Regulaton & Policy
Procurement Process Flexibility – Great in Theory, Tricky in Practice

There are a number of provisions in the new EU Directives that are certainly designed with the best intentions in mind, but may prove more challenging than we might think, and may even have unforeseen consequences. They increase procurement process flexibility, which is great in theory, but could be tricky in practice to implement properly.

One of those is the new “light touch” process which can be used for what were previously the current Part B Services regime, for some service contracts that are valued at over 750,000 Euros. The Commission has provided a lot of flexibility in how procurement can be undertaken, but that flexibility might in itself lead to some confusion!

The first relaxation of the regulations means that contract opportunities can be advertised by means of a contract notice or just a PIN (prior information notice). But what happens next? Here is a comment from Mills and Reeve, public sector legal experts and a leading law firm in this area.

” Although there’s a new requirement for either an OJEU notice or PIN, the contracting authority is then free to design whatever procurement process it chooses, provided this doesn’t offend against principles of transparency and equal treatment.”

Not only is there flexibility in the design of the process, but some national governments are allowing contracting authorities to change their minds after the initial advertising! For example, the draft UK legislation (Draft Regulation 76(4)) allows a contracting authority to depart from what it previously said it would do in the contract notice and decide to run the procurement differently.

That does give a lot of flexibility, but there is a catch – the contracting authority must still adhere to the EU Treaty principles in that it must act transparently, and ensure its actions will not result in unequal treatment of different bidders. If it chooses to change direction, the authority must also keep a written record of how and why these conclusions have been reached.

So as Mills and Reeve says, “the aim here was almost certainly simply to achieve the greatest possible flexibility, but we can see legal fog on the horizon for both the contracting authority and bidders.”

It will be a challenge for the contracting authority to be absolutely sure that they are acting with transparency and equality. And they will have to think carefully about whether their actions will stand up to scrutiny. For bidders, there is a fair chance they will just feel confused about which process is being followed if it changes during a procurement. If they are in a country where there is Freedom of Information legislation, they may be tempted to ask questions around how the authority made the decision, and why, and just how it was properly considered and documented.

The other concern is that the flexibility could also be used for corrupt purposes. Wait until the bids come in, then change the evaluation process to make sure the favoured supplier wins. Oh yes, and then pocket the kickbacks.

This is the downside of flexibility, that you might open up processes to greater fraud and corruption. And in our view, some EU and national legislators may mean well, but be a little commercially naive. As we first said some time ago, the temptation to bend the rules or even slip into outright corruption may be increased by some of the changes that are being implemented in the new directives.

First Voice

  1. Sigi Osagie says:

    Great analyses and summary, Peter. It certainly sounds well-intentioned but “tricky” to implement robustly to say the least!