Documents considered by the Committee on 26 February 2014 - European Scrutiny Committee Contents


14 Electronic procurement and invoicing in public administration

(a)

(35175)

12131/13

COM(13) 453

(b)

(35174)

12104/13

+ ADDs 1-3

COM(13) 449


Commission Communication: End-to-end e-procurement to modernise public administration


Draft Directive on electronic invoicing in public procurement

Legal base(a) —

(b) Article 114 TFEU; co-decision: QMV

DepartmentCabinet Office
Basis of considerationMinister's letter of 12 February 2014
Previous Committee ReportsHC 83-xvi (2013-14), chapter 2 (9 October 2013) and HC 83-xxii (2013-14), chapter 3 (27 November 2013)
Discussion in CouncilSee para 14.8 below
Committee's assessmentPolitically important
Committee's decisionCleared

Background

14.1 Towards the end of 2011, the Commission put forward proposals[69] to modernise the EU Public Procurement Directives (2004/17/EC and 2004/18/EC), including provisions which would make electronic communication mandatory for the publication of notices announcing public procurement tenders, the publication of related documents, and the submission of tenders. Following a Communication[70] in April 2012 which sought to provide a wider view of the benefits of e-procurement, it then put forward in June 2013 these two further documents.

14.2 Document (a) is a Communication, which set out the current state of implementation in the public sector on "end-to-end e-procurement" (covering not only the three steps referred to above, but payment as well), and sought to identify the benefits. It concluded that, although the proposals to make e-notification, e-access and e-submission mandatory would be important, further steps were now needed. These included a legislative proposal (document (b)), which would require the European Committee for Standardisation (CEN) to draw up a new European standard, setting out minimum requirements for the content ("semantic data model") of the core electronic invoice. The Directive would apply to invoices issued under contracts awarded in accordance with the measures which will replace the Public Procurement Directives, and authorities across the EU would have to accept e-invoices meeting those requirements. In addition, there would be a number of supporting non-legislative measures, including further work by the CEN to develop a new European e-invoicing standard, and the Commission also highlighted the need for national action plans to identify the most successful strategies.

14.3 As we noted in our Report of 9 October 2013, the Government agreed that e-procurement can have significant benefits, which are likely to be greatest with full end-to-end electronic processes, and believes that, as a result of the initiatives which have been taken, the UK is already relatively well-placed in this area. It also suggests that public sector e-invoicing should be encouraged, and that the UK's approach to interoperability — which expects authorities to accept e-invoices, whilst encouraging, but not obliging, suppliers to submit them — is similar to that proposed. However, it cautioned that, as there is a raft of existing data standards across the EU, it was not axiomatic that the best approach would be to add another one, and that, as UK public bodies will increasingly adopt e-invoicing before the current draft proposal has been adopted, and this should not lead to incompatibilities with the e-invoicing already in place.

14.4 In addition, the Government said that:

·  full interoperability covers data content, format and transmission, and requiring authorities to accept an electronic invoice which complies only with the content standard could create potential issues if it was not compatible with format and transmission standards and protocols used by authorities;

·  although the draft directive requires that personal data protection should be guaranteed, this depends largely on the persons and systems involved, and any data protection requirements should be proportionate to the actual risks; and

·  the proposal does not provide for specific remedies for economic operators for breaches by authorities and utilities, and consideration will need to be given to the extent to which provisions will be enforced when it is transposed in the UK.

14.5 We commented that it seemed sensible to extend a mandatory approach to e-invoicing by public authorities, and we noted that the Government agreed that this could provide significant benefits. However, as it had also highlighted a number of issues which it wished to explore further, we decided to hold the documents under scrutiny, pending further information.

14.6 We received a letter of 18 November 2013 from the Minister for Civil Society (Nick Hurd), which addressed certain shortcomings in the Government's handling of the Parliamentary scrutiny of the documents, but went on to say that a number of Member States had raised similar issues of substance to those identified by the UK. As a result, it had been possible to achieve a number of improvements, notably that:

·  the Directive was expected to clarify that the data elements covered by the standard invoice should be consistent with those contained in the VAT directive, and that, whilst it would cover the core elements of an invoice, the parties would not be precluded from including other elements as well;

·  although the original draft directive recognised that full interoperability involves data formats ("syntax") and transmission as well as the underpinning data standards, it had concentrated only on the last of these, but the Commission had now suggested that CEN should also be invited to identify for approval a limited number of existing syntaxes of proven usefulness: authorities and utilities would then only be obliged to accept e-invoices which both met the semantic data standard and one of the syntaxes, thus reducing the potential number of syntaxes they might have to accept, and helping to ensure that the standard is consistent with existing good practice;

·  the Commission had now recognised that a data standard cannot in itself "guarantee" protection of personal data, and it was expected that this would be amended so as to "have regard to the need for personal data protection" or similar wording; and

·  the draft directive did not propose specific remedies if authorities and utilities fail to accept relevant e-invoices, and none has been suggested during negotiations, but the Government believed that suppliers should have effective avenues if e-invoice recipients failed to to accept them, and the Cabinet Office would consider further whether specific additional enforcement or remedies would be appropriate, or whether pre-existing legal rights and remedies will be sufficient.

14.7 The Minister concluded by asking if we would now be prepared to clear the document, or grant a scrutiny waiver, in order to allow the Government to accept a general approach in the Council on 2 December 2013. We commented in our Report of 27 November 2013 that the Government supported the main thrust of the proposal, and had been concerned principally about certain detailed points to which we had drawn attention in our previous Report. However, we noted that it believed that the text contained a number of improvements which addressed those concerns, and, whilst we remained reluctant to release the documents from scrutiny, we said that we would be prepared to grant a waiver under paragraph 3(b) of the Scrutiny Reserve Resolution, in order to allow the UK to agree a general approach at the Council, if it was minded to do so. We did, however, ask to be kept informed of further developments.

Minister's letter of 12 February 2014

14.8 We have now received from the Minister a letter of 12 February 2014, indicating that these improvements had been substantially maintained during the trilogue discussions, although several new provisions had been introduced, including the need for the new standards to be practical, user-friendly and suitable for small and medium-sized enterprises, and for use in private sector commercial transactions. In addition, some of the core elements to be covered by the standard are specifically set out in the Directive, the standard must be tested in practice for suitability before it is adopted, and the adoption of the new Directive will be subject to a formal objection procedure (set out in the European Standardisation Regulation), allowing any Member State or the European Parliament to object. Finally, the UK was successful in achieving an exemption where necessary for security reasons.

14.9 The Minister also says that the timescales have been revised, with a 36 month deadline from the entry into force of the Directive for the development, testing and publication of the standard, and Member States will have to transpose the requirement to accept e-invoices within 54 months of the Directive coming into force (although bodies other than central government will be allowed a further 12 months before they are required to accept e-invoices). He concludes by saying that the main concerns and shortcomings which had been identified have been addressed, and by asking if we would now be willing to grant scrutiny clearance.

Conclusion

14.10 We are grateful to the Minister for this update, and confirm that we are now clearing the document.


69   (33585) 18964/11: see HC 428-lii (2010-12), chapter 2 (29 February 2012), HC 86-xxi (2012-13), chapter 5 (28 November 2012) and HC 83-xii (2013-14), chapter 12 (17 July 2013) and (33586) 18966/11: see HC 428-lii (2010-12), chapter 3 (29 February 2012), HC 86-xxi (2012-13), chapter 4 (28 November 2012) and HC 83-xii (2013-14), chapter 12 (17 July 2013). Back

70   (33867) 9299/12: see HC 86-vi (2012-13), chapter 6 (27 June 2012). Back


 
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Prepared 11 March 2014