific services.

Award Criteria: The only award criterion that can be used is most economically advantageous tender which must include a price criterion and may include quality criteria. There is greater flexibility for incorporating social criteria into the tender evaluation e.g. in relation to long-term job-seekers or training for young or unemployed persons.

Contract Modifications: The Directives specify the circumstances in which contract amendments amount to substantial changes requiring a new award process. A "safe harbour" applies where the value of the modification is below the applicable EU thresholds and less than 10% of the initial contract value for service or supply contracts and less than 15% of the initial value for works contracts.

Negotiated Procedure: Under the Public Procurement Directive, there is broader scope for use of the negotiated procedure with a prior call for competition (now called the competitive procedure with negotiation). Contracting authorities are permitted to negotiate initial and subsequent tenders but are not permitted to negotiate final tenders.

Self-Declarations at Pre-Qualification Stage: A standardised European Single Procurement Document is introduced. This is a self-declaration that candidates may submit as preliminary evidence of meeting selection criteria.

Electronic Communications: All tender communication and information exchange must be performed using electronic means subject to certain limited exceptions – Member States may postpone the move to full electronic communications until 18 April 2017 for central purchasing bodies and until 18 October 2018 for all other bodies and utilities.

Division of Contracts into Lots: Contracting authorities must provide an indication of the reasons for not dividing a contract into lots either in the tender documents or in the report on tenders procedures. Member States may provide in national legislation for a mandatory division into lots under conditions to be specified.

Contracts between entities in the Public Sector: The new rules consolidate and clarify existing case-law on the applicability of the procurement rules to in-house awards and shared services.

Restriction on Minimum Turnover Requirements: The new rules specify that in general contracting authorities may not require candidates to have a minimum turnover of more than twice the estimated contract value.

Innovation Partnerships: A new innovation partnership procedure is introduced which contracting authorities may use with one or more market partners to develop and purchase innovative products, services or works.

Exclusion for Past Deficiencies: A new provision allows contracting authorities to exclude bidders who have shown certain significant or persistent deficiencies in performing a prior public contract subject to strict conditions. Evaluating Qualifications and Experience: Evaluation of the organisation, qualification and experience of staff assigned to performing a contract can be used as award criteria provided these have a significant impact on the level of performance of the contract.

Shorter minimum time-limits: The minimum time limits for receipt of requests to participate and receipt of tenders have been reduced. A new open accelerated procedure has been introduced.

Corruption Safeguards and Conflicts: Contracting authorities may exclude bidders that seek to distort competition. Contracting authorities must address conflicts of interest such as staff involvement in procedures in which they have a vested interest and involvement of any candidate or tenderer in preparation of the procurement procedure.

Framework Agreements: Under the Utilities Directive, a new maximum duration of 8 years for framework agreements has been introduced and call-off contracts must be awarded on the basis of objective rules and criteria which must be set out in the procurement documents for the framework agreement.

Concession Contracts: The new Concessions Directive applies to the award of works and services concessions contract with a value in excess of €5,186,000. There is a light regime for award of concession contracts. Where the duration of the concession exceeds 5 years, the maximum duration must not exceed the time reasonably expected for the concessionaire to recoup its investments together with a return on invested capital.

  1. Summary

The new Directives are very much an evolution rather than a revolution of the existing rules. While there is undoubtedly more clarity and flexibility for contracting authorities and utilities in relation to a number of issues (e.g. in relation to the use of selection-type criteria at award stage), there are aspects that may increase the administrative burden on contracting authorities (e.g. new rules on lots, conflicts, evaluation of cost-effectiveness, etc.). Contracting authorities should begin to familiarise themselves with the new rules (particularly the myriad of subtle changes) as soon as possible to be ready for when the Directives are implemented into national law.