The European Procurement Rules
The European Union (EU) procurement directives, and the Regulations that
implement them in the UK, set out the law on public procurement. Their
purpose is to open up the public procurement market and to ensure the free
movement of goods and services within the EU.
The rules apply to purchases by public bodies and certain utilities which are
above set monetary thresholds. They cover all EU member states and, as a
result of international agreements, their benefits also extend to a number of
other countries worldwide.
Where the regulations apply, contracts must be advertised in the Official
Journal of the EU and there are other detailed rules that must be followed.
The rules are enforced through the courts, including the European Court of
The purpose of the EU procurement rules is to open up the public
procurement market and to ensure the free movement of goods and services
within the EU. In most cases they require competition. The EU rules reflect
and reinforce the value for money (vfm) focus of the government's
procurement policy. This requires that all public procurement must be based
on vfm (defined as the optimum combination of whole-life cost and quality to
meet the user's requirement) which should be achieved through competition,
unless there are compelling reasons to the contrary.
The Directives have been implemented into national law in the UK by
Regulations. Revised Regulations came into force on 31 January 2006 to
implement new procurement Directives. These new Directives clarify, simplify
and update the previous regime and introduce a number of new provisions.
There a number of procedures available through the European Directives to
undertake tender processes. The main ones are the detailed below.
Open Tender process
A single stage tender process used when there are limited numbers of
suppliers who are able to provide the supplies, services or works being
Restricted Tender Process
A two stage tender process with a prequalification stage prior to Tenders
being invited from those companies who have qualified. This would be used
when there are significant numbers of companies able to tender and short
listing at the first stage will enable a more effective process.
Negotiated tender Process
This can only be used when the requirements of the contract cannot be
sufficiently specified by the procuring organisation. Negotiated processes are
used rarely but can be justified when an overall outcome is required from a
contract but where there maybe a variety of solutions being offered to deliver
the required outcome.
Introduced in the new consolidated directive in 2006, the process enables a
series of stages to develop the tender requirements before bids are invited
from the participating organisations. Competitive dialogue should be
considered before the Negotiated process and is in general used for complex
contract arrangements where either the exact nature of the requirement
cannot be defines or where the authority is seeking innovation in the delivery
Dynamic Purchasing Systems
This process is intended to address commonly used purchases. They are a
form of electronic framework which bidders can apply to join at any point
during its lifetime. An open procedure must be used and documents for entry
to the system must be made available electronically. All bidders who meet the
selection criteria and who have submitted a compliant indicative bid must be
admitted to the system. As each new requirement occurs a further notice has
to be issued that allows new bidders to submit indicative bids and when this
time has passed all bidders who have met the criteria will be invited to tender
for the specific requirement.
It is anticipated that these systems will only be used in specific circumstances
where markets are particularly dynamic and significant benefits would be
gained from operating this type of purchasing.
Framework agreements are used in the case of repetitive purchases to
choose suppliers who will be able to meet the purchaser’s requirements.
Frameworks may be used in conjunction with any of the above procedures.
When the framework is set up this does not specify and guarantee amount to
be purchased, this is done at the point of call off when the contract is formed.
Frameworks can be single or multiple suppliers. Where the framework is with
a single supplier, work maybe awarded directly provided the terms of the
framework agreement are applicable. Where there multiple suppliers on the
framework this should be a minimum of three or the number of companies
passing the selection criteria if less. Where the original framework terms and
conditions are sufficiently specific work can be awarded directly to specific
suppliers on the framework, otherwise a mini competition within the
framework is required.
Electronic Auctions can be used with the open or restricted procedure as long
as this is identified in the original contract notice.
Electronic auctions can be used for good, services and works but only when
the requirement subject to auction can be specified precisely. Tenders are
invited in accordance with the one of the procedures and a full initial
evaluation of the bids is made using the award criteria specified in the
contract notice or tender documents.
Successful tenderers are then invited simultaneously to take part in a reverse
electronic auction in accordance with the rules for operating auctions as
specified within the directive.
E- auction guidance is available on the Office of Government Commerce
Award of Contracts
Introduction of a Standstill Period
Since August 2005 all procurements subject to the EU Directives must include
a standstill period of at least 10 days between informing tenderers of the
award decision and concluding the contract. The purpose of the standstill
period is to provide tenderers with the opportunity to challenge the decision
prior to award of contract.
The ten days will start on the day following the communication of the award
decision to all tenderers. This communication must be made by either fax or
e-mail and must contain:
Where appropriate, the tenderer’s score
Where appropriate, the winning tenderer’s score
The name of the winning tenderer.
Note that the directives allow purchasers not to publish certain confidential
information. Subject to the provisions of the Freedom of Information Act, this
may prevent the disclosure of certain of the above information in the
notification. If there is reason to believe that these exemptions may apply,
advice should be sought from Legal Services.
The standstill period should also be:
Extended if necessary e.g. around public holidays
Started the day after the award decision is issued and must end on a
If there is a legal challenge, the lead officer should wait to see if interim
measures are granted before proceeding. If interim measures are granted
they should wait until the outcome of legal proceedings before concluding the
In addition to the new notification requirements, the ruling requires that if any
of the tenderers request debriefing information within the first two days of the
standstill period, this must be provided before the end of the seventh day. Any
request for debriefing beyond the second day of the standstill period can be
provided within the existing requirements of 15 days from point of request.
The mandatory standstill period does not apply:
To below threshold procurements
To procurements outside the full scope of the procurement directives
Where single tendering takes place under the urgency provision of the
Where there is only one tenderer including those following the urgency
provision under the negotiated procedure where single tendering takes
For further information contact Dawn Moran ext. 6296.