| Author (Person) | Chapman, Peter |
|---|---|
| Series Title | European Voice |
| Series Details | Vol.9, No.42, 11.12.03, p29 |
| Publication Date | 11/12/2003 |
| Content Type | News |
|
By Peter Chapman Date: 11/12/03 IT MAY not sound it, but if you look at the sums involved, the public procurement business is about as sexy as it gets. It is worth €1,000 billion euro per year - roughly half Germany's national income. It employs millions. But swathes of rules and regulations designed to ensure governments and local authorities spend their money wisely and fairly have transformed procurement into a legal quagmire, understood by few. Last week, EU governments and MEPs thrashed out a deal on European Commission proposals designed to make the tendering process far simpler. Was the effort worthwhile? And can companies and public authorities now afford to sack the lawyers paid to decipher the old regime? Just about 'yes' to the former and 'no' to the latter, says Matthew Hall, a Brussels-based competition and procurement law specialist with international legal firm Ashurst. "There is no doubt that the changes are significant," he states. First, there is an overall simplification because all the rules are now combined into just two directives, one covering general procurement and the other targeting the water, energy and transport sectors. 'Electronic auctions' - complete with 'digitally signed tenders'- are also legal for the first time. But despite the drive to keep things simple, Hall claims endless questions as to what is and is not fair and non-discriminatory remain. "The new directives are not a panacea that will make this area of law simple and easy to apply," he warns. Many everyday issues have been left unresolved. For example, does a small specification change with an additional small fee amount to a new contract? And what is the scope for challenging changes during a procurement process? Answers on a postcard, please. Another neglected point is that the Commission and the European Court of Justice believe that the general EC Treaty rules impose obligations regardless of whether the public procurement directives technically apply. "It is currently not clear how far this extends but the Commission has recently been active in taking public bodies to Court on this point, even for very small contracts," Hall explains. "Thus, in short, the simple fact that the rules do not technically apply does not mean that an authority is completely free to negotiate with whatever firm it wants. "The European Parliament added a clause specifically pointing this out, which seems likely to raise the profile of this issue so that at least a lot more European Community-wide advertising of contracts, not technically covered by the rules, will take place." The failure to resolve this issue will hurt, says Hall. "Over time, this situation could easily erode the advantages for purchasers of a higher threshold for procurement which was also introduced by Parliament," he adds. Voter power inevitably means that public authorities are keen to adopt socially conscious policies when they choose suppliers. The new rules were meant to lay down the ground rules to let them use social or environmental criteria in awarding contracts - provided they do so fairly. Yet again, says Hall, "significant complexities" remain. Crucially, the environmental and social criteria will have to have a bearing on the object of the contract. For instance, an education authority advertising a school canteen contract could stipulate that any companies bidding must use organic food. However, a public authority probably cannot discriminate against a bidder whose general environmental record leaves something to be desired, or if it "once had a leak at a factory". Nor can it take into account general social issues, such as whether or not a company employs a certain number of disabled people declares itself to be an equal opportunities employer, makes charitable donations, or makes products such as tobacco. At least, that is, if these are not related to the contract in question. A final disappointment is the failure to allow authorities far more scope to negotiate with potential partners in extremely complex private finance initiatives (PFIs) or public-private partnerships (PPPs). This is a massive issue in countries such as the UK, where PFIs and PPPs are the norm, from bridge-building projects to new schools. In theory, the proposals include a new 'competitive dialogue' outside the utilities sector designed to do just that. But this is unlikely to be enough, warns Hall. "Authorities will therefore need to continue to squeeze into the restrictive rules governing when a full negotiation can be carried out," he says. So far, the Commission has turned a blind eye to this issue. "But," he predicts, "this could well change when the competitive dialogue is available but remains unused". |
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