Select Committee on European Scrutiny Thirty-Eighth Report



21. PUBLIC CONTRACTS AND UTILITIES PROCUREMENT

 

(a)

(23693)

OTNYR

(b)

(23694)

OTNYR

Draft Directive on the co-ordination of procedures for the award of public supply contracts, public service contracts and public works contracts.

Draft Directive on the co-ordination of the procurement procedures of entities operating in the water, energy and transport sectors.

Legal base:

Articles 47(2), 55 and 95 EC, co-decision, QMV

   

Department:

Trade and Industry

Basis of consideration:

(a) EM of 24 July 2002 and Minister's letter of 20 June 2002

(b) EM of 25 July and Minister's letter of 1 October 2002

Previous Committee Report:

None; but see HC 23-xxviii (1999-2000), paragraphs 20 and 21 (1 November 2000)

To be discussed in Council:

(a) Not yet known

(b) 30 September 2002

Committee's assessment:

Politically important

Committee's decision:

Cleared

 

 

Background

    1. The draft Directive in document (a) is to simplify and clarify three existing Directives (93/36/EEC on supplies contracts, 93/37/EEC on works contracts and 92/50/EEC on public service contracts, all as amended by Directive 97/52/EC) and to update them, for example, to take account of market changes such as e-commerce and developments in best practice. In addition, the Commission proposes to consolidate the changes into a single codified text covering supplies, works and service contracts to replace the three existing Directives.
    2. The draft Directive in document (b) is to amend and replace Directive 93/38/EEC, as amended by Directive 98/04/EC, on procurement by contracting entities operating in the water, energy, and transport sectors. The purpose is to simplify and clarify the existing Directive and to bring it up to date, for example to take account of market changes such as e-commerce and the gradual liberalisation of the water, energy and transport sectors. Additionally, the Commission proposes some re-drafting and re-structuring in the interests of user-friendliness.
    3. In November 2000 our predecessors judged earlier drafts politically important and cleared them. In May 2002 the Minister for Competition, Consumers and Markets, Department of Trade and Industry (Miss Melanie Johnson) told us that at a forthcoming Council meeting she might need to accept a political agreement on a revised text of the public contracts Directive. We told her that, whilst appreciating the UK interest in such an agreement, we found unacceptable the failure of the Spanish Presidency to produce a text in sufficient time for scrutiny. In her letter of 20 June 2002 the Minister tells us that she did in fact join in the political agreement at the Council of 21 May. She cites the need to secure improvements in the text won in protracted negotiations and says she will submit an Explanatory Memorandum once a depositable text is available.
    4. Document (a) is that text and the Minister tells us that it meets the UK's interests on a number of key issues:

    • dialogue with bidders;
    • framework agreements;
    • electronic systems;
    • central purchasing bodies;
    • exclusion for fraud, corruption etc;
    • financial services;
    • environmental and social issues;
    • award criteria;
    • tied aid;
    • postal services; and
    • a mechanism for exclusion where sectors are liberalised.

    1. The amended text at document (b) adopts for the utilities Directive the improvements in Document (a). It also takes in postal services, rather than leaving them under the less flexible rules of document (a), exempts — as a result of liberalisation — the telecommunications sector and provides for exemption of other sectors as they are liberalised.
    2. The Government's view

    3. The Minister tells us:
    4. "The legislative package is of immense importance to British business. The estimated value of public procurement represents 15% of the EU's total GNP. The proposals are a main plank of the wider economic reform agenda and were among key proposals singled out at the Barcelona Council for rapid progress this year."

    5. On document (a) the Minister says:
    6. "For the UK, the proposals are now very much in line with our own objectives for greater simplification, clarity and recognition of modern procurement methods. In particular, our needs for clarity on the scope to enter into dialogue, (particularly for PFI and PPP projects), and to make use of framework agreements and e-systems, have been met."

    7. On document (b) the Minister says:
    8. "The Government supports the Commission's proposals to simplify and clarify the Directive, welcomes the proposal to exempt the telecommunications sector from the scope of the Directive and supports the proposals for other regulated activities to be exempted as liberalisation takes place over time. Where the Commission has a role in deciding whether there is de jure and de facto access to the market in question and whether that market is directly exposed to competition, the UK will be keen to ensure that the procedures are clear and not overly burdensome."

    9. In her letter of 1 October the Minister tells us that document (b) was to be taken at the 30 September Council and that it was her intention to agree the text even though we had not had an opportunity to consider it. She says: "I must stress that I clearly would not take such a decision lightly and would be doing so only with the confidence that the draft text meets UK interests and that to maintain a reserve could be detrimental."
    10. Conclusion

    11. We are greatly concerned that the Minister felt it necessary to breach the scrutiny reserve on both these documents and we request that she ensures that we have a timely opportunity to scrutinise the remaining stages of these proposals.
    12. Nevertheless we are pleased that improvements to the texts, beneficial to the UK and in line with what our predecessors wished for, have been secured. We clear the documents.

 


 
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