Memorandum from the Office of Government
Commerce
EU PROCUREMENT RULES BRIEFING FOR PUBLIC
ADMINISTRATION SELECT COMMITTEE
BACKGROUND
All public procurement should be undertaken
in line with the principles underlying the EU Treaty: non-discrimination,
equal treatment, transparency, mutual recognition and proportionality.
The EU Procurement Directives flesh out these Treaty principles
with detailed procedures and criteria for the procurement of goods,
works and services above set monetary thresholds.[179]
The Directives are implemented in England, Wales and Northern
Ireland by the Public Contracts Regulations 2006. Their
purpose, in line with the Treaty principles outlined above, is
to open up the public procurement market consistent with the free
movement of goods and services within the EU and to ensure that
all potential suppliers are treated in a non-discriminatory way
while tendering for public contracts. Contracting authorities
are responsible for their own compliance with the EU procurement
rules.
The Directives are enforced through the courts,
including the European Court of Justice (ECJ). Even where contracts
are not covered by the Directives, the European Commission (the
Commission) has successfully challenged public authorities in
the ECJ where there has been a breach of EU Treaty principles.
A communication released by the Commission in 2006 reminded EU
public authorities of these obligations. In particular, the communication
noted that some degree of advertising is likely to be required
to demonstrate transparency and that there should be an appropriate
level of visibility for the particular contract, as determined
by the contracting authority.
The Directives and EU Treaty are complemented
by the UK's procurement policy based on value for money, which
is currently set out in Chapter 22 of HM Treasury's Government
Accounting (due to be updated in the near future). It states
that "goods, works or services should be acquired by competition
unless there are compelling reasons to the contrary" and
that "the form of competition should be appropriate to the
value and complexity of the product or service to be acquired".
SPECIFIC QUESTIONS
Can the invitation to tender only be issued to
third sector organisations?
No. Only issuing tender documents to third sector
organisations would be discriminatory and lack transparency. It
would contravene the EU Directives and the principles set out
in the EU Treaty. Restricting competition in this manner would
also run against the UK's policy of ensuring value for money in
public procurement.
Can commissioners specify that they only want
to use a third sector organisation?
No. As above, specifying such a requirement
would be discriminatory and, therefore, contravene both the EU
Directives and EU Treaty principles. This would also restrict
competition, running counter to the UK's policy of achieving value
for money in public procurement.
Can commissioners choose only to approach one
particular provider?
Under most circumstances, no. The EU Directives
only allow the direct award of a contract without an advert or
competition in specific, highly exceptional circumstances, such
as where urgency necessitates an immediate award or where there
is only one provider of a particular supply or service. In the
former, the Accounting Officer of the public authority would have
to be able to justify their action. In the latter, the public
authority must be clear that the provider is the only provider
of a particular supply or service. In most cases, the only way
to test this properly is to run a competitive tender.
Direct award without competition lacks transparency
and restricts competition. It could therefore contravene the EU
Treaty principles and runs counter to UK value for money policy.
What can public authorities do to increase the
participation of third sector organisations in tendering for public
contracts?
— Undertake ongoing dialogue with the
market to identify potential third sector providers, to understand
their capabilities and the barriers they face in tendering for
public sector contracts.
— Engage early with the market to help
inform requirements. While this must not give any provider a competitive
advantage, third sector organisations may have specialist knowledge
and links to the community that are useful in helping to understand
how best to meet the needs of certain user groups.
— Open up contract opportunities by
providing information about how to do business with the authority,
and undertake wide advertisement of contracts, including in third
sector publications.
— Use of outcome or performance based
specifications that allow suppliers, such as third sector organisations,
to demonstrate their expertise and innovation.
— Ensure procurement procedures and
documents are simple, proportionate and relevant.
— Offer training to potential suppliers,
outside of any particular procurement, so they better understand
the public tendering process and what is required of them.
— Provide feedback to allow unsuccessful
suppliers to improve their future performance.
July 2007
179 For certain listed bodies, including Government
departments, the threshold is £93,738 for goods and services
contracts; for all other public sector bodies it is £144,371.
For works contracts the threshold is £3,611,319 for all public
bodies. Back
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