The public procurement Directive 2004/18/EC allows recourse to accelerated procedures where justified on the grounds of urgency. The Commission recognises that the exceptional nature of the current economic situation can justify the use of the accelerated procedure reducing considerably the overall time limit of the procedure from 87 days to 30 days. Such presumption of urgency should apply throughout 2009 and 2010 for all major public projects.

The Commission considers that speeding up procurement procedures can significantly support Member State action to foster their economies through rapid execution of major public investment projects. Such action should be based on the existing internal market acquis.

The time limits set out by the public procurement Directive 2004/18/EC include a certain time frame for potential bidders to decide whether to participate and to draw up their tenders. Furthermore the Remedies Directive 2007/66/EC provides for a standstill period between the award decision and the conclusion of the contract to allow for review of the award decisions. In the restricted procedure, bidders first have to request to participate. Subsequently, selected candidates are invited to submit their tenders.

The regular regime for the restricted procedure, leading to the above time limit of 87 days, provides for minimum 37 days from the date on which the contract notice is sent for lodging requests to participate as well as for another minimum 40 days for the selected candidates to submit their tenders. After the award decision, the above-mentioned “standstill period” of 10 days applies before the contract can be concluded.

Under the accelerated restricted procedure, which the Commission considers justified in the light of the financial crisis, contracting authorities can shorten the time limit for requests to participate from 37 to 10 days if the contract notice was sent by electronic means and the subsequent time limit for the selected candidates to submit their tenders from 40 to 10 days. With the remaining standstill period of 10 days, time limits for the restricted procedure can therefore be ultimately shortened to 30 days all in all.

Source: http://europa.eu/rapid/pressReleasesAction.do?reference=IP/08/2040&format=HTML&aged=0&language=EN&guiLanguage=en

Internal Market and Services Commissioner Charlie McCreevy said: “These lists are a leap forward for more transparency and accountability in public procurement. Taxpayers and businesses have the right to know who is obliged to publish calls for tender. Transparency pays off for the economy: EU public procurement rules ensured in 2006 that almost 32,000 contracting authorities published around 380 billion EUR worth of public contracts. Through public procurement, Member States’ national budgets can save 20 billion EUR in total per year – this is to the benefit of taxpayers everywhere in the EU”.

The public procurement directives (see IP/04/150) contain the lists of contracting authorities and entities that have to apply EU public procurement rules. Although the definitions in the directives themselves provide the exact scope, the lists give a very good indication of all public bodies covered by these rules.

EU public procurement rules apply to several kinds of public authorities: from national ministries to local councils, from schools to universities, but also to hospitals, airports, railway operators, museums, postal entities, urban transport, water utilities and national lotteries.

The lists had to be reviewed for technical reasons – i.e. to reflect the recent enlargement and the recent EU reforms in the postal sector. Rather than limiting itself to technical amendments, the Commission has replaced references to national laws by the actual names of contracting entities, or at least by some examples of these entities.

On EU public procurement

EU public procurement directives stipulate that the awarding of public contracts by central government authorities, regional or local authorities and utilities are subject to EU rules, when their value is above or equal to the following thresholds applicable from 1 January 2008 (excluding VAT):

In practice, this means that tender procedures should be in line with the principles of the EC Treaty, namely that they should be non-discriminatory, transparent and proportionate.

Source: http://europa.eu/rapid/pressReleasesAction.do?reference=IP/08/1971&format=HTML&aged=0&language=EN

The purchasing specifications are part of the state’s green procurement processes which are intended to boost energy efficiency and reduce air and water pollution, while helping public agencies make smart buying decisions. The specifications will help guide purchases of numerous commodities and services, including computers, copiers, printers, electronic signs, dishwashers and engine block heaters.

New York State government is a major consumer of materials and energy, and the establishment of procedures for the purchasing of green goods and services will help leverage its buying power. As part of this initiative, in September, OGS announced the savings of approximately $255 million on the purchase of environmentally-sustainable personal computers, which are now being made available to public entities throughout the state.

“Businesses are making it easier for consumers to buy products and services that are both eco-friendly and cost-efficient, and New York State is leading by example in showing how this can translate into a better work environment,” Commissioner Grannis said. “Already, we have begun to see results from the green procurement initiative, and we look forward to continuing to work with our partners to develop new strategies that will protect our natural resources and be fiscally responsible.”

“New York’s actions are having a global impact,” said Commissioner Egan. “Every day OGS procurement professionals are measuring the market and seeking ways to aggregate the purchase of thousands of products by state and local government. Equally important is the notion that by working closely with top environmental stewards, we are ensuring that sustainability and conservation are included in the purchasing equation.”

In April 2008, Governor David A. Paterson signed Executive Order No. 4, which established a state Green Procurement and Agency Sustainability Program. The order requires state agencies, public authorities and public benefit corporations to green their procurements and to implement sustainability initiatives. To accomplish this, an interagency committee is identifying an annual list of categories and products for environmentally-conscious purchasing, planning and contracting.

This week, the committee tentatively approved 18 new specifications that are currently available for public review. The procurement specifications provide guidance on buying products and services that use energy efficiently (often labeled as “Energy Star”), contain recycled content, avoid toxic chemicals, and promote reuse. When final, state agencies and authorities can use these specifications in purchasing computers, copiers, printers, appliances, printing and ink, some road safety and message equipment, indoor and outdoor pest management, and recycling services.

Also, the committee has finalized four procurement specifications, covering passenger cars, engine block heaters, and desktop and laptop computers. The roster of services and commodities included as part of the green procurement initiative will be posted at http://www.ogs.state.ny.us/ExecutiveOrder4.html. Information about the program is also available on the DEC website at http://www.dec.ny.gov/public/45591.html.

Source: http://readme.readmedia.com/news/show/New-York-Announces-Preliminary-Guidelines-for-Eco-Friendly-State-Purchasing/313185

All federal contractors on deals lasting four months or more and worth $5 million or more (including those outside the U.S. and those providing commercial items) must blow the whistle on criminal violations or overcharging.

Such contractors also will have to “establish and maintain specific internal controls to detect and prevent improper conduct,” according to the rules spelled out in the Federal Register.

The possible consequences of not blowing the whistle? Debarment and suspensions.

Read the whole article at http://voices.washingtonpost.com/government-inc/2008/12/contractors_must_disclose_cred.html.

Another Dublin City Council public-private partnership (PPP) which was to provide the regeneration of an inner city social housing complex has collapsed.

Croke Villas, a 1960s block of 79 flats off the Ballybough Road in the north inner city, was to have been redeveloped as a complex of retail, private apartments and 36 social housing units under a PPP between Bennett Developments Ltd and the council.

The termination of the project follows the collapse this year of five PPP social housing regeneration schemes between the council and developer Bernard McNamara. The changes in the housing market meant it was no longer viable for Mr McNamara to provide social houses in exchange for land to build private housing.

Read the whole article at http://www.irishtimes.com/newspaper/ireland/2008/1211/1228864662524.html.

I do not need to highlight the economic importance of PPPs as a tool to inject efficiency and quality control into the delivery of public services. BSA members well know that from their own experience.

In the area of PPPs, the consultation launched in 2004 with the Green Paper underlined the urgent need to clarify the application of the EU procurement rules to the setting up of joint companies by the public and private sectors to deliver public tasks.

Thus, after extensive consultations with Member States, stakeholders, practitioners and the Parliament, we published early this year, a Communication on Institutionalised Public-Private Partnerships (IPPPs). The Communication reiterated the principle that any share of private capital in a publicly-held company excludes the in-house status of that entity. This means that EU procurement rules apply to the selection of the private partner and to the award of public contracts to the joint company. The Communication then explains that only one tender procedure is required, either when selecting the private partner, or at the time of awarding a public contract or concession to the joint public-private entity. This method is equally applicable in the case of an existing public company that is looking for a private partner to deliver a public task. IPPPs call for a long-term view of the task to be delivered so that the contract caters for a mechanism to adapt itself to a changing legal and economic environment.

Another recent development in the area of PPPs is the launch of the European PPP Expertise Centre (EPEC) by the Commission and the European Investment Bank.

The objective of the EPEC is to enable public authorities in the EU Member and Candidate Countries to become more effective participants in PPP transactions. Its main task is to help the public sector to overcome shortfalls in PPP expertise. Despite considerable knowledge and experience in parts of Europe’s public sector, the failure to share lessons and best practice is limiting the economic efficiency and growth of the European PPP market.

The newly-established European PPP Expertise Centre will share experience and synthesise information from across the EU on requirements for effective transactions and skill-sets required to handle these. Good practical guidance will then be disseminated among the EPEC’s members with the aim of enhancing public sector management, reducing PPP costs and increasing deal flow.

Concessions

Let me now turn to concessions.

By concessions, we mean procurements in which the consideration from contracting authorities consists in the award to the contractor of the right to exploit a work or service, or where this right is accompanied by some sort of payment. A well-known example of these is toll roads, where the contractor builds and operates a motorway and charges tolls on users. Another example is contracts for the management of public services, where contractors set up and/or operate the service and receive fees from users. Concessions are very prominent in the field of PPPs. A study carried out by Price Waterhouse Coopers concluded that approximately 60% of all PPPs take the legal form of concessions.

Following a broad public consultation with the Green Paper on PPP in 2004, we realised that we needed further data on how this worked in practice before considering any further action. This is what we are currently doing. We are studying carefully the concessions market in the EU. After consultations with Member States and stakeholders on this initiative, we are working, therefore, to gather more practical data on the award of concessions in the EU, including in strategic sectors. I also personally see the benefits of service concessions for expanding markets to many new EU Member States where service concessions and other forms of PPPs are infrequently used. Whether or not EU action is needed to facilitate this opening up of new markets is still a more open question.

Given the experience of BSA members with public services, in the UK and abroad, I encourage you to send my services your opinions and experience with concessions.

Defence Procurement

Another important EU initiative is the proposal for a Defence and Security Procurement Directive. This proposal was tabled in December 2007 as part of the so-called “defence package”, together with a proposal for a Directive on Defence Transfers. Only 12 months later, we are very close to finalising the legislative procedure with a first reading adoption by the European Parliament in January 2009.

This Directive is a politically important instrument which will help strengthen Europe’s defence capabilities, make public spending more efficient and enhance the security of our citizens. The principles of the Internal Market – transparency, openness and non-discrimination – will, finally, apply to defence and security markets as well. Fair and transparent procurement rules will allow BSA members to tender more easily in other Member States. European industries will get a much larger “home” market with longer production runs and economies of scale. This, in turn, will reduce costs and lead to lower prices.

At the end, we will achieve greater openness of defence markets between Member States to the benefit of all: industries will get new business opportunities and become more competitive; armed forces will get better value for money; and taxpayers will benefit from more efficiency in public spending.

Source: http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/08/699&format=HTML&aged=0&language=EN&guiLanguage=en

Commissioner for Trade, Catherine Ashton, said: “This accession will provide new opportunities in public procurement for businesses in both the European Union and Chinese Taipei. The Commission will continue to seek market access for European companies, especially to help our small and medium-sized enterprises.”

Commissioner for the Internal Market Charlie McCreevy added: “Expansion of GPA membership has always been one of the key objectives of the EC as it leads to further business opportunities for European suppliers. Also, GPA membership guarantees fair, transparent and non discriminatory procurement procedures. The EC believes that the accession of Chinese Taipei to the GPA will pave the way towards the expansion of GPA membership and that other WTO members will join the Agreement soon”.

Chinese Taipei’s market for government procurement was worth EUR 14.3 billion in 2006 and EUR 16.8 billion in 2007. Foreign suppliers have had a share of 20% in total government procurement worth more than EUR 120billion in Chinese Taipei over the past 10 years. EU companies gained 3% of the total, worth around EUR 3.7 billion.

Source: http://europa.eu/rapid/pressReleasesAction.do?reference=IP/08/1937&format=HTML&aged=0&language=EN

First, we will launch a massive effort to make public buildings more energy-efficient. Our government now pays the highest energy bill in the world. We need to change that. We need to upgrade our federal buildings by replacing old heating systems and installing efficient light bulbs. That won’t just save you, the American taxpayer, billions of dollars each year. It will put people back to work.

Second, we will create millions of jobs by making the single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s. We’ll invest your precious tax dollars in new and smarter ways, and we’ll set a simple rule – use it or lose it. If a state doesn’t act quickly to invest in roads and bridges in their communities, they’ll lose the money.

Source: http://change.gov/newsroom/entry/the_key_parts_of_the_jobs_plan/

Since the review was focused on problematic and risky contracts, i.e. where the EC has detected potential irregularities or where these were reported by the Bulgarian authorities, the sample can not be taken as representative for the situation regarding the procurement and the implementation of all Phare projects. Nevertheless, many of the findings point towards existing systemic weaknesses that might have also affected other than the selected projects.

The checks were focused on both procurement and implementation of the Phare contracts. The most frequent weaknesses and irregularities found so far by D2, OLAF, external auditors and monitoring experts were considered to define the following criteria for review:

Procurement

• Restrictive or targeted tender documentation (Technical Specifications; Terms of Reference, methodology for evaluation, selection criteria);
• Risk for external actors intervention in the Evaluation Committees (unbalanced composition of the Committees};
• Disagreements among the members or manipulations in the Evaluation Committee;
• Lack of independent expert;
• Potential conflict of interest (mainly between the Evaluation Committee and the tenderers);
• Cancellation of tenders/lots without reporting the reasons for the cancellation;
• Inconsistencies between the Project Fiche specifications, the tender documentation launched and the contracts) concluded;
• Risks brought by “last minute” contracting;
• Artificial limitations to competition or appeals;
• Procurements with high amounts;
• Risk of manipulation in evaluation committees.
• Lack of transparency in procedures and documentation

Implementation stage

• Potential conflict of interest between the beneficiary and the contractors considering both – the implementation stage and the tender preparatory stage;
• Contract amendments and modifications (verification of the tools used for amending contracts, type of amendments, Project Fiche consistency of such modifications, financial impact);
• Irregularities (found and reported or not reported) during the contract implementation;
• Results achieved – were results fully achieved in due time?
• Adequacy of the results achieved as regards the beneficiary needs and Project Fiche specifications;
• Acceptance of supplies (if these were performed properly) and approval of the Report of Consultants;
• Disputes between Contractors and Beneficiaries or Contracting Authority;
• Payments – should the respective payments executed by the IAs follow the contract provisions.

The following horizontal findings were concluded:

1. Problems existed in the period under review with the interpretation and consistent application of the National Procurement Rules. We witnessed differences in the interpretation of the Public Procurement Law provisions in the two Implementing Agencies, affecting key areas for sound implementation such as amendments to contracts, evaluation committee proceedings and cancellation of tenders. We also noted a number of cases where a very formal manner of its application appears to have undermined key principles of sound financial management such as equal treatment of applicants, transparency or value for money.

2. Inadequate composition of Evaluation Committees: in various cases members without adequate technical expertise have been included in the Evaluation Committees and despite EDIS provisions no external independent evaluators were involved in Evaluation Committees.

3. Filing and archiving problems – loss/absence of key documents. The archiving system of the two Implementing Agencies was not in proper order and there is a clear risk for lack of audit trail.

4. Inadequate record keeping, in particular unclear or incomplete tender evaluation reports and missing internal approvals and/or comments follow up.

5. Unexplained excessive delays in procurements, including documents withheld from EC ex-ante control before EDIS accreditation without justification.

6. Restrictive Technical specifications for IT equipment, limiting the competition and undermining the “value for money” principle.

7. Insufficient follow up and control of suspicions of conflict of interest, irregularities and frauds’

8. Weaknesses in the supervision of construction projects, including a high risk of subcontracting and completion of works not in line with contract provisions.

9. Indications of contract signature beyond the contracting deadline and excessively delayed start up of contract execution.

10. Indications of overlap between and within programmes (e.g. SAPARD/ Structural Funds vis-à-vis PHARE).

Read the whole report at http://www.focus-fen.net/index.php?id=f1791.

Last month, the commission, the executive arm of the European Union, removed from service 20 deluxe “superautomatic” coffee machines after a staff member sent water from the machines for testing that showed astronomical levels of nickel and elevated amounts of lead. The commission paid about €5,000 for each of the machines from the Italian company Gruppo Cimbali and it pays an additional annual maintenance fee.

Read the rest of the article at http://www.iht.com/articles/2008/12/03/business/coffee.php