This document provides an overview of the modernization of EU public procurement policy, including: 1) Reforms to the Classical and Utilities Directives to simplify procedures, increase flexibility, and promote strategic and SME-friendly procurement. 2) A new Concessions Directive establishing basic rules for awarding concessions contracts. 3) Revisions to the Government Procurement Agreement to facilitate international access to procurement markets. 4) Provisions in EU Association Agreements and DCFTAs for the gradual approximation of partner country procurement legislation with EU standards and increased mutual access to procurement markets.

1. Modernisation of EU
Public Procurement Policy
Niels Schuster
DG Internal Market and Services
Association Agreements
DCFTA
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2. Outline
1. Overview of the Reform
2. Classical Directive
3. Utilities Directive (Water, Energy, Transport, Postal)
4. New Concessions Directive
5. Government Procurement Agreement (GPA)
6. Association Agreements/DCFTA
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3. Overview of the Reform
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4. Current Rules
Classical Directive (2004/18/EC)
• Public works, public supplies and public services
Utilities Directive (2004/17/EC)
• Water, energy, transport and postal services sectors
Directive on Defence procurement (2009/81/EC)
Remedies Directives (89/665/EEC and 92/13/EC )
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5. New Rules: Preparatory works
Greenpaper on modernisation (January 2011)
Evaluation of existing rules
Results of public consultation (June 2011)
 623 replies (Business, public authorities, civil society,
academics & legal experts, citizens…)
Public procurement conference (June 2011)
European Commission proposal (December 2011)
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6. New Rules: Legislative process
July 2013: political agreement
February 2014: Adoption
Directive – needs to be transposed by EU Member States
2 years for transposition
4.5 years for e-procurement (at the latest)
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7. Objectives of the reform
1. Simplification
& more flexibility
7. New rules
for Concessions
3. Better access for
Small & Medium
Enterprises (SME)
2. Strategic use
6. Governance
4. Sound
procedures
5. Compliance
with GPA
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8. Classical Directive
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9. Simplification & more flexibility I
Increased use of negotiated procedures
Reduction of administrative burden
Reduced time limits
Simplified rules for sub-central authorities
e-Procurement
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10. Simplification & more flexibility II
Light regime
 New specific simplified rules for social, health, cultural and
other services
• higher threshold – EUR 750 000;
• only requirements: ex-ante (and ex-post) publicity + non-
discrimination principle; for the rest national rules
Other services covered:
• Hotel and restaurant services
• Certain legal services
• Rescue, fire fighting and prison services
• Government services and services to the community
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11. Strategic procurement I
(1) Strategic policies may be considered in award decision
(2) Technical specifications may refer to production process
(3) Integration of disabled & disadvantaged workers
(4) Innovation Partnership
(5) Use of labels
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12. Strategic procurement II
Sole Award Criterion:
Most economically advantageous tender (MEAT)
 to be assessed on the basis of
1. price, or
2. cost, using cost-effectiveness approach (e.g. "life cycle"), or
3. the best price-quality ratio using criteria such as
• Production process
• Social & environmental criteria
• Innovative characteristics
NB: Criteria must be linked to the subject matter of the contract !
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13. Strategic procurement III
Life-cycle costs
Costs for the
Contracting Authority
Acquisition
Use,
Maintenance,
End of life
External Costs
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14. SME-friendly measures
Division into lots
 "apply or explain" principle;
Proportionate criteria for financial standing
 limited to twice contract value
Reduced documentary requirements
 "European Single Procurement Document"
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15. Sound procedures I
• Conflicts of interests clarified
• Exclusion grounds strengthened and extended
• Compulsory exclusion in case of abnormally low tender
• Modifications of contracts simplified
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16. Sound procedures II
Principles of procurement – Horizontal clause
Appropriate measures to ensure that economic operators comply with
applicable obligations in the field of environmental, social and labour law
Referred to under:
 Non award
 Exclusion grounds
 Abnormally low tenders
 Subcontracting
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17. Sound procedures III
Main changes:
Competitive procedures with negotiation
 Replaces current negotiated procedure with publication
Competitive dialogue
 slightly broader scope for negotiations in the final stages
Innovation partnership
 Research services for the development of an innovative product by
one or more providers plus supply contract
Negotiations without publication
 no substantial changes
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18. Utilities Directive
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19. Utilities Directive
• Procurement for services, supplies or works
• By utilities (public or private)
• Utilitiy activity (water, energy, transport, postal)
 Private entities subject to procurement rules if "operating
on the basis of special and exclusive rights"
 More flexible regime for utilities
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20. Utilities Directive
 Essentially same changes for the Utilities as for the
Classic Directive
Differences
 Framework contracts:
 max 8 years (classic 5 years)
 Contract modifications
 Unforseen circumstances: unlimited (classic: max 50%)
 Definition of special or exclusive rights
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21. New Concessions Directive
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22. New Directive on Concessions
 Works & service concessions ≥ € 5 million
 Classical & utilities sector
Not:
 Drinking Water (supply or distribution)
 Exclusive rights
 Lotteries
 Public passenger transport services
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23. Distinction contracts – concessions
Right to exploit the work or services (sometimes with payment)
 transfer of operating risk
 no guarantee to recoup the investments and costs.
 risk can be limited by regulation, but always real exposure to possible
loss, not merely nominal or negligible
 demand or supply risk or both
Clear delimitation from situations such as licenses, authorizations

24. Duration of Concessions
The duration of concessions shall be limited
General principle for concessions lasting more than 5 years:
 Shall not exceed time necessary to recoup investments made for
operating works/services with return on invested capital
 Possibility to take into account investments at beginning and during
life of concession and those necessary to achieve specific contractual
objectives.

25. Concessions: few procedural rules
• Publication (ex-ante & ex-post)
• Transparency, equal treatment, non-discrimination
• Procedural guarantees, not defined procedures
• Exclusion (=), selection criteria (light)
• Objective award criteria
• Minimum time-limits

26. Government Procurement
Agreement (GPA)
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27. Government Procurement Agreement
Structure
• Text: General principles
• Annexes: coverage (schedules by parties)
Principle of non-discrimination (subject to coverage)
 National treatment
 Most favoured nation clause
 Treatment of other Parties’ goods, services and suppliers
that is “no less favorable than” that accorded to
domestic/other parties' products, services and suppliers

28. Procurement rules in the text
• Tendering procedures
• Publication/invitations to participate
• Qualification of suppliers
• Time limits
• Necessary Documentation
• Award criteria

29. Revised GPA
Revised GPA: more user friendly, closer to EU Directives
• Easier access to procurement - Better use of electronic means
• Improved rights of developing countries to accede
• Rules to avoid conflicts of interest and prevent corrupt practices
• Introduces more flexibility for entities
• Use technical specifications aimed at protection of environment
• Technical specification relate to production process and methods
• Award: lowest price or most advantageous tender

30. Revised GPA : Future
Seeking accession:
China, New Zealand, Albania, Georgia, Jordan, the
Kyrgyz Republic, Moldova, Montenegro, Oman,
Panama and Ukraine
WTO commitments to accede:
the Former Yugoslav Republic of Macedonia , Mongolia,
the Russian Federation and Saudi Arabia
Revised GPA : 2/3 Parties rule for entry into force

31. Association Agreements
DCFTA
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32. Main points
(1) Mutual access to public procurement markets
(2) Gradual approximation of legislation with EU
To be accompanied by:
 Enhanced institutional framework
 Roadmap/Strategy
 Cooperation and technical assistance
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33. Gradual Approximation (Classical Directive)
Basic elements
Definitions, thressholds, principles, procedures, exclusion
grounds, selection and award criteria, publication, information …
Other mandatory elements
(Works) Concessions, design contests…
Non-mandatrory (but recommended)
Competitive Dialogue, FWA, Dynamic Puchasing Systems…
Out of scope
Reporting, statistical information… 33

34. Indicative Schedule
Phase Approximation Market access
1 • Institutional framework
• Basic standards
• Roadmap
Central government
authorities (supplies)
2 • Basic elements Classical &
Remedies
State, regional & local
authorities and public law
bodies (supplies)
3 • Basic elements Utilities &
Remedies
All contracting entities
(supplies)
4 • Other elements Classical All contracting authorities
(services & works contracts
and concessions)
5 • Other elements Utilities All contracting entities
(services & works)
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35. More information
• EU Public Procurement Rules
• http://ec.europa.eu/internal_market/publicprocurement/index_en.htm
• EU-Georgia Association Agreement
• http://eeas.europa.eu/georgia/assoagreement/assoagreement-2013_en.htm
• EU-Moldova Association Agreement
• http://eeas.europa.eu/moldova/assoagreement/assoagreement-2013_en.htm
•
EU-Ukraine Association Agreement
• http://eeas.europa.eu/top_stories/2012/140912_ukraine_en.htm
•
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