Changes to EU Procurement Rules: Innovation Partnerships, Preliminary Market Consultations & Joint Procurements

By Chris Browne on

PFI MeetingsA new EU Procurement Directive* is close to being agreed and is likely to come into force by the end of the year. This blog post is the second in a series (click here for the first one) that will discuss some of the most significant upcoming changes to the EU Procurement Rules and look at some of the possible impacts across the Public Sector.

This post specifically considers the proposed introduction of Innovation Partnerships and Preliminary Market Consultations and examines the possible significance they will have on the procurement process. We’ll also touch upon the new guidelines that govern the way joint procurements are managed.

EU Procurement Rules – Are Innovation Partnerships beneficial or irrelevant?

One of the key aims of the proposed changes to EU Procurement Directives is to promote innovation. Within the proposals is a new procedure providing for the creation of Innovation Partnerships (IP) which will allow Authorities to propose the development of an innovative product, service or works and to form a partnership with private sector entities to develop and deliver same.

IPs will comprise various relevant bodies working in partnership to achieve a common goal. Their introduction is intended to facilitate a new approach to research during the procurement of goods and/or services where no current solution exists. 

The EU has already created a series of IPs working on matters such as Water, Raw Materials, Smart Cities and Communities – all of which were set up in connection with national and regional entities and with EU funding.

Undoubtedly there are circumstances where IPs could be useful and if Authorities identify initiatives where innovative research could be beneficial and the funding exists, why not? IPs could prove effective in providing previously unexplored methods and options of works, goods, or services that could assist the Public Sector in the future.

However, IPs appear best suited to a level of operation outside the realms of which the majority of sub-central government Authorities function, so their practical worth ‘on the ground’ may be somewhat diminished. For most Authorities, the overheads associated with managing such partnerships could be huge; not only in monetary terms but also in resources and time. Governing such a project and ensuring all parties involved move forward in the right direction would require a big commitment on the part of the contracting Authority.

Whilst the IP is an interesting concept and any provision for innovation and modernisation is welcomed, it is one borne of an EU-centred ideology and its practical applications in the real world at local level could turn out to be somewhat limited.

Preliminary Market Consultations: A welcome change?

Although the inclusion of a procedure that allows Preliminary Market Consultations (PMCs) is a new one, we believe the provision has in fact been added in an attempt to deal with the longstanding and somewhat contentious issue of how Authorities and potential bidders might communicate during the pre-competition phase.

Historically, the vast majority of pre-competition engagement has included very little dialogue between parties, mainly due to the understandably cautious approach of Authorities facing a lack of historical guidelines on just how much, if any, dialogue with the market is allowed before issuing tenders. The new directive is welcomed in that improved pre-competition communication will allow for a better targeted, better informed procurement process, and therefore more beneficial, value and quality-centric end results.

Recognising the value of being able to consult with potential bidders and independent experts in the pre-competition phase will allow Authorities to take advice from and be educated by the market and its current trends. The new Directive will formalise and clarify this longstanding issue by applying a framework that allows PMCs to be utilised in a structured and safe way.

Going forward, what exactly will this mean for you? It is imperative that you become familiar with and are mindful of the provision’s guidelines and the need for openness and transparency. Where a bidder has been involved in a PMC, you must be scrupulous before and during the procurement process to ensure that competition is not distorted in any way, including the disclosure of relevant information (excluding specifically pre-defined types of confidential information) exchanged or resulting from any bidder’s involvement.

It is also worth noting that in the unfortunate circumstance that competition would definitely be distorted by allowing a previously consulted bidder into a competition it is possible to exclude that bidder, provided they cannot prove that their “involvement in preparing the procurement procedure is not capable of distorting competition”.

All-in-all, we believe this is a positive and welcome change that will hopefully prove useful to all parties involved in the procurement process – so long as it is handled with scrupulous care!

Joint Procurement: When playing ‘Follow the Leader’ be aware…

In the proposed changes, the traditional model of a ‘lead’ Authority taking the sole responsibility for a joint procurement no longer applies. All the Authorities are now jointly responsible for fulfilling their procurement compliance obligations under the Directive.

Previously, in a joint procurement situation control would usually fall by default to the largest Authority who, generally, would assume responsibility for acting on behalf of the other partners. The implications of this change now mean that all partners are responsible and therefore liable for ensuring proper compliance and governance under EU law of the procurement procedure within which they are involved.

To some extent this change is positive as the shared liability will stop Authorities ‘coasting’ through procurements with little or no active involvement and reaping the benefits of the other partners’ work. The primary drivers of joint procurement procedures are efficiency, financial savings, and the sharing of goods and services that may otherwise be unobtainable by smaller Authorities acting alone, so in that respect, the benefits for smaller Authorities can still be enjoyed and should still outweigh the procurement costs so long as they ‘step up to the plate’ and play a fuller role in the joint procurements they seek to benefit from. We’d wager that this change won’t have that great an impact on the numbers of joint procurements, but the implications for smaller partners are still worth noting.

Concluding thoughts

As mentioned in our last post, the overriding aim of the proposed changes to threshold levels is to modernise the system, allow for greater ease of use and promote sound procurement practices. Inclusion of procedures for PMCs encompasses those values and is potentially going to be very useful for all parties involved. Ideas like IPs, while great in theory, remind us that Directives sometimes reflect various levels of operating procedure across the EU at national and regional levels, and some of the proposed changes will therefore be of lesser relevance to us.

In the next post we’ll consider some of the new criteria relating to the selection and evaluation elements of the tender process and also the contract award process.

* This post has been written and published before the planned changes to the new EU Procurement Directives come into force. As such it should be noted that all points raised are subject to ratification and possible future qualification. This post does not contain an exhaustive list and final documentation should be referred to for clarification and finer detail.

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