All change in public procurement

28 March 2012
It’s all change in public procurement. The wide range reforms proposed by the European Commission, expected to result in a new directive by 2014, make fundamental changes to the way in which public purchasers will go about their daily lives. The latest announcement from the Commission is focused instead on seeking to open up other worldwide procurement markets to EU economic operators. Only 25 per cent of procurement markets are open to competition in the same way as the European model and this relationship is governed through the World Trade Organization Government Procurement Agreement (GPA) and a mish-mash of other trading agreements between different countries. This has led to a piecemeal approach to procurement across the world. The Commission's new Regulation seeks to encourage a more consistent approach through setting out the EU's commitment to open trade, and imposing sanctions on non-EU countries where there is "repeated and serious discrimination" against European suppliers –including a mechanism to restrict access to the EU market – if the country does not open up its procurement markets. The instrument is to be welcomed as finally starting to grasp the nettle on maximising opportunities for EU businesses, particularly in fast developing economies in Brazil, Asia, Russia and India. But its effectiveness remains to be seen. It also does not help EU authorities with the thorny practical questions about how to ensure equality of treatment and non-discrimination for non-EU bidders who often do not fully understand the rules or the process. The headline-grabbing aspect of the measure is that the Commission may approve that contracting authorities can exclude tenders comprising a significant part of foreign goods and services, for contracts above €5 million and where these contracts are not covered by existing international agreements. Not quite a protectionist measure, but could well result in complaints and possible legal action from key exporters, including China (which it is reported is unlikely to join the GPA at this stage). We live in interesting times. ☛ David Hansom is a partner and head of the procurement team at Veale Wasbrough Vizards
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