A lecture on the major changes in the 2014/24/EU Directive

1. • The new EU Public Procurement Directives
Carina Risvig Hamer
Ph.d. Assistant Professor, University of Southern Denmark
Carh@sam.sdu.dk
www.udbudslov.dk

2. Agenda
• Main changes in the EU Procurement Directive
• Implementation in Denmark

3. Modernisation of the EU Procurement
Directives
• January – April 2011: Commission’s Green Paper
hearing
• April 2011: Single Market Act points out the
procurement directives as a key initiative
• December 2011: Commission Proposals
• December 2012: Council general position
• January 2013: Parliament proposal
• June 2013 – Political agreement
• Published March 2014 (Directive 2014/24/EU)

4. Public Procurement Directive
2014/24/EU
• Cluster 1: Flexible Procedures
• Cluster 2: Strategic use of Procurement
• Cluster 3: Reduction of documentation costs
• Cluster 4: E-procurement
• Cluster 5: SMV access
• Cluster 6: Aggregation of demands
• Cluster 7: Other procedural requirements
• Cluster 8: Sound procedures
• Cluster 9: Governance
• Cluster 10: Scope

5. Cluster 1. Flexible procedures
1. Increased access to the procedures ”Competitive procedure
with negotiation” and ”competitive dialogue”
– Article 26(1)(C) Contracting authorities may apply a
competitive procedure with negotiation or a competitive
dialogue when
– ”i) (i) the needs of the contracting authority cannot be
met without adaptation of readily available solutions;
1. Innovation partnership, (Article 31)
1. Reduction of the minimum time limits

6. Cluster 2. Strategic use of procurement
1. Life-cycle costing Article 68
2. Use of labels: specific environmental, social labels, Article 43
3. New terminology regarding award criteria
4. Possibility to use tenderers experience in the award phase when
– (b) organisation, qualification and experience of staff assigned
to performing the contract, where the quality of the staff
assigned can have a significant impact on the level of
performance of the contract;
5. Abolishing the A/B Services and introduction of a new “light
regime”

7. New terminology regarding award criteria
• Art. 67(1), the award of public contracts shall
be based on the most economically
advantageous tender (MEAT)
• Art. 67(2) MEAT shall be identified based on
– Price
– Cost, using a cost-effectiveness approach, such as
life-cycle costing in accordance with Article 68,
– The best price-quality ratio,

8. ”Light regime”
• Social and other specific services (Annex XVI
)
• Fx hotel og restaurant services, certain legal
services, firefighting services and prison
services
• Thresholds 750.000 euro

9. Light regime
• Art. 74-76. Contracting authorities shall make known their
intention by
– Light Contract Notice or
– Light PIN
• Contract award Notice
• Member States shall put in place national rules for the award
of contracts subject to this Chapter in order to ensure
contracting authorities comply with the principles of trans
parency and equal treatment

10. Cluster 3 Reducing documentation
requirements
1. Possibility for contracting authorities to request the
economic operators concerned to submit,
supplement, clarify or complete information or
documentation which appears to be incomplete or
missing
2. (updated) Exclusion grounds
1. European Single Procurement document
2. Self-cleaning

11. Exclusion grounds
• Art. 57 (3) b)
• Possibility to exclude an economic operator in case he has
shown significant or persistent deficiencies in the
performance of a substantive requirement under a prior
public contract which led to early termination of that prior
contract, damages or other comparable sanctions;

12. Cluster 4: E-procurement
1. Mandatory availability of procurement
documents
2. Mandatory electronic communication and
tender submission within 2 ½ years after
transposition deadline
3. E-auctions and E-catalogues, dynamic
purchasing systems

13. Cluster 5: SME Access
1. The minimum yearly turnover that economic
operators are required to have shall not
exceed two times the estimated contract
value,
1. Contracting authorities must provide an
indication of the main reasons for their
decision not to subdivide into lots,

14. Cluster 6: Aggregation of demand
1. Dynamic purchasing systems
2. Clarification of use of framework agreements
(mini-competition and ”direct award”)
3. Clarification of responsibility between CPB
and its users

15. Clarification of use of framework
agreements
• Art. 33(4) b
• The choice of whether specific works, supplies or services
shall be acquired following a reopening of competition or
directly on the terms set out in the framework agreement
shall be made pursuant to objective criteria,
• Recital 61
• Such criteria could for instance relate to the quantity, value or
characteristics of the works, supplies or services concerned,
including the need for a higher degree of service or an
increased security level, or to developments in price levels
compared to a predetermined price index.

16. Responsibility
• Art. 37(3) A contracting authority fulfils its obligations
pursuant to this Directive when it acquires supplies or
services from a CPB
• Art. 37(3) The contracting authority shall be responsible for
(a) awarding a contract under a dynamic purchasing system,
(b) conducting a reopening of competition
• (c) pursuant to points (a) or (b) of Article 33(4), determining
which of the economic operators, party to the framework
agreement, shall perform a given task under a framework
agreement that has been concluded by a central purchasing
body.

17. Cluster 8 Sound Procedures
1. New provision on conflict of interest
– Member States shall ensure that contracting authorities
take appropriate measures to effectively prevent, identify
and remedy conflicts of interest arising in the conduct of
procurement procedures so as to avoid any distortion of
competition and to ensure equal treatment of all economic
operators.
– Directly or indirectly, a financial, economic or other personal
interest which might be perceived to compromise their
impartiality and independence in the context of the
procurement procedure.

18. Cluster 8 Sound Procedures
1. Termination of contracts
1. Substantial modification of the contract
2. The contractor should have been excluded because of an
exclusion ground
3. The contract should not have been awarded to the
contractor in view of a serious infringement of the
obligations under the Treaties and this Directive that has
been declared by the Court of Justice of the European
Union in a procedure pursuant to Article 258 TFEU.

19. Cluster 8 Sound Procedures
• Substantial modification of the contract
– …where it renders the contract or the framework agreement
materially different in character from the one initially concluded.
[Pressetext pr 34] (….)
• Substantial in any event:
– a) introduces conditions which, had they been part of the initial
procurement procedure, would have allowed for the admission of
other candidates/tenderers [Pressetext, pr. 35]
– B) changes the economic balance of the contract or the framework
agreement in favour of the contractor in a manner [Pressetext pr. 37]
– c) extends the scope of the contract or framework agreement
considerably; [Pressetext pr. 36]
– d) where a new contractor replaces the one to which the contracting
authority had initially awarded the contract in other cases than those
provided for under point (d) of paragraph 1.

20. Replacing a contractor
• (d) replacing a contractor
– (i) an unequivocal review clause or option
– (ii) universal or partial succession into the position of the
initial contractor, following corporate restructuring, including
takeover, merger, acquisition or insolvency, of another
economic operator that fulfils the criteria for qualitative
selection initially established provided that this does not entail
other substantial modifications to the contract and is not
aimed at circumventing the application of this Directive; or

21. De minimis rule
• Never substantial
– where the value of the modification is below both
of the following values:
– (i) the thresholds set out in Article 4; and
– (ii) 10 % of the initial contract value for service
and supply contracts and below 15 % of the initial
contract value for works contracts.
• The modification may not alter the overall
nature of the contract or framework
agreement.

22. Governance
1. Member States shall ensure
– application of public procurement rules is monitored.
– information and guidance on the interpretation and appli
cation of the Union public procurement law is available
free of charge to assist contracting authorities and
economic operators, in particular SMEs
• Contracting authorities shall, at least for the duration of the
contract, keep copies of all concluded contracts with a value equal
to or greater than:
– (a) 1 000 000 EUR in the case of public supply contracts or public
service contracts;
– (b) 10 000 000 EUR in the case of public works contracts.

23. Cluster 10: Scope
1. Definition and thresholds
1. Exceptions
– Legal services, political campaign, public passenger
transport services by rail or metro, loans,
3. In-house (art. 12)

24. In-house (art. 12)
• A contract can be awarded without following the Directive if
a) the contracting authority exercises over the legal person concerned
a control which is similar to that which it exercises over its own
departments; (Control criterion)
b) more than 80 % of the activities of the controlled legal person are
carried out in the performance of tasks entrusted to it by the
controlling contracting authority (…) (the activity criterion)
c) There is no direct private capital participation in the controlled legal
person with the exception of non- controlling and non-blocking
forms of private capital participation required by national legislative
provisions, in conformity with the Treaties, which do not exert a
decisive influence on the controlled legal person.
.

25. In-house (art. 12) Horisontal
• A contracting authority can award a contract to another
contracting authority
a. the contract establishes or implements a cooperation
between the participating contracting authorities with the
aim of ensuring that public services they have to perform are
provided with a view to achieving objectives they have in
common;
b. the implementation of that cooperation is governed solely
by considerations relating to the public interest; and
c. the participating contracting authorities perform on the
open market less than 20 % of the activities concerned by
the cooperation.

26. • Danish implementation of the EU
Procurement Directives

27. Danish ”set-up”
• How Denmark implemented the 2004-Directives
– A general act empowers the minister to implement new procurement
rules
– Can be done on the administrative level on basis of a governmental order
– The governmental order deals with the rights and obligations of the
contracting authorities
– The actual text of the directive is annexed
– This means that text of the Directive constitutes the current legislation
(“telles quelles”)

28. Danish ”set-up”
• The public sector in Denmark is very decentralised
– 2 619 Tenders in TED (2011)
– Total expenditure in regard to public procurement is estimated at 294
billion Danish kroner (39,4 billion €)
• National law for works below the EU thresholds
• National law on advertising goods and services of a value above DKK
500,000 (app. € 67,000) but under the EU threshold values (only A-
services)
• No rules for B-services
• 1 Complaints board for Public Procurement

29. Implementation
(Public Procurement Directive)
• Public Procurement law committee
• President: Director of Competition Authority
• Members:
– Advokatsamfundet/Danske Advokater, LO, FTF, Dansk
Byggeri, Dansk Erhverv, Danske Regioner, DI, Erhvervs- og
Vækstministeriet, Finansministeriet, Foreningen af
offentlige indkøbere, Foreningen af Rådgivende Ingeniører,
Kommunernes Landsforening, Håndværksrådet, Statens og
Kommunernes Indkøbsservice, Økonomi- og
Indenrigsministeriet

30. Subcommittee’s
• Subcommittee regarding the procedures for goods
and services below the EU tresholds and the light
regime
• Subcommittee regarding E-Procurement
• Subcommittee regarding award criterira and
transparency

31. The outcome?
• One (big?) Act
• Wording close to the Directive?
• Preparatory acts…
• Last meeting end of September 2014
• Proposal beginning of 2015
• New Government…..

32. Thank you for your attention
Carina Risvig Hamer
Ph.D. Assistant Professor
University of Southern
Denmark
Legal Department
Tlf. 0045-23717973
E-mail: carh@sam.sdu.dk
www.udbudslov.dk