Scottish Government

Guidance on European Legislation affecting Public Sector Procurement

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This note on the EU Procurement Rules is intended to be guidance only and is not a substitute for consulting the rules themselves, or for seeking appropriate specialist advice where required.

What are the EU Procurement Rules?

To Whom Do the EU Procurement Rules Apply?

Which Procurement Directive Applies?

Determining if the Directives Apply

Advertising: The Requirement

Contract Award Procedures

Provisions in Relation to Specified Procurement Mechanisms and Contractual Arrangements

Framework Agreement

Dynamic Purchasing Systems

Electronic Auctions

Post-Tender Negotiations in Open and Restricted Procedures

Contract Award Criteria

The Mandatory Standstill Period

De-brief

Publication of a Prior Information Notice (PIN)

Frequently Asked Questions

Priority (Part A ) Services

Residual (Part B) Services

European Rules Applying to Contracts that Fall Below The Threshold

What are the EU Public Sector Procurement Rules?

The European public sector procurement rules are intended to promote fair and open competition and a single European market.

It should be noted that the EC public sector Procurement Directives give effect to the European Union's obligations under the World Trade Organisation's Government Procurement Agreement (GPA) and bidders from signatory countries have equivalent rights to those from member States of the European Union.

The Treaty Obligations

The Treaty of Amsterdam establishes a number of fundamental requirements for public bodies when awarding contracts. These include non-discrimination, equal treatment, transparency and the free movement of goods and services. These requirements apply irrespective of the application of the EC Procurement Directives. They can have far-reaching effects. For example, asking a bidder if he intends to recruit locally or requiring a bidder to have a local office may be discriminatory; providing information to some bidders which is not available to all may breach the principle of equal treatment; failing to provide adequate information to bidders may breach the principle of transparency, and introducing a requirement which is more difficult for certain suppliers to meet, for example, specifying a material which only a particular manufacturer produces may breach the principle of free movement of goods and services.

The Procurment Directives

These are transcribed into Scots Law by The Public Contracts (Scotland) Regulations 2006. It is this Scottish enactment to which reference should generally be made, however there may be occassions on which it is desireable to have reference to the original European legislation.

The EU Procurement Directives, which are implemented into UK legislation by means of Scottish Statutory Instruments (SSIs) and for England, Wales and Northern Ireland by Statutory Instruments (SI), establish detailed procedural rules which must be observed when awarding Works, Supplies and Services contracts. The current Procurement Directives (with their corresponding SSI and SI reference) are:-

• Public Contracts Directive - 2004/18/EC
• Implemented in Scotland by The Public Contracts (Scotland) Regulations 2006 (SSI 2006/1)
• Implemented in England and Wales by The Public Contracts Regulations 2006 (SI 2006/5)
• Utilities Contracts Directive - 2004/17/EC
• Implemented in Scotland by The Utilities Contracts (Scotland) Regulations 2006 (SSI 2006/2)
• Implemented in England and Wales by The Utilities Regulations 2006 (SI 2006/6)

Case Law of the European Court of Justice and Domestic Courts

The case-law of the ECJ and the domestic courts provides interpretation of the requirements of the Treaty and the Directives and can establish precedents which must be observed. Case-law, by its nature, is constantly evolving and can have significant effects. For example, The judgement from the Telaustria case (Case 324/98) held that even where the Directives do not require advertisement of a public contract in OJEU, it must still be given adequate publicity (in order to satisfy the principle of transparency), such as advertising tendering opportunities on an appropriate website

To whom do the EU Procurement Rules apply?

If you are a public body, you must comply. A public body in this context means the State, regional, local authorities, associations formed by one or more of such authorities or bodies governed by public law.

Body governed by public law means any body:

• established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character, and
  
• having legal personality and
  
• financed, for the most part, by the State, or regional or local authorities, or other bodies governed by public law; or subject to management supervision by those bodies; or having an administrative, managerial or supervisory board, more than half of whose members are appointed by the State, regional or local authorities or by other bodies governed by public law.

This definition is given a broad interpretation by the ECJ. A body may be covered even if is expected to recover its operating costs through commercial/trading activity if, for example, it exercises a public policy function. And "established in the general interest" does not mean "established by the State", it simply means that the body must (even as a minor part of its overall remit) fulfil a need in the general interest.

Which Procurement Directive applies?

Contracts for Supplies, Services and Works are now covered by a single Directive,Directive 2004/18/EC. This EU Directive has been established into Scottish law byThe Public Contracts (Scotland) Regulations 2006.

It is important to determine the type of contract that will be awarded, as there are slight variations in the rules for Supplies and Services and more significant variations in the rules for Works.

The Public Contracts Directive provide definitions of Supplies, Works and Services:-

• " Supplies " contracts are essentially those for the supply (and installation where appropriate) or hire of products.
  
• " Works " is defined as "the outcome of building or civil engineering, works taken as a whole that is sufficient of itself to fulfil an economic and technical function".
  
• " Services " includes, for example, services such as maintenance of equipment, transportation, consultancy, technical services etc. Services are split into two categories, Part A services and Part B services. A contract for a Part A service is subject to the full requirements of the Directive. Part B services do not have to be advertised in OJEU, but you are obliged to place a notice in OJEU once the contract has been awarded. However, as noted above, case-law has established that there must still be adequate publicity, such as advertising in the national press or website.

There are three initial questions to ask:-

• Is the awarding body a contracting authority?
• Does the value of the contract exceed the threshold?
• Is there a general or special exemption?
  

1. Is the awarding authority a contracting authority?

See 'To whom do the EU Procurement Rules apply?' above for a definition.

Examples of a contracting authority are:-

• The State
  
• Regional & local authorities
  
• Bodies governed by public law
  

This would therefore cover:-

• Central government (including agencies)
• Local government
• Police and Fire Services
• NHS
• Universities
• Other bodies governed by public law

2. Does the contract value exceed the threshold?

The Directives only apply to contracts above certain financial threshold values. These thresholds are set out in the Directives in Euros (although Sterling equivalents are available), and are fixed for 2 year periods. The values change on the 1st January every even year.

Follow this link to view the current EU Procurement Thresholds

Valuing the requirement

Purchasers are required to estimate the value of the contract or contracts to the best of their ability. If the estimate proves to have been flawed, for example, because bids or the eventual contract value are significantly higher than estimated, there may be a breach of the Rules (and the competition may have to be stopped and start again).

For Supplies and Services, the estimated value of the contract must include all possible options under the contract. For example, if the contract allows the purchaser to either purchase additional supplies or services or extend the contract period beyond its original duration, the financial implications of these must be included in the estimate of the potential contract value; even if the likelihood of taking up these options is small.

Supplies - where volumes and prices are known in advance, then the value of the contract is the full amount which you will pay during the life of the contract e.g. 100,000 items at £2 each over 12 months, gives you a contract value of £200,000. If the contract is for the hire of goods for an indefinite period, or for a period of time which is uncertain when the contract is entered into, then the value of the consideration is what you expect to pay each month, multiplied by 48. Where you propose to enter into two or more contracts for goods of a particular type, then the estimated value of each of the contracts must be added together. This aggregate value is the one which you must apply. If this aggregated estimated value exceeds the threshold, each contract has to be advertised in OJEU, even if the estimated value of each individual contract is below the threshold.

Services - the Directive lays down rules for calculating the estimated value of the contract. These state that, where appropriate, account shall be taken of:

• for insurance services, the amount of any premium payable;
• for banking and other financial services, the amount of any fees, commissions and interest as well as other types of remuneration; and
• for contracts which involve design, any fee payable.

If the services are sub-divided into several lots, with each lot being the subject of a contract, then the value of each lot must be taken into account for the purposes of calculating the value. The requirements of the Directive may be waived for an individual lot which has an estimated value of less than £54,738, (€80,000) provided that the total value of such lots does not exceed 20% of all the total value of all the lots.

The estimate does not need to include any Value Added Tax payable.

Where the contract is one of a series of similar contracts, the value of each must be aggregated to determine the estimated value.

Be aware of the Aggregation Rules. When determining whether the Aggregation Rules apply, it is the requirement which is important, not the contract. The Directives expressly prohibit the splitting of requirements into smaller units or orders in an attempt to avoid the application of the Directives.

For Works, purchasers are required to estimate the value of the whole works project, irrespective of whether or not it comprises a number of separate contracts for different activities. For example, if the construction of a new building is divided into three phases, site clearance, construction and fitting out, the threshold must be applied to the value of all three phases, even though the activities are different and even though different contractors may be used. Another example might be the construction of a new road. This might consist of separate contracts for the construction of the road itself, road signs, lighting, and landscaping. If all these contracts form part of the same project, the value of each contract must be added together to arrive at a value against which the threshold must be applied. Similarly, if the public body buys materials or products for use in connection with the works (i.e. by the works contractor) the value of these must be included when calculating the whole works project value. When procuring these materials or products, if they are above the Supplies threshold, the public body must comply with the Directive when procuring them. Related services (for example, architectural or quantity surveying services) may be purchased under separate contracts, in which case their value need not be counted against the whole works project value. However, the Directive must be applied if separate services contracts exceed the Services threshold.

If the contract period is not fixed, then the amount payable on a monthly basis is multiplied by 48 to arrive at a notional contract value.

3. Is there a general or special exclusion?

There are exclusions from the application of the Directives. The following lists are not exhaustive; if in doubt, refer to the relevant Directive.
Examples of general exclusions include:

• Secret - when a contract/requirement has been classified as Secret or where protection of the basic interests of the security of the UK dictates that no public advert should be placed.
• Procurement of war-like stores (Article 296 of EC Treaty)
• Where as a result of an International Agreement, different award procedures apply.
• Examples of special exclusions for Service-contracts include:
• Employment contracts (but contracts for temporary staff may be covered)
• Research & Development (if the result/outcome is shared)
• Acquisition/rental of land
• Some financial services
• Service Concession contracts i.e. a right to exploit the service to generate an income
• Part B services
  

It should be noted that when relying on one of the exemptions, the purchaser will need to provide an explanation. The exemptions are very narrowly interpreted by the European Commission and the European Court of Justice.

Advertising: The Requirement

An advert must be prepared and sent to the Official Journal of the European Union (OJEU).
Standard forms must be used.

• The Contract Notice and Contract Award standard forms should be used - these are also available to download from the Commission's website SIMAP
• OJEU will publish the advert within 12 days.
• If you decide to also advertise in other publications (e.g. the national press, a trade magazine etc), you must not :
• send your advert to the other publication(s) before you send your advert to OJEU. Note: you do not have to await the publication of the OJEU advert, your obligation is to ensure that the OJEU advert is despatched before any other advert.
• provide information or detail in the other advert(s) that does not appear in the OJEU advert.
• If the contract value is below the relevant threshold value at which an advert is mandatory, an advert can still be placed 'on a voluntary basis'. Case-law seems to indicate that voluntary publication of a notice in OJEU does not mean that the competition is subject to the processes and procedures of the Directives
• Where the contract does not fall within the scope of the Directives, the Telaustria case ruled that the procedure employed must be still be consistent with the principles of the treaty, particularly the obligation of transparency, and that therefore a "sufficient" degree of advertising should be used -

"[the] obligation of transparency which is imposed on the contracting authority consists in ensuring, for the benefit of any potential tenderer, a degree of advertising sufficient to enable the services market to be opened up to competition and the impartiality of procurement procedures to be reviewed.

63 It is for the national court to rule on the question whether that obligation was complied with in the case in the ain proceedings and also to assess the materiality of the evidence produced to that effect."

Contract Award Procedures

Having established that the Directives apply, and identified the appropriate Directive, the next issue is to identify the appropriate Award Procedure. There are 4 options:-

• Open Procedure
• Restricted Procedure
• Negotiated Procedure
• Competitive Dialogue Procedure

NB: - The circumstances when the final two procedures can be used are limited

1. Open Procedure

The main points are:

• Closing date for receipt of bids must be no earlier than 52 days from the day after the date of despatch of advert to OJEU.
• Invitation to Tender (ITT) documents must be issued to all companies requesting one.
• ITT to be issued within 6 days of request.
• If there has been a Prior Information Notice (see below) published not less than 52 days previously and no longer than 1 year ago, then the 52 day period that must elapse before bids can be received is reduced to 36 days (or 22 days in exceptionally justified cases).
• Reductions in timescales are available if documents and adverts are sent electronically
  

2. Restricted Procedure

It is a 2 stage process:-

i. Selection of a number of suitably experienced, qualified companies ('shortlisting'), and
ii. Inviting those selected companies to submit proposals.

Stage 1

• Advert is prepared and sent to OJEU.
• A minimum of 37 days, starting from the day after the advert is sent to OJEU, must be allowed for companies to request to be considered for 'shortlisting'.
• Shortlisting is on the basis of looking at the company's capacity, not how they propose to meet the contract. Therefore, this is a process that is 'backward looking, not forward looking' i.e. you cannot consider matters relating to the expected nature of the contract at this stage.
• There must be a minimum of 5 companies shortlisted (where there are at least 5 suitably qualified, experienced companies).
• Reductions in timescales are available if documents and adverts are sent electronically

Stage 2

• Issue ITT documents to the shortlisted companies.
• A minimum of 40 days must be elapse before you can ask the bidders to submit their tenders.
• If there has been a Prior Information Notice (see below) published not less than 52 days previously and no longer than 1 year ago, then the 40 day period can be reduced to 26 days. Note: the 37 day requirement remains.
• Reductions in timescales are available if documents and adverts are sent electronically

3. Negotiated Procedure

Can only be used in exceptional circumstances.

• Under the Supplies Directive, it is difficult to justify use of this procedure
• Under Works and Services Directive, the Negotiated Procedure can be used in a number of limited circumstances.

There are 2 types of Negotiated Procedure:

i. Negotiated Procedure with call for competition, and
ii. Negotiated Procedure without call for competition.

Negotiated Procedure with call for competition

Like the Restricted Procedure, this is a 2 stage process:-

Stage 1

• Advert is prepared and sent to OJEU.
• A minimum of 37 days, starting from the day after the advert is sent to OJEU, must be allowed for companies to request to be considered for 'shortlisting'.
• Shortlisting is on the basis of looking at the company's capacity, not how they propose to meet the contract. Therefore, this is a process that is 'backward looking, not forward looking' i.e. you cannot consider matters relating to the expected nature of the contract at this stage.
• There must be a minimum of 3 companies shortlisted (where there are at least 3 suitably qualified, experienced companies). Note: this is different from the obligation in a Restricted Procedure.

Stage 2

• Enter into negotiations with the company/companies with a view to agreeing on the terms of a contract.
• There is no specified time period for this stage of the process.

This procedure can be used:-

• where a restricted or open procedure has failed
• where overall pricing is not possible
• where specifications cannot be drawn up with sufficient precision to enable bidders to submit proposals without further discussion/dialogue

Negotiated Procedure without a call for competition

No advert is placed in OJEU. Instead, a company is identified by the awarding body to enter into negotiations with a view to agreeing the terms of a contract.

This procedure can be used in limited circumstances:-

• Absence of suitable tenders (i.e. an attempt to generate competition through the Open, Restricted or Negotiation with a call for competition has failed to generate competition).
• Research & Development, but only if the purpose is not to recover costs or generate profit.
• For technical or artistic reasons the contract may be carried out by a particular provider.
• For extreme urgency brought about by unforeseeable (not unforeseen) events. An example might be where a fire at a hospital means that medical supplies must be obtained urgently. This only applies in the case of genuine emergencies and must only be invoked to the minimum extent necessary. In the hypothetical case of the hospital fire, if this was used as a pretext to award a 12 month contract, as opposed to simply obtaining what was needed to deal with the emergency, there would likely be a breach of the Supplies Directive.
• Additional works/services (services must be no greater than 50% of original contract value).
• Repeat works.
• Additional supplies.
• Reductions in timescales are available if documents and adverts are sent electronically

4 Competitive Dialogue Procedure

This is new procedure for "particularly complex" procurements and can only be used in exceptional circumstances.

It is suitable for supplies, services and works contracts where it would not be possible to award a contract using the open or restricted procedures and where the circumstances do not permit use of negotiated procedures.

The process always involves competitive tendering and can only use the most economically advantageous award criterion.

Definition -

" A procedure -

• in which any economic operator may make a request to participate; and
• whereby a contracting authority conducts a dialogue with the conmic operators admitted to that procedure with the aim of developing one r more suitable alternative solitions capable of meeting its requirements and on the basis of which the economic operators chosen by the contracting authority are invited to tender."

A "particularly complex contract" means a contract where a contracting authority is not objectively able to -

• define the technical means...capable of satisfying its needs or objectives;or
• specify wither the legal or financial make - up of a project or both.

Main Features -

• Dialogue is allowed with selected suppliers to identify and define solutions to meet thte needs and requirements of the contracting authority,
• The award is made only on the most economically advantageous tender criteria
• Dialogue may be conducted in successive stages, with the aim of reducing the number of solutions/bidders and
• There are explicit rules on post-tender discussion.

Procedure -

Like the Restricted Procedure, this is also a 2 stage process:-

Stage 1

• Publication of the contract notice in OJEU, setting out "needs and requirements" which can be further defined in a "descriptive document",
• A minimum of 37 days, starting from the day after the advert is sent to OJEU, must be allowed for companies to request to be considered for 'shortlisting'.
• Selection/pre-qualification of candidates
• Shortlisting is on the basis of looking at the company's capacity, not how they propose to meet the contract. Therefore, this is a process that is 'backward looking, not forward looking' i.e. you cannot consider matters relating to the expected nature of the contract at this stage.
• There must be a minimum of 3 companies shortlisted (where there are at least 3 suitably qualified, experienced companies).
• Reductions in timescales are available if advert is sent electronically

Stage 2

• Participation in the dialogue.
• Enter into dialogue with the company/companies with a view to agreeing on the terms of a contract.
• Dialogue has to be structured.
• One stage or successive stages
• Award criteria may be used progressively to reduce the number of participants.
• Dialogue continues until contracting authority can identify solutions capable of meeting its needs at which point it declares the dialogue closed and formally calls for Final Tenders
• Tenders must be complete and contain " all of the elements necessary for the performance of the contract"
• Tenders may be "clarified, specified and fine-tuned" provided that this does not involve changes to the basic features of the tender or the call for tender variations in which are likely to distort competition or have a discriminatory effect.
• Bids are assessed against the published award criteria.
• There is no specified time period for this stage of the process.

Preferred Bidder

• Preferred bidder may be asked to clarify aspects of the tender and confirm commitments...provided this does not involve distortion of competition or discrimination
• Underlying Principles -
• confidentiality (extending beyond confidential matters, but also to "solutions" and "information"),
• equal treatment

Comparing Competitive Dialogue with Negotiated Procedure

Accelerated Procedures

• These can be used in a Restricted or Negotiation with a call for competition procedure where urgency makes the normal timescale impractical.
• It does not alter the processes of the procedure, but it does reduce the timescales:
• the normal time limits of 37 days to express an interest can be reduced to 15 days.
• the time limit for the receipt of tenders in a Restricted Procedure competition can be reduced from 40 to 10 days
• the maximum time for request of documents from 6 to 4 days.
• The contracting authority is required to send the notice to the OJEU by the fastest possible means and the normal publication date is to be advanced from 12 days after receipt to 5 days.
• The legislation makes it clear that the accelerated procedure is to be used exceptionally, and the contracting authority must indicate its reasons in the notice to the OJEU.

Provisions in Relation to Specified Procurement Mechanisms and Contractual Arrangements

The 2004 Procurement Directives have introduced rules in regards to Framework Agreements, Dynamic Purchasing Systems and Electronic Auctions and it is important to have regard to these rules before implementing such arrangements.

Framework Agreements/Contracts

• Now recognised formally in the Directives
• Definition -

"An agreement or other arrangement between one or more contracting authorities and one or more economic operators which establishes the terms ( in particular the terms as to price and, where appropriate, quanitity) under which the economic operator will enter into one or more contracts with the contracting authority in the period during which the framework agreement applies"

Types of Framework Agreement -

Framework Agreements can take one of two forms -

Setting up a Framework Agreement

• Can be established using the Open, Restricted, Negotiated or Competitive Dialogue procedures, but note that -
• The value of the framework is the estimated value of all contracts envisaged to be awarded under the agreement during its duration.
• The duration of the framework must be limited to 4 years except in "exceptional circumstances"
• There s a requirement that frameworks should not be used improperly or to prevent, restrict or distort competition

Single Supplier Framework Agreements - "Call-offs"

• Call-off/specific contracts are awarded
• "within the limits of the terms laid down in the framework agreement" but you may also consult the supplier in writing "requestng it to supplement its tender as necessary

Multi-supplier Framework Agreements - Call-offs

• Call off contracts can be awarded either
• by application of the terms set out in the agreement itself; or
• where not all the terms are set out in the framework agreement, by mini competition

Multi-supplier Framework Agreements - Mini Competition "Call-offs"

• Re-open the competition between the economic operators which are parties to the framework agreement and which are capable of performing the proposed call off contract.
• the call off must be placed with the tenderer who has submitted the best tender in accordance with the award criteria which should have been set out in the framework agreement
• Remember - you cannot justc hange matters which have been agreed as part of the framework agreement itself, when you are awarding call-offs

Dynamic Purchasing Systems

Definition -

• a completely electronic system of limited duration which is
• established by a contracting authority to purchase commonly used goods, work, works or services;
• open throughout the duration for the admission of electronic operators
• DPS must not last londer than 4 years, except in "duly justified exceptional circumstances"
• Must not be used to prevent, restrict or distort competition

Creation of DPS -

• OJEU Open procedure must be used
• Unrestricted, direct and full access to the spec electronically throughout the lifetime of the DPS
• Candidates may apply to join at any time by submitting indicative tender
• Contracting authority to evaluate indicative tender within 15 days of submission
• Any candidate submitting compliant indicative tenders passing selection criteria must be allowed to join the DPS

In Practice

Process for contract award using the system -

• Simplified OJEU advert required inviting anyone interested and not yet admitted to DPS to submit indicative tender
• Allow interested parties minimum of 15 days to submit an indicative bid to get themselves on to the DPS
• Everyone then on DPS must be invited to tender
• Use original award criteria, although these may be "more precisely formulated"

Pros and Cons

Disadvantages -

• Must keep DPS open at all time
• Must go back to the market ffor EOIs before each procurement
• must invite all DPS members to tender - and must evaluate them all.
• Must base award largely on original contract award criteria

Advantages -

• Selection process is mostly complete
• Prices are current

Electronic Auctions -

• An electronic auction can be used in conjunction with -
• The open procedure
• The restricted procedure
• The negotiated procedure, where this is employed when open, restricted or competitve dialogue procedure have been discontinued due to irregular or unacceptable tenders
• A re-opening of competition in a Framework Agreement under Regulation 19(7) of the Public Contracts (Scotland) Regulations 2006
• A dynamic purchasing system

• An electronic auction may not be used
• in public services or public works contracts whose subject matter involves intellectual performance, such as the design of works
• To prevent, restrict or distort competition

• The intention to hold an electronic auction must be specified in the contract notice.

• The contract specification must include -

1. the electronic system to be used in the electronic auction and
2. the arrangements for and technical specifications relevant to connection to the electronic system to be used.

• Before proceeding with the auction it is necessary to -
• make an initial evaluation of the tenders against the specified award criteria
• simultaneously, by electronic means, invite all those who have submitted admissible tenderers to submit new prices or values in the auction
• the invitation should be sent at least 2 working days prior to the auction

• The invitation should include -
• the outcome of the evaluation of their tender
• all relevant information regarding connection to the electronic auction system
• the date and time it starts
• the number of phases in the auction
• the mathematical formula to be used to determine the automatic re-ranking of tenders and incorporating the weighting of all criteria (any ranges used should be set at a specified value before the invitation is sent)
• where variant bids are authorised, the separate matehmatical formula for each
• the basis on which the auction is to be closed

• During each phase the contracting authority -
• shall instantaneously communicate to all operators information sufficient to allow them to ascertain their relative rankings
• may communicate information regarding the prices or values set by the other operators, so long as this was provided for in the specification
• may disclose the number of operators participating
• shall not disclose the identity of any participating economic operator

Closing the Auction

• An Auction should be closed at -

• The date and time specified in the invitation
• When it recieves no new bids which meet the requirements
• When the number of phases specified in the invitation have been completed
• The period allowed to elapse between a submission and the close of the auction, or the timetable for each phase, should be specified in the invitation

• Post-Tender Negotiations should not be undertaken following an electronic auction.

Post-Tender Negotiations in Open and Restricted Procedures

Following the receipt and opening of tenders in Open or Restricted Procedure competitions, any contact with the tenderers should be conducted carefully, bearing in mind the rules and principles of the EC Treaty. In particular, contracting authorities engaging in such post-tender contact with potential suppliers should have reference to the joint statement of the Council and the Commission in Council Directive 90/531/EEC where it was stated that -

"in open and restricted procedures, all negotiation with candidates or tenderers on fundamental aspects of contracts, variations in which are likely to distort competition, and in particular on prices, shall be ruled out; however, discussions with candidates or tenderers may be held but only for the purpose of clarifying or supplementing the content of their tenders or the requirements of the contracting authorities and provided that this does not involve discrimination."

Contracting authorities involved in post-tender negotiation may also find it useful to have reference to the 1993 Guide to the Community Rules on Public Service Contracts. While some of the rules have changed since this was published, it may still be of relevance in areas such as post-tender negotiations. The key point that should be foremost in the Contracting authority's mind is the requirement not to act in a manner that is likely to distort competition. This does not preclude negotiation, but does affect the manner in which it can be undertaken.

Bearing in mind these statements, it is important that all post-tender communication, whether in the form of clarification or negotiation, is meticulously recorded and, above all, that proceedings are conducted in a manner which is not only fair, but which is seen to be fair by the relevant parties. This should reduce the risk of a decision becoming subject to a legal challenge.

For guidance on the practicalities of Post-Tender Clarifications and Negotiations, purchasers should have reference to the Tender Clarifications and Post-Tender Negotiations (PTNs) section of the toolkit.

Contract Award Criteria

• The rules relevant to the Contract Award Criteria are recounted in detail in the Establish Tender Evaluation Criteria Section.
• In all instances, once a contract has been awarded (including Part B service contracts), the awarding body must publish a notice in OJEU within 48 days of contract award. This notice must be on a Standard Form, available from the Commission website
  SIMAP

Mandatory Standstill Period

This requirement is explained in detail in An Introduction to the Mandatory Standstill Period

De-brief

• Once a decision as to contract award been awarded, all unsuccessful bidders should be notified by the most rapid means of communication possible.
• An unsuccessful bidder, if he requests so in writing within 2 working days of unsuccessful bidders being notified, must be told the reasons why his bid was not successful. The contract cannot be awarded unless a minimum of 3 working days elapse after the unsuccessful bidder is notified of reasons why his bid was unsuccessful, and in the absence of any legal challenge to the contract award decision.
• If an unsuccessful bidder requests, in writing, the reasons why is bid was not successful but outwith the 2 working days limit mentioned above, he must be told the reasons within 15 days of his request.
• A more detailed exploration of the Debriefing Process is available on the Contract Award and Debriefing page.

Publication of a Prior Information Notice (PIN)

• In respect of supplies and services contracts, a PIN should be published as soon as possible after the commencement of each financial year.
• The PIN should contain details of supply and services contracts for which the public body expects to seek tenders during the forthcoming 12 months.
• For works contracts, a PIN must be issued as soon as possible after the decision approving the planning of a work or works which exceeds the relevant threshold.
• The standard PIN form should be used.
• The thresholds above which a PIN should be published are:-
• Supplies & Services £513,166 (€750,000)
• Works £3,611,319 (€5,278,000) - hence all works require a PIN
• Once a PIN has been published, reductions in timescales for competitions identified in the PIN are possible.

Frequently Asked Questions

Do the Directives apply to Subsidised Contracts?

In some circumstances, the procurement Directives may apply to contracts awarded by bodies who do not fall within the definition of a "public body" (see above for definition).

This is because the rules apply to some Works and Services contracts which receive 50% or more public funding. These contracts are known as Subsidised Contracts.

Do the Directives apply to Works Concession Contracts?

Yes, although the Works Directive permits different procedural rules for the award of Works concession contracts.

A Works concession contract is one in which a significant part of the contractors consideration consists of the right to exploit the provision of the work. For example, where, in the case of a new road or bridge, the contractor is allowed under the contract to charge tolls for its use, and retain the income generated. Case-law on Works concession contracts is not clear, although the working assumption is that 15%-20% is sufficient to constitute a "significant part of the contractors consideration", and thereby classify the contract as a Works concession contract.

Do the Directives apply to Service Concession Contracts?

The procurement Directives do not apply to Service concession contracts, although Treaty requirements still apply and advertisement in the national or trade press may still be required.

A Service concession contract is a contract under which the awarding body grants the contractor the right to provide services to the public and under which the contractor's remuneration consists of mainly (50% or more) of the right to exploit the provision of those services. For example, where a contractor is given the right to manage and operate a Leisure Centre, and will receive 50% or more of its income from charging the public to use the Leisure Centre, this will be regarded as Service concession contract, as opposed to a Service contract.

Case-law on Service concession contracts is not clear. However, the effect of classifying a contract as a Service concession contract is that the Services Directive will not apply. It is therefore likely that the Commission and ECJ would apply a stricter test than in the case of Works Concessions when considering the extent to which the contractor's remuneration must consist of the right to exploit (through direct charging or associated commercial activity) the provision of the service to the public. A reasonable assumption is that the right to exploit provision of the service must represent at least 50% of the contractor's remuneration.

Do the Directives apply to Design Contests?

Yes. Special rules apply, and are set out in the Services Directive, to the award of service contract through a design contest. A design contest, in this context, means a procedure in which a Service contract is to be awarded to the company or person submitting the winning design. In summary:

• Design contests are procedures for obtaining plans or designs, which involve a jury, which is autonomous in making its decisions, and offer prizes or payments, or which may lead to the award of a services contract.
• The rules apply to contests which are expected to lead to public service contracts which would otherwise be subject to the Services Directive; or where the value of prizes or payments for the contest equals or exceeds that amount.
• Where the rules of the contest require a services contract to be awarded to the successful contestant or one of the successful contestants, the negotiated procedure can be used without a call for competition, provided all the successful contestants are invited to negotiate the contract.

I have an existing relationship with a contractor. Do I still need to advertise the contract?

Yes, unless the contractor was appointed in accordance with the Directives and the existing contract clearly covers the requirements of the new project.

When selecting bidders in a restricted or negotiated procedure, can preference be given to the existing contractor, or to a contractor from whom I have previously bought goods/services?

No. Giving preference to a known contractor would be in breach of the Treaty principles of non-discrimination and equal treatment. Each candidate must be treated on its merits.

Is it permissible to assess bidders on the basis of "local" experience or a local office?

No, since this would be discriminatory.

What information can be assessed when selecting bidders?

The public sector Procurement Directives restricts the information which may be sought from candidates. Care must be taken to ensure that information is not sought which exceeds what is permitted in the Directives or which is not directly relevant to the particular contract. Selection must also be on objective grounds.

Priority (Part A) Services

1. Maintenance and repair of equipment.
2. Land transport, other than of mail, but not rail including armoured cars and courier services.
3. Air transport other than of mail.
4. Transport of mail by land or air but not rail.
5. Telecommunications, but not voice, telex, radio telephony, paging and satellite.
6. Financial Services.
7. Computer and related services.
8. Purchase of Research and Development.
9. Accounting, Auditing and Book-keeping services.
10. Market research and public opinion polling.
11. Management consultancy and related services, but not arbitration or conciliation.
12. Architectural services, engineering, urban planning and landscape services, related consultancy services, technical testing and analysis.
13. Advertising services.
14. Cleaning of buildings and property management.
15. Publishing and printing on a fee or contract basis.
16. Sewage and refuse disposal, sanitation and similar services.

Residual (Part B) Service

17. Hotel and restaurant services.
18. Transport by rail.
19. Transport by water.
20. Supporting and auxiliary transport services.
21. Legal services.
22. Personnel placement and supply of services.
23. Investigation and security services, except armoured cars.
24. Education and vocational education services.
25. Health and social services.
26. Recreational, cultural and sporting services.
27. Other services.

European Rules Applying to Contracts that Fall Below The Threshold

The European Commission issued an Interpretative Communication on how European Law affects contracts to which the Procurement Directives do not apply. Please read the Interpretative Communication for further details.