Public Procurement Analysis

Of tick boxes and time bombs

Standardisation can sometimes yield considerable gains. In shipping for example, the use of intermodal freight containers in standard sizes allows for the seamless global transfer of goods. In the EU, the use of common product standards and mutual recognition of qualifications have helped the single market to develop, albeit to the detriment of bendy bananas. In procurement, standardised forms and nomenclatures (such as the Common Procurement Vocabulary) are long-established as tools of the trade, and technical specifications commonly refer to standards such as the EN and ISO families. This is particularly useful in a jurisdiction with 24 official languages.

However not all aspects of procurement are suited to standardisation. On the list of jobs most likely to be taken over by robots in the next 20 years, procurement officers rank 141st out of 366 roles, according to research by Oxford University and Deloitte. Solidly mid-table, but the same research indicates that any role which involves negotiation is unlikely to be computerised any time soon. Certain procurement tasks lend themselves to use of electronic systems, and in some cases automation – for example checking that bids have been submitted on time and are complete. Others, such as the assessment of service quality and understanding risk pricing, are likely to require human intelligence for the foreseeable future.

Where does the assessment of exclusion and selection criteria fit into this picture? For some, it is the most bureaucratic and routine aspect of procurement, and one which they would happily avoid. This was a view put forward strongly by businesses in the consultations preceding both the 2014 EU procurement directives and the UK's reform of below-threshold procurement in Part 4 of the Public Contracts Regulations (PCR 2015). It is also shared by some contracting authorities who see exclusion and selection criteria as a mere formality, meaning the use of standardised forms is welcome if it expedites the process. This view makes sense if bidders are either all equally reliable or all equally unreliable – or if it is impossible to determine their reliability prior to awarding them a contract. Contracting authorities would be better off allowing all prospective bidders through the selection stage, or using the open procedure.It can certainly be difficult to make the right decisions when selecting tenderers, but there are a number of reasons why contracting authorities may not wish to give up on this altogether. One is that the PCR 2015 give new scope to take important factors such as defective prior performance, compliance with environmental and labour law, supply chain management and conflicts of interest into account. These are the type of issues which create major headaches for public authorities when they arise in contracts, particularly high-value or high-profile ones. Some may argue that it is hard to elicit the type of information which allows such problems to be detected at selection stage – but this is much more difficult where excessive reliance is placed on standard forms and tick-boxes. The new rules seek to balance the right of contracting authorities to act on such information with the right of companies to 'self-clean' – but these powers can only be meaningfully exercised where both the specific expectations of the authority and the process for dealing with any apparent issues are set out in the PQQ.A second reason for not doing away with the selection stage altogether is that, properly run, it serves to reduce the pool of potential tenderers to a manageable number. This benefits bidders who then have a better chance of winning, and benefits contracting authorities who can evaluate bids from companies or groupings who are actually qualified to deliver the contract in question. Transaction costs on both sides are lower – because fewer unsuccessful tenders are prepared and evaluated. There is always some risk that overzealous reduction of numbers leads to good companies being excluded – thus the need to ensure that selection questions are relevant to the specific contract and that all requirements (including those related to turnover and previous experience) are proportionate.This brings me to the recent publication of the much-awaited European Single Procurement Document (ESPD) by the European Commission this month, and to the standard Pre-qualification Questionnaire (PQQ) published by the Crown Commercial Service in 2015 and due to be updated shortly. The ESPD deals with the mandatory and discretionary exclusion grounds, selection criteria and (optionally) criteria for reducing the number of qualified candidates. The standard PQQ is also designed to cover these stages, so at the moment there is some overlap between them. Under Regulation 95 of the Public Contracts Regulations (Article 95 of Directive 2014/24/EU) contracting authorities are obliged to accept the ESPD as preliminary evidence regarding compliance with exclusion and selection criteria – however they are able to request supporting documents at any time where needed to ensure the proper conduct of the procedure. The question is how much time and effort these standardised documents will save in practice. Considerable thought and expertise has gone into the drafting of both documents – but they also have the potential to create new legal, financial and technical risks in public procurement.The ESPD is a self-declaration which is to be completed in electronic format by companies wishing to express an interest in or submit a tender for a public contract. It is divided into six parts covering information about the contracting authority and procurement; information about the economic operator; compliance with exclusion grounds; information relating to selection criteria; information relating to criteria for reducing the number of qualified candidates; and concluding statements and signature.[1] Notably, all six of these sections make cross-references to the procurement documents, so a new ESPD will need to be completed for each procurement. While some answers could be copied over, the company will need to check that the information is still valid and relevant at the time of submitting the ESPD. Likewise, the instructions indicate that contracting authorities cannot just state that they will accept the ESPD, but must indicate which sections are to be completed and what information is required in relation to subcontractors.[2]The ESPD mirrors the provisions set out in Article 57-65 of Directive 2014/24/EU (Regulations 57-65 PCR 2015), and to that extent is relatively harmless/uncontroversial. However several questions arise on perusal of the standard form and accompanying instructions. The first is whether any matters dealt with in the ESPD can also be addressed in a PQQ. This would detract from the administrative expediency which is a primary object of the ESPD, but it may be necessary to ensure transparency, equal treatment of operators, and the proportionality of selection criteria applied. Transparency may be adversely affected due to the limited ability for contracting authorities to enter information in the ESPD, meaning multiple cross-references to the procurement documents/PQQ are needed. Equal treatment is at risk due to the indication that the ESPD does not need to be filled out in its entirety where an operator is registered on an official list or national pre-qualification system. This creates a two-tier system which is likely to favour domestic operators registered on such lists – problematic given that one of the statedobjectives of the ESPD is to facilitate cross-border procurement. Equal treatment is also at risk where the ESPD is relied upon in two-stage procedures without supporting documents being checked prior to the tender stage – as an operator may be admitted to the tender stage who does not in fact meet the relevant criteria.However perhaps the biggest challenge facing the ESPD, which is also my main criticism of the standard PQQ, is that it makes it more difficult for contracting authorities to apply exclusion and selection criteria which are relevant and proportionate to the specific contract. Attempting to rely upon a 'one-size-fits-all' document risks including certain criteria which are inappropriate. For example, the standardised PQQ only allows three previous contracts to be submitted, whereas a wider cross-section of contracts may help to demonstrate that SMEs or new entrants to a market meet the authority's requirements. On the other hand, if 'standard forms' are endlessly adaptable, they are less likely to cut down on the work which contracting authorities and economic operators need to do. For my money, I would rather spend some time developing or responding to a sensible set of questions which are specific to the contract at hand, rather than attempting to rely on imperfect standard documents. But then maybe I'm just trying to ward off the robots.[1] The lack of a common format for electronic signatures is one of the bugbears afflicting the ESPD. It asks for a signature only 'where required or necessary' – which it would be in most EU countries, but not all are likely to accept the same format.[2] At time of writing, the online 'ESPD service' referred to in Commission in Implementing Regulation 2016/7 remains shrouded in mystery, as does the question of whether and how this will interact with the existing (but not recently updated) e-Certis database. Article 61 of the Directive requires the use of e-Certis specifically.


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