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.
Senior Procurement Consultant