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Top Tips from Irelands Procurement Lawyers

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Top Tips From Ireland’s Procurement Lawyers

I chaired CMG’s www.cmgevents.ie recent conference on procurement and tendering.

Hereunder is a summary of some of the points made by the procurement lawyers who presentted.

Tender Evaluation: Courts look at situations where there is a manifest error. Important that evaluators are not substituted during the evaluation process. The evaluation report, including Conflict of Interest Declarations, should be signed by all evaluators. Keep notes. Give evaluators plenty of time to assess tender responses prior to the evaluation meeting.

Clarifications: Cannot change essential conditions (for example introducing new technical specifications) by means of clarifications prior to submisiosn daedline. Best practice is that clarifications should be sought at evaluation stage, but in so doing a non-compliant submision should not be made compliant as a result of a clarification. Responses to clarifications are contractually binding.

Abnormally low tenders: Should seek clarifications if an abnormally low priced tender (that is not defined) is submitted. Decision taken should be carefully recorded in Procurement Audit Report.

Competitive Dialogue/Competitive Procedure with Negotiation: The use of these procedures must be justified and so recorded in procurement audit report. Main difference is that under CD it is possible to negotiate with preferred tender post Best and Final Offer stage. European Institute of Public Administration has published detailed guidance.

Results Letters: Use OGP templates (January 2019). Communicate characteristics and relative advantages of successful tenderer to compliant tenderers. Only possible to determine ‘relative’ advantages when evaluation of all submissions is completed. Detailed reasons should be given with reference to specifics. Respect tenderer’s confidentiality. A tenderer that is deemed as non-compliant does not need to be provided with a detailed briefing. No need to provide detail debriefing if scores are the same. Detailed narrative should be given to procurements with a contract value below €25,000. No obligation to give a tenderer’s ranking but it is best practice.

Standstill: Essential that a standstill notice letter must give sufficient information to enable an unsuccessful tenderer to decide whether there are grounds for seeking review.
Formal submission of legal papers starts the process.

Debriefing Meeting: Not recommended: ‘too dangerous’. Not a requirement under the procurement rules. Prepare carefully if a de-briefing meeting is agreed. Conduct an independent review of scoring where appropriate. The standstill (30 day) clock will not be reset if a debriefing meeting is held.

Keeping Records: A Procurement Audit Report, with supporting documentation (including evaluators’ notes), must be prepared and kept for three years for all tender competitions above EU threshold and in situations below the threshold where cross-border submissions received. Best practice is to prepare a PAR to support internal audit function.

Pre-tender Consultation: Permissible based on clear rules of engagement but must not result in a violation of the principles of transparency and non-discrimination. No guidance in Regulations about conduct of market consultation. One-on-one meetings most useful. All pre-tender consultation documents must be published. Best practice for high risk procurements.

Estimated contract value: Must be included in contract notice.

Discovery: Recent Court of Appeal ruling may make it more difficult to get discovery of documents.

Confidentiality: Publication of tender price in Contract Award Notice may be withheld if certain conditions met e.g. it might harm legitimate commercial interests of tenderer.

Freedom of Information: Office of the Information Commissioners guidance notes should be consulted. EU procurement law has primacy over Ireland’s FOI Act. Specific rules apply in relation to access to information on the environment.

Know How:https://beta.courts.ie/is a useful web site for sourcing procurement cases.

Peter Brennan

The material in this post is purely for information and discussion and does not purport to advise on matters of law. Any persons affected by the matters discussed in this post should seek legal advice on their particular situation.

More on EU Public Procurement Stats 2018

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In a previous post I looked at some figures for EU-level public procurement activity undertaken by Irish contracting authorities in 2018. In this post I will look at the overall figures for the EU 27 as a whole in 2018.

The following is a summary of the main figures:

Type of NoticeEU 27 in 2018Notes
Contract Notice213,731An increase of 8% over 2017 (197,976 )
Open Procedure186,047
Restricted Procedure6,804
Negotiated Procedure9,084(Utilities)
Competitive Procedure with Negotiation10,495Only available to Public Sector Contracting Authorities since the adoption of the 2014 Directives. Take-up has been rapid and 2018 represents a 55% increase on 2017 (6,739).
Competitive Dialogue774An increase of 46% on 2017 (528).
Innovation Partnership77Up from 39 in 2017.
Accelerated Restricted Procedure82
Accelerated Negotiated Procedure16
Other/Not Specified352
Contract Award Notice228,548
Open Procedure181,245
Restricted Procedure10,105
Negotiated Procedure8,875(Utilities)
Competitive Procedure with Negotiation9,287
Competitive Dialogue594
Innovation Partnership51
Accelerated Restricted Procedure86
Accelerated Negotiated Procedure1,939Of which Portugal appears to account for 1,920?
Negotiated procedure without a call for competition10,762Seems very high given that this is supposed to be an exceptional procedure.
Contract award without prior publication/direct award5,015This only relates to acknowledged direct awards. There would appear to be a significant number of direct awards which are not declared via OJEU.
Not Specified /Other589
Other Notices Used in 2018EU 27Notes
Voluntary Ex-Ante Transparency Notices7,061Often published to proof direct awards against challenge under Remedies Directives.
Modification of a Contract/Concession during its term11,144New transparency obligation imposed by 2014 Directives.
Dynamic Purchasing System660Usage increasing following simplification in 2014 Directives. UK appears to be the lead user of DPS with 253 advertised in 2018.
Prior Information Notice without call for competition12,990Often published with a view to reducing response timescales.
Prior information notice with call for competition570New feature of 2014 Directives and not available to central government bodies.
Periodic indicative notice without call for competition557
Periodic indicative notice with call for competition102
Qualification system without call for competition291Available to Utilities only
Qualification system with call for competition593Available to Utilities only

Comment:
The overall scale of activity is truly massive. Anyone who has been involved in just one OJEU-level procedure will appreciate the time and effort involved. The figures suggest that across the EU there are approximately 200,000 procedures in train at any given time. This represents a very large expenditure of effort and resources by public purchasers not to mention the corresponding time, effort and resources of all the economic operators who submit responses.

The most striking trend to emerge from the 2018 figures is the high take-up (10,495) of the new “Competitive Procedure with Negotiation” for which there seems to be a strong demand. It will be interesting to see how the use of this procedure progresses in future years in the light of buyers’ experience. There have always been concerns that, if not used properly, this procedure could shift the balance of bargaining power significantly from purchaser to supplier and lead to adverse outcomes for the taxpayer. A space to be watched.

Another noticeable trend is the increased usage of Dynamic Purchasing Systems (660) and it will also be interesting to follow how this procedure fares in future years. It would seem to have great potential in helping contracting authorities to address recurring purchases of standard “off-the-shelf” goods/services and works.
On the downside, the figures for use of direct awards (5015) and negotiated procedure without a call for competition (10,762) are disappointingly high, considering that these options are supposed to be exceptional and subject to strict limiting conditions.

Another curious feature is the apparently high level of Accelerated Negotiated Procedures used by Portugal in 2018 when it accounted for almost 100% of the use of this procedure across the EU 27.

James Farrell
Senior Procurement Consultant

e: james@publicprocurement.

Procurement Research Ltd. April 2019. The material in this post is purely for information and discussion and does not purport to advise on matters of law. Any persons affected by the matters discussed in this post should seek legal advice on their particular situation.

Council of European Municipalities and Regions and EU Committee of the Regions survey Assessing the implementation of the 2014 Directives on public procurement: challenges and opportunities at regional and local level

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Our readers in local and regional authorities will be interested to note this survey which can be accessed here:

EU Committee of the Regions Survey on Impact of 2014 Procurement Directives

The survey is open for responses until Monday May 13th. 2019

It is being conducted by the Council of European Municipalities and Regions (CEMR) and the European Committee of the Regions (CoR) and is aimed primarily at local and regional authorities.

“Considering the key role of subnational governments in local public markets, through their spending on goods and services, construction and public works, the CoR has started to analyse the challenges and opportunities faced by regions and cities in implementing the new legal framework.”

“By responding to this survey, you will help COR to identify these key challenges and to gather the views of regions and cities on the types of policy needed to help overcome them.”

The CoR .is expected to publish the survey results in May 2019 in a summary paper that will be circulated to all respondents. They will also feed into the CoR opinion on the implementation of the 2014 Directives on public procurement.

“If you represent a local or a regional authority (official, politician, or other), or if you are a stakeholder acting at regional or local level, and you are potentially impacted by the EU Public Procurement Directives, we would like to hear from you!”

All responses will be kept confidential

For more information, please contact econ-survey-cor@cor.europa.eu

Posted by:
James Farrell
Senior Procurement Consultant

e: james@publicprocurement.ie

Handle with Care: Voluntary Ex-Ante Transparency (VEAT) Notices.

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Background
The EU Procurement Directives make provision for certain very limited situations where a contracting authority may award contracts without advertised competition. These are set out at Article 32 (2)-(5) of Directive 2014/24/EU (Public Sector), and Article 50 (a)-(j) of the Utilities Directive and Article 31 (4) and (5) of the Concessions Directive. Those situations may be summarised briefly as follows:

The works, supplies or services can be provided by only one economic operator because:
(a) no suitable responses received to a previously-advertised tender competition;
(b) where for uniqueness (e.g. artworks) or technical or intellectual property reasons a product or service may be provided by only one economic operator (NB – subject to very significant additional detailed qualifications);
(c) because of extreme urgency brought about by unforeseen events that are not attributable to the contracting authority.

For supply (goods) contracts where:
(a) the products are purely for research purposes;
(b) additional deliveries by an original supplier (and subject to detailed qualification);
(c) for supplies quoted and purchased on a commodity market;
(d) for purchases on exceptionally advantageous terms due to liquidation of the suppler etc.

For new works or services where:
(a) a contract is to be awarded on foot of a previously advertised design contest;
(b) the new works or services consist of the repetition of similar works or services awarded to the original contractor under an advertised competition, provided that such works or services are in conformity with a basic project for which the original contract was awarded, and, when the basic project was advertised, the extent of possible additional works or services and the conditions under which they will be awarded was made clear (and subject to additional qualifications).

The Recitals to the three Directives (which should always be read carefully if contemplating a direct award) emphasise the very limited scope of these exceptions: “In view of the detrimental effects on competition, negotiated procedures without prior publication of a contract notice should be used only in very exceptional circumstances.”

In other words, the EU legislators were conscious that permitting direct unadvertised awards could facilitate anti-competitive behaviour and so these exceptions are very tightly drawn.

Because they are exceptional grounds, they will be construed narrowly by the courts and the onus will always be on the contracting authority to justify their use.
In short, any contracting authority contemplating the use of these procedures should take considerable care, including seeking legal advice, in order to ensure that they are not caught offside in making illegal direct awards.

Logic would suggest that a prudent contracting authority, if faced with any doubt on the matter, should err on the side of caution and conduct an orthodox advertised tender process.

As explained in my previous post on the Eurotunnel case in the UK, there can be serious consequences in the event that a contracting authority is found to have made an illegal direct award, including the risk of having the contract set aside as ineffective, and/or the award of damages and/or fines.

Voluntary Ex-Ante Transparency Notices
In order to mitigate the risk of ineffectiveness in bona fide cases the EU Remedies Directives make provision for the publication of a Voluntary Ex Ante Transparency Notice which allows for a minimal degree of transparency in direct award situations.

In completing the VEAT notice it is critical that the contracting authority gives sufficient information as to the nature and full extent of the contract and its justification for direct award without OJEU advertising, and observe a minimum 14 day standstill period before the contract is awarded.

This allows economic operators the opportunity to challenge the decision of the contracting authority and either force the holding of an orthodox competition or, should the contracting authority persist with the award, enable an aggrieved party to seek to have the award set aside in court. The advantage to the contracting authority of the VEAT procedure is that the penalty of mandatory ineffectiveness does not apply in the event of a challenge to a contract awarded after the 14-day standstill period has elapsed.

Irish contracting authorities may use the etenders portal to publish VEAT notices in appropriate cases.

According to Tenders Electronic Daily, there were 7,061 VEAT Notices published across the EU 27 in 2018, of which 28 were published by contracting authorities in Ireland. (NB – this is by no means the full extent of direct awards: it appears from the data on the TED website that there were 10,762 contracts awarded across the EU by “negotiated procedure without a call for competition” and a further 5,006 by “direct award without prior publication” during 2018. It seems likely too that a significant but unknowable number of over-threshold contract awards are made throughout the EU without any form of notice being published.)

The significant volume of VEAT notices published annually has given rise to concerns of possible abuse whereby these notices are being “sneaked out” in the hope that interested market operators will not pick up on them or be able to mount a challenge within the very tight limitation period of 14 days (or 10 days in some Member-States).

The European Commission in its most recent Report on the Effectiveness of the Remedies Directives does not appear to share that concern, and the use of VEAT notices is barely mentioned in it.

Another ground for concern is where a contracting authority fails to set out clearly the true nature and extent of the contract in the VEAT Notice, a factor which recently led the English Court of Appeal to set aside as ineffective a land development contract awarded by an English local authority in the Faraday Developments case because the Court found on the facts that the VEAT notice being relied on to resist Faraday’s claim of ineffectiveness failed to give a properly detailed description of the contract and therefore was not a valid notice that could be relied on to prevent the court making a declaration of ineffectiveness.

The European Court of Justice ruling in the Fastweb case C-19/13 (cited in the Faraday case) is also significant in the context of ensuring that direct award decisions are made for bona fide reasons in the limited exceptional circumstances provided for in the Directives.

Conclusion.
While it is useful for procurement officials to be aware of the existence of the VEAT Notice procedure which may be a legitimate option in appropriate cases, they should also be aware of the risks involved and the need for extreme care in making use of it.

James Farrell
Senior Procurement Consultant

e: james@publicprocurement.ie

This post is an exploratory discussion of procurement issues of general interest and does not purport to constitute legal advice.

Direct Award of Contracts Without Advertised Competition

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Lessons from Ferrygate and knowing when you’re on Thin Ice.

This is a salutary case for public procurement officials which underlines the commercial and reputational risks inherent in awarding public contracts without advertised competition. While lacking the detail of a fully reported court case, there is still enough information in the public domain to gain an understanding of what happened and what lessons can be taken from it.

The background is that the Department for Transport in the UK awarded significant contracts for cross-channel transport services without having an advertised public procurement process as is required under EU Directives and (for now) UK law. A market operator in this space (Eurotunnel) sued the Department under relevant EU and UK procurement law when learned of the direct awards.

It is understood that if Eurotunnel had succeeded in establishing that the contracts had been awarded illegally the court could have: (i) set aside the awarded contracts; (ii) and/or awarded compensation to Eurotunnel; and/or (iii) imposed financial penalties on the Department.

There are (very limited) exceptional circumstances in which a contracting authority may legitimately award contracts without advertised competition and in this case it appears that the Department for Transport sought to claim that the contracts were not advertised due to “extreme urgency” (a permitted exception) in order to manage a no-deal Brexit. However, for this to work the Department would have to show that the claimed “extreme urgency” was not foreseeable and not of its own making.

Because a “no-deal” Brexit was officially foreseen for a long time before the contract awards it was clear that the Department did have ample time to conduct an advertised tender process if it so wished. On that basis it seems likely that its claimed justification would have failed in court and it could then have faced significant disruption and costs in having existing contracts set aside, and/or payment of substantial damages to Eurotunnel, and/or financial penalties. And so it appears that the Department decided to settle with Eurotunnel for £33 million rather than perhaps risk potentially heavier costs and penalties by letting the matter go to judgment.

This case is of particular relevance in an Irish context where the direct award of public contracts without advertised competition appears to be on the increase. As noted in a previous post, the most recent Appropriation Accounts published by the Comptroller and Auditor General during 2018 showed a significant level of contracts awarded or renewed without advertised competitive process during 2017. The published figures show that, across the 42 Votes covered, there was a total of 686 such awards to a combined value of €122.6 million.

These figures, which are self-declared under paragraph 8 of D/PER Administrative Circular 40/02, are in respect of central government bodies only and do not cover the Health, Local Authority, Semi-State (commercial and non-commercial) and Utilities Sectors, so the true level of direct awards may be far higher. While some of these direct awards may be genuinely justifiable within the permitted exceptions, it is possible that many are simply awarded, “rolled over”, or “extended” for reasons of administrative convenience or lack of resources to undertake the necessary procurement procedures.

The Eurotunnel case emphasises that this approach to the award of public contracts may give rise to serious financial risks for the taxpayer. We have been fortunate that suppliers in Ireland have been reluctant to take issue with “direct award” practices in the courts, up to now, but that could change if more suppliers follow Eurotunnel’s example. There are signs that suppliers are beginning to realise that the enforcement of public procurement law is in their hands via the courts ( or C&AG and the PAC ) and that suffering in silence while waiting for the European Commission or others to intervene and enforce the rules is not a realistic option.

It would seem that many Irish contracting authorities are not fully aware of the nature and extent of the risks they are taking in making direct awards and it must be said that the official guidance materials under which they operate do not fully spell out these risks. Circular 40/02 as the title indicates, dates from 2002 and is not cognisant of major changes to procurement law that have taken place since then, and in particular: the Remedies Regulations of 2010 (as amended); a completely new set of EU Procurement Directives in 2014; as well as several significant Irish and European Court of Justice decisions.

The more recent Office of Government Procurement Guidelines require that direct awards over certain values be reported in line with Circular 40/02 but do not go further in highlighting the risks of court challenge and the possibility of damages and/or financial penalties for unlawful direct awards.

In addition, the OGP Guidelines do not mention the possibility of using Voluntary Ex Ante Transparency Notices to mitigate the risks arising in unavoidable direct award situations and this will be the subject of next week’s post.

James Farrell
Senior Procurement Consultant

The material in this post is purely for information and discussion and does not purport to advise on matters of law. Any persons affected by the matters discussed in this post should seek legal advice on their particular situation.

“Light Touch” Procurement Procedures

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Background
The recitals to Directives 2014/24/EU and 2014/25/EU set out reasons for excluding certain social, health, educational and other specified services from their full scope and for applying higher thresholds of €750,000 and €1,000,000 respectively before OJEU advertisement of these requirements is mandated.

The Directives go on to specify the services subject to this so-called “Light-Touch Regime” by reference to a listing of CPV (Common Procurement Vocabulary) Codes set out in Annex XIV to the Public Sector Directive and Annex XVII to the Utilities Directive.

The “Light-Touch” Annexes are curious in that they look to have been put together in something of a hurry. Instead of setting out a clear and full listing of the services in question as one would expect in a legal enactment, it includes numerical-only groupings such as “from 85000000-9 to 85323000-9” which requires procurement officials to carry out a cross-reference check against the full CPV Code listing in order to establish what services are in fact covered in that grouping.

There also seems to be a degree of arbitrariness when it comes to the services included in the “Light-Touch” regime. For example, the provision of “security services” is classified as “Light-Touch” and excluded from standard procedures whereas “cleaning services” is not and remains subject to the standard rules. Both these services are increasingly provided and procured together as “facilities management” packages and it is not at all clear why such closely-related economic activities should be subject to very different treatment under public procurement law.

Uptake to Date

It appears from Tenders Electronic Daily that there is a significant appetite for the new procedures with some 170 over-threshold “Light-Touch” procedures advertised on TED from 2015 to date, mostly involving health service requirements in the UK (141 notices), Ireland (26) and Luxembourg (3).

This begs the question as to how the other EU Member States are applying the “Light-Touch” rules, or if they are using them at all?

A review of some of the Notices published on TED also highlights the following:

  • One project for housing services, which expressly claims to be an “Annex XIV procedure” uses CPV codes that are not so designated in the Directive;
  • One notice for “Executive and Legislative Services” is in fact for qualified accountants to act as court-appointed official receivers in corporate bankruptcy matters. As accountancy services are subject to the normal rules, one would have expected the procurement in this case to err on the side of caution and follow standard procedures for accountancy services.
  • Another notice classifies what appears to be a works/fitting-out project as “Health Services” apparently because the works in question are required for a hospital.

This raises the question as to whether anyone is monitoring these notices in the publishing authorities before release.

Issues for Procurement Officials

CPV Codes should always be carefully checked prior to issue of Contract Notices.

Consideration of the “Light-Touch” procedure needs to be carefully checked by cross-reference to the CPV Code. This can give rise to tricky situations where the procurement official will have to exercise careful judgment. For example: a requirement may involve the provision of “event services” with CPV Code 79952000 which is within the scope of the Light-Touch regime but may also involve the hire of audio equipment or other goods/services which have different CPV Codes that are subject to the normal transparency requirements and the lower thresholds. Prudence would suggest that an orthodox approach using standard procedures should be taken in such cases.

The use of CPV Codes is a mandatory legal requirement for all notices published at OJEU/TED level and is a critical element in the effective communication of requirements to the market, and in enabling contracting authorities/entities to meet their transparency obligations. The incorrect use of CPV codes would seem to be a matter of concern to the EU Commission, particularly in the light of the 2017 Cosinex report which cited one study that found incorrect use of CPV codes in 23% of notices analysed. The Cosinex report concluded that CPV errors have an appreciable adverse impact on transparency and the achievement of value for money. It remains to be seen what action the Commission will take in response. In the meantime, procurement officials should exercise care in the use of CPV codes given that incorrect or misleading CPV Codes may conceivably result in legal challenge1, particularly if there has been an adverse or misleading impact on the transparent communication of a requirement to the market.

Issues for Service Providers

Service providers need to be alive to the potential for mis-classification errors with the CPV Codes and should establish procedures to monitor published TED notices by use of key-word searches in addition to monitoring by CPV Code.

There is also a risk of reduced competition in the market sectors subject to the “Light-Touch” rules because there is no longer a legal obligation to advertise on TED/OJEU for requirements with values in the ranges €144- €750K (Central Government) and €443- €1m (Utilities).

This could see a lot of business being awarded without advertised competition although it appears that, for now, many contracting authorities/entities are continuing to advertise such contracts on national e-procurement portals on the basis of either national administrative rules or good practice in securing value for money. However, in the case of Ireland at any rate, there may be a further question as to whether such contracts are “reviewable contracts” as defined for the purposes of the Irish Remedies Regulations because the awarding of such contracts is outside the scope of the Irish Public Contracts Regulations of 2016. If that view is correct, it could mean that Irish economic operators in the social/health/educational sectors do not have access to the same legal remedies to challenge procurement decisions as economic operators in other sectors. This seems inherently unfair and a perverse outcome for legislation that has the elimination of arbitrary discrimination as one of its primary objectives.

James Farrell
Senior Procurement Consultant 

Snapshot of Irish Procurement Activity at EU level* in 2018

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The following statistics, extracted from the EU Commission’s Tenders Electronic Daily, provide an interesting snapshot of the level and types of procurement activity undertaken by Irish contracting authorities during 2018. It suggests a number of interesting trends including:

  • the emergence of the first Dynamic Purchasing Systems as enabled by the 2014 Directives;
  • significant uptake in the use of Competitive Procedure with Negotiation (41);
  • the first use of Contract Modification Notices (which permit certain changes to contracts during their term);
  • the first use of so-called “Light-Touch” procedures for certain health and social services as prescribed in Annex XIV to the 2014 Directive; and,
    an increased use of Voluntary Ex Ante Transparency Notices (VEAT).

We will comment further on the foregoing trends in future posts over the coming weeks but, for now, here are the main details for 2018:

Irish Procurement Activity at EU level* in 2018

Edit
Type of Notice Number Published by Irish Contracting Authorities Comment
Contract Notice 1,545 Of which 1,268 were issued under the Public Sector Directive; 269 under the Utilities Directive and 8 under the Defence Directive.
Contract Notice for Open Procedure 1,016
Contract Notice for Restricted Procedure 215
Contract Notice for Negotiated Procedure 237 (Utilities only)
Contract Notice for Competitive Procedure with Negotiation 41 (only available to Public Sector CAs since 2016)
Contract Notice for Competitive Dialogue 35
Contract Notices for Framework Agreements 320
Contract Award Notice 1,188 1,029 under Public Sector Directive; 157 under Utilities; 1 under Defence; 1 under other.
Prior Information Notice without Call for Competition 125
Prior Information Notice with Call for Competition 15
Periodic Indicative Notice 27
Without Call for Competition
Periodic Indicative Notice with Call for Competition 1
Design Contest 6
Works Concession 1
Services Concession 10
Concession Award Notice 4
Qualification System with Call for Competition 37 Available to Utilities Sector only
Dynamic Purchasing System 5
Voluntary Ex Ante Transparency Notice 28
Contract Modification Notice 26
Annex XIV Notices (“Light Touch” Procedures) subject to €750k threshold (Public Sector) and 1m (Utilities) 12 Approx. 100 such notices for EU as a whole, with remainder from UK.
Corrigendum Notices 149

*This data relates only to contracts/concessions with values in excess of monetary thresholds prescribed in EU Directives. A large volume of contract notices for contracts under EU-Threshold values are published on the national procurement portals www.etenders.gov.ie and www.supplyGov.ie

The publication of contract notices represents the majority of activity and the number published in 2018 (1,545) represents an increase of 326 (or 26%) over the number of such notices published in 2014 (1219).

The publication of contract award notices shows a continuing and welcome improvement over previous years with 1,188 such notices published in 2018, an increase of 466 or 64% over the 722 award notices published in 2014.

At national level, the etenders website indicates that there were approximately 6,300 contract notices published on that portal during 2018 with approximately 2,800 award notices.

However, on the down side, the 2017 Appropriation Accounts published by the Comptroller and Auditor General during 2018 showed a continuing high level of contracts awarded or renewed without competitive process in 2017. The published figures show that, across the 42 Votes covered, there was a total of 686 such awards made during 2017 to a combined value of €122.6 million. These figures, which are self-declared under Circular 40/02, are in respect of central government bodies only and do not cover the Health, Local Authority, Semi-State (commercial and non-commercial) and Utilities Sectors.

With regard to the Health Sector, the 2017 HSE Annual Report confirms that non-compliance with public procurement rules remains an issue. That Report states that “Comptroller and Auditor General findings in 2017 indicated a level of non-compliance in relation to 36% (by value) of the sample of payments examined at 5 HSE locations visited during the audit.” However, the HSE (Health Procurement Services) is committed to addressing this matter and has put a programme in place to enhance compliance in the coming years.

Clearly, while much is being done by many diligent officials across the system, there is still room for improvement.

James Farrell
Procurement Research Limited
7 February 2019

© Copyright Procurement Research Limited, February 2019. Used by Public Procurement Services Ltd. with permission. Further use or citation not authorised without permission of copyright holder and due attribution.

National Development Plan – Procuring €116 Billion

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Peter Brennan, Chairman of Bid Services, shares his thoughts on the Project Ireland 2040 National Planning Framework and Capital Development Programme announced by the Government this afternoon.

I reviewed the NDP to find out what the Government is proposing in terms of procuring the announced €116 billion in works, supplies and services.

Correctly, there is a lot of emphasis in the document in terms of securing value for money through the strict application of the Public Spending Code.

However, to my astonishment, procurement is barely mentioned. There is no policy statement about the procurement strategy that will be used to drive this unprecedented level of socio-economic infrastructure.

There is no indication as to how much of the projected €116 billion should be won by Irish SMEs by way of competitive tendering. If current trends continue, over €12 billion of this quantum may be awarded to non-Irish contractors with a commensurate loss in taxation, jobs and knowhow. DPER should lead an initiative whereby Irish companies and sub-suppliers are trained to secure the maximum amount feasible from this not inconsiderable capital investment.

In the absence of any other option, public bodies will continue to rely on the Capital Works Management Framework (CWMF), a set of guidance dating from 2004 that is not fully compliant with the current EU Procurement Directives. It is timely to ask the question: is the CWMF fully ‘fit for purpose’ to deliver the wide variety of works projects identified in the NDP. While the CWMF provides important templates and model letters and contracts, it needs more flexible rules to make it easier for contractors and sub-contractors to pre-qualify. Only in relation to works contracts, are all tenderers required to submit a suite of supporting documents as part of the qualification process.

In addition, new rules should be written into the CWMF to allow some projects to be procured using the (very flexible) EU Concessions Directive. Many contracting authorities should be using the Competitive Procedure with Negotiation to procure complex works projects yet the CWMF is silent as to how best should be done.

The OGP should use the Dynamic Purchasing System to procure construction professionals for the many public bodies that will need specialist service providers over the coming decade.

It is notable that the Office of Government Procurement – Ireland’s Centre of Procurement Excellence – is mentioned just once in the NDP; in relation to the proposed investment in the eTenders platform.

The NDP states clearly that all large-scale projects should continue to be assessed in terms of suitability for procurement by Public Private Partnership and/or alternative financing (by means of user charges for example). There is a commitment to look at a ‘new procurement option’ (whatever that might be) later this year. The construction sector/PPP industry does not like the Competitive Dialogue, so whatever new process is preferred in its place will be an improvement.

Many of the works procurements will be tendered by Ireland’s utilities. Is there scope to streamline and make these tender competitions less costly for potential contractors?

The National Planning Framework identified the transition to a low-carbon and climate-resilient society and achieving sustainable mobility as ‘vital’ strategic outcomes. Yet there is no mention as to how green procurement techniques that are deployed in every other Member State could be best used to reduce Ireland’s carbon emissions. For example, energy efficiency in buildings and transport solutions could be hugely influenced if sustainability award criteria were written into tender requirements.

DPER’s Infrastructure Projects Steering Group and the Construction Sector Working Group need to assess how best smart procurement techniques should be used to drive the wide portfolio of projects in the pipeline.

Procurement Under the Spotlight

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The EU Public Contracts Directive (Article 84) requires all contracting authorities (of which there are over 3,000 in Ireland) to prepare a written report after every tender competition, other than mini-competitions conducted under framework agreements.

This audit report should contain the following:

– The name of the buyer
– The subject matter and value of the contract
– The results of the pre-qualification process i.e. the names of the successful candidates with reasons provided for selection/non-selection
– Reasons for rejecting abnormally low tenders
– The name of the preferred bidder and the reasons for selecting their tender
– The name(s) of sub-contractors and the share of the contract to be sub-contracted
– Justification, where appropriate, for the use of the competitive dialogue/competitive procedure with negotiation
– Reasons for not awarding a contract or a framework
– An explanation for not using an electronic submission
– Measures taken to address potential conflicts of interest of the evaluators
– Reasons for not using lots
In addition, buyers must maintain records of internal deliberations, records of dialogue or other meetings and details about the preparation of the procurement documents, including the setting of selection and award criteria.

Over time these procurement audits will become an important source of insight for unsuccessful suppliers. These documents may be discoverable under the Freedom of Information Act.

The preparation of procurement audits is a significant additional layer of compliance for buyers.

Contracting authorities that need advices or support in relation to the preparation of these new procurement audit reports should contact us now.

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