27 January 2014 | Will Green
The overhaul of public sector procurement directives agreed by the European Parliament has been broadly welcomed.
Political parties and trade bodies have been positive about how the changes will encourage more SMEs and public sector mutuals to bid for contracts while putting more emphasis on social and environmental impacts in the tendering process.
However, concerns have been expressed the social criteria do not go far enough, while problems around abnormally low tenders in construction contracts have not been addressed.
Governments have two years to transpose the directives into law but the UK government has said it will seek to do this “quickly”.
Cabinet Office minister Francis Maude said there were already more than 80 mutuals in existence providing more than £1 billion worth of services, while the changes could cut SMEs’ bidding process costs by 60 per cent.
He said: “The changes will help encourage more public sector mutuals to spin out by protecting the newest from full EU competition rules.
“EU rules used to make it hard for government to exclude suppliers with a poor performance record and so it’s good news that the changes will make it easier for us to manage contracts effectively.”
Catherine Stihler MEP, Labour's European spokesperson on public procurement, said: “If these measures are implemented correctly we will see a much more sustainable approach to procurement that will encompass our social and environmental goals."
Jürgen Creutzmann MEP, of the Alliance of Liberals and Democrats for Europe, said: "The new rules will make public procurement easier, more modern and transparent, and curb corruption and nepotism. Companies have now better opportunities than ever to take part in public tenders all over in Europe. We have successfully fought to divide large contracts into smaller lots. This helps especially SMEs who create most of the jobs in Europe."
Peter Holbrook, chief executive of Social Enterprise UK, said the changes could “rebalance the markets”.
“These new EU rules are good news for society – they recognise that public service markets don’t always put people first,” he said.
However, while the European Construction Industry Federation welcomed the removal of red tape and increased support for SMEs, it said the changes were a “missed opportunity” to address the problem of firms submitting abnormally low tenders.
Director general Ulrich Paetzold said: “We regret that the EU legislators seem to underestimate the negative consequences of abnormally low tenders on quality and sustainability to the detriment of both the public authorities and serious, law-abiding private companies. Cheap can prove to be very expensive in the end.”
The GMB union was generally positive about the overhaul but expressed concern about “back-door privatisation”.
European officer Kathleen Walker Shaw said: “We are disappointed that the final text of the directive still allows authorities to buy the cheapest rather than the most socially and environmentally sustainable option – despite calls from GMB and the European Parliament to remove lowest cost criterion. The final compromise wording for awarding tenders is now less clear. Although life-cycle costing provisions have been improved, the social externalities cannot be taken into account in life-cycle assessment, which GMB sees as a flaw and missed opportunity.”