Update on the revision of the Procurement Directives

1. Update on the revision of the Procurement Directives Mark Hidson Director ICLEI’s Global Sustainable Procurement Centre Deputy Regional Director

2. In December 2011 the Commission adopted its proposals on public procurement. Part of an overall programme aiming at an in-depth modernisation of public procurement in the European Union.

3. The proposed reform aims to: • Simplify rules and procedures. In particular: • Encourage access to public procurement for SMEs • Greater consideration for social, environmental criteria and LCC (Europe 2020 strategy) • Improvements aimed at combating conflicts of interest, favouritism and corruption.

4. The European Parliament’s Internal Market Committee (IMCO) undertaking a trilogue discussion with the Council, Commission and IMCO Plenary vote expected 19 November 2013 . Now set for January 2014. 2 years for transposition 4.5 years for e-procurement (at the latest) http://www.europarl.europa.eu/document/activities/cont/201309/20130913ATT71292/20130913ATT71292EN.pdf Current Status

5. General overview…

6. General Overview • Innovation appears in many places…Recital 17: • Streamlining of documentation requirements at selection stage • Exemption for R&D services • Rules on preliminary market consultations • Functional and performance-based specifications • Innovation partnership procedure • Competitive procedure with negotiation • Greater availability of competitive dialogue • Reporting on public procurement of innovation and SME involvement

7. General Overview • Subject matter link maintained but extended (production process, fair trade) • Socialcriteria (protectionofworkers, employmentofhandicapped, longtermjobless, etc.) • Recital 39: No general mandatory environmental requirements due to differences between individual sectors and markets • Rules on joint procurement

8. General Overview • CAs may require that environmental, social or other characteristics required of goods, works or services are certified as such by a specific label (Art 41) • Contracting authorities are able to calculate cost using a “life-cycle” concept, taking into consideration internal costs and monetised external environmental costs (Art 66 & 67)

9. Specific articles ...

10. Article 29: Innovation Partnerships This is a new process introduced in the proposals. It enables an economic operator to enter into a structured partnership with a contracting authority with the aimof developing an innovative product, service or works, with the subsequent purchase of the outcome. This will allow authorities to call for tenders to solve a specific problem without prescribing how it should be tackled. Once minimum requirements are fulfilled, it is up to bidders to offer the most innovative answer.

11. Article 40: Technical Specifications Article 40 (1) Currently: …may also refer to the specific process or method of production or provision of the requested works, supplies or services or to a specific process for another stage of its life cycle even where such factors do not form part of their material substance provided that they are linked to the subject-matter of the contract and proportionate to its value and its objectives.

12. Article 41: Labels 1. Where contracting authorities intend to purchase works, supplies or services with specific environmental, socialor other characteristics they may, in the technical specifications, the award criteria or the contract performance conditions, require a specific label as means of proof that the works, services or supplies correspond to the required characteristics, provided that all of the following conditions are fulfilled: (a) the label requirements only concern criteria which are linked to the subject-matter of the contract and are appropriate to define characteristics of the works, supplies or services that are the subject-matter of the contract; (b) the label requirements are based on objectively verifiable and non-discriminatory criteria; (c) the labels are established in an open and transparent procedure in which all relevant stakeholders, including government bodies, consumers, social partners manufacturers, distributors and non-governmental organisations, may participate; (d) the labels are accessible to all interested parties; (e) the label requirements are set by a third party over which the economic operator applying for the label cannot exercise a decisive influence.

13. Article 41: Labels cont... Where contracting authorities do not require the works, supplies or services to meet all of the label requirements, they shall indicate which label requirements are referred to. Contracting authorities requiring a specific label shall accept all labels that confirm that the works, supplies or services meet equivalent label requirements. Where an economic operator has demonstrably no possibility of obtaining the specific label indicated by the contracting authority or an equivalent label within the relevant time limits for reasons that are not attributable to that economic operator, the contracting authority shall accept other appropriate means of proof, which may include a technical dossier from the manufacturer, provided that the economic operator concerned proves that the works, supplies or services to be provided by it fulfil the requirements of the specific label or the specific requirements indicated by the contracting authority. 2. Where a label fulfils the conditions provided in points (b), (c), (d) and (e) of paragraph 1 but also sets out requirements not linked to the subject-matter of the contract, contracting authorities shall not require the label as such but may define the technical specification by reference to those of the detailed specifications of that label, or, where necessary, parts thereof, that are linked to the subject-matter of the contract and are appropriate to define characteristics of this subject-matter.

14. Environmental Management Schemes – Art 61 (2) Where contracting authorities require the production of certificates drawn up by independent bodies attesting that the economic operator complies with certain environmental management systems or standards, they shall refer to the European Union Eco-Management and Audit Scheme (EMAS) or to other environmental management systems as recognized in accordance with Article 45 of Regulation (EC) No 1221/2009 of the European Parliament and of the Council or other environmental management standards based on the relevant European or international standards by accredited bodies. They shall recognise equivalent certificates from bodies established in other Member States. Where an economic operator has demonstrably no access to such certificates, or no possibility of obtaining them within the relevant time limits for reasons that are not attributable to that economic operator, the contracting authority shall also accept other evidence of environmental management measures, provided that the economic operator concerned proves that these measures are equivalent to those required under the applicable environmental management system.

15. Article 66: Contract Award Criteria The most economically advantageous tender from the point of view of the contracting authority shall be identified on the basis of the price or cost, using a cost – effectiveness approach, such as life-cycle costing in accordance with Article 67, and may include the best price-quality ratio, which shall be assessed on the basis of - criteria including qualitative, environmental and/or social aspects linked to the subject - matter of the public contract in question.

16. Article 66: Contract Award Criteria... 66 (3) Award criteria shall be considered to be linked to the subject-matter where they relate to the works, supplies or services, including: In the specific process of production, provision or trading of those works, supplies or services, or In a specific process for another stage of their life cycle even where such factors do not form part of their material substance (clear that EC want social to come under Contract Award Criteria)

17. Article 67: Life-cycle costing The life-cycle cost will include: a) internal costs i) costs relating to acquisition, ii) costs of use, such as consumption of energy and other resources, iii) maintenance costs, iv) end of life costs, such as collection & recycling costs;b) b) monetised external environmental costs Provided their monetary value can be determined and verified. Costs may include emissions of greenhouse gases and of other pollutant emissions and other climate change mitigation costs. NOTE: only environmental

18. Article 67: Life-cycle costing cont… 2. Indicate in procurement documents (a) it is based on objectively verifiable and non-discriminatory criteria. In particular where it has NOT been established for repeated or continuous application (i.e if the CA develops it’s own LCC criteria); (c) it is accessible to all interested parties; (ca) the data required can be provided with reasonable effort by normally diligent economic operatorsincluding operators from third countries Whenever a common method for the calculation of LCC has been made mandatory by a legislative act that should be applied

19. Next steps... • ICLEI has been and is feeding comments through several channels • Finalised by January 2014? • Adopted 2014. Transposed by 2016. • ICLEI considering setting up a group to undertake an in-depth analysis of the Directives once they have been agreed and look at what it will mean for practical implementation... • Updating our Procura+ manual to include the new provisions