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There is an increasing debate and indeed some concern amongst contracting
authorities and their potential tenderers over the use by public
bodies of general select or approved lists as a source from which
to identify potential suppliers to invite to tender for their contracts.
This concern is widespread where these lists are operated by private
sector organisations and/or require a payment from potential suppliers
and service providers for registration or accreditation. This guidance
seeks to help clarify the application of the relevant EU and UK
legislation and allied issues.
EC Treaty Principles
There may be nothing wrong in principle with a contracting authority
employing a private sector company to conduct its qualification/selection
procedures against the contracting authority’s predetermined
criteria or with a private sector undertaking providing a service
to one or more contracting authorities for the maintenance of information
about suppliers for them to cite when bidding for public contracts.
However, a contracting authority using such schemes must ensure
that they are conducted for an appropriate purpose and in accordance
with EC Treaty principles (transparency, equality of treatment,
proportionality and mutual recognition). If they discriminate between
undertakings, treat them unequally or lack transparency, they will
fall foul of the EC Treaty, never mind the EC Public Procurement
Directives. For contracts covered by the Procurement Directives,
such schemes must also be adapted to the procedures prescribed.
Questions may also arise as to whether a contracting authority
which requires potential suppliers to use such services is effectively
entering into a contract with the service provider by promising
exclusivity in exchange for the availability of the service. Depending
on the terms that might be a contract covered by the Services Directive
as a Part A service contract or a service concession to which the
Directive would not apply. Whichever may be the case, the authority
will be obliged to comply with the general principles of the EC
Treaty as a minimum. These Treaty principles apply even for contracts
that have a value below the EC Directives thresholds or for those
excluded from the full application of the procedures laid down in
the Directives, such as Part B services and service concession contracts.
In the Telaustria concession case, for example, the European Court
of Justice (ECJ) stated that “the obligation of transparency
which is imposed on the contracting authority consists in ensuring
for the benefit of any potential tenderer, a degree of advertising
sufficient to enable the services market to be opened up to competition
and the impartiality of procurement procedures to be reviewed.”
In its consultation paper on the setting up of Public Private Partnerships
the European Commission considers that the rules resulting from
the relevant provisions of the EC Treaty can be summed up in the
following obligations:
• fixing of the rules applicable to the selection of the
private partner;
• adequate advertising of the intention to award a contract/concession
and of the rules governing selection in order to monitor impartiality
throughout the procedure;
• introduction of genuine competition between operators with
a potential interest and/or who can guarantee completion of the
tasks in question;
• compliance with the principle of equality of treatment
of all participants throughout the procedure, ie selection on the
basis of objective, non-discriminatory criteria.
Contracting authorities should therefore carefully consider seeking
competition before they enter into any agreement with a private
sector company for any provision of an accreditation or supplier
list service, especially one which they intend to promote as their
preferred source of suppliers. As discussed later, however, authorities
must not restrict tenderers to only those suppliers listed or accredited
to such services.
Official Lists
With regards to national official list registration requirements,
the ECJ has held that ‘foreign’ undertakings cannot
be required to register on national ‘official lists’
whereas indigenous undertakings can be.
This appears to be reflected in the new Consolidated Directive
at Article 52. The principle of ‘home country registration’
has to be recognised and taken at face value. On the other hand,
there is reason to believe that the European Commission suspects
that, in one or two Member States, official lists are misused to
discriminate in favour of national suppliers. This perception seems
to explain why the Commission refused to bring forward proposals
for extending the scope of ‘qualification systems’ from
the utilities sector to the public sector.
Indeed, an accreditation scheme would almost certainly be vulnerable
to challenge if it involved an additional hurdle or disproportionate
costs for foreign suppliers.
However, if the same rules are applied for registration/accreditation
to both national and foreign suppliers it might be arguable on the
basis of the facts that the scheme treats them equally. It might
even be arguable that such a scheme could be beneficial to both
national and foreign suppliers by comparison with the conventional
approach envisaged in the Directives.
The conventional approach means an appropriate time limit within
which to provide relevant documentary evidence, examination of the
evidence to establish compliance with the contracting authority’s
minimum qualification requirements and, under selective procedures
(restricted, negotiated, competitive dialogue), selection of the
undertakings to be invited to participate.
A private accreditation scheme might well serve the purposes of
establishing whether undertakings meet a contracting authority’s
minimum requirements but it would need to be fairly sophisticated
to serve the purposes of tenderer selection as well. On the other
hand, there would potentially be a problem if the accreditation
scheme was disproportionate to the subject of the contract(s) or
took so long so as effectively to exclude any candidate not already
registered. There is no express provision to that effect, however,
even where the Directives apply.
Setting Criteria
The EC recognises that within the parameters
of the evidence that may be required and the nature of the award
criteria permitted by the Directives a contracting authority is
free to define its selection and award criteria, provided this choice
does not result in restricted access to the contract in question
to the detriment of tenderers from other Member States or in breach
of other Treaty principles. These Treaty principles apply to all
public contracts, irrespective of whether they fall within or without
the scope of application of the Public Procurement Directives. They
also apply to any conditions that will apply to the performance
of a contract.
EC Selection Process
The objective of the selection process is to identify those candidates
considered by the contracting authority to be capable of executing
the contract and, in selective procedures, to select those to be
invited to tender. Therefore, the different requirements must have
a direct link to the subject matter or the execution of the contract
at stake.
The EC Service Directive (92/50/EEC) indicates expressly that evidence
of the service provider’s technical capacity may be furnished
by various exhaustively defined means according to the nature, quantity
and purpose of the services to be provided.
As stated above, it would be extremely difficult for an accreditation
service to ensure that, on each occasion a contracting authority
used its services to identify potential tenderers, the accredited
suppliers had been assessed and approved in accordance with the
subject matter of that specific contract.
EC Award Process
The common factor shared by all award criteria used for the evaluation
of tenders is that they must concern the nature of the goods or
services to be provided, the work to be carried out or the manner
in which it is done. The criteria applied should give the contracting
authority limited discretion to compare objectively the different
tenders and to accept the most advantageous on the basis of objective
criteria such as those listed by way of example in the Directives.
Unless price is the sole criterion, the objective of this assessment
is to establish which tender best fulfils the needs of the contracting
authority in relation to the consideration payable and costs of
acquisition. Therefore, the function of the award criteria is to
assess the intrinsic quality of the tenders and the award criteria
have to be linked to the subject matter of the contract.
Rules for Selection of Candidates
The rules laid down in the Public Procurement Directives consist
of three different types.
The first set of rules concerns the grounds that justify a candidate’s
exclusion from participating in a public contract. These relate,
for example, to a state of bankruptcy, conviction for offences,
grave professional misconduct, and non-payment of social security
contributions or taxes.
The second set of rules concerns a candidate’s financial
and economic standing.
The third set of rules concerns a candidate’s technical capacity.
These rules also enable, to a certain extent, environmental considerations
to be taken into account, by defining, for example, a minimum level
of equipment or facilities guaranteeing the correct execution of
the contract.
The new Consolidated Directive specifies that the information required
for evidence of an operator’s financial and economic standing
as well as for technical capacity must be related and proportionate
to the subject matter of the contract.
Accreditation service providers may accredit suppliers etc on a
wider range of criteria, some of which may not be relevant to a
contracting authority’s specific contract or may not be appropriate
to consider at the selection stage. In such instances the contracting
authority cannot rely on the accreditation given and will have to
disregard extraneous elements and evaluate all potential suppliers
against only those elements permitted in relation to the contract;
thus potentially rendering such accreditation services of limited
value.
For contracts covered by the EC Procurement Directives a list provider
should only provide information of a type specifically set out in
the Procurement Regulations, covering personal, economic and financial
standing and technical capacity. Any accreditation status should
be determined by sole reference to these areas.
In the Utilities sectors, contracting entities dispose of a wider
margin of appreciation for the assessment of the capacity of candidates
or tenderers, in so far as Directive 93/38/EEC only requires that
objective rules and criteria are applied which are defined beforehand
and are put at the disposal of interested candidates or tenderers.
Contracts not Covered by the Procurement Directives
For contracts not covered by the Public Procurement Directives,
the detailed rules stemming from the Directives do not apply. Indeed
Community law leaves it to the Member States to decide whether or
not public procurement not covered by the Community Directives should
be subject to national procurement rules.
Within the limits set by the EC Treaty and Community law, Member
States are free to adopt their national legislation. It will therefore
depend on national legislation whether public procurement may, or
even shall, be used to fulfil objectives other than ‘best
value for money’, subject to the single market objectives
of the Treaty. When defining the subject matter of such a contract,
a broad range of requirements and conditions may be imposed, even
if these conditions and requirements do not have a direct link to
the basic subject of the contract.
Of course, these requirements and conditions must observe the rules
of the EC Treaty and the principles flowing from the Treaty. Thus,
the ECJ has held that inclusion of clauses referring to national
standards or specific origin in an invitation to tender may cause
economic operators who produce products equivalent to products certified
as complying with the national standard to refrain from tendering.
If measures impose more rigorous rules on a national of one Member
State, or put him in law or in fact in a less favourable position
compared with a national of the Member State imposing the measure,
these measures could infringe the Treaty rules on free movement
of goods and services.
As regards the qualification of candidates, purchasing authorities
are free to impose requirements and define conditions that go beyond
what is possible under the Public Procurement Directives. The criteria
need not be limited to the financial and economic situation of a
candidate, or to his technical capacity and ability. Of course,
the requirements for qualification have to be compatible with Community
law and Community law principles, notably the rules and principles
relating to the free provision of services, such as non-discrimination
and mutual recognition.
For the evaluation of tenders, award criteria may be defined freely
by a purchasing authority, as long as the Treaty rules and Community
law principles are observed, and the criteria remain objective,
transparent and non-discriminatory.
The question of whether the EC Treaty rules or the principles of
Community law are observed depends on a case-by-case assessment.
Approved Supplier Lists
The UK does not have official lists, but subject to local government
legislation contracting authorities may maintain lists of approved
suppliers as an aid to calling for competition, approving candidates
and expediting the selection of tenderers.
Questions may arise when contracting authorities insist that suppliers
register on some form of supplier information database, if this
is the only evidence they will accept from potential candidates
and tenderers for their contract opportunities.
Two overriding principles must be applied:
• When contracts are covered by the EC Directives inclusion
on any list MUST NOT automatically pre-qualify any firm so that
they can simply be invited to tender – firms must respond
to the advertisement if they wish to be considered. Nor may a supplier
be excluded from tendering because it is not registered on any list
other than an official list, which does not apply in the UK.
• Where the EC Procurement Directives do not apply then authorities
may choose to use a list to help identify candidates to invite to
tender. However, it should be remembered that Treaty principles
of equality, transparency and freedom of movement apply even where
the Directives themselves do not. The ECJ has held in a number of
cases that there has to be an appropriate call for competition in
the interest of transparency to demonstrate compliance with the
fundamental requirement for non-discrimination.
Accordingly, contracting authorities cannot simply select tenderers
from their approved lists, even for contracts below the thresholds
of the Directives.
Contracting authorities should therefore give careful consideration
as to the merits of seeking to use an accreditation service to select
candidates given that others must also be allowed to express their
interest to tender. Tenderers may also question the worth of paying
fees for accreditation if it provides little benefit. However, they
may determine that, where they are repeatedly applying to tender
for contracts from an authority that uses the services of an accreditation
broker, pre-accreditation offers value for money.
Open Access
Although the UK does not operate official lists,
it is interesting in this context that Article 52 provides that
“economic operators from other Member States may not be obliged
to undergo registration [on an official list] or certification in
order to participate in a public contract” and that, where
official lists do exist, “economic operators may ask at any
time to be registered in an official list or for a certificate to
be issued. They must be informed within a reasonably short period
of time of the decision of the authority drawing up the list or
of the competent certification body.”
It would seem, by analogy, that any delay in registration which
had the effect of excluding a candidate from the contract for which
accreditation was required would be unacceptable.
Other Analogies
According to Article 33(4): “Contracting authorities shall
give any economic operator, throughout the entire period of the
dynamic purchasing system, the possibility of submitting an indicative
tender and of being admitted to the system under the conditions
referred to in paragraph 2. They shall complete evaluation (against
both selection and award criteria) within a maximum of 15 days from
the date of submission of the indicative tender. However, they may
extend the evaluation period provided that no invitation to tender
is issued in the meantime.”
Thus evaluation of applications to participate in a dynamic system
has to be undertaken quickly and before the system is used.
Similarly, the Utilities Directive provides for the establishment
and operation of a system of qualification:
• Article 49(3): “Contracting entities which establish
and operate a system of qualification shall inform applicants of
their decision as to qualification within a period of six months.
If the decision will take longer than four months from the presentation
of an application, the contracting entity shall inform the applicant,
within two months of the application, of the reasons justifying
the longer period and of the date by which his application will
be accepted or refused.”
• Article 53(1): “Contracting entities which establish
or operate a system of qualification shall ensure that economic
operators are at all times able to request qualification…It
shall be operated on the basis of objective criteria and rules for
qualification to be established by the contracting entity.”
• Article 53(6): “Where a contracting entity considers
that the qualification system of certain other entities or bodies
meets its requirements, it shall communicate to interested economic
operators the names of such other entities or bodies.”
Thus, the Utilities Directive envisages:
• that qualification systems might be of indefinite duration
(as opposed to being for the purposes of awarding a particular contract);
• that undertakings can apply at any time following publication
of a notice; and
• that they must be told within two months if the contracting
entity will need more than four months to reach a conclusion.
The implication is that, under the Public Procurement Directives,
an accreditation system taking two or three months in relation to
a specific contract would be considered to be unreasonably drawn
out. It would be particularly vulnerable to challenge if that had
the effect of precluding tenders and thus of favouring known undertakings.
Fees
Another even greater problem, however, might be the disproportionate
cost for new undertakings seeking qualification for a particular
contract by comparison with the spread cost for repetitive candidates.
Much might depend therefore on whether the cost of accreditation
for a series of contracts significantly exceeds the normal cost
of qualifying for one of them. There would be another cause for
concern if a company offering accreditation services to undertakings
purported to secure favoured treatment from contracting authorities
rather than acting as a means of securing equal treatment.
Do remember that the Local Government Act 1988 precludes authorities
covered by the Act charging for inclusion on a select list.
The Office of the Deputy Prime Minister has issued guidance stating
that where an authority contributes to the design or contents of
such a list, for example by contributing to the decision as to who
is to be registered on the list or to the criteria determining registration,
then there is a possibility that this could be construed as ‘maintaining’
a list and so fall within the scope of Part II of the 1988 Local
Government Act. In these latter circumstances, where local authorities
have required contractors to appear on such a list, it will not
be appropriate for a charge to be made for inclusion on such a list.
Notwithstanding the above, guidance and rulings on the interpretation
of the Directives and the EC Treaty are continually being developed
by the Commission and ECJ. Therefore, on the issues raised herein,
both the Commission and the Court might take a more restrictive
view.
Summary
1 The use of an accreditation service by a contracting authority
to help identify potential suppliers is permitted provided accreditation
is set against criteria specific to the contract opportunity.
2 Any contract, concession or other agreement entered into by a
contracting authority with a select list or accreditation service
provider should first be subject to competition in accordance with
the EC Treaty and, where applicable, the EC Directives.
3 Local authorities must not directly contribute to the content,
operation, design or management of fee-based selection or accreditation
services. Nor may they charge for inclusion in their supplier lists.
4 The presence of a firm on a list or a supplier accreditation
database must not automatically mean that it should be invited to
tender.
5 The absence of a contractor from a list or a supplier accreditation
database must not preclude that potential contractor from consideration.
6 The ability to seek accreditation must constantly be open to
all.
7 The time taken to process accreditation must not preclude suppliers
from any tender opportunity.
8 For contracts covered by the EC Procurement Directives, all elements
of accreditation must be relevant to the specific contract matter
on each occasion and both selection and award criteria must be linked
to the subject matter of the contract.
9 Contracting authorities should not effectively delegate the
selection of tenderers to the list/accreditation service providers.
10 Payment must not be disproportionate for new undertakings seeking
qualification for a particular contract by comparison with the spread
cost for repetitive tenderers.
Caution: The above is meant as general guidance only and should
not be used as the basis for any decision without first seeking
legal advice.
Select and NHS-sid
Select and NHS-sid are aimed at rationalising the management of
pre-qualification data during the procurement process, thereby reducing
the administrative burden on potential suppliers to the public sector
and the NHS. Select and NHS-sid seek to minimise any replication
of effort for the benefit of suppliers, with NHS-sid operating in
accordance with the NHS Purchasing and Supply Agency (PASA)’s
stated ‘once only’ principle to minimise duplication
of effort for the benefit of both the NHS and its suppliers.
Accordingly, managing commercial information electronically via
Select and NHS-sid will reduce the costs to businesses providing
this data; improve speed and efficiency; and establish a single
source of uniform supplier information.
Select and NHS-sid are free of charge to use for suppliers and
buyers, with NHS-sid being funded centrally by NHS PASA.
The systems are secure and can be accessed via various procurement
portals; however, only authorised public sector personnel may access
supplier data. Similarly, suppliers’ use of the systems is
restricted to their own data. The combination of these factors and
other system checks ensures the security of your commercial information.
Select can be accessed through various official portals, including:
• Delta-ets: www.delta-ets.com
• Society of Procurement Officers in Local Government:
www.sopo.org
• London Contracts and Supplies Group: www.lcsg.org
• Central Buying Consortium: www.cbconline.org.uk
• Government Opportunities: www.govopps.co.uk
NHS-sid can be accessed through the official NHS PASA website:
• NHS-sid: www.pasa.nhs.uk/sid
Note: The registration and publication of a company profile on
NHS-sid does NOT mean or imply that the supplier has in any way
been vetted or approved by NHS PASA.
Suppliers wishing to compete for advertised NHS contracts must
respond to any call for competition by submitting a separate Expression
of Interest.
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