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
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Commission Communication: End-to-end e-procurement to modernise public administration
Draft Directive on electronic invoicing in public procurement
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Legal base | (a)
(b) Article 114 TFEU; co-decision: QMV
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Department | Cabinet Office
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Basis of consideration | Minister's letter of 12 February 2014
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Previous Committee Reports | HC 83-xvi (2013-14), chapter 2 (9 October 2013) and HC 83-xxii (2013-14), chapter 3 (27 November 2013)
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Discussion in Council | See para 14.8 below
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Committee's assessment | Politically important
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Committee's decision | Cleared
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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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