Public procurement relates to the purchase of goods, services and/or works by public bodies, bodies governed by public law and entities operating in the utilities sector (contracting authorities).
What is the applicable legislation?
If the value of the goods, services or works is above a certain threshold, the procurement is generally regulated by one of three directives:
- The Procurement Directive (Directive 2014/24/EU) on public procurement is the most commonly applicable directive and regulates the award of public sector contracts for services, supplies, and works. This is implemented in Ireland by the European Union (Award of Public Authority Contracts) Regulations 2016 (S.I. No. 284/2016).
- The Utilities Directive (Directive 2014/25/EU) regulates procurement procedures of contracting authorities operating in the water, energy, transport, and postal service sectors. This is implemented in Ireland by the European Union (Award of Contracts by Utility Undertakings) Regulations 2016 (S.I. No. 286/2016).
- The Concessions Directive (Directive 2014/23/EU) relates to concession contracts. This is implemented in Ireland by the European Union (Award of Concession Contracts) Regulations 2017 (S.I. No. 203/2017).
The Directives specifically govern how contracting authorities interact with interested third parties and the manner in which contracts must be advertised, tenders evaluated and contracts awarded.
Each of these regimes also has another Directive that sets out the remedies available for breach of the applicable procurement rules.
Guidelines and circulars
Irish contracting authorities are also subject to a series of public procurement guidelines and circulars issued by the Irish Government which similarly lay down how a procurement process should be run. If the value of the goods or services to be procured is below the applicable value threshold, a procurement process will fall outside the ambit of the Directives, but will still be subject to the guidelines and circulars.
EU principles
The principles enshrined in the EU Treaty, such as those of non-discrimination, transparency, equality and proportionality, apply if a contract to be awarded has a European dimension. A contract may fall outside the ambit of the Directives because it does not meet the value thresholds, but still be subject to the principles of EU law.
What are the value thresholds?
The value thresholds set out in the Directives are broken down by reference to what exactly is to be purchased and are revised from time to time. The Procurement Directive value thresholds are currently
- €5,538,000 for works
- €143,000 for services or supplies procured by central government authorities such as government departments,
- €221,000 for services or supplies procured by other public bodies, and
- €750,000 for certain “light-touch” services.
The Utilities Directive and Concessions Directive also have distinct thresholds.
Advertising contracts
If the Directives apply, a contracting authority is generally required to publish a contract notice in the EU Official Journal advertising the goods or services it wishes to procure. The particular information to be included in a contract notice is laid down by EU law. It includes the selection and award criteria, and certain other information relating to the contract to be awarded.
The completion of the contract notice is important as its content lays down the foundation for the entire procurement process. The notice also needs to be drafted carefully to ensure compliance with the EU law principles, particularly those of transparency, non-discrimination and equal treatment. Even if a contract fall outside the ambit of the Directives, for instance if the value is below the applicable value threshold, contracting authorities may still be required under EU law to advertise a contract. If the value of a contract is such that it may interest suppliers outside Ireland, advertising may have to go beyond national advertising even if the Directives do not apply. In such an event, the same information should be provided simultaneously in national and international advertisements in order to ensure equality of treatment and non-discrimination. This can be achieved in a cost-efficient manner by publishing a non-mandatory contract notice in the EU Official Journal.
A contracting authority must allow a specified minimum number of days for interested parties to respond to the contract notice. In this way, parties in all Member States are given an equal opportunity to bid for and win the contract to be procured. In certain prescribed circumstances, the time which must be allowed to respond to a contract notice, and some of the other applicable timelines laid down by the Directives, may be reduced; thus enabling the procurement process to be accelerated.
Award criteria
A contracting authority may choose the winning tender only on the basis of the “most economically advantageous” tender. This can be on the basis of cost alone or on the basis of a combination of cost and quality criteria.
Any cost evaluation must use a cost-effectiveness approach, such as life cycle costing. Award criteria must in all cases be linked to the subject-matter of the contract in question. They may comprise, for instance:
- Quality, including technical merit, aesthetic and functional characteristics, accessibility, design for all users, social, environmental and innovative characteristics, and trading and its conditions
- Organisation, qualification and experience of staff assigned to performing the contract, where the quality of the staff assigned can have a significant impact on the level of performance of the contract, or
- After-sales service and technical assistance, delivery conditions such as delivery date, delivery process, and delivery period or period of completion
The contracting authority must set out, in the contract notice or contract documents, all the award criteria which it will take into account in awarding the contract and the weighting to be given to those award criteria.
What are the different types of tendering procedures?
The Procurement Directive and Utilities Directive allow a contracting authority to put a contract out to tender using one of a number of distinct competitive procedures, namely the open or restricted procedures, which contracting authorities are free to choose, or the competitive dialogue or competitive procedure with negotiation which can generally only be used in specified exceptional circumstances. The Concessions Directive offers a more flexible approach and does not contain any prescribed procedures.
Choosing the correct tendering procedure at the outset of a tendering process can prove critical. This is because a contracting authority cannot change from one competitive procedure to another without restarting the entire process once it has been initiated. Under the open procedure, any interested party can submit a tender. Conversely, under the restricted procedure, any interested party may request to participate; however, only those invited to do so may submit a tender.
The competitive procedure with negotiation and the competitive dialogue procedure allow a contracting authority a greater degree of flexibility than is present in an open or restricted procedure. In the competitive procedure with negotiation, a contracting authority consults with entities of its choice and negotiates the terms of the contract with them. Under the competitive dialogue, any interested party may request to participate. The contracting authority then conducts a dialogue with the admitted candidates with the aim of developing one or more suitable solutions capable of meeting its requirements. The contracting authority then invites the chosen candidates to submit a tender on the basis of the developed solutions.
Generally, a contract notice is supplemented by a detailed document, known as an invitation to tender or request for tenders. This document elaborates upon the contracting authority’s needs. It also sets out the rules governing the process and contains important legal provisions relating to, for example, exclusions of liability or termination of the process.
Selection
As those who respond to the publication of a contract notice may not be suitable, all four award procedures permit a process of selection in order to eliminate candidates which do not satisfy minimum standards.
First of all, the contracting authority establishes that the candidates do not fall within a number of proscribed circumstances relating to the candidates personal situation. Normally, candidates make a statutory declaration to the effect that they do not fall within the exclusion criteria.
Then, the contracting authority considers whether the candidates satisfy certain published selection criteria. In the case of the Procurement Directive, these relate to the economic and financial standing of the candidate and the technical and professional ability of the candidate. In essence, these two sets of criteria act as a threshold which a candidate must cross prior to the contracting authority considering the candidate’s ability to perform the contract.
Evaluation
Under all procedures, the contracting authority evaluates the tenders and awards the contract to the tenderer who satisfies the selection criteria and whose tender best satisfies the award criteria. The selection criteria are not considered when deciding which tender best satisfies the award criteria.
Information to unsuccessful tenderers and the standstill period
The Directives require contracting authorities to inform unsuccessful bidders of the reasons for the rejection of their tenders at the time of the award decision. The contracting authority must then wait to sign the contract until the end of the “standstill period”. This will be 14 calendar days, given that all standstill letters are now sent electronically.
The standstill letter should contain the full legal name of the successful tenderer, the respective scores of the successful tenderer and tenderer being debriefed, the characteristics and relative advantages of the successful tender, and the exact standstill period.
In setting out the characteristics and relative advantages, the contracting authority must give a bespoke statement of reasons, which must at least mention the matters which should have been included in the applicant’s tender or the matters which were included in the successful tender and which must be sufficiently precise to enable the tenderer to ascertain why they lost. For more insights on debriefing requirements, please see our vlog.
Often, the standstill letter is the first time that unsuccessful tenderers become aware of an infringement. There are strict timelines for launching procurement proceedings, this is normally 30 days – it is very rarely extended. This means it is vital to seek legal advice as soon as possible once an issue is identified.
For more information on bringing a procurement complaint and the considerations and process involved, please see our Practical Guide to Procurement Challenges.
The content of this article is provided for information purposes only and does not constitute legal or other advice.