How EU procurement rules affect the public sector

1 Apr 16

EU procurement rules often get bad press but they have not yet had a high profile in the UK referendum debate on membership. But they lie at the heart of the internal market and often have a big impact on public services.

Public expenditure on goods, works and services represents about 13% of the European Union’s gross domestic product, and tenders for higher value contracts valued at around €420bn were published EU-wide in OJEU in 2014. 

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Ever since the UK joined the then common market, public procurement regulations have been based on European law and regulation. Even if the UK were to vote to leave the EU it is almost certain that a condition of a favourable trade deal and access to the bloc’s Single Market would require the UK to continue to have public procurement legislation closely aligned with the wider EU regulations, including “state aid” rules.

Therefore the rules are likely to be of interest to the public sector whatever the outcome of June 23’s vote, and they have been constantly changing and evolving in recent years, with further change likely. The implications of the Transatlantic Trade and Investment Partnership proposals for a trade deal between the EU and the United States is one area where one would hope that an UK government would be seeking to exclude key public services from competition and competitive contracting. This requires the UK government to be at the EU Council not shouting across the Channel.

The EU procurement regulations have got a bad press and often this has been unfair. Any domestic government would wish to adopt sound public procurement rules so that it would be wrong to suggest that if the UK had not been a member of the EU its public procurement regulations would have been much different to the current ones.

It has been too easy and frankly lazy for public procurement officials and others to blame the EU for their own over-engineering of the application of the regulations or simply poor procurement practice.

Recent changes to the EU procurement directives are fundamentally important, and show how the UK can currently influence the regulations. These arise from the EU Public Contracts Directive (Directive 2014/24/EU) which has transposed into UK law for England, Wales and Northern Ireland by the Public Contracts Regulations 2015 and for Scotland by the Public Contracts (Scotland) Regulations 2015.

The new rules have been presented as a step forward in the simplification and modernisation of public procurement, with one change being the relaxation in the justification for the use of Competitive Dialogue and the newly created Competitive Procedure with Negotiation. This was in line with one of the key aims of the UK government in its response to the consultation by the European Commission before, as is normal, it made legislative proposals in a draft directive. The UK was then able to influence the negotiations amongst member states and in the European Parliament over the draft directive, underlining the importance of being at the table to help shape the laws that affect our communities, citizens and businesses. 

To understand these latest developments in the evolution of EU public procurement I have turned to an accessible and informative newly published book - “Competitive Dialogue and Negotiated Procedures – A Practical Guide (2nd edition) written by Michael Burnett and Martin Oder and published by the European Institute of Public Administration. An update of their 2010 book on a similar theme this book explains the new regulations, their genesis and context, and how practitioners and leaders can use them to secure value for money and excellent outcomes through effective public contracts.

Given the importance of and the emphasis which the government is placing on major public infrastructure programmes, and the continual wish of some in the public sector to adopt outsourcing arrangements for the delivery of public services, it is critical that public officials – political and executive – understand the potential opportunities and challenges which these European regulations create. Public procurement has to secure social value and value for money in efficient ways. It has to secure long-term sustainable contracts and partnership arrangements. The public sector has to maximise the effectiveness of its application of the new regulations and procedures.

As one might expect many possible ways of implementing these procedures within the law. And of course as ever what is legally permissible is not necessarily the same as what is desirable from a value for money perspective. Creative flexibility within the law is what is required. These regulations are with us and everyone involved needs to ensure that they understand and can apply them to the public benefit.

  • John Tizard
    John Tizard is an independent strategic adviser and commentator on public policy and public services. He works with a range of public, private, third, union and academic organisations. He now holds several non-executive, trustee and chair roles in the VCS and arts sectors. He was a senior executive both at Capita and Scope, and is a former joint council leader

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