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Centralised purchasing bodies and publiccontracts registers: function in practice,benefits and competition concerns
Dr Albert Sanchez-GraellsERA Annual Conference on European Public Procurement Law 2016, Trier, 14-15 April 2016
14 April 2016
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Agenda• Provide an overview of developments on
centralised and joint procurement: the push for collaborative procurement
• Provide background discussion on future developments on contracts registers
• Assess competition implications of both developments of EU public procurement law
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Centralisation of public procurement• An exploding trend in public procurement?
• European Commission (DG Grow), Indicators on public procurement performance in the MS (2016)
• Indicator [3]: Aggregation; this indicator shows how often public buyers buy together. … Aggregation measures the proportion of procedures with more than one public buyer
[http://ec.europa.eu/internal_market/scoreboard/performance_per_policy_area/public_procurement/index_en.htm]
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[3] Aggregation 10% or more Less than 10%
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Centralisation of public procurement
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What is the Commission working on?• Public Procurement Strategy
• Facilitating the aggregation of demand• ‘intends to support the dissemination of good practice and
promote the use of innovative procurement by CPBs and other forms of aggregation of demand’[http://ec.europa.eu/growth/single-market/public-procurement/strategy/index_en.htm]
• Work-in-progress on an Action Plan on cooperative procurement (not officially adopted)
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Discussion of the new rules in Arts 37 – 39 of Directive 2014/24• Centralised procurement [Art 37, Art 39]
• Clear emergence of two models of CPB + leeway for Member States to reject (one but not both)
• Joint procurement [Art 38]• Relationship with Art 12 of Directive 2014/24
(public-public cooperation and in-house provision)• Cross-border procurement [Art 39]
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A legal utopia or a practical dystopia?
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CPB1 MSA
CPB2 MSB
CA1 MSA
CA2 MSA
CA3 MSB
CA4 MSB
Sup1 MSA
Sup3 MSC
Sup2 MSB
(R3)
FWA
(R1)
(R2)
(R3)
(R4)
(R4)
Member State A Member State BMS C
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What economic implications derive from centralised public procurement?• Unclear net effects (more actual efficiency?)• Distribution of public funds/rents (financing CPBs
through kick-backs still to be identified as an issue, but potentially problematic)
• Better service for contracting authorities?• A Frankenstein waiting to wake up?
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What implications from a competition law and State aid perspective?• Subjection of CPBs to competition (likely?)
• FENIN, C-205/03 P, EU:C:2006:453 • ’there is no need to dissociate the activity of purchasing
goods from the subsequent use to which they are put’• EasyPay, C-185/14, EU:C:2015:716
• ’in order to avoid classification as an economic activity, that activity must, by its nature, its aim and the rules to which it is subject, be inseparably connected with …’
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What implications from a competition law and State aid perspective?• Difficulty justifying reservation of activity +
funding given to CPBs, if indirectly, State aid?• Can this be an SGEI?• What standard applies?
• Altmark Trans, C-280/00, EU:C:2003:415• Spezzino, C-113/13, EU:C:2014:2440• Germany v Commission (Zweckverband
Tierkörperbeseitigung), C-446/14 P, EU:C:2016:97ERA Annual European Public Procurement Conf 2016
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Public Contract Registers• The Commission has committed to full-fledged
action in this area as part of the Oct 2015 Strategy for the Upgrading of the Single Market [COM(2015) 550 final]• Needs to be implemented by 2017-2018• How is this different from transparency and reporting
obligations under Art 84 of 2011 Proposal?
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Public Contract Registers• Purpose
• ‘to improve the transparency and quality of national procurement systems … by the establishment of contract registers covering the whole life cycle of contracts and by supporting the development and deployment of a data analytics and anomaly-detection tool to better uncover existing or prospective procurement irregularities’
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Some characteristics of existing central procurement registers in Member States• Fully accessible on-line, including copies of
contracts and full conditions applicable to procurement
• Some prevent payment of any invoices unless contract is published, including direct awards
• Managed by CPB or CPB-connected entities
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Are central procurement registers working?• Information is inputted in different ways, but
generally there is significant divergence on the actual level of detail of information
• So far, there are efforts to ensure its tractability as big data, but there are still difficulties
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What are the competition law implications• Put simply, such central procurement registers
are an invitation to cartellisation and generate excessive transparency
• Most information is not necessary and, if it was disclosed through a private platform, would clearly be prosecuted by competition authorities
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A tentative example – Portugal
• National database of public contracts[http://www.base.gov.pt/Base/pt/Homepage]All contracts available in full
Recently sanctioned a cartel in the School construction market (prefab modules for Schools)[see discussion in http://www.telles.eu/blog/2015/8/14/portuguese-competition-authority-fines-cartel-operating-in-public-procurement]
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Coincidence?
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What is the alternative?• Targeted disclosure
• A system based on enabling or targeted transparency, whereby each stakeholder gets access to the information it needs for a specific purpose
• Specific proposals to create granularity in disclosure rules is available at http://www.howtocrackanut.com/blog/2015/09/why-are-public-contracts-registers.html
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Thank you for your attention
Be in [email protected]://howtocrackanut.com@asanchezgraells
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Further reading – Centralisation • A Sanchez-Graells & I Herrera-Anchustegui, ‘Impact of Public Procurement
Aggregation on Competition: Risks, Rationale and Justification for the Rules in Directive 2014/24’, in R Fernández Acevedo y P Valcárcel Fernández (eds), Centralización de compras públicas (Madrid, Civitas, 2016) 129-163. http://ssrn.com/abstract=2534496.
• A Sanchez-Graells & I Herrera-Anchustegui, ‘Revisiting the Concept of Undertaking from a Public Procurement Law Perspective – A Discussion on EasyPay and Finance Engineering’ (2016) 37(3) European Competition Law Review 93-98, http://ssrn.com/abstract=2695742.
• A Sanchez-Graells, Collaborative Cross-Border Procurement in the EU: Future or Utopia? (2016, work-in-progress) http://ssrn.com/abstract=2734123.
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Further reading – CPBs and State aid• A Sanchez-Graells, 'The Commission’s Modernization Agenda for Procurement
and SGEI', in E Szyszczak & J van de Gronden (eds), Financing Services of General Economic Interest: Reform and Modernization, Legal Issues of Services of General Interest Series (The Hague, TMC Asser Press / Springer, 2012) 161-181, http://ssrn.com/abstract=2071655.
• A Sanchez-Graells, ‘Competition and State Aid Implications of Spezzino (C-113/13): The Scope for Inconsistency in Assessing Support for Public Services Voluntary Organisations’ (2016) 11(1) European Procurement & Public Private Partnership Law Review 31-38, http://ssrn.com/abstract=2625166.
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Further reading – Central Registries • A Sanchez-Graells, The Difficult Balance between Transparency and
Competition in Public Procurement (2013) http://ssrn.com/abstract=2353005. • Anderson, Kovacic & Müller, Promoting Competition and Deterring Corruption
in Public Procurement Markets: Synergies with Trade Liberalisation (2016), http://e15initiative.org/wp-content/uploads/2015/09/E15-Competition-Anderson-Muller-Kovacic-Final.pdf
• A Sanchez-Graells, How to Crack a Nut Blog• Why are public contracts registers problematic? http://www.howtocrackanut.com/
blog/2015/09/why-are-public-contracts-registers.html • What level of transparency for call-off decisions within framework agreements? http
://www.howtocrackanut.com/blog/2015/06/what-level-of-transparency-for.html ERA Annual European Public Procurement Conf 2016
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