Procurement Directives Revision

EU consultation submission: What should remain unchanged

Pedro Telles

— 4 min read

On this final entry based on my response to the public consultation on the revision of the procurement Directives I focus instead on what should not change and is worth keeping as it is.

  1. While tempting to focus on change in the context of the public consultation for a new piece of legislation, it is important as well to make a case for what should not change. Some key ideas and tenets of public procurement have been under pressure and are likely to be subject to intense lobbying in the coming months.

Importance of competitiveness, competition and the single market

  1. If procurement is to remain regulated at EU level with secondary legislation, the key job to be done is that of opening up the single market and increase competition for public contracts. This has to be the primary objective since that is why we have the regulatory framework in the first place. The current set of Directives recognises this and while allowing for additional objectives to be pursued, these cannot come at the expense of competition or the opening up of the single market.
  2. Letting go of competition and competitiveness as the guiding principle for the existence of EU secondary rules will surely lead to a return of a less integrated European public procurement market as it was in the 1960s. If that is the intention - or consequence - we might as well not have any secondary legislation applicable to public procurement as suggested on section 1.

Additional objectives should remain optional

  1. As today, going forward there should be no obligation to pursue additional objectives via public procurement. Public procurement in the EU is complex as it is, adding further mandatory obligations will significantly increase complexity for contracting authorities. Additional complexity will increase risk, costs and depress competition even further. The more objectives there are to be pursued the less likely it is contracting authorities will be able to procure effectively due to the tradeoffs those impose.
  2. The 2014 Directives offer a reasonable compromise - and compromise is the key word here. Contracting authorities can do more, but with caveats and constraints in place. Those additional objectives can easily be manipulated for purposes that are contrary to EU rules, namely fostering protectionism and national or local preferences. For example, the idea of short supply chains first introduced in legislation in Catalonia can easily be understood as an attempt to drive a wedge between Catalonia and the rest of Spain. Naturally the same wedge is driven also on EU supply chains as well.
  3. Doing more with procurement than simply serving the need that triggered the purchasing in the first place is hard and difficult. It is unsurprising that additional objectives have not seen the take up their advocates would like them to. Making them mandatory will not magically solve the problems currently faced daily in practice. In fact, the additional complexity will simply add to their difficulties.

Lowest price

  1. Despite all attempts to move contracting authorities from using lowest price as the award criterion and into MEAT, lowest price remains by far the preferred choice of award criteria. Its popularity can be explained by the safety or sense of security it offers directly and the drawbacks of MEAT. MEAT is more difficult to deploy, the assessment more complex and with at least more implicit discretion. It requires more capacity and professionalism from the contracting authority to do well. The last decade has shown contracting authorities are still not ready or not interested in it. Beyond the last decade, variants have been in the legislative toolbox since at least the early 1990s and yet they have never taken off either.
  2. A move to mandatory additional objectives is likely to force the use of MEAT in the worst possible way: because it is mandatory even if the contracting authority is not ready or does not want to do it. Before making these mandatory it would be important to fully understand why contracting authorities struggle to use it and what could be done to solve that problem. Making it mandatory will not magically solve the underlying issues.
  3. In addition, there is a growing body of evidence that MEAT and the discretion it enables can enable corruption in ways that lowest price is more resilient to.
  4. Lowest price gets a lot of bad press but it gets the job done in the least bad way most of the time. It is arguable that if the professionalism of contracting authorities was resolved, then MEAT would not be needed at all since the specifications could be designed better obviating the need for discretion in the assessment of tenders.
  1. The subject-matter link is another key plank of the procurement regime that is currently under pressure from advocates wishing it to be reformed or disappear altogether. The logic being to enable procurement to be used as a compliance tool on economic operators without the confines of the contract.
  2. Letting go of the subject-matter link makes no sense in the context of procurement. The procurement process is nothing more than a structure to identify what is the best way to deliver on the needs of the contracting authority. This is done at the end via a contract between the contracting authority and the economic operator.
  3. If we were to break the subject-matter link then we break the system’s logic as well. Bidders are no longer going to be assessed only how good their bid is, but instead on how good they are as a bidder. We have spent the last 50+ years trying to detach the importance of the bidder's identity, reputation or behaviour from the underlying bid so that smaller or recent economic operators are not discriminated against, just to bring that back again.
  4. Not taking into account prior behaviour in similar contracts/contexts is problematic and has its downsides, such as making it difficult to punish bad behaviour. However, that is the price we pay to protect non-discrimination between bidders. Letting go of the subject-matter link would open up the possibility of ever more compliance requirements being loaded into public procurement and the discrimination it entails.

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