Centralising Public Procurement: The Approach of EU Member States 1800370407, 9781800370401

Table of contents :
Dedication
Contents
List of figures
List of contributors
Foreword
List of abbreviations
1 Introduction to Centralising Public Procurement • Mario Comba and Carina Risvig Hamer
2 EU perspective on CPBs • Mario Comba and Carina Risvig Hamer
3 CPBs in the European legal space: an unresolved misconception • Mario Comba
4 A comparative view of the use of procurement techniques and electronic instruments by central purchasing bodies • Marta Andhov and Roxana Vornicu
5 Joint procurement: an economics and management perspective • Fredo Schotanus
6 Public procurement by central purchasing bodies, competition and SMEs: towards a more dynamic model? • Albert Sanchez-Graells
7 CPBs and their users: shared liability, contract management and remedies • Carina Risvig Hamer
8 Public purchasing in the EU during the COVID-19 pandemic • Judy Yueh Ling Song
9 Central purchasing bodies (and other forms of joint procurement) – Belgium • Steven Van Garsse
10 Central purchasing bodies in Denmark • Carina Risvig Hamer
11 Central purchasing bodies in Finland • Kirsi-Maria Halonen
12 Central purchasing bodies in France • Fanette Akoka and François Lichère
13 Country report on Germany • Martin Burgi and Christoph Krönke
14 Centralised procurement in the Netherlands: a mixture of procurement autonomy, decentralisation and diversified collaborative purchasing • W.A. Janssen and M.A.J. Stuijts
15 Central purchasing bodies in Italy: reluctance and challenges • Gabriella M. Racca
16 Central purchasing bodies: the case of Poland • Paweł Nowicki
17 Centralisation and central purchasing bodies in Portugal • Pedro Cerqueira Gomes
18 Central purchasing bodies in Romania • Roxana Vornicu and Dacian Dragos
19 Central purchasing bodies in Spain • Patricia Valcárcel Fernández
20 Central purchasing bodies in Sweden • Åsa Edman
21 Central purchasing bodies in the United Kingdom • Alice Manzini, Luke Butler and Martin Trybus
Index

Citation preview

Centralising Public Procurement

EUROPEAN PROCUREMENT LAW Series Editors: Roberto Caranta, Turin University, Italy and Steen Treumer, Faculty of Law, University of Copenhagen, Denmark Public procurement is a highly significant and growing area of legal practice. Each book in this series addresses one of the most pressing topics in EU public procurement law and practice, taking a comparative approach and combining cross-cutting thematic chapters with detailed country information. This is both valuable and necessary in understanding how public procurement law is developed and applied – or misapplied – in the EU and in its Member States. In so doing, the series hopes to inspire new approaches and offer guidance in applying the principles and basic (though at times very detailed) rules. The clear descriptions of the practices, regulations, case law and interpretations of public procurement law throughout the EU will assist practitioners both in better understanding the rules as applied in their own jurisdiction and in developing best practices. The books are written by academics and experts from a broad range of Member States who have worked closely together since 2010 in a cross-border research group specialized in public procurement law. Titles in the series include: Modernising Public Procurement The Approach of EU Member States Edited by Steen Treumer and Mario Comba Transparency in EU Procurements Disclosure Within Public Procurement and During Contract Execution Edited by Roberto Caranta, Kirsi-Maria Halonen and Albert Sanchez-Graells Public–Private Partnerships and Concessions in the EU An Unfinished Legislative Framework Edited by Piotr Bogdanowicz, Roberto Caranta and Pedro Telles Centralising Public Procurement The Approach of EU Member States Edited by Carina Risvig Hamer and Mario Comba

Centralising Public Procurement The Approach of EU Member States

Edited by

Carina Risvig Hamer Associate Professor, University of Copenhagen, Denmark

Mario Comba Professor, University of Turin, Italy

EUROPEAN PROCUREMENT LAW

Cheltenham, UK • Northampton, MA, USA

© The Editors and Contributors Severally 2021

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK Edward Elgar Publishing, Inc. William Pratt House 9 Dewey Court Northampton Massachusetts 01060 USA A catalogue record for this book is available from the British Library Library of Congress Control Number: 2021947949 This book is available electronically in the Law subject collection http://dx.doi.org/10.4337/9781800370418

ISBN 978 1 80037 040 1 (cased) ISBN 978 1 80037 041 8 (eBook)

EEP BoX

This book is dedicated to professor Steen Treumer, who passed away on August 16, 2021 after many years of illness he fought against valiantly. Steen was among the founders of the European Procurement Law Group and co-editor of the EPLG series. Steen was a great scholar and a pioneer within public procurement law – both in his home country Denmark and internationally. He was a kind colleague with a great sense of humor. Steen meant a lot to the members of our group and was particularly helpful to the group’s young researchers.

Contents List of figuresix List of contributorsx Forewordxii List of abbreviationsxvi 1

Introduction to Centralising Public Procurement1 Mario Comba and Carina Risvig Hamer

2

EU perspective on CPBs Mario Comba and Carina Risvig Hamer

3

CPBs in the European legal space: an unresolved misconception Mario Comba

4

A comparative view of the use of procurement techniques and electronic instruments by central purchasing bodies Marta Andhov and Roxana Vornicu

5

Joint procurement: an economics and management perspective Fredo Schotanus

6

Public procurement by central purchasing bodies, competition and SMEs: towards a more dynamic model? Albert Sanchez-Graells

71

7

CPBs and their users: shared liability, contract management and remedies Carina Risvig Hamer

87

8

Public purchasing in the EU during the COVID-19 pandemic Judy Yueh Ling Song

9

Central purchasing bodies (and other forms of joint procurement) – Belgium Steven Van Garsse

vii

9 21

36 54

100

121

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Centralising public procurement

10

Central purchasing bodies in Denmark Carina Risvig Hamer

138

11

Central purchasing bodies in Finland Kirsi-Maria Halonen

154

12

Central purchasing bodies in France Fanette Akoka and François Lichère

170

13

Country report on Germany Martin Burgi and Christoph Krönke

185

14

Centralised procurement in the Netherlands: a mixture of procurement autonomy, decentralisation and diversified collaborative purchasing W.A. Janssen and M.A.J. Stuijts

201

15

Central purchasing bodies in Italy: reluctance and challenges Gabriella M. Racca

220

16

Central purchasing bodies: the case of Poland Paweł Nowicki

239

17

Centralisation and central purchasing bodies in Portugal Pedro Cerqueira Gomes

253

18

Central purchasing bodies in Romania Roxana Vornicu and Dacian Dragos

266

19

Central purchasing bodies in Spain Patricia Valcárcel Fernández

278

20

Central purchasing bodies in Sweden Åsa Edman

297

21

Central purchasing bodies in the United Kingdom Alice Manzini, Luke Butler and Martin Trybus

316

Index336

Figures 5.1

The highway matrix; a classification of forms of joint procurement61

5.2a Situation without joint procurement

67

5.2b Situation with one dedicated bus ride

68

5.2c Situation with competition between bus rides

68

5.2d Situation with competition between a bus ride and individual suppliers

69

ix

Contributors Fanette Akoka: Legal Counsel, Colas Marta Andhov: Associate Professor, University of Copenhagen Martin Burgi: Professor, Ludwig Maximilian University of Munich Luke Butler: Associate Professor, University of Nottingham Pedro Cerqueira Gomes: Lecturer, Porto School of Law, Universidade Católica Portuguesa Mario Comba: Professor, University of Turin Dacian Dragos: Jean Monnet Professor of Administrative and European Law at the Public Management and Administration Department, Babes Bolyai University Åsa Edman: Chief Legal Officer, Adda AB Kirsi-Maria Halonen: Professor, University of Lapland W.A. Janssen: Associate Professor, Centre for Public Procurement & Centre for Regulation and Enforcement in Europe, School of Law, Utrecht University Christoph Krönke: Full Professor of Public Law at WU Vienna University of Economics and Business François Lichère: Professor of Public Law, Université Jean Moulin Lyon 3 Alice Manzini: Marie Curie PhD Fellow, Birmingham Law School Paweł Nowicki: Professor of the NCU, Department of International and European Law, Faculty of Law and Administration, Nicolaus Copernicus University Gabriella M. Racca: Professor of Administrative Law, Department of Management, University of Turin Carina Risvig Hamer: Associate Professor, University of Copenhagen Albert Sanchez-Graells: Professor of Economic Law, Director of Centre for Global Law and Innovation, University of Bristol Law School x

List of contributors

xi

Fredo Schotanus: Professor of Law, Economics and Governance, University of Utrecht M.A.J. Stuijts: Director, Bizob Martin Trybus: Professor of European Law and Policy, Birmingham Law School Patricia Valcárcel Fernández: Professor of Administrative Law, University of Vigo Steven Van Garsse: Professor University of Hasselt and Antwerp Roxana Vornicu: Research associate, Kings College London Judy Yueh Ling Song: Researcher, University of Turin, Contract Professor, University of Piemonte Orientale

Foreword We are happy to present the 11th volume in the Series, the fourth volume to be published by Edward Elgar Publishing. In the previous volumes we covered remedies, a number of substantive issues (in-house, sustainable public procurement, contracts outside or at the margins of the Procurement Directive, selection and qualification, award criteria, transparency) and analysed both the 2014 classic Procurement Directive and its implementation in the Member States. The tenth volume on PPPs and concessions pushed us into new grounds and a different Directive (2014/23/EU). Turning our attention back to Directive 2014/24/EU, this time the European Procurement Law Group has decided to analyse central purchasing bodies (CPBs), which purchase goods and services for other contracting authorities, and procurement aggregation. CPBs already play an important role in many EU Member States, such as Denmark and Italy, from where the two editors hail, but also in Finland, Portugal and Sweden. Pushed by both the desire to cut costs and the need for professionalisation highlighted by the Commission’s Recommendation on the professionalisation of public procurement – Building an architecture for the professionalisation of public procurement (C(2017) 6654 final), centralisation and aggregation have an important role to play in the application of Directive 2014/24/EU. Recital 59 to that Directive both bears witness to the “strong trend emerging across Union public procurement markets towards the aggregation of demand by public purchasers” but also cautions that “the aggregation and centralisation of purchases should be carefully monitored in order to avoid excessive concentration of purchasing power and collusion, and to preserve transparency and competition, as well as market access opportunities for SMEs”. There are thus many interesting legal issues that are fully and competently analysed in this volume. The methodology is the one that has been refined and perfected since the original small group of us first met in Turin in 2008 to discuss in-house providing. There are 13 national chapters, written by scholars and practitioners from the 12 selected EU Member States and UK, which are based on a questionnaire. Moreover, this volume is particularly well endowed with chapters addressing both general issues, such as joint cross-border procurement, the legal nature of CPBs and the procurement techniques they use, and comparative chapters, based on the national chapters, covering competition issues, remedies and the uninvited guest to our table, COVID-19 and its mutations. Moreover, given xii

Foreword

xiii

the specific topic, the editors were wise to secure some economic insight to complement our legal expertise. We still stay true to our original idea: EU law needs comparative law! To us the comparative law approach is both valuable and necessary to understand how public procurement law is developed and applied – or misapplied – in the EU and in its Member States. Both convergences and divergences send important signals to both EU and domestic lawmakers, including the Court of Justice of the European Union. Comparative knowledge may inspire new approaches and help avoid mistakes in applying what are in the end the same principles and basic – and at times detailed – rules. Moreover, it is of value for practitioners in the Member States to be aware of practices, regulations, case law and interpretations of public procurement law throughout the EU, as this can assist them in both understanding the rules as applied in their own jurisdiction, and in developing best practices. Furthermore, as the Court of Justice itself recalls on its official website, the courts of the Member States are courts of the EU as “the ordinary courts in matters of European Union law”. National courts and review bodies (where present) may, and in some cases must, refer questions to the Court of Justice. However, with more and more Member States having joined the EU and ensuing delays in the preliminary reference procedure under Article 267 TFEU, national courts and review bodies increasingly have to look elsewhere for best practices and possibly guidance. Precedents of national courts and review bodies of other EU Member States giving application to the same common EU rules should be a precious source of inspiration for those having to defend and decide public procurement cases. The Court of Justice is aware of the comparative approach and some of its rulings are influenced by developments and trends in the regulation or practice of some Member States. Increased comparative knowledge of the case law of the Member States may alert the Court of Justice to the difficulties that national courts and review bodies are facing in giving full effect to EU law, including due to an insufficient understanding of the law as it is. The reference to a decision by the Danish Complaints Board for Public Procurement in Advocate General Wathelet’s opinion in Ambisig (Case C-46/15) is an obvious example of the value of dialogue between the Court of Justice and national courts. The Danish Complaints Board has recently referred questions to the Court of Justice in the pending case C-23/20, Simonsen & Well A/S, which might lead to a substantial modification of the ruling in C-216/17, Autorità. The case concerns quantity/value estimates under a framework contract and the remedy’s ineffectiveness. Chapter 7, written by Carina Risvig Hamer, contains a comparative analysis of the enforcement issue that forms part of the case. Chapter 4, written by Marta Andhov and Roxana Vornicu, addresses the topic

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of estimates of the value of a framework agreement. The undersigned (Steen Treumer) took part in the reference to the Court as member of the Complaints Board and will take part in the follow-up to the ruling from the Court. Since March 2017, the promotion by the European Commission of a network of first instance review bodies on public procurement is also testimony to the increasing value of this type of exchange of information across EU jurisdictions. Moreover, a comparative approach makes EU institutions aware of the possible development of common trends in the Member States. This itself points to a spontaneous convergence towards workable solutions that may give rise to a jus commune which would be better guided than opposed, or worse, ignored. This is obviously all the more important concerning the implementation of a new legislative package that is rich with novelties. In the interpretation and application of the 2014 Concession Directive, the national courts will start from limited precedents in their own jurisdictions. Courts elsewhere may instead have already decided one issue and looking at their judgments might not just help them make their decisions, but also reinforce comity among courts in the EU and coherence in their case law. The Court of Justice will in turn benefit from this dialogue among national courts and might take heed of possible convergence in the domestic case law giving effect to EU law. This volume bears witness to how fruitful comparative research is. We were lucky enough to be spared from COVID-19 but as academics and – some of us – also practitioners, life has become more complicated. We must therefore thank Mario Comba and Carina Risvig Hamer for having led the enterprise with sure hands and their contributors for having fulfilled their commitments. Mario must also be thanked for hosting us again in Turin, in the autumn of 2019, in what now seems a completely different world. But this will not last forever and we hope to meet again in person later this year to work on contract implementation. We also want to thank Stephanie Tytherleigh at Edward Elgar for her invaluable help in the production process, two anonymous reviewers for their useful comments, and Judy Yueh Ling Song for helping in the editing of this book.

Foreword

xv

June 2021 Roberto Caranta Professor University of Turin Steen Treumer Professor University of Copenhagen This book was published with the contribution of Compagnia di San Paolo.

Abbreviations CPB CJEU Commission DPS Autorità Directive

Directive 2004

EU Remedies Directive

TFEU SME

central purchasing body Court of Justice of the European Union European Commission dynamic purchasing system Case C-216/17 Autorità Garante della Concorrenza e del Mercato – Antitrust and Coopservice Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts European Union Directive 89/665/EEC of 21 December 1989 on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts, [1989] OJ L 395/33, as amended by Directive 2007/66/EC of the European Parliament and the Council of 11 December 2007, [2007] OJ L 335/31 Treaty on the Functioning of the European Union Small or medium-sized enterprise

xvi

1. Introduction to Centralising Public Procurement Mario Comba and Carina Risvig Hamer Every year 250,000 public authorities in the EU spend around 14 per cent of GDP on the purchase of services, works and goods.1 Some of these authorities are central purchasing bodies (CPBs) who purchase goods and services for other contracting authorities, which have combined their purchasing (aggregated procurement). CPBs play a great role in some EU Member States such as, for example, Denmark, Portugal, Italy, Finland and Sweden and the tendency is gaining traction across different EU Member States. The increased use of CPBs is based on the theory that large procurement volumes generate better prices and increase competition in the market, thus affecting prices and other terms in ways that are favorable for the contracting authority and ultimately for the taxpayers.2 On top of this, the individual contracting authorities will save a significant amount of transaction costs as they do not need to conduct procurement procedures themselves as well as benefitting from the fact that CPBs are often more experienced with procurement procedures (professionalisation). Thus, particularly for contracting authorities, which do not have the capacity to conduct procurement procedures (nor the buying power) for all types of contracts, these agreements can be useful tools in purchasing. Taking the advantages of joint procurement into account, it is not surprising that the Commission also wishes to promote more joint cooperation among contracting authorities.3 1 See the Commission’s website: https://​ec​.europa​.eu/​growth/​single​-market/​public​ -procurement​_nn (accessed 6 April 2021). The Commission estimates that 11 per cent of procurement procedures in the EU are carried out through joint procurement. 2 See e.g. OECD (2011), Centralised Purchasing Systems in the European Union, SIGMA Papers, No. 47, OECD Publishing, Paris, https://​ doi​ .org/​ 10​ .1787/​ 5kgkgqv703xw​-en , Directive 2014/24/EU, Recital 59 in particular. 3 In the EU Commission’s 2017 communication, “Making public procurement work in and for Europe”, joint procurement is one of the Commission’s six strategic policy priorities. See further: https://​eur​-lex​.europa​.eu/​legal​-content/​EN/​TXT/​?uri​=​ COM​%3A2017​%3A572​%3AFIN (accessed 6 April 2021).

1

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Centralising public procurement

There are, however, also threats related to joint procurement, such as preferences for contracts with a single supplier in order to lower transaction costs, which puts economic operators in a position in which they need to work together in order to be able to bid for the agreement. Cooperation among undertakings can be problematic, as they risk their cooperation being seen as an anticompetitive agreement (Art. 101 TFEU). Other potential negative effects of aggregation are linked to excessive concentration of purchasing power and collusion, as well as a reduction in market access opportunities for SMEs. The potential closure of the market for a given time period can result in less innovation and perhaps less competition in the long run (for the next contract). The aim of this book is to analyse in particular the use and structure of CPBs in different EU Member States. The study shows that how Member States have organised themselves in relation to joint procurement varies significantly across the EU. The book contains 13 national chapters, written by scholars and practitioners from the 12 selected EU Member States and the UK. Contributors answered a questionnaire, which is reproduced at the end of this introduction. Besides the national chapters, the book consists of a general part on CPBs, exploring the legal rules and selected economic issues relevant to CPBs. This part of the book also contains a number of comparative chapters based on the national chapters. In Chapter 2 Comba and Risvig Hamer give an introduction to the EU perspective on CPBs. The chapter explores the legal background in the Procurement Directives on CPBs and analyses the general EU legal framework, including elements such as joint cross-border procurement, liability and CPBs’ relationship to the EU competition rules. In Chapter 3 Comba analyses the legal nature of CPBs from a comparative perspective. The chapter looks closer at the possible clash between the scope of national CPBs – cost efficiency and professionalisation, against the scope of the Directive – fostering competition and avoiding discrimination on the basis of nationality. Moreover, the chapter tries to classify the different models of CPBs introduced in Member States, taking into account the major divide between the private law and public law approaches to the law of public procurement. In Chapter 4 Andhov and Vornicu examine the different procurement techniques used by CPBs. The preferred technique is framework agreements, but in some Member States dynamic purchasing systems (DPS) have started gaining attention. Most Member States do not have additional rules relating to framework agreements, but practices vary and purchasing systems in those Member States that frequently use framework agreements are becoming more advanced.

Introduction to Centralising Public Procurement

3

In Chapter 5 Scotanus shares some economic insights to CPBs. Scotanus points out some of the advantages of joint procurement in terms of economies of scale, economies of knowledge or information and economies of process. Scotanus also discusses different impediments to joint procurement such as, for example, insufficient collaboration experience or insufficient procurement skills. Sanchez-Graells, in Chapter 6, takes a closer look at issues relating to competition and SMEs from a comparative perspective. This chapter focuses on the competition law challenges arising when contracting authorities aggregate their needs by using a CPB and create large-scale procurement schemes with the risk of closing the market or generating long-term distortions that may reduce incentives to innovate or damage market structures in a way that makes them particularly prone to collusion or coordination (i.e. oligopolistic competition). In Chapter 7 Risvig Hamer analyses the consequences for contracting authorities in case of breaches of the procurement rules in the different Member States. In most Member States, CPBs are not treated any differently to other contracting authorities and few issues regarding liability and enforcement in relation to joint procurement have been raised. However, in the Scandinavian Member States some questions have been raised and the Autorità case has gained significant attention. The chapter takes a closer look at different Member States’ approaches to the case and the recent preliminary reference in Case C-23/20, Simonsen & Wehl, is discussed. Procurement centralisation is no longer an emerging practice, but the way in which most public procurement − and potentially even large-scale cross-border procurement − will be carried out in the future, as we have seen with the joint procurement at EU level regarding, for example, medical equipment in relation to the COVID-19 crisis. Thus, in Chapter 8 Yeuh Ling Song compares the different approaches taken in the Member States regarding purchases during the COVID-19 pandemic. As a whole, the book analyses the rules and complications derived from the regulatory framework created by the Public Procurement Directive 2014/24 throughout the EU in a coherent way. It gives a comparative analysis of the rules on CPBs and the procurement techniques they use and we hope that this can be an inspiration to achieve better joint procurement in the future.

QUESTIONNAIRE 1 Introduction The introduction should cover an overview of the use of CPBs and other forms of joint procurement in the Member State. This includes elements such

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as the number of CPBs, the type of cooperation arrangements, the “owners” and users of the CPBs. The chapter should also answer general questions such as: is there any specific regulation which covers CPBs? What is the political environment in respect of CPBs? Historic aspects, such as when was the first CPB established and the development/tendency regarding joint procurement, are also addressed. 2

Structure and Use of CPBs and Other Forms of Joint Procurement

This part looks closer at how CPBs are structured and used in the Member State. This includes elements such as: Question 1(a) How are CPBs structured? (i) Geographical jurisdiction: is there only one national CPB or more national CPBs and/or regional or municipal CPBs? (ii) Functional jurisdiction: are CPBs – at any geographical level – only providing certain goods or services? (iii) Legal structure: provided that CPBs must be contracting authorities (Art. 2(1)(16) of Directive 24/2014), what kind of contracting authorities are they: State, central local authorities, or associations formed by such authorities, or bodies governed by public law? In case of bodies governed by public law, are there CPBs with private partners/shareholders? If not, is that because the national law forbids it or just because it didn’t happen? (iv) Activity: do they act also as wholesalers or only as agents? Do they also provide ancillary purchasing activities and, if so, what are the most common? Do they also provide public works? If so, do they provide public works for a single work (e.g. building a new hospital or a new school) or do they “centralise” public works? In the case of public works, do they only award the contract or do they also monitor the execution of the contract for the contracting authority? Question 1(b) Who are the users of the CPBs? Are there any mandatory requirements to use a given CPB? Please refer to the geographical and functional jurisdiction of CPBs (above, Question 1(a)(i) and 1(a)(ii)). What is the model followed by your legislation? (i) Free adherence model: each contracting authority can choose any CPB – in this case, how is the “contract” between the contracting authority and the CPB legally qualified? Is it enforceable? Is the contracting authority bound to give reasons why it chooses that specific CPB? Can you say there is competition among CPBs? (ii) Compulsory adherence model: what are the compulsory links? All members and only members of the CPB must/can buy through the CPB; or all contracting authorities based in a certain

Introduction to Centralising Public Procurement

5

territory must use the CPB having jurisdiction in that territory; or all contracting authorities wanting to buy a certain good/service must use a specialised CPB? Other (iii) Conditioned compulsory adherence: contracting authorities must use a CPB unless they prove they can purchase the same good/service at a lower price. What are the consequences of a contract awarded in violation of the obligation to adhere to a CPB? Is the contract ineffective/void? Question 1(c) How are CPBs financed, e.g. through the general budget, through rebates from suppliers, through fees from users and/or suppliers? Provided that CPBs are contracting authorities and therefore cannot be for-profit entities: (i) do they get public funding from taxpayers’ money (taxpayers’ money model)? (ii) Do they get fees from their members (consortium model)? (iii) Do they get fees from non-members’ contracting authorities they are working for (quasi commercial model/1)? (iv) Do they get fees from the awardees (quasi commercial model/2)? In this case, are you aware of any complaint/litigation from economic operators against the duty to pay a fee? Question 1(d) Do CPBs have other roles, e.g. technical advisory services, training services, any other policymaking role in promoting procurement policy or legislation? Question 2 What is the experience with cross-border procurement? Is there any formal and informal cooperation? Do CPBs have any users from outside the Member State? What is the legal model chosen, among the three provided by Art. 39 of Directive 2014/24/EU? Question 3 Efficiency and policy issues. How effective are the CPBs in terms of costs (transaction costs as well as value for money), and are the agreements transparent? Do CPBs have a particular role in the fight against corruption or in achieving strategic procurements, etc.? Has there been any research or analysis in your Member State regarding economic aspects relating to CPBs (transaction costs, efficiency or competition aspects)? 3

Procurement Techniques

This part looks closer at the procurement techniques that CPBs use. This includes:

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Question 4 What types of techniques and agreements do CPBs use and create? What are the experiences with e-procurement, DPS and e-catalogues? Please comment on each of the three. In relation to techniques please also elaborate on the following: (i) please describe national practices and provisions on DPS and indicate challenges or limitations in the establishment of DPSs in your country. (ii) Please describe national practices and provisions on e-catalogues and indicate challenges or limitations in the establishment of e-catalogues in your country. (iii) Are there any specific issues in relation to evaluation for CPBs (how are large framework agreements with many product lines evaluated)? Can new award criteria be introduced in the mini-competition in a framework agreement? Question 5 What types of framework agreements do CPBs create? Are there any specific regulations in relation to framework agreements (for example, national mandatory framework agreement)? Question 6 What do users use the agreements (e.g. call-offs, direct purchasing, etc.)? Please describe national practices and provisions on performance of framework agreements and refer to any relevant case law and practices on the consideration of principles like transparency and competition. Question 7 Please state how changes in framework agreements/DPSs are tackled at a normative level and describe national practices. Question 8 Are there any requirements in relation to estimates for the purchase and what are the consequences of wrongful estimates? Does the framework agreement expire when the estimate has been reached (national reflection on Case C-216/17, Autorità Garante della Concorrenza e del Mercato – Antitrust and Coopservice)? 4

Competition and SME Aspects

Question 9 Have any concerns been raised regarding competition law aspects in your Member State regarding the agreements by CPBs – if so which and how are they tackled?

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Question 10 Are CPBs solely for the use of public sector entities, or can they also sell to private users? If the latter, how are prices determined (is there a single price for public and private buyers)? Does the type of buyer have an impact on the way the CPB is remunerated (e.g. are there commissions, or different fees, for private sector sales)? Question 11 Are SMEs being taken into account by CPBs? Do SMEs bid for contracts at CPBs? Are there any requirements to divide a contract into lots? 5

Liability between CPBs and their Users

Question 12 Issues on contract management. Does the CPB follow up on requirements in the framework agreement/DPS? Do the users? Please refer to relevant national practices and case law. Are there any e-procurement tools available for contract management? Question 13 What are the rules regarding enforcement and remedies for the agreements established by CPBs? Are there any specific regulations or case law that address the issues of liability between a CPB and its users? Or case law regarding ineffectiveness, annulment and damages for procurement conducted by a CPB? Does the framework agreement expire when the estimate of the value of the framework agreement has been reached and does this mean that purchases can be declared ineffective once the estimate has been reached? Question 14 What are the consequences for the users of using a CPB agreement if the CPB has entered into the agreement unlawfully? 6

COVID-19 and Joint Procurement

Question 15 Has COVID-19 had any impact on the joint procurement of products needed in the fight against COVID-19, e.g. medical equipment, protective equipment, respirators or similar? How has your Member State organised the procurement of these products – nationally as well as internationally? In particular:

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Question 15(a) Apart from the massive application of Art. 32(2)(c) Directive 2014/24, were the usual procedures applied by CPBs in your Member State modified due to the COVID emergency? And was the structure of CPBs, as described under section 2 of this questionnaire, modified? Question 15(b) If you have a structure with central and local CPBs, was the balance of competences between them modified due to the COVID emergency? In other words, did COVID imply a trend towards nationalisation or, on the contrary, regionalisation of centralised procurement? Question 15(c) Did the COVID emergency entail the creation of new CPBs, or was it tackled with the already-existing CPBs? Question 15(d) Were the powers of the CPBs’ employees increased in consideration of the urgency of decisions to be taken under the COVID emergency? And would this also increase the potential liability/responsibility?

2. EU perspective on CPBs Mario Comba and Carina Risvig Hamer 1 INTRODUCTION Looking at central purchasing bodies (CPBs) and public purchases from an EU perspective, the first time CPBs was mentioned in the EU procurement rules was in Directive 2004/18/EC.1 However, this did not mean that CPBs did not exist in the Member States beforehand. As can be seen from the national chapters in this book, CPBs already existed in many Member States before 20042 – and the EU Commission had in fact also approved the existence of CPBs.3 Thus, the inclusion of CPBs (and framework agreements and dynamic purchasing systems) in Directive 2004/18/EC was not the result of a good idea at EU level, but more a necessary element to be included in the rules based on national practices.4 The scope of EU regulation in relation to CPBs, therefore, seemed to be more to acknowledge and cover the existing CPBs under EU law rather than fostering a new tool to better implement competition rules in public procurement. In the 2014 Directive, more focus was added to aggregated procurement and the topic was even one of the ten thematic clusters, into which the negotiations of the Directive were divided, but once again the initiative to focus more on aggregation and CPBs came from the Member States (the Council) whereas

1 Directive 2004/18/EC included a definition of a CPB as well as rules relating to the conditions under which contracting authorities who purchase works, supplies and/ or services through a CPB can be considered to have complied with the Directive, see Article 1(10), Article 11 and Recital 15 of Directive 2004/18/EC. 2 See e.g. chapters on Finland, Spain, Sweden, France and Denmark. Contrast with Poland, where the possibility to create CPBs was inserted in the legislation in 2006. 3 See the chapter on Denmark where it is stated that the Commission approved that the main CPB (SKI) could create framework agreements on behalf of other contracting authorities. 4 See also Directive 2004/18/EC Recital 15 which states “Certain centralised purchasing techniques have been developed in Member States.”

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the Commission’s proposal had only suggested a few changes.5 Overall, the EU regulation on CPBs acknowledges the existence of CPBs as creating advantages (such advantages being better prices due to economies of scale, fewer transaction costs, higher professionalisation in the techniques of procurement, higher capacity to carry out sustainable procurements).6 However, the Directive also notes that there is a “dark side” to CPBs as they can have possible anti-competitive effects, which cannot always be efficiently countered by recourse to divisions into lots.7 As regards the substance of the EU rules, in the 2014 Directive the focus was still only on a definition of CPBs as well as addressing the topic of liability between CPBs and their users. The most significant development in the 2014 Directive was that the definition of CPBs elaborates on the different roles that CPBs can have – agent and wholesaler – elements that were (also) introduced by the Council.8 This chapter gives a brief overview of the EU procurement rules relating to CPBs and joint purchases.9 The chapter’s main focus is on what constitutes a CPB (Section 2), the topic of cross-border procurement (Section 3), the issue of liability between CPBs and their users (Section 4) and CPBs and competition aspects (Section 5). Section 6 states some overall conclusions.

2

WHAT CONSTITUTES A CPB

As with the provisions regarding framework agreements and dynamic purchasing systems (DPSs), the provisions on CPBs in the 2004 Directive were voluntary for the Member States to implement. Although the Commission in its proposal for the 2014 Directive had suggested that it should no longer be left for the Member States to decide whether CPBs were an option, this suggestion

5 Commission, “Proposal for a Directive of the European Parliament and the Council on public procurement” COM(2011) 896 final. 6 See Recital 59 of the Directive in particular; see also Chapters 1 and 5 of this book. 7 See Chapter 6 in this book by A. Sanchez-Graells. 8 It has been argued that the introduction of the option for CPBs to act as a wholesaler has “increased important competition issues concerning the concept of undertaking”. See I. Herrera Anchustegui, “Division into lots and demand aggregation – extremes looking for the correct balance?”, in Grith S. Ølykke and Albert Sanchez-Graells (eds), Reformation or Deformation of the EU Public Procurement Rules (Edward Elgar Publishing, 2016). See also D. Kristensen Balshøj, Public Procurement and Framework Agreements (DJØF Publishing, 2018) and A. Sanchez-Graells in Chapter 6 of this book for more on competition aspects relating to CPBs. 9 The chapter does not focus on the different types of procurement techniques CPBs use. These elements are dealt with by Andhov and Vornicu in Chapter 4 of this book.

EU perspective on CPBs

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was not a part of the final Directive. This means that Member States are still free to decide whether they wish to make it possible for contracting authorities to acquire supplies and/or services via a CPB – and can in fact even make it mandatory. Nevertheless, even if a Member State decided not to implement the provision on CPBs, Member States may not prohibit their contracting authorities from using centralised purchasing activities offered by CPBs located in another Member State. Joint procurement can take place in a structured way, as with CPBs, but can also occur as cooperation among contracting authorities, through so-called occasional joint procurement. Such cooperation can exist between contracting authorities from the same Member State (Article 38)10 as well as between contracting authorities from different Member States (Article 39), see Section 3 below. Joint procurement can take various forms, including cases where one contracting authority, for example, conducts the procurement procedure(s) concerned on its own, but the other contracting authority may (and sometimes must) also use the agreement. A joint procurement can also occur when one contracting authority prepares common technical specifications for works, supplies or services that will be procured by a number of contracting authorities, each conducting a separate procurement procedure, or situations where the contracting authorities concerned jointly conduct one procurement procedure either by acting together or by entrusting one contracting authority with the management of the procurement procedure on behalf of all contracting authorities.11 Generally speaking, the idea with a CPB is that a contracting authority can use an agreement that a CPB has entered into by following the procurement rules. Thus, the CPB conducts the procurement procedure and enters into different types of agreements with undertakings, which the contracting authorities can use without the need to conduct procurement procedures themselves.12 Member States have a wide discretion to organise CPBs in accordance with 10 The main aim of including a provision on joint procurement was to place emphasis on liability. Thus, in cases where the contracting authorities jointly carry out a procurement process in the name and on behalf of all the contracting authorities concerned, they shall be jointly responsible for fulfilling their obligations pursuant to this Directive. Where the conduct of a procurement procedure is not in its entirety carried out in the name and on behalf of the contracting authorities concerned, they shall be jointly responsible only for those parts carried out jointly, see Article 38(2). It is relevant to pay attention to what has been stipulated in the Contract Notice; if both contracting authorities are mentioned, they will be jointly responsible. 11 Directive, Recital 71. 12 There are certain requirements as to who can use the agreements. This topic is dealt with in Chapter 4 by Andhov and Vornicu, see also C. Risvig Hamer, “Techniques and instruments for electronic and aggregated procurement”, in M. Steinicke and

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the needs of the Member States and the particularities of the Member States.13 If taking a closer look at the definition of a CPB in the Directive, Article 2(16) states that a CPB “means a contracting authority providing centralised purchasing activities and, possibly, ancillary purchasing activities”. It is necessary that the CPB itself is considered as a contracting authority, and hence private parties cannot establish a CPB. However, although it’s not excluded that there can be private parties involved in a CPB,14 and even though, as can also be seen from the national chapters in this book, there are many different ways in which the Member States organise and use CPBs, private parties are not as such involved in CPBs.15 A CPB will in most cases be a body governed by public law.16 In that regard it has been argued that a CPB that conducts procurement on behalf of others does not fulfil the requirement in Directive Article 2(1)(4)(a), that a body governed by public law must be “established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character”.17 However, in the recent ASMEL case the CJEU emphasised that a CPB acts as a contracting authority to fulfil its needs – and not as an economic operator having a commercial interest (and thus CPBs do not compete on the open market).18 A CPB can therefore, and will often be, a body governed by public law. The structure of a CPB must be set on a more permanent basis,19 but the Directive does not define what is to be considered as a permanent basis.

P. Vesterdorf (eds), EU Public Procurement Law: Brussels Commentary (Hart Publishing, 2018), p. 414 ff. 13 See also Case C-3/19 ASMEL società consortile a.r.l. v. A.N.A.C. – Autorità Nazionale Anticorruzione ECLI:​EU:​C:​2020:​423, paragraph 61, not yet available in English. 14 Ibid. 15 See Comba in Chapter 3 and the various national chapters. 16 Article 2(1)(4) of the Directive. 17 See e.g. D. Kristensen Balshøj, Public Procurement and Framework Agreements (DJØF Publishing, 2018), pp. 148–150. 18 Case C-3/19 ASMEL società consortile a.r.l. v. A.N.A.C. – Autorità Nazionale Anticorruzione ECLI:​EU:​C:​2020:​423, not yet available in English, paragraph 64, states “En effet, une centrale d’achat agit en qualité de pouvoir adjudicateur, afin de pourvoir aux besoins de celui-ci, et non en tant qu’opérateur économique, dans son propre intérêt commercial.” 19 See also the definition of centralised purchasing activities in Article 2(1)(14) of the Directive as well as Cluster 6 “Aggregation of demand” Council document 6907/12 of 28 February 2012, which states “There is one addition, namely the reference to the activities being conducted on ‘a permanent basis’. This is necessary to create a difference between central purchasing bodies and contracting authorities carrying out occasional joint procurement as provided for under Article 37.”

EU perspective on CPBs

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A CPB can act as a wholesaler20 or intermediary (agent).21 Most frequently, a CPB acts as an intermediary when it concludes framework agreements, which other contracting authorities (the users) can purchase though without the need to conduct a new procurement procedure. However, some CPBs also act as wholesalers.22 A CPB may also provide activities ancillary to purchasing,23 such as activities which support purchasing, for example, technical infrastructure enabling contracting authorities to award public contracts or to conclude framework agreements. This infrastructure could be, for example, electronic tools such as software needed for the conduct of electronic auctions. An ancillary purchasing activity could also be the CPB’s provision of advice on the conduct or design of public procurement procedures or activities relating to the preparation and management of procurement procedures on behalf of and on the account of a contracting authority.24 Ancillary purchasing activities could also consist of advice on the conduct or design of public procurement procedures or activities relating to the preparation and management of procurement procedures on behalf of and on the account of the contracting authority concerned.25 Such advice could also relate to legal advice as to the legality of a given framework agreement, bearing in mind that if the legal advice relates to the procurement rules in general (or other rules), such advice would not be considered as ancillary. The line between the two can be difficult to draw.

20 Article 2(1)(14)(a) of the Directive states that “‘centralised purchasing activities’ means activities conducted on a permanent basis, in one of the following forms: (a) the acquisition of supplies and/or services intended for contracting authorities”. 21 Article 2 (1)(14)(b) of the Directive states that “‘centralised purchasing activities’ means activities conducted on a permanent basis, in one of the following forms: … (b) the award of public contracts or the conclusion of framework agreements for works, supplies or services intended for contracting authorities”. 22 See Comba in Chapter 3 and the various national chapters. 23 A definition is found in Article 2(1)(15), and covers activities consisting in the provision of support to purchasing activities, in particular in the following forms: (a) technical infrastructure enabling contracting authorities to award public contracts or to conclude framework agreements for works, supplies or services; (b) advice on the conduct or design of public procurement procedures; (c) preparation and management of procurement procedures on behalf and for the account of the contracting authority concerned … 24 Ibid. 25 Ibid.

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3

CROSS-BORDER PROCUREMENT

Cross-border procurement was not regulated in the procurement Directives until the 2014 Directive, in which Article 39 explicitly targets situations where the contracting authorities are located in different Member States – so-called cross-border procurement. The fact that a similar provision was not included in the 2004 Directive did not mean that joint procurement between contracting authorities located in different Member States did not take place before, as it was not forbidden in the Directive. According to the Commission, stakeholders had complained about the lack of legal certainty in cross-border joint procurement situations, in particular in cases where contracting authorities from different Member States were jointly awarding a public contract.26 In the Commission’s proposal for the 2014 Directive, cross-border procurement is seen as an important tool for innovative purchases, and it was therefore particularly important to remove the legal barriers to such cross-border projects.27 Article 39 clarifies that contracting authorities can engage in cross-border procurement and that they have free choice between the techniques described in the following paragraphs, namely joint procurement through a CPB, joint contract awards and procurement through a joint legal entity. The rules of Article 39 determine the conditions for cross-border utilisation of CPBs and designate the applicable public procurement legislation, including the applicable legislation on remedies, in cases of cross-border joint procedures, complementing the conflict of law rules of Regulation (EC) No. 593/2008 of the European Parliament and the Council.28 Member States may not prohibit contracting authorities from using central purchasing activities offered by a CPB located in another Member State.29 In

26 Cluster 6, Council document 6907/12 of 28 February 2012, p. 15. See also Recital 71, which states: “Joint awarding of public contracts by contracting authorities from different Member States currently encounters specific legal difficulties concerning conflicts of national laws. Despite the fact that Directive 2004/18/EC implicitly allowed for cross-border joint public procurement, contracting authorities are still facing considerable legal and practical difficulties in purchasing from central purchasing bodies in other Member States or jointly awarding public contracts.” 27 See Cluster 6. 28 See Recital 74. 29 In the Commission’s proposal the wording of the provision was as follows: “Member States shall provide for” which indicated that Member States should do something active, e.g. adopting legislation, issuing guidance, etc. By prescribing instead that “Member States may not prohibit”, that wording should help make it clear that Member States do not need to include national rules on the matter, and at the same

EU perspective on CPBs

15

cases in which a contracting authority uses a CPB located in another Member State, the procedure must be conducted in accordance with the national provisions of the Member State where the CPB is located. These national provisions apply even when the contracting authority carries out parts of the awarding procedure itself, for example, in the award of a contract under a DPS or in the award of a contract based on a framework agreement, conduct such as a reopening of a competition under a framework agreement or the determination of which of the economic operators that are party to the framework agreement shall perform a given task. It should be borne in mind in that regard that in order for a contracting authority to use a framework agreement it must be a party to the agreement from the outset.30 Thus, it will only be for new framework agreements that a CPB can establish that a contracting authority from another Member State may take part; an example is that the Danish CPB, SKI, is a user of an agreement of a Swedish CPB, SKL.31 When purchasing via a CPB located in another Member State, the procurement procedure shall be conducted in accordance with the national provisions of the Member State where the CPB is located. This is also the case for the activities the contracting authority using the CPB conducts itself, for example, a mini-competition, an award of a contract under a DPS, etc. The rules on CPBs, and in particular the rules on the allocation of responsibility between the CPB and the contracting authorities in Article 37(2), also apply in cross-border situations. Only a few Member States have experience regarding cross-border procurement involving CPBs,32 and in Spain, the provisions in Article 39 have not even been implemented.33

4 LIABILITY From an EU perspective, the issue of liability between CPBs and their users became clearer with the 2014 Directive. In the 2004 Directive, the CPB would have to follow the rules in the Directive when entering into a framework agreement, and the contracting authority could only have adhered to the rules in the Directive if the CPB had complied with the Directive. In that regard, the question arose as to the consequences for a contracting authority that used such

time are not allowed to prohibit contracting authorities from using central purchasing bodies located in another Member State. 30 See Chapter 4. 31 See Chapter 10 on Denmark. 32 See e.g. Chapters 10, 15 and 20 on Denmark, Italy and Sweden, respectively. 33 See Chapter 19 on Spain.

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a framework agreement if the CPB had made a mistake when setting up the framework agreement.34 Article 37(2) of the Directive now states that a “contracting authority fulfils its obligations pursuant to this Directive when it acquires supplies or services from a central purchasing body”. The Directive also states that the contracting authority concerned shall be responsible for fulfilling the obligations pursuant to [the] Directive in respect of the parts it conducts itself, such as: (a) awarding a contract under a dynamic purchasing system, which is operated by a central purchasing body; (b) conducting a reopening of competition under a framework agreement that has been concluded by a central purchasing body; (c) pursuant to points (a) or (b) of Article 33(4), determining which of the economic operators, party to the framework agreement, shall perform a given task under a framework agreement that has been concluded by a central purchasing body.

Using the wording “such as” indicates that only examples are given and that these are not exhaustive. Thus, a contracting authority will not be responsible for the mistakes made by a CPB when entering into the framework agreement itself. This even applies in cases where a CPB has made significant errors when entering into the framework agreement. As long as the contracting authority using the framework agreement has followed the conditions established in the framework agreement, it does not risk the contract (the call-off) later being declared ineffective. However, in cases in which the contracting authority does not follow the conditions in the framework agreement, for example, introducing a new award criterion in a mini-competition, which has not been foreseen in the framework agreement, or purchasing goods that are not covered by the framework agreement, the call-off contract is at risk of being declared ineffective. Such situations have occurred several times in Denmark, including situations in which the user of the framework agreement and the undertaking made substantial modifications to the framework agreement, or in cases in which the users’ choice of using a direct award instead of a mini-competition was not permitted.35

34 Council Proposal for a Directive of the European Parliament and of the Council on public procurement – Cluster 6: Aggregation of demand Council document, [28 February 2021] 6907/12, where it is stated that one of the main issues with the wording of the 2004 Directive was that “the consequences for the contracting authorities who have procured from or through a central purchasing body are far from clear in case it is – subsequently – found that the central purchasing body has not complied with the provisions of the Directive”. 35 See Chapter 7 by Risvig Hamer.

EU perspective on CPBs

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There are many grey areas in practice where it is not clear whether the mistake made lies in the framework agreement itself (and hence the responsibility lies with the CPB) or the mistake relates to the use of the framework agreement (and hence the responsibility lies with the contracting authority). The consequences of wrongful use of an agreement will often be for the users to bear as the risk of wrongful use of an agreement can lead to ineffectiveness or other potential remedies.36

5

CPBS AND COMPETITION ISSUES

The application of competition law to CPBs can be examined mainly through two perspectives:37 the first focuses on CPBs as purchasers and is concerned with possible abuse of their dominance in the market (Article 102 TFEU), particularly against SMEs; the second considers CPBs as service providers, in competition among themselves and with other economic operators offering centralised purchasing services. Both issues are tackled in this book by Albert Sanchez-Graells,38 with a critical approach towards CPBs and towards the technique used by national legislation in order to reduce anti-competitive effects of centralisation – subdivision into lots – which is considered mainly ineffective. Applying the EU competition law to CPBs is the proposal that, according to Albert Sanchez-Graells, would allow the tackling of the question of CPBs more correctly and would introduce a more dynamic model for regulating CPBs. The advantages and disadvantages of CPBs, from an economic and managerial point of view, are weighed up by Schotanus,39 whose conclusion is more favourable towards CPBs and suggest a scenario where contracting authorities have different joint procurement options to choose from, even if he does not address the issue of the application of competition rules to CPBs. However, considering CPBs as service providers (the second approach) would perhaps require some further consideration, again in the field of procurement rules, and leaving open to debate the question of whether they should be subject to competition rules. A first reflection is that the potential competition between CPBs and economic operators providing procurement services should not be underestimated: on one side, the procurement Directives do not exclude it because the scope of Article 37 of the Directive is to allow existing CPBs to provide Ibid. D. Kristensen Balshøj, “Can intermediary central purchasing bodies be subject to competition law?” (2019) Public Procurement Law Review, 2, 59–69. 38 See Chapter 6 in this book. 39 See Chapter 5 in this book. 36 37

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procurement services to contracting authorities without being subject to the Directive, rather than limiting the activity of CPBs by forbidding them to provide services to private entities too. The only limit set by the Directive is that CPBs must be contracting authorities (see above Section 1). In that regard even bodies governed by public law can sell services to private clients, with the only limitation being not to choose this as their primary activity. On the other side, national legislation does not explicitly prevent CPBs from operating in favour of private parties, with a few exceptions, and although that phenomenon seems to be limited now, that does not rule out that it could expand in the future. Moreover, in Member States where procurement activities are considered to be a commercial service because procurement does not imply the exercise of public power, the cultural background seems to be ready for such a development. Even if limited to competition among CPBs, the issue entails relevant problems which should be framed in the European legal space. The problem was recently addressed by the CJEU in the ASMEL case.40 In this decision, the CJEU was faced with an Italian piece of legislation imposing a geographical limit and the obligation to use a specific legal form on certain CPBs. The Italian Council of State doubted that those provisions could be contrary to the definition of CPB and also to freedom of services under Article 56 TFEU. The questions before the CJEU related to Article 11 of Directive 2004/18/EC. The CJEU rejected the preliminary questions, stating that the 2004 Directive did not require the Member States to create CPBs, but rather allowed them to use such a means for centralising purchases and thus it was up to the Member States to decide what should be the legal form that CPBs should have. The only limitation imposed by the Directive was that CPBs should be contracting authorities, and in the case of the Italian legislation examined by the CJEU, this condition was met. The same reasoning was made in relation to the geographical limitation: it is up to the Member State to organise the activity of CPBs as they prefer. In order to reach this conclusion, the CJEU had to exclude the nature of undertaking of CPBs because otherwise the limitation imposed by the Italian legislation would have been contrary to Article 56 TFEU. In paragraphs 64 to 66 of its decision, the CJEU declared that CPBs are not economic operators because they do not operate in their own economic interest, but only for the participating contracting authorities. It follows that they are not subject to Article 56 TFEU, nor to the other competition legislation.

40 Case C-3/19 ASMEL società consortile a.r.l. v. A.N.A.C. – Autorità Nazionale Anticorruzione ECLI:​EU:​C:​2020:​423, not yet available in English.

EU perspective on CPBs

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In reality, the CJEU leaves open the way to another interpretation: if a CPB is not operating under the instruction of contracting authorities, as can happen in the wholesaler model, but also in some cases with the agent model, then it can be considered an undertaking because its procuring activities are not inseparably connected to the interests of participating contracting authorities41 and are therefore subject to competition rules. Since every Member State regulates CPBs according to its own legal tradition, a thorough analysis of specific legal features characterising the relationship between CPBs and their users is needed in order to decide whether a CPB is an undertaking, according to the CJEU in ASMEL. It is not possible to rule out the possibility that CPBs are undertakings, because the judgment necessarily varies according to the shape given to CPBs by national legislation. Moreover, in its opinion on the ASMEL case, AG M. Campos Sanchéz-Bordona acknowledges that, while Directive 2004/18/EC excludes the possibility of qualifying CPBs as undertakings, Directive 2014/24/EU introduces ancillary services, which can constitute a market where CPBs compete with private companies (and also among themselves).42 For the moment it seems a market of centralised procurement activities does not yet exist, but it cannot be excluded that, in the near future, competition among CPBs and between CPBs and private companies offering ancillary services (but also centralised procurement services, in those States where the exercise of public power is not required) may arise. There are no legal obstacles in EU law: such developments will depend on economic reasons and on how national legislation will shape legal relations between CPBs and their users.

6 CONCLUSION Looking at CPBs and joint procurement from an EU perspective, there is a clear tendency and wish to promote joint procurement. This can also be seen in relation to the Commission’s “recommendation on the professionalisation of public procurement”, in which the Commission encouraged the Member States to take steps to increase the professionalism of contracting authorities and to support coordination strategies including cooperation among contract41 See (even though published prior to the ASMEL decision) A. Sànchez Graells, “Revisiting the concept of undertaking from a public procurement law perspective – a discussion on Easy Pay and Finance Engineering” (2016) European Competition Law Review, 93–98, para. IV. 42 Opinion delivered on delivered on 2 April 2020, by AG M. Campos Sanchéz-Bordona, in Case C-3/19 ASMEL società consortile a.r.l. v. A.N.A.C. – Autorità Nazionale Anticorruzione EU:​C:​2020:​254, paragraphs 72 and 73.

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ing authorities.43 Also, the recent joint purchases of equipment and vaccines to fight COVID-1944 could potentially lead to more joint procurement between the different Member States at EU level. The legal rules at EU level do not involve many requirements as to how joint procurement and purchase through CPBs must be done, but mainly seeks to place emphasis on the option of procuring through CPBs, and on the ways CPBs can work. In addition to this the rules elaborate on the responsibility between CPBs and their users in order to ascertain who is the responsible party in the eyes of the procurement rules. As can be seen from the national chapters in this book, the use of CPBs varies significantly in the Member States, but the trend is clear that purchases made through CPBs are gaining more and more attention. This also means that competition between CPBs and their agreements as well as contracting authorities’ own agreements are likely to occur.45 The interaction between procurement rules and competition rules regarding CPBs also raises some issues in this regard. However, for the moment it seems a market of centralised procurement activities does not yet exist, and it remains to be seen whether such a market could breach the EU competition rules.

43 European Commission Recommendation (EU) 2017/1805 on the professionalisation of public procurement — Building an architecture for the professionalisation of public procurement, C/2017/6654, OJ L 259, 7.10.2017, pp. 28–31. 44 See Chapter 8 of this book on purchases relating to COVID-19. 45 This topic will be addressed in a current research project funded by the Independent Research Fund Denmark. The project is called “Safeguarding competition and equal access to Central Purchasing Bodies’ agreements” and C. Risvig Hamer is principal investigator (PI) and M. Comba is part of the Stakeholder group. Learn more about the project here: https://​jura​.ku​.dk/​ciir/​english/​research/​safeguarding​ -competition​-and​-equal​-access ​-to​-central​-purchasing​-bodies ​-agreements/​?fbclid​=​I​ wAR2WVOkqo​Au7CbUNhRV​plRW613BgK​Z2PEa2jO5c​vjY9iIZObTHJZ4b7PBnc.

3. CPBs in the European legal space: an unresolved misconception Mario Comba 1

INTRODUCTION: THE NEED FOR THE COMPARATIVE METHOD AND THE TWO MAIN CLEAVAGES

When addressing the issue of central purchasing bodies (CPBs) and their legal nature, one has to acknowledge even more the wisdom and the practical utility of Armin von Bogdandy’s theory of the European legal space as opposed to the European legal order1 and its implications on the use of comparative techniques inside such European legal space. It is indeed impossible to understand the legal nature – or rather the legal natures – of CPBs if only European law is taken into account, namely the public procurement Directives packages of 2004 and of 2014, which for the first time regulated CPBs in European law. The in-depth analysis of the national chapters in this book highlights at least two main critical aspects, or misconceptions, pertaining to the legal nature and the scope of CPBs and centralised procurement activities, if considered both at national and EU level. All national chapters show that the practice of centralising public purchases was rooted in national legal systems well before the EU regulations of 2004 and 2014, having been introduced mainly during or after World War II, but in some cases even before, such as in the Netherlands, where the first CPBs dates back to 1921; even the Romanian chapter, which states that CPBs are a recent phenomenon, cannot help mentioning that some Ministries (Health, Emergency Situations and Prison Administration) were operating historically as CPBs. All in all, it is easy to imagine that centralisation of purchases was a kind of natural trend in administrative organisations of European countries, developed with the social State, particularly at the national level and probably reinforced during emergencies and war. The history of evolving centralised 1 A. von Bogdandy, “The idea of European public law today” (2017) MPIL Research Paper Series, No. 2017-04.

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Centralising public procurement

procurement in the European States must still be written, but what is indisputable is that when EU secondary legislation on centralised procurement was implemented at the beginning of the 21st century, it found a “legal space” which was not empty, but already filled with different models and legal traditions of CPBs, not necessarily fitting with the EU law model. Moreover, the potential conflict between new EU Directives and already existing Member States’ legal institutions was not only related to the legal structure but even to the scope of centralised procurement, which was created by Member States mainly to get more efficient purchases through economies of scale and professionalisation, while the legal basis for EU procurement Directives is not – and cannot be – concerned with efficiency in public spending, but rather with fostering competition and eliminating discrimination against economic operators on the basis of nationality.2 At this point, one may ask why the EU legislator felt the need, first in 2004 and then in 2014, to regulate CPBs, which were not a new phenomenon, but were already existing and working in most of the Member States for many decades. A possible answer can be found in a judgment of the CJEU3 published in 2005 (Commission v. France), in which a French law, which reserved to an exhaustive list of legal persons the task of delegated project contracting (“mandat de maîtrise d’ouvrage déleguée”) was deemed contrary to Directive 97/52/EC and to the (then) Article 49 EC Treaty. Under French law 85-807, a contracting authority could appoint an agent to fulfil certain services consisting of the provision of delegated project contracting services which, according to the French government, were to be considered as the transfer of a public power and therefore not subject to the Services Directive 97/52. However, the CJEU considered such services as merely commercial services, not implying the transfer of public power and hence declared a breach of Directive 97/52 because law 85-807 reserved the possibility of providing such services only to a limited list of legal persons, preventing the wider circulation of services and competition.4 Considering the position of the CJEU, one may presume that the reason for the intervention of the EU Directives on CPBs was not an intention to foster recourse to a new scheme for aggregated procurements but rather was aimed at legalising a pre-existing situation which could have been considered 2 M. Comba, “Variation in the scope of the new EU public procurement Directives of 2014: Efficiency in public spending and a major role of the approximation of laws”, in F. Lichère, R. Caranta and S. Treumer (eds), Modernising Public Procurement: The New Directive (Djoef Publishing, 2014), pp. 29–48. 3 Case C-264/03 Commission of the EC v. French Republic ECLI:​EU:​C2005:​620. 4 The same position was confirmed by another decision of the CJEU. See, Case C-220/05 Jean Auroux and Others v. Commune de Roanne ECLI: EU:​C:​2007:​31.

CPBs in the European legal space: an unresolved misconception

23

in breach of the European case law on public procurement.5 In other words, since centralised procurement techniques were already widely used by the Member States, but the Commission brought a case to the CJEU pretending that they were contrary to the (then applicable) procurement Directives, it was necessary to define in the new procurement Directive (of 2004) the conditions under which they could be admitted. A question of realpolitik rather than a policy-driven decision. That would explain the apparent contradiction of the 2004 public procurement Directives: their main scope is to promote competition but they foster a new legal scheme for aggregated procurement, even if it can be an obstacle to competition, especially in respect of the participation of SMEs; so much so that they have to warn against its possible anti-competition effects.6 That seems to be the unresolved misconception underlying the whole discipline of central purchasing bodies: European legislation tries to force them into the model of a pro-competition institution, but they have a different nature and were originally conceived by Member States for another scope – pursuing cost efficiency – which does not necessarily coincide with promoting competition and, rather, can have serious anti-competitive consequences.7 A second critical aspect in the analysis of CPBs must be pointed out, and that is again an issue which can be understood only if approached with a comparative method, in the framework of the European legal space. As was explained previously, the core legal issue in Commission v. France (C-264/03) was indeed the legal nature of central purchasing activities and, namely, if they are to be considered as the transfer of public power or just as the provision of a commercial service. The CJEU decided on the latter, but comparative analysis shows that the legal qualification of purchasing activities cannot be decided once and for all because it depends very much on the different legal

5 The decision of the CJEU was published in 2005, but the recourse was introduced by the Commission in 2003 and therefore it is possible that the EU legislator was worried about the possible outcome of the judgment. 6 For the anti-competitive effects of CPBs, see Chapter 6 by Sanchez-Graells in this book. 7 The contradiction turns out pretty clearly in Recitals 59, 69 and 70 of the Directive, see M. Comba, “Centralized purchasing activities and central purchasing bodies”, in R. Caranta and A. Sanchez-Graells (eds), European Public Procurement: Commentary on Directive 2014/24/EU (Edward Elgar Publishing, forthcoming 2021).

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traditions of Member States. According to the opinion recently delivered by AG Kolkott,8 there are … very different ideas in the EU Member States regarding the contracting administration’s possible powers to act as a public authority. Whilst German law, for example, strictly rejects such powers, it is recognised in French law not only that the administration has unilateral powers to amend and terminate contracts in administrative law in the context of the “contrat administratif”, but also that the administration may have recourse, as part of the performance of any contracts … to its general prerogatives as a public authority under the financial rules.

The same activity – centralised purchasing activity – is qualified as the exercise of public power in France and as commercial service, regulated only by private law, in Germany.9 It is not possible to force the variety of national legal regulations experienced by Member States into one model proposed by the EU legislation: central purchasing activities can be either qualified as the exercise of public power or as commercial activities and both qualifications are correct, depending on what national legal regulation is chosen. That demonstrates again that CPBs and centralised procurement activities cannot be correctly studied unless starting from the analysis of national legislation and then comparing it with the EU model, in the framework of the European legal space, which is the scope of this book. This chapter will address and try to analyse the material presented by the national chapters along the lines set out by the two main cleavages abovementioned – which are very much interconnected: pursuing cost efficiency vs fostering competition and exercising a public power vs being a commercial service. The two cleavages are indeed shaped under different perspectives: in the former case, we have a potential clash between the scope of CPBs as

8 Case C-584/17 P ADR Center SpA v. European Commission ECLI:​EU:​C:​2020:​ 576 paragraphs 82–89. 9 Indeed, an accurate analysis should first of all distinguish between the adjudication phase and the management of the contract phase. While the former is undoubtedly subject to public law rules, because the contracting authority holds and uses public powers according to EU law, in relation to the latter the question is more debatable. However, it can be said that the activity performed by the contracting authority is just the same both in the German and the French models, because in both cases the public contractor “can modify or terminate the contract, although the conceptual nature and foundation of such rules varies as between legal systems”, P. Craig, “Specific powers of public contractors”, in R. Noguellou and U. Stelkens (eds), Comparative Law on Public Contracts Treatise (Bruylant, 2010) pp. 173–174. See also M. Comba, “Contract execution in Europe: different legal models with a common core” (2013) European Procurement & Public Private Partnership Law Review, 8(4), 302–308, para. III.

CPBs in the European legal space: an unresolved misconception

25

declared in the European procurement Directives and the aim of pre-existing national CPBs; in the latter, we have on the contrary a substantial divide at the level of EU Member States’ legislation, between CPBs exercising a public power and CPBs acting as private service providers. The following part of this chapter takes a closer look at the legal nature and organisational structure of CPBs in different Member States, including the legal bounds between CPBs and their users (Section 2) while the different models of financing CPBs, efficiency and policy issues and joint cross-border activities performed by CPBs are tackled in Section 3 and a conclusion is proposed in Section 4.

2

LEGAL NATURE AND ORGANISATIONAL MODELS OF CPBS IN EUROPE

All national chapters acknowledge, explicitly or implicitly, that their CPBs are contracting authorities and therefore, according to the language of Directive 2014/24/EU, Article 2(1), they are either State, regional, or local authorities, or bodies governed by public law or associations formed by one or more such authorities or one or more such bodies governed by public law. It follows that, even when they are incorporated as commercial companies, they cannot have commercial or industrial character and must be financed or subject to supervision by State, regional or local authorities. That means that all Member States considered in the national chapters have interpreted Article 2(1)(16) of the Directive as “declarative”, in the sense of saying that a CPB must be a contracting authority, and not as “constitutive”, in the sense that it serves the purpose of establishing that an entity providing centralised purchasing services and, possibly, ancillary purchasing is always a contracting authority, even if not meeting the requirements of Article 2(1)(1).10 The situation is different in Germany – even if de facto and not de jure – because Germany is the only Member State where CPBs are very rarely used in practice: there are some CPBs at the federal level (the most relevant, outside the military sector, being the Ministry of the Interior), and very few at the level of Länder. The existing CPBs are all compliant with the definition of Article 2(1)(1) but they represent de facto a limited share of the public procurement market in Germany, given that the greater part is run by single contracting authorities. The German chapter highlights that in Germany professionalisa10 The “constitutive” interpretation was suggested, even if considered a little forced, by A. Sanchez-Graells during a private conversation on 27 November 2020. Such interpretation is also supported by C. Malinconico, “Commento all’articolo 33 D. Lgs. 163/06”, in G.F. Ferrari and G. Morbidelli (eds), Commentario al codice dei contratti pubblici (EGEA, 2013), pp. 435–436.

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Centralising public procurement

tion – but not centralisation – of public procurement is guaranteed by recourse to private procurement services providers – a real “boom” according to the authors of the German chapter – which entails different legal problems from those typical of CPBs because such private service providers are not vested with the exercise of public power.11 Even if the German chapter explains this prevalence of private service providers to the detriment of CPBs with the tendency of contracting authorities not to aggregate in order to keep political control on purchase decisions, it is not to be excluded that such a trend in favour of private procurement services providers can also be traced back to the German model according to which the contracting authority is not provided with public powers, as was explained in Section 1. With a background of such legal tradition, it must be easier for German contracting authorities to call on the services of private consultants, who can also come to manage the entire procurement process and can be “virtually omnipresent in the practice of the award procedure”.12 The qualification of CPBs as contracting authorities does not exclude the possibility for CPBs to also act on behalf of private entities, in addition to contracting authorities: in some cases the possibility for CPBs to provide centralising activities to private parties too is explicitly admitted by the national chapters (Germany, Poland, France and Portugal), while in most cases the question is not addressed, meaning that probably the law does not say anything (thus not forbidding it). In only one case (Sweden) is it provided that CPBs can only act for public bodies, with the exception of private schools and private services for elderly care on temporary framework agreements for personal protection equipment (PPE) against COVID-19. If CPBs can “sell” their services to private entities too, a question of competition law inevitably arises,13 because CPBs will be in competition with economic operators offering those services to the same private entities. Turning now to the territorial and functional organisation of CPBs, the picture offered by the national chapters is very varied and fragmented: there is no common scheme but, generally speaking, it is possible to find CPBs at the national level and the local level, as well as some CPBs that are specialised for their functional competence (the most common being health, IT, public

11 However, the health sector general puchasing organisation (GPO) landscape in Germany sees a strong concentration of private and public GPOs (it is not possible to use the word CPBs here): SANA AG, Propitalia, GDEK GPO, PEG GPO, Clinicpartners AG, AGKAMED are all the result of partnerships between public (and church) hospitals with private economic operators, mainly health-care insurers or private equity. 12 See the chapter on Germany in this book. 13 See Chapter 6 by A. Sanchez-Graells in this book.

CPBs in the European legal space: an unresolved misconception

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transport) both at the national and local level. What is certain is that there is an overlapping of jurisdictions among different CPBs: it can happen that the same (usually local) contracting authority is subject to the national and the regional CPBs and perhaps also to a third CPB with a specific functional competence, which entails legal and practical problems not so different from the parallel framework agreements phenomenon, examined in the Danish chapter in this book. Such a situation, where in the same Member State more CPBs are operating, can be managed with different legal rules, which can be classified according to the existing legal bounds between contracting authorities and CPBs. First, a model can be established in which every single contracting authority is free to decide whether to adhere to any CPBs or to purchase by itself: that is the model of “free adherence” which is used in Germany, in France (since 2001) and in the Netherlands. This model also implies that any contracting authority can choose any CPB, with no restriction, for example, connected to geographical location or participation as a member of the CPB. That is the model which implies a higher level of competition among CPBs, because contracting authorities may choose among different CPBs with different levels of specialisation, of efficiency and also with different costs, so that in an ideal world they will choose the most efficient CPB.14 A second possibility is when a contracting authority is subject to legal constraints limiting its freedom of choice, as is allowed by Directive 2014/24/EU, Article 37(1), last phrase.15 According to the landscape described by the national chapters, the main models of such constraints can be listed as follows, on the basis of increasing intensity: a. The optional model.16 Contracting authorities can purchase by themselves but, if they decide to use a CPB, they must use only specific predetermined

14 Even if, de facto, local contracting authorities, will usually choose CPBs which are territorially closer. 15 “Member States may provide that certain procurements are to be made by having recourse to central purchasing bodies or to one or more specific central purchasing bodies.” Such provision is very much criticised by A. Sànchez-Graells and I. Herrera Anchustegui, “Impact of public procurement aggregation on competition. Risks, rationale and justification for the rules in Directive 2014/24” (5 December 2014), University of Leicester School of Law Research Paper No. 14-35. 16 See the chapters on the UK, the Netherlands and Italy (for goods and services below 40,000 euros and public works below 15,000 euros), Germany and Finland (other contracting authorities except the State), Spain (except the State and the Autonomous Communities), Romania (other contracting authorities except central purchasing body), Portugal (other contracting authorities except those with a national system for public

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CPBs, based on the territorial connection (e.g., all national contracting authorities must use national CPBs and regional contracting authorities must use their regional CPBs), or the functional competence (e.g. all IT or health purchases must be done through national CPBs specifically established for such purchases) or a combination of the two. b. The conditioned compulsory model.17 Contracting authorities can purchase by themselves only if they demonstrate that the price obtained (more rarely, the most economically advantageous tender) is lower than or equal to the price offered by the competent CPB. c. The compulsory model.18 Contracting authorities can purchase only through one or more predetermined CPBs. Obviously, the reality described by the national chapters is much more multifaceted, but it seems that these are the main three models to which all the existing legal solutions can be traced back. Just to give some examples of the existing variety, in certain cases (Italy) the compulsory model is triggered only for procurements above a certain threshold, below which contracting authorities can procure by themselves, while in other cases (Romania), contracting authorities are divided into main users, obliged to register with the CPB system, while secondary users can choose to register. Moreover, it has to be noted that the conditioned compulsory model is not easy to achieve in practice, because it is (almost) always possible for a contracting authority to pretend that their need is not exactly the same as that satisfied by the CPBs and thus prices and the most economically advantageous tender are not comparable, unless they are for standardised commodities.

purchases (NSPP)), Denmark (except those mandated to the State on certain types of agreements), and Sweden (except for children’s vaccines). 17 See chapters on Belgium and Poland. 18 See chapter on Spain, where it is stated that the State and the Autonomous Communities must purchase through their respective CPBs, and also there are mandatory goods and services that have to be obtained through the generic State CPB, but other contracting authorities may voluntarily adhere to CPBs. See also the chapter on Romania, where it is stated that CPBs must register as users, but others may do so voluntarily; the chapter on Portugal, stating that entities of NSPPs must use CPBs, mainly ESPAP I.P., but other contracting authorities are free to choose whether to join the CPBs; the chapter on Italy (mandatory for purchases of good and services above 40,000 euros and public works above 150,000 euros), the chapter on Finland (State authorities must use agreements of Hansel Oy for certain goods and services), the chapter on Denmark (mandatory for the State on certain agreements), and the chapter on Sweden (mandatory for children’s vaccines).

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29

An interesting variant of the optional model is that by which the contracting authority can only use a CPB if it is a member of such CPB, which is used in Finland where the Finnish Public Contracts Act thus requires that there is a certain in-house relationship between the CPB and its users … even if … in-house requirements are not to be followed to the full extent. In other words, there can be purchases from minority owners or sister organisations even though a CPB is owned by multiple contracting authorities.19

The Finnish case offers a good opportunity to specify that, under EU law, CPBs are not in-house organisations, as per Article 12(1) of the Directive, because Article 2(1)(16) does not require CPBs to have the three requisites needed for in-house organisations. In particular, it is not required under EU law that more than 80 per cent of CPBs’ activity should be the performance of tasks entrusted by controlling contracting authorities which should exercise a control similar to that which they exercise over their own departments. On the contrary, CPBs are conceived to provide procurement activities for any interested contracting authority, even if located in another Member State. Indeed, through a more accurate analysis, the Finnish model also seems to be different from the in-house scheme, which allows us to conclude that CPBs and in-house organisations are different legal institutions, born in different contexts (in-house organisations are a creation of CJEU case law) and aimed at solving different problems and therefore subject to different legal regulations.20 It remains to be seen if the same legal entity can be simultaneously a CPB and an in-house organisation, carrying out two different and separate activities (procuring services as a CPB and other activities in house), each under a different legal regime. The proposed classification highlights the need for an accurate comparative analysis of the existing legal relationship between CPBs and their users: what kind of contract (if any) regulates the reciprocal duties and rights, when a CPB offers its services to contracting authorities? In addition to the main distinction between wholesaler and agent, which will be examined in the following section of this chapter, one has to take into account – just to give some examples – the possibility of a non-contractual public law relationship (like in-house), of an See the chapter on Finland. Even if they are both an exception to the application of public procurement rules and, as such, represent a reaction of European law to a phenomenon already existing in EU Member States, which needed a legal cover. For such interpretation applied to in-house organisations, see M. Comba, “In-house providing in Italy: the circulation of a model”, in M. Comba and S. Treumer (eds), The In-House Providing in European Law (Djoef Publishing, 2010) pp. 95–117. 19 20

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agency contract, of a mandate-to-buy contract and so on, without forgetting that each national legislation can have different legal regulation of these legal relationships. And the discourse of the legal relationship between CPB and users leads to the problem of liabilities and remedies.21 In short, there is still a lot of work for comparative lawyers studying CPBs.

3

OTHER POSSIBLE CRITERIA FOR CLASSIFYING CPBS

CPBs models existing in the EU Member States can be further classified under different criteria. Such taxonomy will be reported in this section not only for the sake of describing the wide variety of models co-existing with the EU regulation, but also – and perhaps above all – because every single contrasting pair of qualifications allows the shedding of light on a different problematic aspect of CPBs. Wholesaler vs Agent Model The national chapters tell us that almost all CPBs follow the agent model, instead of the wholesaler one, with the relevant exception of the French Union des Groupements d’Achats Publics (UGAP). Indeed, the Dutch government even seems to discourage the wholesaler model, by mentioning the stock risk which is run in adopting such a model, because purchases are made prior to the non-obligatory procurement from contracting authorities. The issue seems not to have been sufficiently analysed and perhaps deserves deeper reflection, because it can influence the shape of CPBs’ activities and, of course, the legal relations with their users, the contracting authorities. Indeed, in the wholesaler model contracting authorities are qualified as purchasers from the CPB and not principals as in an agency contract; but this can seem too simplified a scheme, since it can happen that the CPBs only buy when they have received a certain number of requests from contracting authorities, in order to avoid or limit the stock risk, and therefore the legal relationship between a wholesaler CPB and its users can be different, according to national legislation. In addition, the choice in favour of the wholesaler model can have an influence on joint cross-border procurements, which are perhaps easier to organise if based on the wholesaler model, so that it is possible that such a model will be reconsidered by Member States, especially in relation to centralised procurements in the health sector. The UGAP experience certainly deserves to be better studied.

See Chapter 7 of this book by Risvig Hamer.

21

CPBs in the European legal space: an unresolved misconception

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Funding of CPBs and Efficiency: Tax Revenues vs Fees on Users (or on Suppliers) Most CPBs are funded through tax revenues of the State or the regional/local community they refer to22 and often they also ask for a fee from participating contracting authorities,23 while in certain cases they charge a percentage of the suppliers’ invoiced sales (the latter case, however, is considered illegal by the Italian Anti-Corruption Authority).24 In the case of funding through tax revenues, it should be assessed whether it involves the direct reimbursement of all expenses incurred, or if a thorough justification of costs on the basis of efficiency is required, and that is even more important if competition among CPBs – and above all between CPBs and private providers of procurement services – is admitted.25 The same applies in the case of funding based on fees required from users, especially if this method of funding is coupled with the compulsory model (see Section 2), where contracting authorities do not have the possibility to choose which CPB to refer to, nor to procure for themselves and therefore they cannot but pay the required fee to the CPBs to which they are obliged to refer. The question of funding is thus strictly linked to that of efficiency of CPBs, which is addressed, from a managerial perspective in Chapter 5, written by F. Schotanus. However, it is not possible to understand – from the reading of the national chapters – what is the real cost of single procurement procedures in order to compare them,26 and it is therefore not possible to assess the efficiency of different CPBs across Europe. The national chapters reveal a general lack of accurate analysis on the efficiency of CPBs: in some cases (Finland and Belgium) savings ranging from 20 to 30 per cent have been reported, but it was not specified how these figures were calculated, while in Germany and Denmark polls reported satisfaction rates of 60 per cent (Denmark) and 90 per cent (Germany). In the UK chapter, the report of the National Audit Office (NAO) on the Crown Commercial Service (CCS), is mentioned, according to which the CCS achieved “large savings” and 60 per cent satisfaction, but no conclusion is drawn on cost efficiency, as compared with other contracting authorities, buying for themselves without centralisation. Moreover, the

See chapters on Spain, Italy, Poland, Romania and Belgium. See chapters on Spain, France, Italy, Poland, Belgium, Germany, Denmark, Portugal, Finland, Sweden and the Netherlands. 24 See the chapter on Italy. 25 See Chapter 2. 26 Some information on this point can be found in the OECD, Report on Centralised Purchasing Systems in the European Union (SIGMA Papers, No. 47, 2011) which, however, has not been updated and lacks a deeper analysis of collected data. 22 23

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GAO report acknowledges a general impression that CCS did not achieve the intended goals. However, most national chapters27 underline that the efficiency of CPBs is not limited to cost efficiency, i.e. lower purchase costs due to economies of scale, but is also – if not above all – related to higher professionalisation,28 which entails anti-corruption effects, fast and widespread digitalisation and a stronger tendency to carry out strategic procurements and – it can be added – a higher rate of success in case of litigation brought by dissatisfied tenderers (compared to the outcome of litigation against single contracting authorities), faster procurement procedures, and a lower rate of procedures declared unsuccessful for lack of bids received. It could be very interesting to elaborate a common system for evaluating the positive consequences of higher professionalisation of European CPBs, in order to compare them and understand what are the most efficient organisational and managerial models. Formula 1 Team / Carpooling / Bus Ride Models In Chapter 5 on economic and managerial perspectives on CPBs, Schotanus suggests a possible classification of collaborative procurement under different structures, ranging between “coordination by hierarchy” to “coordination by market”. The metaphor used by Schotanus is drawn from road transportation: the factors of influence of all members and of frequency of initiatives allow the classification of collaborative procurement from the Formula 1 model, where the influence of single members is very high and the frequency of initiatives is low, to the bus ride model where, on the contrary, the influence of single members is very low, while the frequency is high, passing through the carpooling model, where the characteristics of the two elements are mixed. The very idea of CPB is inevitably attracted to the bus ride model – as is shown by all national chapters – but the question deserves further study because even in the bus ride model one can perceive different legal solutions regulating the relationship between CPBs and users (see Section 2, above), and thus different ways in which users can perform an active role in the group. Limiting the analysis to the agent models (as opposed to the wholesaler), users can just adhere to the framework agreement proposed by the CPB, or they can describe the products they need and ask the CPB to carry out a framework agreement, or they can even ask to be consulted in the definition of the contract

27 See chapters on Italy, France, Denmark, United Kingdom, Spain, Germany, Belgium, Finland, Poland and the Netherlands. 28 That is also the opinion of Schotanus, see Chapter 5, Section 2.

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and in the appointment of the jury. Here again, the question of legal regulation between CPBs and their users comes out, under the perspective of the managerial organisation of the CPB model, with the already mentioned implications in the field of liability and remedies. Joint Cross-Border Procurements / Only National Joint Procurements All national chapters witness a limited experience of joint cross-border procurements, with the exception of a few cases, mainly in the field of health procurement, for example between Dutch and German hospitals, among the Nordic countries (the Danish SKI is mentioned as a user for a framework agreement signed by the Swedish SKL and a great deal of informal cooperation is carried out between the Nordic CPBs), as well as the cross-border procurements already mentioned in the widely cited feasibility study of 2016.29 In Spain, it is even impossible to carry out joint cross-border procurements, since Article 39 of the Directive has not been transposed into national law. In some cases, joint cross-border procurements are carried out under specific treaties between interested countries for the construction of infrastructure, thus avoiding the application of the Directive: that is the case for the high-speed railway between Turin and Lyon, or the Belgian Ghent–Terneuzen project. The reason for the failure of joint cross-border procurements is mostly identified by the national chapters not so much in a lack of interest (on the contrary, it is mostly perceived as an interesting and useful tool which should be implemented) but rather in the complexity of legal problems entailed by the preparation and execution of joint cross-border procurements and the lack of clear models to be followed (even if, in the German chapter, it is also traced back to the lack of a pressing need to go across borders, given that Germany is one of the largest Member States, with various opportunities for joint procurement at home). However, the COVID-19 pandemic30 showed the need to organise cross-border centralised systems for buying PPE and medicines, and the

29 BBG-SKI, Feasibility Study Concerning the Actual Implementation of a Joint Cross-Border Procurement Procedure by Public Buyers from Different Member States (2016). See also: Commission, “Feasibility study concerning the actual implementation of a joint cross-border procurement procedure by public buyers from different Member States”, http://​ec​.europa​.eu/​DocsRoom/​documents/​22102, accessed 30 April 2021. The limited recourse to JCBP is confirmed by the analysis, related to the year 2017, published by I. Locatelli, “Do European public buyers purchase together? An assessment of joint cross-border procurement contracts published in TED in 2017 and beyond” (2019) Ius Publicum, 1, www​.ius​-publicum​.com, accessed 8 May 2021. 30 See Chapter 8.

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first very large example of joint cross-border procurement can be considered the agreement between the EU Commission and Member States (following the agency model), based on Regulation 2016/369/EU, aimed at buying anti-COVID vaccines.31 It is likely that joint cross-border procurement techniques will be improved in the near future, at least in the health sector, to meet the challenges presented by the need for contracting authorities to negotiate with large transnational suppliers.32

4

CONCLUSION: THE UNRESOLVED MISCONCEPTION

CPBs were already existing in most Member States before their recognition, first by Directive 2004/18/EC and now by Directive 2014/24/EU, and their main function was to reduce the cost of public purchasing through economies of scale and professionalisation of public procurement. Albeit pursuing cost efficiency in public procurements is a sound legal ground for national public administrations, it is not so for European legislation which, in the field of public procurements, should be based on the principles of free circulation of goods and services, prohibition of discrimination on the basis of nationality and approximation of laws. On the other hand, centralising public procurement can have anti-competition effects because it can potentially reduce the number of competitors due to the high requirements needed to participate in award procedures for very large contracts. This seems to be the unresolved misconception underlying the whole discipline of CPBs: European legislation tries to force them into the model of a pro-competition institution, but they have a different nature and were originally conceived by Member States for another purpose – pursuing cost efficiency – which in this case does not necessarily coincide with promoting competition. A clear example of this unresolved misconception is the problematic relationship between CPBs and competition laws, both from the perspective of CPBs as purchasers, potentially altering the market, and from that of competition among them.33 It is not easy to imagine a solution. Perhaps the simplest – but not necessarily the best – could be to acknowledge the public nature of CPBs and to admit them as an exception to competition rules, which means that CPBs must be 31 Commission, “Decision of 18.6.2020 approving the agreement with Member States on procuring COVID-19 vaccines on behalf of the Member States and related procedures” C(2020) 4192 final. See also Chapter 8 in this book. 32 The European Health Public Procurement Alliance (EHPPA) is one of the most active cross-border associations operating in this field. 33 See Chapter 2.

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considered – like in-house and institutional collaboration – as non-competitive (or anti-competitive) institutions. This result could be justified by the need to comply with the principle of internal self-organisation of Member States, like in the two cases mentioned, and by the acknowledgement that the award of public procurements implies a certain exercise of public powers.34 On the other side, it would entail a prohibition on CPBs from providing procurement services on the market, forbidding any involvement of CPBs in the market for procurement services, although that might still not be enough to strike a balance between Article 56 and Article 106 TFEU in relation to CPBs. Perhaps, all in all, one has just to acknowledge the rich variety of CPB models offered by the national legislation of EU Member States and admit they are not traceable back to one single model, so that ad hoc solutions should be sought, on the basis of a thorough comparative analysis.

34 Of course, the proposed solution will probably be unsuitable for Member States, like Germany, that are more oriented towards a “private law” qualification of public procurements.

4. A comparative view of the use of procurement techniques and electronic instruments by central purchasing bodies Marta Andhov and Roxana Vornicu 1 INTRODUCTION Chapter 2 of the Directive enumerates procurement techniques and instruments for electronic and aggregated procurement but does not include a definition of what procurement techniques or electronic instruments are. These procurement techniques include framework agreements (Art. 33) and dynamic purchasing systems (Art. 34), while electronic catalogues (Art. 36) and electronic auctions (Art. 35) are types of electronic instruments. As a general point of departure, procurement techniques are not a type of a public contract – though, under specific circumstances, they might become one – nor are they a type of procurement procedure. Procurement techniques could be described as an organisational infrastructure where one of the available procurement procedures is applied (usually the open or restricted procedure), leading to a conclusion of a public contract. Both procurement techniques and electronic instruments can increase competition, aggregation and digitalisation of procurement processes, and streamline public purchasing.1 Central Purchasing Bodies (CPBs) use these procurement techniques and instruments for their aggregated purchases, and they are the main bodies establishing such organisational infrastructure. The types of products and services purchased through these techniques differ very much from one Member State to another. In some Member States, CPBs buy

1 Recital 68 Directive 2014/24/EU. See also: M. Andrecka (now Andhov), ‘Framework agreements, EU procurement law and the practice’ (2015) Upphandlingsrättslig Tidskrifts, 2, 127–149, www​.urt​.cc/​sites/​default/​files/​UrT​ %202015​-2​-Andrecka​%20​-​%20S​%C3​%A4rtryck​.pdf, accessed 26 March 2021.

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mostly goods – for example, in Romania.2 In other Member States, CPBs buy goods and services. For example, Belgium’s national report identifies an interesting framework agreement for soil studies and soil remediation projects used by local authorities.3 In a few Member States, there are also examples of aggregated purchases of works by CPBs (Italy, Denmark and the UK but also in Belgium). This chapter aims to provide a comparative analysis of how relevant provisions on procurement techniques and electronic procurement and e-catalogues are interpreted and applied in the different Member States. The chapter will also address the identified challenges, as well as good practices, in the application of these provisions in the Member States.4 The chapter is structured in the following manner. Firstly, procurement techniques are analysed: in section 2, framework agreements and in section 3, dynamic purchasing systems. Section 4 addresses e-procurement and electronic catalogues. Section 5 concludes the chapter.

2

FRAMEWORK AGREEMENTS

Framework agreements are a flexible procurement technique that a contracting authority may use to establish general terms for the award of multiple contracts over a longer period, either to a single supplier or among several suppliers enrolled in the framework. They may be established by a single or several contracting authorities, with CPBs becoming the leading creators of framework agreements on behalf of others.5 Identified as an advantageous tool to achieve economies of scale, framework agreements allow, on the one hand, reductions in transaction costs and time and, on the other hand, achieving value for money by aggregating demand. Transactional costs and time are often reduced as some procedural steps, e.g. advertising and assessing qualified tenders, are carried out just once for multiple call-off contracts, rather than for each individual contract. Value for money can be achieved by better exploiting economies of scale, that is, the aggregation of extended volumes and values of public needs.6

See chapter on Romania in this book. See chapter on Belgium in this book. 4 The chapter looks closely at section 3 of the questionnaire. The questionnaire can be found in Chapter 1 of this book. 5 PwC, Public Procurement in Europe: Cost and Effectiveness (2011) https://​ op​ . europa​ . eu/​ e n/​ p ublication​ - detail/​ - /​ p ublication/​ 0 cfa3445​ - 7724​ - 4af5​ - 8c2b​ -d657cd690c03, accessed August 2021. 6 However, aggregation also raises some concerns, see, e.g. Chapter 6 by Albert Sanchez-Graells in this book. 2 3

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While framework agreements were introduced into the EU public procurement regime by Directive 2004/18/EC,7 they were widely used and considered as an efficient procurement technique throughout Europe even before that.8 Out of the Member States under analysis in this book, Denmark, Finland, Sweden, the United Kingdom (not an EU MS anymore), the Netherlands, Spain, Germany, Italy and France often use framework agreements. In the other Member States, such as Romania and Poland, such usage is limited.9 2.1

Types of Framework Agreements

The framework agreements that CPBs use can be of various types, for instance, framework agreements with a single supplier or with multiple suppliers, framework agreements that are mandatory or optional, more complex (e.g. framework agreements for works with various users that also sign themselves up to another or multiple frameworks10) or rather simple (for instance CPBs that buy paper or fuel for the use of various contracting authorities, which in relation to a CPB are called users). In all surveyed Member States, national legislation provides the same distinction between framework agreements as the Directive, namely based on the number of suppliers in the framework agreement: the single supplier framework and the framework agreement concluded with multiple suppliers (section 2.1.1). The second differentiation is based on whether the framework agreement has a voluntary or mandatory character (section 2.1.2). 2.1.1 Single and multi-supplier framework agreements Framework agreements can be concluded with one or multiple suppliers. Whenever a framework agreement is concluded with just one supplier, call-off contracts must be awarded within the terms laid down in the framework agreement. However, this does not mean that the contracting authority has a right to

They could be found under the Utilities Directive before 2004. See for instance the chapters on Denmark, Italy or the UK in this book. 9 In Romania, usage is limited and not encouraged by Romanian National Procurement Authority, which in its guidance note points out that whenever a contracting authority uses a framework agreement without it being truly necessary, the disadvantages are more significant than the advantages and the contracting authority’s activity becomes ineffective. See more in the chapters on Romania and Poland in this book. 10 See for instance the case of Denmark, where frameworks within a framework are allowed, in the Danish chapter in this book. See also the case of the UK, where the Crown Commercial Service (CCS) signs complex framework agreements for works, in the UK chapter in this book. 7 8

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enter into a specific call-off contract automatically. The supplier may be asked in writing to supplement its tender, if necessary. Where a framework agreement is concluded with more than one supplier, the framework agreement shall be performed by (a)

a so-called ‘direct award’ of call-off contracts – following the terms and conditions of the framework agreement without reopening competition, where all the terms and conditions for awarding the call-off contracts are set; or by (b) the application of a so-called mini-competition, where the framework agreement sets out the terms and conditions for a reopening of the competition amongst the providers of the framework agreement for the award of call-off contracts. Multi-supplier framework agreements may include more than one type of procedure for the award of call-off contracts.11 This means that part of the framework agreement’s call-off contracts may be ‘directly’ awarded, and the other part may be granted based on a ‘mini-competition’. The choice between the two mentioned call-off methods should be based on objective criteria set out in the procurement documents.12 Such objective criteria are defined broadly and can relate to the quantity, value or characteristics of the works, supplies or services contracted. This includes the need for a higher degree of service, increased security level, or developments in price levels compared to a predetermined price index.13 A practical example may be that public call-off contracts will be awarded through the direct award method below a certain value. Above a certain – previously established value – call-off contracts will be awarded based on a mini-competition. Compared to Recital 61 of the Directive, the Danish Procurement Act goes further by adding ‘other specific procurement needs of the contracting authority’. In the Danish preparatory works for the Procurement Act, the phrase is further elaborated on, stating that the specific procurement need could be the need for a specific product.14 As Risvig Hamer points out, this is a reasonably flexible approach and goes further than the practice of the Danish Complaints Board before the introduction of the Procurement Act (e.g. the Konica Minolta

11 See M. Andhov, ‘Commentary to article 18(2)’, in R. Caranta and A. Sanchez-Graells (eds), European Public Procurement:​ Commentary on Directive 2014/24/EU (Edward Elgar Publishing, forthcoming 2021). 12 Art. 33(4)(b) of Directive 2014/24/EU. 13 Recital 61 of Directive 2014/24/EU. 14 See chapter on Denmark in this book.

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case, December 201115). It remains to be seen how far the ‘specific procurement needs’ can be construed without ceasing to be objective criteria and violating procurement rules.16 2.1.1.1 Direct award of call-off contracts In the case of multi-supplier framework agreements, the call-off contracts shall be awarded following the terms and conditions of the framework agreement, without reopening of the competition, where the framework sets out all the terms governing the provision of the works, services and supplies concerned and the objective conditions for determining which of the undertakings in the framework agreement shall perform them.17 The latter conditions shall be indicated in the procurement documents for the framework agreement. One way of awarding call-off contracts might be through the ‘cascade’ model.18 This involves first awarding the call-off contract to the supplier whose tender was ranked as the best one, then turning to the second one if the first one is not capable or not interested in providing the goods, services or works in question.19 Other methods of direct award of call-off contracts in framework agreements include ‘cab rank’ (acceptance of any given order); rotation between suppliers; percentage allocation; alphabetical rotation; or random selection.20 However, when the Commission referred to the ‘cascade’ method in its explanatory note, it did not elaborate on the other methods.21 There is no case law to confirm the availability or prohibition of use of the methods mentioned above. It seems that some of these methods, for example, cab rank, could be sustained provided 15 The Danish Public Procurement Complaints Board ruling on 5 December 2011 in Konica Minolta v. Voccational School Region North Zeleans. 16 Ibid. 17 Art. 33(4)(a) of Directive 2014/24/EU: see also S. Arrowsmith, The Law of Public and Utilities Procurement Regulation in the EU and UK (vol. 1, 3rd edn, Sweet & Maxwell, 2014) pp. 1141–1146. 18 M. Andrecka (now Andhov), ‘Framework Agreements: Transparency in the Call-off Award Process’ (2015), European Procurement & Public Private Partnership Law Review, 10(4), 231–242. 19 European Commission Explanatory Note, ‘Framework Agreements – Classic Directive’ (CC2005/03_rev/ of 14.7.2005) at 3.2. 20 Procurement Lawyers Association, ‘The use of framework agreements in public procurement’, March 2012, p.  35, www​.procurementlawyers​.org/​pdf/​PLA​%20paper​ %20on​%20Frameworks​%20PDF​%20Mar​%2012​.pdf, accessed 26 March 2021; F. Lichere and S. Richetto, ‘Framework agreements, dynamic purchasing systems and public e-procurement’, in F. Lichere, R. Caranta and S. Treumer (eds), Modernising Public Procurement the New Directive (DJØF Publishing, 2014), p. 216. 21 European Commission Explanatory Note, ‘Framework Agreements – Classic Directive’ (CC2005/03_rev/ of 14.7.2005) at 3.2.

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that the award criteria are objective, transparent and non-discriminatory. While other methods, such as random selection or rotation, might be challenging to uphold in the event of a legal challenge. This is because the procurement process’s purpose is to identify the best tender, which also provides the best value for money. Consequently, use of the random selection method in the call-off contract award is questionable. Unless all the bids in the framework agreement have an identical high score, it could be argued that the best tenders were identified at the stage of establishing the framework agreement. Therefore, the subsequent award of call-off contracts may be chosen based on different criteria and a broader understanding of the best tender, or even randomly. 2.1.1.2 Mini-competition In the case of multi-supplier framework agreements where not all terms and conditions are specified at the outset, other than some limited provisions of the Directive, the method of designing the mini-competition is mostly left to the discretion of the contracting authority. The procedure for a call-off contract award often is less formalistic and more flexible. Nevertheless, they do resemble procedures established in the procurement Directives. Also, at the stage of mini-competition, no substantial changes to any terms agreed at the stage of establishing a framework agreement can be introduced.22 The mini-competition shall be based on the same terms applied in respect of the award of the framework agreement and, where necessary, more precisely formulated terms, and, where appropriate, other terms referred to in the procurement documents for the framework agreement.23 All undertakings in the framework agreement that are capable of performing the call-off contract shall be invited in writing to participate in a mini-competition.24 Contracting authorities shall fix a time limit, which is sufficiently long to allow tenders for each specific call-off contract to be submitted, considering factors such as the complexity of the subject-matter of the call-off contract and the time needed to send in tenders.25 Tenders shall be submitted in writing, and their content shall not be opened until the stipulated time limit for reply has expired.26

22 See Arts 33(2) and 72 of Directive 2014/24/EU and Judgment of 19 June 2008, Case C-454/06 Pressetext Nachrichtenagentur GmbH v. Republik Österreich, ECLI:​ EU:​C:​2008:​351. 23 Art. 33(4)(c) of Directive 2014/24/EU. See also: Arrowsmith, The Law of Public and Utilities Procurement Regulation in the EU and UK (vol.1, 3rd edn, Sweet & Maxwell, 2014) pp. 1146–1153. 24 Art. 33(5)(a) of Directive 2014/24/EU. 25 Art. 33(5)(b) of Directive 2014/24/EU. 26 Art. 33(5)(c) of Directive 2014/24/EU.

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Finally, contracting authorities shall award each contract to the tenderer who has submitted the best tender based on the award criteria set out in the procurement documents for the framework agreement.27 Available award criteria for framework agreements include the most economically advantageous tender that shall be identified based on the price or cost, using a cost-effectiveness approach, such as life-cycle costing.28 It is established that the award criteria for an award of call-off contracts may be different, but they need to be established in the framework agreement. The criteria for awarding call-off contracts are required to identify the most economically advantageous tender. Consequently, the methods used during the award stage of call-off contracts must support this aim. This excludes the applicability of using methods such as random selection. Some Member States, like Denmark, have a flexible interpretation of competitions within framework agreements, whilst others have a stricter one. According to the Danish approach, a framework agreement within a framework agreement is compliant with national law, whereas in Sweden, this is not permitted, and all awards from framework agreements must result in contracts that fix all the conditions.29 2.1.2 Voluntary vs mandatory framework agreements According to the Directive, framework agreements are described as voluntary techniques as a starting point.30 This means that a contracting authority has the discretion to decide whether it wants to become part of a framework agreement or not. Even if the contracting authority becomes a part of the framework agreement, it still might decide to procure – in respect of the need covered by that framework agreement – outside it. Arrowsmith points out that one of the most advantageous characteristics of framework agreements is the retention of a contracting authority’s freedom to buy outside the framework agreement if that should prove more favourable when a call-off contract is placed.31 However, a challenge to such an approach might be observed in the UK, namely, framework agreements being established but not used.32 While Art. 33(5)(d) of Directive 2014/24/EU. Arts 67 and 68 of Directive 2014/24/EU; see M. Andhov, R. Caranta and A. Wiesbrock (eds), Cost and EU Public Procurement Law: Life-Cycle Costing for Sustainability (Routledge Publishing, 2020). 29 See chapters on Denmark and Sweden in this book. 30 See Recital 61 of Directive 2014/24/EU. 31 Arrowsmith, The Law of Public and Utilities Procurement Regulation in the EU and UK (vol.1, 3rd ed. Sweet & Maxwell 2014), pp. 1101–1105. 32 M. Andrecka, ‘Dealing with legal loopholes and uncertainties within EU public procurement law regarding framework agreements’ (2016) Journal of Public Procurement, 16(4), 505–527. 27 28

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this is a practical issue, it might also become a legal one from the perspective of the transparency principle. A framework agreement that multiple contracting authorities do not plan to utilise might be misleading to the economic operators. Nothing in the procurement Directives prohibits national legislators from making framework agreements mandatory. Therefore, national laws and their interpretation will play a role here that introduces some limitations. Member States have different approaches in this regard. In Denmark, parallel frameworks are allowed by law, and use of them is also a common practice of contracting authorities.33 In the Netherlands, the award of public contracts outside the framework agreement is not allowed if their substance falls within the framework agreements’ scope, even when there is no an explicit contractual obligation to act accordingly.34 According to the national chapters, in Sweden, Finland, the UK and Romania, mandatory framework agreements are in use, while they do not exist in the Netherlands. CPBs such as SKI in Denmark, the NPS in Wales, or SKL Kommentus in Sweden establish mandatory framework agreements for the contracting authorities that want to be part of their framework agreements.35 In such cases, the contracting authorities need to bind themselves to use the framework. In Denmark, several mandatory framework agreements for the central government authorities and municipalities have been established.36 The expectation is that more agreements will become mandatory.37 The mandatory agreements are established mainly by the main CPB, the SKI, which currently has 23 mandatory frameworks. Still, some also exist for the authorities under the central government at Statens Indkøb.38 In Sweden, state procurement coordination regulation makes it more or less compulsory for authorities under the government to use central government

See chapter on Denmark in this book. See chapter on Netherlands in this book, in which it is stated, ‘The Dutch legislature deemed these awards to be a violation of pre-contractual principles of good faith, the principles of good administration and the principles of reasonableness and fairness.’ 35 M. Andrecka (now Andhov), ‘Framework agreements, EU procurement law and the practice’ in Upphandlingsrättslig Tidskrifts, 2, 127–149 www​.urt​.cc/​sites/​default/​ files/​UrT​%202015​-2​-Andrecka​%20​-​%20S​%C3​%A4rtryck​.pdf, accessed 26 March 2021. 36 Whenever a framework agreement is mandatory, the contract notice will mention it, but if they still want to purchase outside the framework agreement, this will not be an issue between the supplier and the contracting authority, but between the contracting authority and the Finance Department. 37 See chapter on Denmark in this book. 38 State Procurement & Modernisation Agency, www​ .statensindkob​ .dk/​ ServiceMenu/​In​-English, accessed 26 March 2021. 33 34

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authorities’ framework agreements.39 The other national CPBs have framework agreements that are voluntary for their users to use, with few exceptions. SKL Kommentus has only one mandatory framework agreement for its regional users. It covers vaccines within the children’s vaccine programme. What is interesting are the consequences of a breach of the previously mentioned obligation of mandatory character, as there seem to be none. As authors reflect in Denmark and Sweden, there is no case law, sanctions or practice regarding the potential consequences of not using the mandatory frameworks.40 2.2

Identification of parties and closed character of framework agreements

When tendering a framework agreement, the notice must include all the contracting authorities’ identities, which are to be a part of the framework agreement.41 This is because framework agreements are closed systems, which new suppliers are not permitted to enter.42 Such a requirement is established to secure the principle of transparency and equality within the framework agreements. In several Member States, it has been debated to what extent the parties and future users shall be identified.43 The Directive states that contracting authorities may be individually named, or they may be named by the recognisable class of contracting authorities such as central government departments, local authorities in region X, province Y, etc.44 It must be possible to identify the contracting authority concerned immediately.45 Consequently, a reference to new schools or hospitals is not sufficient, as in simple terms, contracting authorities such as ‘new schools’ do not exist.46 If the class description does not allow the immediate identification of the authority concerned, the information should be included in the notice, where further information may be found. Reference may be given to a separate document, web page, list, etc.

See chapter on Sweden in this book. See chapters on Denmark and Sweden in this book. 41 Recital 60 of Directive 2014/24/EU. 42 There are exceptions to this rule, see Art. 72 of Directive 2014/24/EU. 43 See chapters on Finland, the United Kingdom and Italy in this book. 44 Recital 60 of Directive 2014/24/EU. 45 European Commission Explanatory Note, ‘Framework Agreements – Classic Directive’ (CC2005/03_rev/ of 14.7.2005). 46 C. Risvig Hamer, ‘Chapter II: Techniques and instruments for electronic and aggregated procurement’, in M. Steinicke and P. Vesterdorf (eds), Commentary on EU Public Procurement Law (Nomos, 2018). 39 40

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2.2.1 The issue of non-signatories The CPB establishing a framework agreement may be interested in a broad description of the parties involved. It would enable the party to include as many users of a framework agreement as possible, which may be a great advantage in receiving bigger discounts for bulk purchases. Simultaneously, identifying framework agreements’ end users/contracting authorities is essential, as it scopes the market that the procurement will cover. The Directive does not explicitly cover whether the identified contracting authorities intend to use the framework agreement. The challenge identified in practice is that at times centralised framework agreements may be established without consultation with the end users/contracting authorities. Therefore, a contracting authority (non-signatory) will not know that it is part of a newly established framework agreement. The contracting authority (non-signatory) will not plan to use the framework agreement, or the contracting authority will already be part of a similar framework.47 The issue of referring to non-signatory contracting authorities in the framework agreement procurement notice has been considered in the CJEU’s Autorità case, where an ‘extension clause’ was provided with the possibility of extending the agreement to several regional health authorities identified in that clause.48 The CJEU was asked whether EU procurement legislation allowed a contracting authority to conclude a framework agreement on its behalf and on behalf of other contracting authorities that were not direct parties (signatories) to that agreement but were specified as potential users of that framework agreement. In its decision, the CJEU confirmed that a contracting authority did not have to be a direct signatory to the relevant framework agreement to enter call-off contracts under a framework agreement. Instead, it was sufficient for it to appear as a potential beneficiary of that framework agreement from the date on which it is concluded by being clearly identified in the tender documents with an explicit reference that makes both the ‘secondary’ contracting authority itself and any interested operator aware of that possibility. That reference can appear either in the framework agreement itself or in another document, such as an extension clause in the tender specifications, as long as the requirements as to advertising and legal certainty and, consequently, those relating to transparency are complied with.49

47 M. Andrecka, ‘Dealing with legal loopholes and uncertainties within EU public procurement law regarding framework agreements’, (2016) Journal of Public Procurement, 16(4), 505–527. 48 Case C-216/17 Autorità Garante della Concorrenza e del Mercato – Antitrust, Coopservice Soc. coop. arl, EU:​C:​2018:​1034 para. 56. 49 Case C-216/17 Autorità Garante della Concorrenza e del Mercato – Antitrust, Coopservice Soc. coop. arl v. Azienda Socio-Sanitaria Territoriale della Vallecamonica

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The element that remains unclear is whether the contracting authorities identified as potential users of a framework agreement must provide their express consent to being identified as such in the procurement documents. Following the judgment in the Autorità case, and specifically the clarification regarding total quantity and maximum amount of purchases, it seems reasonable to conclude that the potential users of the framework agreement shall first consider the possibility of making use of that framework; and second, if they decide to use the proposed framework agreement, they need to communicate this information to the CPB establishing the framework agreement. The potential users who intend to use the framework agreement shall communicate their intent and their estimates of the volume of purchases they are predicting to make under the framework agreement. According to the Advocate General’s Opinion in Autorità, a contracting authority will acquire ‘party’ status to a framework if it agrees to be bound by the terms and conditions of the agreement either by way of signature of the agreement or by the signature of any other legal act expressing such consent, provided that act is referred to and incorporated into the framework agreement.50 2.3

The overall value of the framework agreement

Besides clarifying the issues of non-signatories under framework agreements, Autorità established that when awarding a framework agreement, the contracting authority must provide the total quantity and maximum amount of purchases to be covered by call-off contracts awarded under the framework agreement, and the estimated value given cannot be exceeded without a new award procedure; at the time when this amount is reached, the framework agreement has exhausted its effect.51 This aspect of the judgment drew a substantial amount of attention and debate in the Scandinavian countries.52 That is because the CJEU made a much stricter interpretation of the provisions of the Directive on framework agreements than had previously been practised in Denmark, Sweden or Finland. Also, interestingly, the Belgian Council of State decided that contracting authorities (the rule probably applies to CPBs as well) are not obliged to disclose a maximum quantity and that contracting authori-

- Sebino (ASST) and Others, EU:​C:​2018:​1034 para. 56. Finnish Supreme Administrative Court has considered a similar issue in the Hansel case. See chapter on Finland. 50 Advocate General’s Opinion, Case C-216/17 para. 67. 51 Case C216/17 Autorità Garante della Concorrenza e del Mercato – Antitrust, Coopservice Soc. coop. arl, EU:​C:​2018:​1034 para. 61. 52 See chapters on Denmark, Sweden and Finland in this book.

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ties have no obligation to disclose the total budget in respect of a framework agreement.53 The aftermath of Autorità and the strict interpretation of the procurement rules posed significant challenges for CPBs in Scandinavia. The Danish Competition Authority issued a statement saying that once the maximum estimate has been reached in a framework agreement, it is no longer possible to use it. It has been recognised that there are potentially many ongoing framework agreements whose value has been exceeded. In light of the judgment, such purchases are potentially at risk of being declared ineffective.54 The Swedish Competition Authority and the Swedish Procurement Support Agency have issued an opinion on the case’s interpretation.55 From the opinions, it follows that the CJEU judgment is interpreted as applying to framework agreements with only one supplier but probably also covers agreements with suppliers in ranking order. Nevertheless, both authorities also recommend the use of maximum values in framework agreements with mini-competitions. The Swedish Procurement Support Agency does not rule out that the case could also apply to social and other services. According to both Swedish authorities, maximum volumes should be specified for each lot that tenderers can bid on (calling each lot a framework agreement). While the Swedish Competition Authority is of the opinion that there should be both a maximum quantity and a maximum value, the Procurement Support Agency is more flexible, stating that a maximum value would suffice in most types of procurement. Further clarification on the issue of maximum value and quantities – specifically whether maximum value and/or quantities should be published in the procurement documents or the framework agreement – is expected in the CJEU judgment in the pending C-23/20 Simonsen & Weel case.56 On the one hand, the contracting entity must establish a fair estimate of its needs and at the same time ensure a certain margin of discretion so that the framework agreement does not run out before the end of the contract period. On the other hand, an indication of an artificially high value will be contrary to the principle of equal treatment and transparency. It would give the tenderers a misleading picture of the framework agreement’s scope, which can lead

See chapter on Belgium in this book. See chapter on Denmark in this book and Chapter 7 on liability and remedies. 55 Ramavtalsupphandlingar och öppenhetsprincipen – EU-domstolens avgörande i mål C-216/17 Coopservice, Konkurrensverkets ställningstagande 2019:1 och Vägledning om takvolym i ramavtal, Upphandlingsmyndighetens vägledning 2019:3. See the chapter on Sweden in this book. 56 For more on the potential consequences of the case, see Chapter 7 in this book, ‘CPBs and their users – shared liability, contract management and remedies’. 53 54

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to incorrect pricing and subsequent challenges with the supplier.57 Precise estimates of the framework agreement’s quantities and values might be particularly challenging when using a framework agreement with a large number of users. A framework agreement that can be used by multiple contracting authorities will often be more difficult for assessing clearly and precisely all users’ overall needs. Finally, there is a risk that one contracting authority will use up the value of the framework agreement at the expense of one or more other contracting authorities. 2.4

Large product ranges

Denmark and Sweden in particular report specific challenges in regard to framework agreements covering a large product range. Namely, the question is how the contracting authority can describe its technical specifications when many product lines are involved, and how the contracting authority can subsequently evaluate the incoming tenders, especially concerning the many product lines, but also the situation where the tenderers do not necessarily have multiple product lines.58 In Sweden, framework agreements with many product lines are usually evaluated using the so-called ‘cart’ method (a product selection method), where the vast majority of the products included in the procurement are being evaluated. Simultaneously, discounts are given on the suppliers’ regular prices for the rest of the assortment covered by the procurement.59 There are several Swedish court cases regarding how the products or services that are part of procurement should be evaluated.60 2.5

Change of a framework agreement’s member

National reports state that rules on modifications of framework agreements throughout the EU are similar. Member States have not regulated the provisions in further detail beyond repeating the EU rules. Only Spanish law includes more detailed provisions on limits for modifying the framework agreement and contracts based on the same.61 The Directive clarifies the regime on modifications of framework agreements by explicitly establishing the situations where the undertakings in a framework agreement can be replaced. The initial members of a framework agreement may be changed 57 See Finnish Supreme Administrative Court decision in Case Ref. KHO 2019:84, 26.6.2019. 58 See chapter on Denmark in this book. 59 See chapter on Sweden in this book. 60 See chapter on Sweden in this book. 61 See chapter on Spain in this book.

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without the requirement of starting a new procurement procedure if such an option has been provided for in the initial procurement documents in clear, precise and unequivocal review clauses. Nevertheless, such a change should not alter the overall nature of the framework agreement. The members of a framework agreement may also be changed in a situation of universal or partial succession, following corporate restructuring (including takeover, merger, acquisition or insolvency).62 However, a potential new member of a framework agreement must fulfil the criteria for qualitative selection initially established and this must not entail other substantial modifications to the framework agreement and must not be aimed at circumventing the application of the Directive.63 These possibilities shall not be seen as exceptions to the closed character of framework agreements. The rules allow the substitution of a member of a framework agreement, not the opening up of access to the framework agreements. Similarly, the modification of the framework agreement’s scope shall be assessed through the lens of Article 72 of the Directive.

3

DYNAMIC PURCHASING SYSTEMS

A dynamic purchasing system (DPS) is a technique of procuring commonly used purchases, which is generally available on the market through a completely electronic process.64 It allows the contracting authority to have an extensive range of tenders and ensure optimum use of public funds through broad competition.65 Therefore, it is particularly suitable for high frequency, repeated aggregated procurement made by CPBs where a contracting authority wishes to take advantage of new suppliers entering the market while reducing procurement proceedings’ administrative burden. DPSs are used for works, supply and services. Examples include caretaker services, medical equipment, e-learning systems, horses for the police, passenger cars, emergency and security equipment and playground equipment.66 DPSs are often compared with framework agreements, as both allow contracting authorities to postpone the moment of purchase and, as such, both provisions are often grouped. DPSs were introduced in the EU procurement system in the 2004 Directive, parallel to introducing framework agreements. Art. 72(1)(d) of Directive 2014/24/EU. Ibid. 64 Art. 34 Directive 2014; see S. Arrowsmith, The Law of Public and Utilities Procurement Regulation in the EU and UK (vol. 1, 3rd edn, Sweet & Maxwell, 2014) pp. 1207–1221. 65 Recital 63 of the 2014 Directive. 66 See chapter on Denmark in this book. 62 63

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However, unlike framework agreements, DPSs have not gained popularity on the public tender market and have been used infrequently.67 This has been noted in Recital 63 of the Directive: ‘In view of the experience acquired, there is also a need to adjust the rules governing dynamic purchasing systems to enable contracting authorities to take full advantage of the possibilities afforded by that instrument. The systems need to be simplified.’ There are several substantial differences between framework agreements and DPSs. The latter are designed for commonly used purchases. They must be operated as a fully electronic process and it is open for new electronic operators to join a DPS throughout the DPS’s validity.68 From the market perspective of the last ten years, a strong preference existed for framework agreements over DPSs. The reasons for that could be that under the 2004 Directive, DPSs were to be procured through an open procedure and required full electronic procurement. Therefore, the reluctance to use the open procedure required for indicative tenders, and often the lack of technology, or resources to establish the technology, to apply a DPS have been identified as some of the major burdens associated with DPSs. However, with the introduction of the 2014 Directive amendments in the DPS regime, to simplify and clarify the rules, the procurement market’s situation is slowly changing. The 2014 procurement reform brought some changes regarding DPSs. Namely, instead of an open procedure, a restricted procedure shall be applied. The amendments in the DPS regime aiming to make this procedure more applicable and flexible seem to be succeeding in the Member States such as Denmark, Sweden, Finland and Italy, where the increasing use of DPSs is reported. There are even national discussions on whether it is compliant with EU provisions to award a framework agreement through a DPS in Sweden.69 Particularly in Sweden, it is generally considered that it is easier for SMEs to participate in a DPS than in a regular procurement of a framework agreement due to the procedure’s flexibility.70 At the same time, Member States that experience an increase in the use of DPSs report that there are some challenges in operating them. These include: how precisely the different categories must be described and how to create a fast procedure in the call-off phase, as it is also necessary for the contracting authority to state reasons to the undertakings that have not been awarded the contract; how the economic operators can supply documentation for elements relating to the selection phase to make the award

See the country reports, Chapters 9 to 21, in this book. Art. 34(1) of the 2014 Directive. 69 See chapter on Sweden in this book. 70 Ibid. 67 68

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of the contract fast and efficient; and how precise an estimate of a specific purchase under DPS must be (see maximum value in section 2.3).71 Some Member States remain reluctant to use DPSs. For instance, in Spain, DPSs are said to be practically non-existent, and the General Directorate for Rationalisation and Centralisation of Procurement has recently suggested that DPSs are difficult to use, and in fact, their efficiency has not been proven. In France, Belgium and Portugal, DPSs are not widespread, while in Germany, Poland and Romania, the technique is not used at all. 72

4

E-PROCUREMENT AND E-CATALOGUES

Digital procurement or e-procurement is one of the key drivers toward implementing the EU’s Digital Single Market strategy.73 The hope is that with the digital transformation of public procurement to e-procurement, the processes should become more transparent, evidence-oriented, optimised, streamlined and integrated with market conditions. The 2014 Directives compelled the Member States to fully implement electronic means of communication and procurement. New rules on e-procurement in the EU are now in force, and CPBs were the first ones for whom e-procurement became mandatory. This means that CPBs and contracting authorities must use electronic means to communicate with economic operators during all stages of the public procurement procedure and use electronic tender platforms for all tender procedures above the EU thresholds. As the Directives only set the e‑procurement framework and the goals to be achieved, and the implementation is left to the discretion of national legislators, this results in the fact that the outcome of implementation varies between Member States. Some have already made significant progress with their practical experience of e-procurement, while others are still in their infancy. In Germany, CPBs have been publishing invitations to tender exclusively electronically since 2006 and now provide users with a central portal for e-procurement. In Sweden, CPBs have used e-procurement platforms since at least 2012 and today, all CPBs, and presumably all contracting authorities, use e-procurement when they publish procurements and award contracts/ framework agreements. In Denmark, almost all procurements are conducted electronically, and several e-supplier systems exist. In Finland, most CPBs have been using e-procurement, and almost all Finnish contracting authorities are currently using one and the same e-tendering system. In Spain, the imple-

See chapter on Denmark in this book. See chapters on Spain, Romania and Poland in this book. 73 https://​ec​.europa​.eu/​growth/​single​-market/​public​-procurement/​digital​_en. 71 72

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mentation of e-procurement is inconsistent, but some CPBs operate through e-procurement. 4.1

E-Catalogues

Electronic catalogues are one of the novelties of 2014 Directive. They have been introduced in Article 36 of the Directive to boost the development of e-procurement and provide minimum guidelines concerning this technique.74 There is no definition of e‑catalogues. In practice, e-catalogues are anticipated for use in framework agreements of DPSs. Multi-supplier frameworks can take the form of an e-catalogue, particularly the direct award type in which all elements are decided. In most systems, e-catalogues are also open to new suppliers; therefore, they can take the form of DPSs.75 Article 36 in conjunction with Recital 68 emphasise the need for transparency and adaptation of general e-catalogues to the specification established by contracting authorities: ‘the use of electronic catalogues for the presentation of tenders should not entail the possibility of economic operators limiting themselves to the transmission of their general catalogue’. Further, Recital 55 of the Directive stresses the need to standardise e-catalogues to avoid imposing an excessive administrative burden on economic operators: in order to participate in a procurement procedure in which use of electronic catalogues … is permitted or required, economic operators would, in the absence of standardisation, be required to customise their own catalogues to each procurement procedure, which would entail providing very similar information in different formats depending on the specifications of the contracting authority concerned. Standardising the catalogue formats would thus improve the level of interoperability, enhance efficiency and would also reduce the effort required of economic operators.76

In none of the investigated Member States have CPBs experienced regular e-catalogue usage. In Finland, Spain and Belgium, the use of e-catalogues is very rare. In Denmark, it is reported that a majority of procurements are done 74 See EU Commission, Report on Electronic Catalogues in Electronic Public Procurement (2007). 75 Gian Luigi Albano and Caroline Nicholas, The Law and Economics of Framework Agreements (Cambridge University Press, 2016), 17. 76 See further: C. McCue and A.V. Roman, ‘E-procurement: myth or reality?’ (2012)  Journal of Public Procurement, 12(2), 212–238; and M. Rahim and S. Kurnia, ‘Understanding e-procurement system benefits using organisational adoption motivation lens: a case study’, in Proceedings of the Pacific Asia Conference on Information Systems (2014), 80.

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through e-procurement: ‘some sort of e-catalogues’ are used. E-catalogues are not used at all by CPBs in Poland and Germany.

5 CONCLUSION The panorama of how CPBs function in general throughout the EU is very heterogeneous, from Member States with a wide number of CPBs engaged in extremely complex procurement exercises (Denmark, Sweden, the UK and Italy) to Member States where aggregated purchasing is present but neither widely used nor complex (Romania and Poland). Similarly, the use of techniques such as framework agreements, DPSs or electronic catalogues is very different from one Member State to another. A problematic example is the case of DPSs, which in Spain have been declared inefficient by a public procurement authority, whilst in Member States such as Sweden they are widely used, to the extent where national debates in Sweden centre around whether framework agreement could be awarded via DPSs. The approach should not be so different. Despite cultural differences, the use of techniques such as DPSs should be unified and made efficient throughout the EU and this can only be done via initiatives at EU level. The conclusion is equally applicable to framework agreements, where an EU-wide study on their effectiveness and how to improve it would be not only welcomed but also necessary. This would allow CPBs to share knowledge and gain insight into good practices. Equally, the creation of a network of CPBs at EU level would also help CPBs from all Member States to engage in more complex procurement procedures and gain confidence in the use of the techniques tackled in this chapter.

5. Joint procurement: an economics and management perspective Fredo Schotanus 1 INTRODUCTION This chapter introduces the general concept of joint procurement from an economics and management perspective. The aim of this chapter is to provide general insights regarding how choices made by contracting authorities regarding different forms of joint procurement affect contracting authorities, suppliers and markets. We first introduce the advantages and disadvantages of joint procurement in terms of economies of scale, economies of process, and economies of knowledge or information (Section 2). Next, we discuss common impediments to joint procurement (Section 3). In Section 4, different forms of joint procurement are described. In the two final content sections (Sections 5 and 6), we discuss the application of different forms of joint procurement in one group and competition between joint procurement initiatives. We end the chapter with a few overarching conclusions (Section 7).

2

ADVANTAGES AND DISADVANTAGES IN TERMS OF ECONOMIES OF SCALE, KNOWLEDGE OR INFORMATION, AND PROCESS

In this chapter, we use the term joint procurement to refer to the concept of a purchasing group in which works, services and/or supplies are procured jointly. The group members are two or more contracting authorities with a similar demand. The purchasing group can be organised in different forms (see also Section 4), such as a central purchasing body (CPB) with different functions, or a more informal joint procurement initiative. Joint procurement is not new – in Member States such as, for example, Sweden, Italy, the Netherlands and Denmark, public authorities have been

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55

buying together for a number of years.1 However, only about 11 per cent of procedures in the EU are carried out through joint procurement.2 Although joint procurement is not always suitable, for instance in the health-care sector, much higher percentages are found in the United States (between 30 and 50 per cent of joint procurement3) and Germany (about 80 per cent of joint procurement4). We also see large differences between Member States, indicating that there is especially potential for joint procurement in the Member States with low percentages of joint procurement. The potential for joint procurement to improve EU public procurement practices is acknowledged in the European Commission’s public procurement strategy as well. One of the six strategic policy priorities that were set out in the communication ‘Making public procurement work in and for Europe’ is to procure more together. Joint procurement is typically put in place because of potential price savings and/or quality improvements and/or to reduce duplications and save time. Sometimes the scale is required to get access to certain suppliers, for instance, to reduce drug prices, to initiate innovation or to stimulate new social or environment-related initiatives. Small authorities might not lead the market to change behaviour, but a large group of authorities can push in the desired direction. Joint procurement can even prevent unwanted competition between Member States for scarce supplies. There are also disadvantages. These include coordination costs, less flexibility and less control. It can also be difficult to synchronise specifications and contract periods for new joint procurement projects. Finally, when joint procurement initiatives become very large and when vendor fees and kickbacks are allowed, such as in the United States health-care sector, they can also have a negative impact on certain markets. The effects of group purchasing organisations (GPOs) in US health care are heavily debated in the literature, but it might be that large for-profit GPOs can have negative effects on prices and competition between suppliers, business opportunities for SMEs, and innovative behaviour of suppliers, and they could even create drug shortages and lead 1 On the development of central purchasing in the Member States see Chapter 2 of this book. 2 See the EU Commission’s website (cooperating to procure together), 2019, https://​ec​.europa​.eu/​growth/​single​-market/​public​-procurement​_en (accessed 14 March 2021). 3 H. Qiaohai and L.B. Schwarz, ‘Controversial role of GPOs in healthcare-product supply chains’ (2011), Production and Operations Management, 20(1), 1–15; C. Brouwer (2017), ‘US and Dutch health care GPOs: a comparative analysis’, Bachelor’s thesis, University of Twente. 4 M. Dorrestein (2014), ‘Zorg kan half miljard besparen op inkoop’, Zorgvisie, www​.zorgvisie​.nl/​zorg​-kan​-half​-miljard​-besparen​-op​-inkoop​-1546791w/​ (accessed 31 August 2021).

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to supplier mergers under specific market circumstances. Nevertheless, even for this specific situation, several studies indicate that GPOs have positive effects for hospitals and their patients.5 The mechanisms behind the most relevant advantages and disadvantages for the Member States are briefly discussed in the next three subsections. Economies of Scale Joint procurement is well known for creating scale advantages. There are many determinants of economies of scale and it goes beyond the scope of this chapter to discuss all of them. In the context of joint procurement, economies of scale generally mean that certain fixed (transaction) costs become relatively lower leading to lower purchasing prices. In addition, large joint tenders can be more interesting to participate in for suppliers, which increases competition and also leads to lower prices and better quality. On the other hand, large joint tenders can also be more complex, create synchronisation costs,6 increase risks, and could be less interesting for SMEs, leading to less competition. Nevertheless, an analysis of the number of bidders per tender on the European Tenders Electronic Daily database showed that the number for an individual contract award increased from 5.4 to 12 for a CPB.7 In this way, joint procurement leads to higher visibility, which could also prompt more cross-border undertakings to participate in tenders.8 If SME involvement is an issue, this can be resolved technically by tendering in lots. For instance, each contracting authority could be a separate lot. Another solution is to jointly prepare procurement documents, but to tender individually.

5 Several articles and reports debate this topic with some researchers supporting the way group purchasing organisations (GPOs) are organised in the United States and others who oppose it. See for instance Q. Hu and L.B. Schwarz, ‘Controversial role of GPOs in healthcare product supply chains’ (2011), Production and Operations Management, 20(1), 1–15; B.L. Weinstein, ‘The role of group purchasing organizations (GPOs) in the US medical industry supply chain’ (2006), Estudios de Economia Aplicada, 24(3), 789–801; L.R. Burns and J.A Lee, ‘Hospital purchasing alliances: utilization, services, and performance’ (2008), Health Care Management Review, 33(3), 203–215. 6 Synchronisation costs relate to, for instance, synchronising specifications and synchronising end dates of individual contracts before a joint tender can be started. 7 https://​ec​.europa​.eu/​growth/​content/​public​-buyers​-save​-money​-cooperative​ -procurement​-0​_en (accessed 14 March 2021). 8 https://​ec​.europa​.eu/​growth/​content/​public​-buyers​-save​-money​-cooperative​ -procurement​-0​_en (accessed 14 March 2021).

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Economies of Knowledge or Information Economies of knowledge or information in the context of joint procurement are not always mentioned explicitly when describing the advantages of joint procurement. Here we refer to sharing knowledge and information between group members or appointing a lead buyer who has the most knowledge and/ or experience of a particular market. Similarly, if there is a separate contracting authority conducting tenders on behalf of other contracting authorities, the separate authority has more possibilities for specialisation. It is often assumed that price savings and/or quality improvements realised by joint procurement are the result of economies of scale only. In our experience, more professional procurement due to buying together can be just as important or even more important. Price savings and difficulties regarding measuring such savings9 are debated extensively in the literature. Most studies indicate small to large savings. A lesser number of studies report no or negative price effects. For a more extensive analysis, we refer to Carrera et al. (2015).10 Economies of Process With economies of process, we refer to the concept of lower transaction costs and workload for contracting authorities. If all authorities have the same demand, one joint tender can reduce many duplications. Similarly, if all contracting authorities involved use (almost) the same procurement documents which were jointly developed, but tender by themselves, this also reduces transaction costs for contracting authorities and suppliers. Karjalainen11 showed for a specific subset of tenders that individual tenders take on average 167 hours. Closing national framework agreements takes more time, on average 571 hours, but if only a couple of contracting authorities participate in such an agreement, it would create more efficient use of public officers’ time. These time savings disappear, however, if the decision made to participate in a national contract is the outcome of a long and intensive decision-making

9 There are several difficulties in measuring price savings due to joint procurement. For instance, it is difficult to determine how to take quality differences into account and how to determine the difference between individual and joint prices. 10 P.M. Carrera, S. Katik and F. Schotanus, ‘Cooperative purchasing of pacemakers by Dutch hospitals: what are the determinants, cost-savings and perceived non-monetary benefits?’ Proceedings of the 24th IPSERA Conference, Amsterdam (The Netherlands), 30 March–1 April 2015. 11 K. Karjalainen, ‘Estimating the cost effects of purchasing centralization – Empirical evidence from framework agreements in the public sector’ (2011), Journal of Purchasing and Supply Management, 17(2), 87–97.

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process. Time savings also disappear – or even become negative – if a lot of coordination effort is required to satisfy all kinds of different demands for group participants.

3

IMPEDIMENTS TO JOINT PROCUREMENT

Overall, the advantages of joint procurement outweigh the related disadvantages for many situations in the public sector.12 Compared to the private sector, joint procurement seems to be especially interesting for the public sector, for instance, for organisations like government ministries, schools, housing corporations and municipalities.13 These types of public organisations often have similar organisational structures, similar networks, similar purchasing needs, mutual trust, no market competition, a common external environment, and one common goal: to maximise the value and impact of taxpayers’ money. However, in practice, it appears that joint procurement does not always succeed or its use is limited in some Member States. Several studies identified potential impediments to joint procurement. Among other things, Nollet and Beaulieu identified the importance of trust and competence in organising cooperative relationships.14 Schotanus and colleagues conclude that important impediments are inadequate communication, lack of commitment, lack of internal support,15 internal resistance due to enforced collaboration, not enough effort put into it by the group members, no common objectives, no equality of influence of the group members and unfair allocation of gains and cost. Moreover, they found specific procurement impediments, such as insufficient or unreliable spend/contract data, insufficient procurement skills, absence of standardised purchasing processes, insufficient resources, and contract synchronisation issues.16 Finally, Walker and colleagues found that joint

12 F. Schotanus (2007), ‘Horizontal cooperative purchasing’, PhD thesis, University of Twente. 13 See also Chapter 3 where this is described in a comparative analysis of the different Member States. 14 J. Nollet and M. Beaulieu, ‘Should an organisation join a purchasing group?’ (2005), Supply Chain Management, 10(1), 11–17. 15 F. Schotanus, J. Telgen and L. de Boer, ‘Critical success factors for managing purchasing groups’ (2010), Journal of Purchasing and Supply Management, 16(1), 51–60. Lack of internal support could for instance be the result of specific product preferences of internal users or ingrained routines focused at procuring individually. 16 A. Erridge and J. Greer, ‘Partnerships and public procurement: building social capital through supply relations (2002), Public Administration, 80(3), 503–522 and A. Laing and S. Cotton, ‘Patterns of inter-organizational purchasing evolution of consortia-based purchasing amongst GP fundholders’ (1997), European Journal of Purchasing and Supply Management, 3(2), 83–91.

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Table 5.1

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Impediments to joint procurement

Impediments Collaboration

Procurement

• Lack of trust in each other

• Contract and specification synchronisation

• Lack of shared objectives

issues

• Lack of commitment

• No standardised purchasing processes

• Inadequate communication

• Insufficient or unreliable data

• Not enough effort of group members

• Insufficient procurement skills

• Not enough influence of group members

Internal

• Insufficient resources • Unfair allocation of gains and costs

• Ingrained routines aimed at individual procurement

Market

• Lack of internal and/or management support

• Lack of consideration of suppliers, market structure and

• Resistance due to enforced cooperation

supplier resistance

procurement could be hindered by topics such as a lack of consideration of the supply market and the market structure and supplier resistance, for instance by temporarily offering much better price offers to large contracting authorities to prevent them joining a joint procurement initiative.17 The impediments are summarised in Table 5.1. How to overcome these impediments differs by organisation and Member State. In general, we observe more joint procurement in Member States or regions where contracting authorities are relatively small, where there is strong political support and where there are several third-party organisations enabling large or national contracts. In general, we also see that the more trust, commitment, (political) support, experience or knowledge on how to work together is available, the fewer formal agreements are necessary between contracting authorities and the more popular the concept of joint procurement can be in a Member State. More formality is necessary with higher financial or juridical risks and interests, fewer organisational similarities, or a more formal culture within a Member State or one or more of the contracting authorities.

17 H. Walker, F. Schotanus, E. Bakker and C. Harland, ‘Collaborative procurement: a relational view of buyer–buyer relationships’ (2013), Public Administration Review, 73(4), 588–598.

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4

STRUCTURE OF DIFFERENT FORMS OF JOINT PROCUREMENT

In practice, we observe different types of joint procurement.18 A theory that explains these differences is new institutional economics. This theory assumes among other things that there exists a wide range of different hybrid organisational forms between doing something by yourself to completely outsourcing an activity. This wide range of organisational forms can be defined as ‘coordination by network’ and ranges between ‘coordination by hierarchy’ and ‘coordination by market’.19 This theory also applies to joint procurement. In some cases, an organisational form leaning to coordination by hierarchy may be suitable, for instance when a complex service is procured, and all contracting authorities want to agree on the joint specifications and supplier award model. In other cases, an organisational form leaning towards coordination by market may be suitable, for instance, for energy procurement. To analyse different forms of joint procurement, a typology can be used as is shown in Figure 5.1.20 Road transport is used as a metaphor in this figure to have practical labels for the main forms of joint procurement. The factor, ‘influence by all members’, on the vertical axis is defined as the extent to which all group members can perform an ‘active’ role in the group. The higher the influence, the more the organisational form leans to coordination by hierarchy. The lower the intensiveness, the more the organisational form leans to coordination by market. The second factor, the ‘number of different activities for the initiative’ on the horizontal axis ranges from undertaking ‘one occasional cooperative activity’ to ‘continuously undertaking different activities within the same group’. These activities can be carried out by a separate contracting authority, a third party or it can be a joint effort by several contracting authorities. An intensive organisational form, more complex supplies and services can be bought together. Simple supplies and services are better suited to the lower

See also Chapter 3 of this book. G.R. Jones and C.W.L. Hill, ‘Transaction cost analysis of strategy–structure choice’ (1988), Strategic Management Journal, 9(2), 159–172; T. Kivisto, V.M. Virolainen and E. Tella, ‘Consortia purchasing and logistics in Kuopio area – lessons learned from a 4-year project’, in IRSPP Conference Proceedings, Budapest, Hungary (2003); G. Thompson, J. Frances, R. Levacic and J. Mitchell, Markets, Hierarchies and Networks (Sage, 1991). 20 F. Schotanus and J. Telgen, ‘Developing a typology of organisational forms of cooperative purchasing’ (2007), Journal of Purchasing and Supply Management, 13(1), 53–68. 18 19

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Figure 5.1

61

The highway matrix; a classification of forms of joint procurement

side of the matrix. Supplies or services for which the value is very low or supplies or services that are highly specific are less suitable for joint procurement.

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Within an intensive and active organisational form such as a Formula 1 team, a further organisational range exists from loosely structured relationships under the control of purchasing managers to highly structured business models with complete autonomy. The formality, number of participants, etc. may also differ by form, but still there are several similarities within each of the forms in Figure 5.1. In the next subsections, we describe several of these similarities for the different forms. Hitchhiking Hitchhiking, also known as piggy-backing, typically involves a large contracting authority that establishes a contract to its own specifications, and this contract may be used by other (smaller) contracting authorities. For instance, when purchasing officers of the main buyer seek tenders for a new contract for their own organisation they state in their purchasing documents that smaller authorities will also use the contract. The names and volumes of the other authorities are mentioned as well. The piggy-backing contracting authorities usually cannot influence the specifications and award model, just as a hitchhiker cannot influence the final destination of their ride. Bus rides A bus ride involves a separate third-party organisation that typically seeks tenders on behalf of the aggregate demand of multiple contracting authorities. Bus rides could be CPBs with an intermediary function or a wholesaler function. The bidding process is typically based on the (expected) aggregate procurement volume and is carried out with the specific purchasing expertise of the third party.21 There does not have to be a limit on the number of participating contracting authorities or bus travellers, the numbers of joint contracts and their geographical location. So, bus rides can become very large organisations and can even close national (framework) agreements and deliver other services, such as training or establishing policies.22 Participating authorities or suppliers typically have to pay a fee to cover related costs made by the third party. Products and services which fit best with bus rides typically involve little alignment, are non-emotional and mostly standardised, and the specifications 21 C.M. Harland, H.L. Walker, J. van de Gronden, K. Bloch and N. Ramm, ‘United Nations case for the Budapest workshop: procurement in the United Nations system, IRSPP Conference Proceedings, Budapest (Hungary) 2003. 22 OECD, ‘Central purchasing bodies’, in Government at a Glance 2015 (OECD Publishing, 2015), p.  142, DOI: https://​doi​.org/​10​.1787/​gov​_glance​-2015​-45​-en (accessed 14 March 2021).

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of different contracting authorities are mostly the same. Otherwise, differences in specifications can be resolved by contracting with multiple suppliers. It is advisable not to reward the third party financially only on the basis of the procurement volume. This incentivises higher purchasing volumes and prices, as this leads to higher fees. A disadvantage of bus rides is that the members usually have no or hardly any control over the procurement process. A possible complaint is that specific procurement need is not taken into account and sometimes there is a lack of trust in the procurement capabilities of the third party. Carpooling Carpooling involves outsourcing tenders to one of the contracting authorities that participate in the same group: each tender is coordinated by the most suitable contracting authority according to their expertise, resources or purchasing volume. The concept of carpooling is also known as external lead buying. This enables contracting authorities to specialise in conducting typical tenders. Some consideration and evaluation will be necessary to determine which authority drives to which destination in the carpooling initiative. These meetings also allow the authorities to influence to some extent the tenders put out by the others. Similar to bus rides, products and services which fit best with carpooling typically involve little alignment, are non-emotional, simple and mostly standardised, and specifications are mostly the same. Nevertheless, typically more diversification is possible within a carpooling group than within a bus ride. There are some typical disadvantages and requirements involved in carpooling. One disadvantage is becoming dependent on the knowledge and skills of the other members. One requirement for becoming a successful carpooling group is that the participating authorities preferably have at least some similarities, such as the same geographical location, similar size, etc. As more consideration is necessary with carpooling than with hitchhiking or bus rides, carpooling initiatives usually have fewer participants. Convoy A convoy is a more intensive form of joint procurement and is well suited to one shared exceptional purchasing project. Supply risks can be shared, and increased knowledge can be used to deal with uncertainties. Typical convoys involve quite some consultation between the members to bring specifications up to the same level, to agree with one another on the supplier selection model, and so on. Convoys may be one-time events and the number of different cooperative activities for the initiative is therefore limited. Because of the more

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exceptional character of a convoy there are usually several learning moments during the joint procurement. It may be difficult to work together with relatively unknown partners for one project. Particularly in a convoy, one should also prevent potential free-rider problems or at least try to limit their effects. Examples of convoys can be buyer groups or ‘big buyers’ initiatives’ that facilitate and stimulate sustainable and social public procurement. Convoys can also be used for, for instance, the purchases of vaccines and medical equipment in times of crisis. Formula 1 Team Intensive organisational forms such as Formula 1 teams often involve representatives of the management teams of the relevant contracting authorities meeting regularly in a steering committee to discuss joint tenders. All parties can usually influence specifications, supplier selection models, and so on. The project groups for these joint tenders include at least one member of the steering committee and other representatives of most or all members. Together they carry out several steps of the procurement process and thus share the administrative work. In practice, the workload and costs are often allocated equally or proportionally. For a Formula 1 team, allocating the costs and workload equally is fairer and more stable in the long run.23 In contrast with bus rides, supplies and services jointly procured in a Formula 1 team form typically involve alignment, can be emotional, complex and customised and specifications can differ to a larger extent between different contracting authorities. Standardised supplies and services are less suitable for an intensive collaboration form such as a Formula 1 team. A carpooling initiative is often organised similarly to a Formula 1 team with one major difference. The project groups in a carpooling initiative consist of participants of one contracting authority and not of different authorities. Aspects of highly structured Formula 1 teams or carpooling initiatives are regular meetings, several procedures and rules such as joining and leaving rules, duties and rights, and so on.

23 F. Schotanus, J. Telgen and L. de Boer, ‘Unfair allocation of gains under the equal price allocation method in purchasing groups’ (2007), European Journal of Operational Research, 187(1), 162–176, https://​doi​.org/​10​.1016/​j​.ejor​.2007​.03​.009 (accessed 14 March 2021).

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65

USING DIFFERENT FORMS OF JOINT PROCUREMENT AND HYBRID FORMS

In this section, we discuss the application of hybrid forms and different organisational forms of joint procurement within the same group. In practice, different forms of joint procurement can be combined within the same joint procurement initiative. We find, for instance, joint procurement initiatives that mostly operate in the form of a bus ride for joint tenders, but for specific or custom-made equipment, they use a carpooling or Formula 1 team. We also see initiatives that mostly operate as a carpooling team, but that sometimes allow others to piggy-back on joint contracts. Several similar examples can be found in practice. For specific situations, hybrid forms of joint procurement could also be set in place. For instance, a hybrid form regularly occurs between a carpooling and Formula 1 team. In a pure Formula 1 form, all or almost all members would participate in a joint tender team. However, in a hybrid form, the activities for a joint tender are carried out by a limited number of members. In other words, a small intensive sub-team takes the lead on behalf of the whole group. For each tender, a new small and intensive team is created. This hybrid form can typically have more members than a Formula 1 team.

6

COMPETITION BETWEEN DIFFERENT JOINT PROCUREMENT INITIATIVES

In this final content section, we discuss the issue of competition between separate joint procurement initiatives. We start the discussion with a simple illustration. When a small contracting authority is a member of a regional joint procurement initiative that mostly operates as a carpooling or Formula 1 team, it might be useful for the authority to join a separate bus ride as well. In this example, the regional joint procurement initiative could focus on customised and complex tenders and the bus ride on more simple supplies and services. Both forms of joint procurement have added value for the contracting authority, and they do not have to compete as they cover different types of tenders. It becomes somewhat more complex when there is a contracting authority that joins two separate joint procurement initiatives that both use intensive forms of joint procurement. This seems less logical, as it will require quite some effort of the authority to maintain relationships with the contracting authorities in both joint procurement initiatives. However, if both joint procurement initiatives focus on different supplies and services, it still might be a beneficial solution for the contracting authority and it will not lead to problems for the joint procurement initiatives.

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The most complex situation is typically when there is competition between bus rides. Although there is an ongoing debate about, among other things, the effects of joint procurement on markets, SMEs and competition between suppliers, the debate about competition between bus rides is limited. It is clear though that joint procurement initiatives need sufficient buying power to succeed; on the other hand, (quasi)-monopsonies need to be prevented.24 In addition, contracting authorities might not want to become overly dependent on one large bus ride which operates at a national level. As far as we know, there are no studies that support the idea that competition between joint procurement initiatives should be restricted. There is support though for allowing competition. When third parties are involved with bus rides, especially if they are for-profit organisations, competition between bus rides might have several benefits. Allowing competition reduces the risk of creating monopsonies or other forms of imperfect competition. It also stimulates the bus rides to perform better than the other joint procurement initiatives. In addition, the risks related to large for-profit bus rides mentioned in Section 225 especially apply when bus rides are allowed to restrict their members from purchasing from other joint procurement initiatives. A potential disadvantage of allowing competition between bus rides is that – as a result of mutual competition – they could create extra price pressure on suppliers. We argue that this disadvantage would apply in particular when contracting authorities conducted price comparisons of or tenders for bus rides for each procurement need. This would also create a market inefficiency as is illustrated in Figures 5.2c and 5.2d compared to Figures 5.2a and especially 5.2b. We explain this concept of inefficiency in more detail below. Figure 5.2a shows a simplified situation in which there is no joint procurement and where all contracting authorities each invite three suppliers to submit a bid for a particular procurement need. The straight lines reflect an awarded contract and the dotted lines reflect losing bids. In total, there are nine lines in this situation. Figure 5.2b shows a simplified situation in which there is an agreement between three contracting authorities with one dedicated bus ride. This means the contracting authorities have closed a long-term agreement with one bus

24 R.D. Blair and C.P. Durrance, ‘Group purchasing organizations, monopsony, and antitrust policy’ (2014), Managerial and Decision Economics, 35(7), 433–443. 25 Large for-profit bus rides can have negative effects on prices and competition between suppliers, business opportunities for SMEs, innovation behaviour of suppliers, and could even create drug shortages and lead to supplier mergers under specific market circumstances.

Joint procurement: an economics and management perspective

Figure 5.2a

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Situation without joint procurement

ride to cover several joint procurements26 based on their aggregate demand. The authorities have to close this agreement based on the capacity and capabilities of the bus ride and evaluate the agreement periodically, but there is no necessity for new agreements for each procurement need. This is why the lines between the contracting authorities are shown as thin lines. The lines between the bus ride and suppliers are shown as thicker lines, as the tenders cover a higher procurement volume. In total, there are nine thin lines and three thick lines in this situation. Here, economies of scale, process and knowledge are utilised, especially when more contracting authorities join the bus ride. Figure 5.2c shows a simplified situation in which contracting authorities ask three bus rides for quotations or proposals for each procurement need. In total, there are nine lines between the contracting authorities and the bus rides. In addition, there are three thick lines in this situation. Here, economies of scale are utilised, but economies of process and knowledge would diminish. The reason for this is that there are more transaction costs compared to Figure 5.2b and the contracting authorities need knowledge to be able to decide which bus ride should be chosen for each specific procurement need. Finally, we note that similar circumstances occur as in Figure 5.2c when contracting authorities consider a bus ride as a price benchmark or as a separate supplier and compare the bid of the bus ride with the bids of individual suppliers. This situation is shown in Figure 5.2d. An additional disadvantage of this 26 For instance, to cover the procurement of energy, office materials, office facilities, catering, cleaning, etc.

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Figure 5.2b

Situation with one dedicated bus ride

Figure 5.2c

Situation with competition between bus rides

situation is that it could stimulate strategic bidding by suppliers to contracting authorities and to the bus ride.27

27 For instance, a supplier could offer better conditions to a large contracting authority than to a bus ride, in order to reduce the added value of the bus ride. This situation might be beneficial in the short term for the one large contracting authority, but it might reduce the benefits for the other authorities to a greater extent. In the long term,

Joint procurement: an economics and management perspective

Figure 5.2d

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Situation with competition between a bus ride and individual suppliers

Summarising the above, we believe that allowing competition between bus rides and other forms of joint procurement is important, mainly to prevent (quasi)-monopsonies and to stimulate joint initiatives to deliver optimal quality. However, we argue that the concept of competition between joint procurement initiatives does not work well when contracting authorities organise competition between joint procurement initiatives on an individual procurement need level. To fully utilise economies of scale, process and knowledge, a longer-term commitment is required. For instance, for a certain range of supplies, services and works, a contracting authority can choose to use bus ride A. For a more specific situation, a convoy or another bus ride can be used. And in all other cases, individual tenders are conducted among suppliers.

7 CONCLUSION We conclude that there seems to be a large potential in the EU for more joint procurement, either in the form of a CPB or in other forms of joint procurement. The concept can create economies of scale, knowledge and process for participating contracting authorities. It can also reduce transaction costs for suppliers, lead to better procurement documents and make tenders more interesting to participate in. Nevertheless, the current average usage of joint this could even lead to termination of the bus ride and at that point, the conditions might reduce for all authorities as economies of scale, process and knowledge disappear.

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procurement is only about 11 per cent in the EU. Although the concept is not always interesting and there are disadvantages related to joint procurement, there are several indications that a much higher percentage than 11 per cent could be realised. To fully reach this potential, we argue in this chapter that it is important to be aware of impediments and choose the most fitting form of joint procurement for the tender at hand. In general, the smaller the role of individual contracting authorities is in the joint procurement process, the larger the potential benefits are. An important precondition for this is that the requirements of the contracting authorities are known and do not differ too much. Contracting authorities participating in joint procurement forms such as bus rides also need to accept that they have no or limited control over the tender process. Obviously, the decision to let go of control will be different for a large and political contracting authority than for a small and independent administrative body. Finally, we discuss that for contracting authorities, it would be valuable to have different joint procurement options to choose from. For simple commodities, large bus ride contracts could be valuable and for more complex services, supplies and works, more intensive regional forms of joint procurement could be more valuable.

6. Public procurement by central purchasing bodies, competition and SMEs: towards a more dynamic model? Albert Sanchez-Graells 1 INTRODUCTION The creation of central purchasing bodies (CPBs) sought to generate administrative efficiencies and to aggregate public demand to enable the exercise of buying power capable of delivering better value for money and an opportunity for strategic procurement steering.1 Over the last decade, CPB procurement has been gaining strategic importance.2 It now constitutes one of the top six priority areas in the European Commission’s 2017 procurement strategy,3 as part of the broader push for (cross-border) collaborative procurement.4 It also ranks high in the domestic policy agendas of most of the EU jurisdictions, though the maturity of its practice varies. However, the desirability of unconstrained procurement centralisation is not necessarily a foregone conclusion. CPB activity can have negative dynamic

1 For general discussion, see the reflections by Comba and Risvig Hamer in Chapter 2 of this book and Schotanus in Chapter 5. 2 OECD, Report on the Implementation of the Recommendation of the Council on Public Procurement, 16.7.2019, C(2019)94/FINAL, https://​one​.oecd​.org/​document/​ C(2019)94/​FINAL/​en/​pdf (accessed 25 May 2020). 3 Communication from the Commission to the Institutions, Making Public Procurement work in and for Europe, 3.10.2017, COM(2017) 572 final, https://​ec​ .europa​.eu/​docsroom/​documents/​25612 (accessed 25 May 2020). See also I. Locatelli, ‘Process innovation under the new public procurement Directives’ in G. M. Racca and C. R. Yukins (eds), Joint Public Procurement and Innovation: Lessons Across Borders (Bruylant, 2019) 33 ff. 4 See A. Sanchez-Graells, ‘The emergence of trans-EU collaborative procurement: a “living lab” for European public law’ (2020) 29(1) Public Procurement Law Review, 16–41.

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effects on market structure,5 transparency and the ensuing risk of bid rigging,6 distort competition for future public contracts,7 and reduce the resilience of the procurement system and the supply chains on which it relies by depleting the supplier pool.8 This can have particularly serious effects on procurement access for SMEs9—which, in the absence of adequate tender design,10 can be excluded from very large contracts.11 Despite repeated warnings of these anticompetitive risks,12 procurement centralisation continues to increase in most

5 A. Sanchez-Graells, Public Procurement and the EU Competition Rules (2nd edn, Hart, 2015) 110. 6 For extended discussion, see the comparative chapters by K.-M. Halonen and A. Sanchez-Graells in K.-M. Halonen, R. Caranta and A. Sanchez-Graells (eds), Transparency in EU Procurements: Disclosure within Public Procurement and during Contract Execution, vol. 9 European Procurement Law Series (Edward Elgar Publishing, 2019). 7 A. Sanchez-Graells and 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 and P. Valcárcel Fernández (eds), Centralización de compras públicas (Civitas, 2016) 129–163. 8 As mentioned by J. Meehan, M. N. Ludbrook and C. J. Mason, ‘Collaborative public procurement: institutional explanations of legitimised resistance’ (2016) 22 Journal of Purchasing & Supply Management, 160, 161. 9 Cf. PWC/ICF GHK/Ecorys, SMEs’ Access to Public Procurement Markets and Aggregation of Demand in the EU (2014) http://​ec​.europa​.eu/​DocsRoom/​documents/​ 15459 (accessed 25 May 2020). 10 See M. Trybus, ‘The division of public contracts into lots under Directive 2014/24: minimum harmonisation and impact on SMEs in public procurement?’ (2018) 43(3) European Law Review, 313–342. See also M. Trybus and M. Andrecka (now Andhov), ‘Favouring small and medium sized enterprises with Directive 2014/24/ EU?’ (2017) 12(3) European Procurement & Public Private Partnership Law Review, 224–238. For discussion, see Gustavo Piga, ‘Centralization vs. bundling: the victory of an Italian David against an Italian Goliath’ (2018) 1 European Journal of Public Procurement Markets, 62. For a thorough analysis, see Emma McEvoy, ‘Small and Medium-Sized Enterprise (SME) Participation in Public Procurement’ (2020) PhD Thesis, Maynooth University, http://​mural​.maynoothuniversity​.ie/​12559/​1/​Thesis​ %20Emma​%20McEvoy​%20Final​%206th​%20Jan​%202020​.pdf (accessed 21 August 2020). 11 See e.g. OECD Sigma, Small and Medium-Sized Enterprises (SMEs) in Public Procurement (2016) Public Procurement Brief 33, www​.sigmaweb​.org/​publications/​ Public​-Procurement​-Policy​-Brief​-33​-200117​.pdf (accessed 25 May 2020). For discussion, see I. Herrera Anchustegui, ‘Division into lots and demand aggregation— extremes looking for the correct balance?’ in G. S. Ølykke and A. Sanchez-Graells (eds), Reformation or Deformation of the EU Public Procurement Rules (Edward Elgar Publishing, 2016) 125–145. 12 With more references, see e.g. A. Sanchez-Graells, ‘Public Procurement and competition: some challenges arising from recent developments in EU public procure-

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EU jurisdictions13—with the European Commission seeking to boost CPB training on SME issues in some countries.14 Meanwhile, despite the relatively uncontroversial fact that the buying power CPBs accumulate can generate the same type of competition distortions that competition law is aimed at preventing,15 and the exercise of such buying power may only generate positive effects in monopolistic markets16 (such as, for example, in pharmaceutical and medicine markets),17 the subjection of CPBs to competition law is contested and increasingly unclear,18 as the general exclusion of public procurement from the concept of ‘economic activity’ for the purposes of EU competition law is indiscriminately extended to CPB activities in a less than convincing manner.19 Moreover, the possibility of classifying procurement as a service of general interest (SGI)20 casts further doubts

ment law’ in C. Bovis (ed.), Research Handbook on European Public Procurement (Edward Elgar Publishing, 2016) 423–451. 13 However, there was a noticeable contraction in relative terms in several jurisdictions in 2018; see European Commission, Single Market Scoreboard for Public Procurement (2019) https://​ec​.europa​.eu/​internal​_market/​scoreboard/​performance​_per​ _policy​_area/​public​_procurement/​index​_en​.htm (accessed 25 May 2020). 14 See e.g. COS-TSMFRIEND-FPA-2019-2-02: Training for SME-friendly policies in Central Purchasing Bodies (CPBs), https://​ec​.europa​.eu/​easme/​en/​section/​ cosme/​cos​-tsmfriend​-fpa​-2019​-2​-02​-training​-sme​-friendly​-policies​-central​-purchasing​ -bodies (accessed 25 May 2020). 15 Of course, some practitioners heavily involved in the management of CPBs tend to disagree. See e.g. G. L. Albano, ‘Much noise and a few signals: will Alice ever learn anything about centralized procurement?’ (30 May 2020) www​.gianluigialbano​.com/​ blog​-detail/​post/​84077/​much​-noise​-and​-a​-few​-signals:​-will​-alice​-ever​-learn​-anything​ -about​-centralized​-procurement (accessed 21 August 2020). 16 For discussion of bilateral monopoly–monopsony dynamic effects, see I. Herrera Anchustegui, Buyer Power in EU Competition Law (Concurrences, 2017) 59–62, and 455 ff. 17 See the chapter by Schotanus in this book. See also S. Baldi and D. Vannoni, ‘The impact of centralization on pharmaceutical procurement prices: the role of institutional quality and corruption’ (2017) 51(3) Regional Studies, 426–438. 18 See e.g. S. Keating, ‘What role do competition law principles play in public procurement?’ (Practical Law Public Sector, 6 Jul 2015) http://​publicsectorblog​.practicallaw​ .com/​what​-role​-do​-competition​-law​-principles​-play​-in​-public​-procurement/​ (accessed 25 May 2020). 19 For discussion and further references, see A. Sanchez-Graells and 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. 20 Although in the area of State aid and concerning e-procurement, see Judgment of 7 November 2019 in Aanbestedingskalender and Others v Commission, C-687/17 P, EU:​C:​2019:​932. For discussion, A. Sanchez-Graells, ‘10 years on, the CJEU creates more uncertainty about the (in)divisibility of public powers and economic activities

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on the extent to which competition can effectively prevent negative impacts of CPB activity on the competitive structures of the markets for supplies and services to the public sector, especially concerning SMEs. Beyond competition concerns—or, rather related to them—it is worth stressing that procurement centralisation can generate excessive risks and result in unsustainable procurement systems, in particular where CPBs seeking to, for example, maximise economies of scale or minimise administration costs rely on severely reduced numbers of suppliers and contractors. Those then become ‘strategic’ or ‘critical’ to the functioning of the public sector,21 despite oftentimes acting as mere ‘contractual fronts’ that in turn depend on strained supply chains through subcontracting arrangements. It should also be acknowledged that the existence of CPBs as market agents will also create additional agency problems in so far as the institutional incentives of the CPB do not (fully) align with those of its ‘users’, or in so far as the CPB privileges some of its clients over others.22 All of which creates a system that can be particularly vulnerable to external shocks and, ultimately, fail to satisfy the public needs dependent on the supplies and services that CPBs procure. The emerging evidence of the failure of the UK’s centralised health-care procurement system to react to the COVID-19 pandemic is the canary in the coalmine.23 It is starting to be clear that excessive concentration on single suppliers and service providers justified on the grounds of ‘listed price’ savings and streamlined contractual administration, at the expense of a wider choice of (more expensive) suppliers, creates very significant operational and governance issues—including exploitative capture (through excessive pricing), insufficient supply and inflexibility to scale up operations when required, as well as too many ‘single points of failure’ along supply chains that can be put under extreme pressure—in particular, but not only, concerning medical equipment and consumables. It is also evident that CPBs can have incentives (or outside political pressures) to let some or most of their users down in the name of in public procurement (C-687/17 P)’ (How to Crack a Nut, 18 November 2019) www​ .howtocrackanut​.com/​blog/​2019/​11/​18/​cjeu​-creates​-uncertainty​-about​-public​-powers​ -and​-economic​-activities​-in​-procurement (accessed 25 May 2020). 21 For discussion in the context of UK centralised health-care procurement, see A. Sanchez-Graells, ‘Centralisation of procurement and supply chain management in the English NHS: some governance and compliance challenges’ (2019) 70(1) Northern Ireland Legal Quarterly, 53, 66 ff. 22 Generally, on the application of agency theory in this context, see C. R. Yukins, ‘A versatile prism: assessing procurement law through the principal–agent model’ (2010) 40(1) Public Contract Law Journal, 63. 23 See D. Hall et al., Privatised and Unprepared: The NHS Supply Chain (20 May 2020) University of Greenwich / We Own It, https://​weownit​.org​.uk/​privatised​-and​ -unprepared​-nhs​-supply​-chain (accessed 25 May 2020).

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preserving their own position—as shown by the shameful episode of ‘demand management’ of personal protective equipment (PPE) by the UK’s health-care CPB (NHS Supply Chain), which rejected or part-supplied hospital orders despite having some stocks, with the aim of allowing politicians to claim that the PPE had never gone out of stock and blaming shortages on ‘logistics’ at local level.24 It is too early to extract clear lessons from pandemic-related procurement fiascos (in the UK and elsewhere), but the evidence that excessive centralisation was a contributing factor to the inadequate reaction to a surge in demand for PPE, for example (in the UK) seems difficult to rebut.25 All of this will likely (or at least it ought to) trigger a reconsideration of the centralisation strategy and the impacts on markets and supply chains it carries with it, as well as the need for more detailed regulation of CPB activity.26 So, it would seem that, in the permanent swing of the procurement regulation pendulum, we are now approaching a (renewed) realisation that diversity of supply is a strategic need for resilient systems and we shall possibly start discussing again dual (or rather, multiple) sourcing requirements reminiscent of those traditionally used in defence procurement,27 or perhaps limiting CPB activity to markets with particular offer-side structural characteristics (e.g. olipolistic or monopolistic markets where bilateral buying power can act as a mutual check). Against this background, this chapter undertakes a comparative survey of the oversight of CPB activity from the perspective of market competition and SME participation in selected EU jurisdictions and the UK. The questionnaire for the earlier fieldwork included three questions: one on competition law and CPBs (Q9) another one on CPB activity beyond public markets (Q10) and a final one on SME issues (Q11).28 This chapter aggregates the relevant insights in a different way. Section 2 traces the awareness of anticompetitive 24 See A. Sanchez-Graells, ‘COVID-19 PPE extremely urgent procurement in England. A cautionary tale for an overheating public governance’ in D. Cowan and A. Mumford (eds), Pandemic Legalities (Bristol University Press, forthcoming) https://​ ssrn​.com/​abstract​=​3711526 (accessed 25 February 2021). 25 National Audit Office, ‘Investigation into government procurement during the COVID-19 pandemic’ (26 November 2020) HC 959, www​ .nao​ .org​ .uk/​ report/​ government​-procurement​-during​-the​-covid​-19​-pandemic/​ (accessed 25 February 2021). For more on COVID-19 and centralisation, see Chapter 8 of this book. 26 For interesting discussion, see G. M. Racca and C. R. Yukins, ‘Introduction: the promise and perils of innovation in cross-border procurement’ in G. M. Racca and C. R. Yukins (eds), Joint Public Procurement and Innovation: Lessons Across Borders (Bruylant, 2019) 1, 21 ff. 27 For a ‘classic’ discussion, to which we may well return, see W. B. Burnett and W. E. Kovacic, ‘Reform of United States weapons acquisition policy: competition, teaming agreements, and dual-sourcing’ (1989) 6(2) Yale Journal on Regulation, 249–318. 28 The questionnaire can be found as in Chapter 1 of this book.

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and anti-SME risks in CPB activities. The analysis shows emerging national practices that increasingly subject CPB activities to competition scrutiny, to judicially enforced limits and to increasing requirements of market engagement and consultation. It also shows a clear prominence of SME concerns in the CPB context. Section 3 then critically reflects on the emerging approach to monitoring competition and SME impacts of CPB activities and their regulation. The analysis shows that there is still limited awareness at national level of the medium- to long-term negative effects of (excessive) CPB reliance and that most current checks and balances are still rather static. Section 4 concludes by suggesting that a more dynamic model could be used as a regulatory benchmark.

2

AWARENESS OF ANTICOMPETITIVE AND ANTI-SME RISKS IN CPB ACTIVITIES

An initial clarification that may be necessary is that the interaction of competition rules and CPB activities gives rise to two distinct concerns, depending on whether one focuses on the demand or the supply side. First, on the supply side and in relation to the behaviour of the tenderers for CPB contracts, there is a concern that centralisation can require (or be deemed to justify) higher levels of collaboration between tenderers and, thus, potentially lead to anticompetitive joint tendering. Second, on the demand side and in relation to CPB behaviour, there is a concern that the way in which CPBs tender contracts (most usually, framework agreements, and increasingly dynamic purchasing systems)29 can in itself be restrictive of competition and, thus, not only potentially breach the principle of competition in Article 18(1) of Directive 2014/24/EU,30 but also the EU competition rules in Articles 101 and/or 102 TFEU. For the purposes of this chapter, the second concern is of particular interest, as the first one is largely indistinguishable from the treatment of joint tendering and bid rigging more generally—which discussion exceeds the space available here. Focusing thus on demand-side, potentially anticompetitive, CPB activity, perhaps unsurprisingly, there are notable differences in the levels of awareness of the impact of aggregation on SME access to CPB procurement and on competition in the market across jurisdictions. What is perhaps more surprising is that, although these two issues are closely connected—for, functionally, less SME access means less competitive pressure,31 and a likely depletion of the On the types of agreements, see Chapter 4 by Andhov and Vornicu in this book. This claim is frequent in Swedish procurement litigation vis-à-vis CPBs; see the Swedish chapter in this book. 31 Cf. G. L. Albano, ‘On the fuzzy concept of competition in public procurement’ (15 April 2019) https://​ssrn​.com/​abstract​=​3372085 (accessed 21 August 2020). 29 30

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pool of potential providers for the future—the narrative concerning each of them is also rather different in some jurisdictions. At the lower level of awareness, in some jurisdictions, there are no reported concerns with the impact of procurement centralisation on competition in the relevant markets, at least from the perspective of subjecting CPB activities to competition monitoring and/or enforcement. This is the case in Italy32 and Poland.33 In these jurisdictions, there is concern about SME access to public tenders, but it is largely framed not in competition terms, but rather on some other understandings of equity or equality of opportunity in accessing opportunities financed by public funds, or simply results from political pressure. This seems to be the case in Belgium too, as SME access to centralised procurement has featured among other measures aimed at boosting sustainability in procurement.34 In some jurisdictions, the issues of competitive impact and SME access in the context of centralised procurement are still at a nascent stage, but that largely derives from the limited experience with centralisation in itself. That is for example the case of Romania, although there are early signs of awareness of competition impacts and trade-offs.35 Conversely, in jurisdictions with a mature and relatively complex CPB landscape, like the United Kingdom, competition concerns may only play a marginal role in terms of CPB regulation, largely on the assumption that market incentives suffice to discipline their behaviour.36 Indeed, the preservation of those market incentives was one of the main reasons to discard making the use of CPB services mandatory in the UK, where SME policies are also left to each of the CPBs in a largely deregulated approach, with some pursuing more active approaches than others.37 In Scandinavian jurisdictions, however, the potential impact of procurement aggregation through CPB activity on market competition, including SME access, has been subjected to some more detailed scrutiny. For example, in Denmark, while a 2015 report by the competition authority found no relevant issues and even reported significant (price) advantages in single-supplier framework agreements, there are continued discussions on SME access in the

32 See the Italian chapter in this book. However, there is Italian case law quashing tenders that had not been divided into lots. See e.g. Consiglio di Stato, n. 3110/2017. 33 See the Polish chapter in this book. This is perhaps particularly surprising in view of the possibility for Polish CPBs to offer their services to public and private entities alike. 34 See the Belgian chapter in this book. 35 See the Romanian chapter in this book. 36 This is, in itself, notable, as market mechanisms can only function efficiently under adequate competition law enforcement. 37 See the UK chapter in this book.

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political arena, including the possibility of mandating the division of contracts into lots to increase SME accessibility.38 Similarly, in Sweden, although there has been debate on the potential anticompetitive effects of CPB activity in terms of long-term monopolisation (rectius, foreclosure) of certain markets, including a report commissioned by the competition authority in 2010, there is an increasingly positive view of CPB activity and uptake in the use of their services—which is partly explained as ‘the result of CPBs taking into consideration the above mentioned critique in their strategies and daily businesses’.39 Perhaps more starkly, in Finland, a recent merger of the two largest CPBs—which was cleared by the competition authority, despite effectively being a merger to monopoly—has raised significant concerns about SME accessibility.40 However, despite this ‘structural tolerance’ to centralisation and its political support, there are clear signs of a growing attention to competition concerns in the way CPBs behave or, in other words, in the way in which they design and implement their procurement. For example, in a landmark case, the Finnish Supreme Administrative Court found that ‘the decision to award “too-large” a framework agreement for health care and hospital supplies created barriers to bidding for most undertakings and was unduly restricting competition’.41 Much along the same lines, in Germany, there is consolidated case law subjecting collaborative procurement to antitrust law and, in principle, there are quantitative limits in place to restrict the accumulation of excessive buying power. However, most recent enforcement action has primarily consisted of checking that the relevant contracts were divided into lots as a compensatory measure in terms of competition, as imposed by the applicable legislation, which includes a number of measures to promote SME participation.42 Not too differently, in Spain, the competition authority can oversee and recommend modifications to the tender design, in particular for contracts to be awarded by the State-level CPB, and there is an emerging body of administrative practice in that regard, in particular concerning framework agreements. Similar to the Finnish case mentioned above, there are also precedents in Spain of review bodies (administrative tribunals) quashing tender procedures on the basis that

See the Danish chapter in this book. See the Swedish chapter in this book. 40 See the Finnish chapter in this book. 41 Ibid. For extended discussion, see K.-M. Halonen, ‘Framework agreements should not be used improperly or in such a way as to prevent, restrict or distort competition’ (How to Crack a Nut, 9 December 2016) www​.howtocrackanut​.com/​blog/​2016/​ 12/​8/​framework​-agreements​-should​-not​-be​-used​-improperly​-or​-in​-such​-a​-way​-as​-to​ -prevent​-restrict​-or​-distort​-competition​-guest​-post (accessed 25 May 2020). 42 See the German chapter in this book. 38 39

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the advertised framework agreement would have been ‘too large’. Also similarly, the main tool to facilitate SME participation is the legal requirement to divide contracts into lots.43 In the Netherlands, there is also explicit consideration of the competition impacts of collaborative procurement—though it seems to be primarily of a sectoral nature and focused on health care and pharmaceuticals, which display peculiar market structures, including on the demand side due to the Dutch insurance health-care system—and explicit guidance has been formulated by the competition authority to that effect. Under Dutch law, there are also quite developed SME-orientated requirements, including a cluster ban and a splitting obligation that go beyond what is required by Directive 2014/24/EU (see further details below, section 3.3)—although their effectiveness has been doubted in the context of increased use of market consultations to scope the relevant contracts.44 There are some additional moderating factors that may be important parts of the broader model that seems to be emerging in jurisdictions where there is some degree of consideration of competition impacts twinned with clearer concerns for SME access to public contracts. First, it is important to stress that Danish, Finnish, Dutch, Spanish and Italian CPBs only offer their services to public sector buyers (largely understood, to cover, for example, sheltered workshops in the Netherlands), which may be seen to exclude issues of (unfair) competition between CPBs and other intermediaries in private markets (e.g. supply-chain management consultancy). In Germany and in Sweden, some CPBs offer services to private buyers as well, but the general trend seems to still be largely constrained to CPBs serving the public sector, widely construed (e.g. to include housing companies in Sweden and Denmark). Second, there are clearly distinct approaches to the inclusion of SME considerations, which may largely be determined by issues of legal culture that can also play a role in terms of the general approach—which, however, exceed the possibilities of this chapter. In that regard, it is worth stressing that it seems that Danish, Finnish and Swedish CPBs have explicit SME policies in place, in a sort of self-regulatory approach that may appease policymakers facing calls to ensure SME access (as well as competition concerns, at least in the case of Sweden). Differently, a much clearer command-and-control approach reliant on juridification can be observed in other jurisdictions. In Germany and Spain, the main elements of a pro-SME procurement design—notably, an obligation to divide contracts into lots—are enshrined in the law and, thus, of general application. Similarly, there is a rather developed system of requirements under Dutch law. I elaborate on these insights in the next section, where

See the Spanish chapter in this book. See the Dutch chapter in this book.

43 44

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I critically reflect on the emerging approaches to monitoring competition and SME impacts of CPB activities and their regulation.

3

THOUGHTS ON CPB OVERSIGHT AND REGULATION FROM A COMPETITION AND SME PERSPECTIVE

The emerging regulatory model, as far as one can be identified in the limited experiences cursorily surveyed in the previous section, seems to be one where there are a few relevant elements: (i) concerns ‘public-only’ or ‘mostly public’ CPB markets; (ii) strongly relies on discrete controls on the division of contractual opportunities into (SME-friendly) lots; and (iii) focuses on the short term and is largely oriented towards ‘large number’ controls based on proxies for the competitiveness of procurement markets. The model allows for some variation on (ii), as controls on contractual allotment can either be legally mandated or left to self-regulation. This section concentrates on each of these issues in turn. It concludes that there is still limited awareness at national level of the medium- to long-term negative effects of (excessive) CPB reliance and most current checks and balances are still rather static, which leads to suggesting a more dynamic approach in the following section. 3.1

No Private Competition, No Problem?

One of the main implicit elements of the emerging competition oversight model seems to be that: given that there is no competition between CPBs and (private) undertakings because CPB activities are limited to serving the public sector (loosely defined), there is no need to subject CPBs to direct competition law oversight and enforcement. While this could theoretically make some sense because CPBs that do not offer their services in private markets cannot, for example, cross-subsidise their services or engage in predatory practices, it obviates both the possibility of competition among CPBs (where they have overlapping remits),45 as well as the fact that CPBs are put in a practically unassailable position—which is legally unassailable where CPB use is mandatory. This, in itself, is a weakness of the emerging model, not only because the remit of CPBs is not necessarily fixed and because there could be likely foreclosure of potential alternative providers of centralised purchasing services (in the long run), but also because CPBs could engage in exclusionary or exploitative practices vis-à-vis potential or current contractors. For example, pricing

45 See the discussion on competition amongst ‘bus rides’ in the chapter by Schotanus in this book.

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strategies are highly unlikely to be scrutinised despite the potential for CPBs to extract excessive rents from their contractors. This is possible, for example, in very large contracts based on average unit prices for expected (large) delivery volumes, which may then be implemented to much lower levels that, in turn, would have required higher unit prices for suppliers to turn a reasonable profit and/or not sell at a loss.46 Or, in other words, where there is a big discrepancy between expected and actual supply volumes but the CPB retains the discount that economies of scale would have generated on the basis that tendered prices are binding for suppliers. While this is an issue that can (sometimes) be addressed through procurement rules,47 the natural remit for such type of analysis is competition law (on unilateral conduct by a dominant undertaking). The second weakness is perhaps less visible and concerns the ‘transmission’ of the unassailable position from the CPB to the contractor(s) engaged in their contractual arrangements—mostly, framework agreements. The relevant issue here is that, where a CPB put out to tender a large framework contract or a number, or a sequence of them, it can act as a funnel for market power and end up creating a system that puts ‘key’ or ‘strategic’ suppliers in a dominant position. The emerging model limits the oversight to whether a given specific tender was divided into lots (whether as a legal requirement, or a pragmatic expectation), which raises the question whether contractual allotment suffices to avoid the issue of e.g. cumulative awards (which it does not). 3.2

In Lots We Trust?

Almost with no exception, the jurisdictions covered in the survey place the brunt of SME and competition concerns on the effectiveness of the rules on the division of contracts into lots. The rather clear intuition behind this approach is that, where the different lots are adequately designed, SMEs will not face a disadvantage and, where SME participation is possible (or, better, maximised), the competitive mechanism for the award of the public contract will prevent market distortions and ensure value for money. Now, of course, the catch is in the difficulty of ascertaining whether or not the different lots are adequately designed. The difficulties in establishing the adequate scope of a contract and, where appropriate, its allotment make these decisions notoriously difficult to challenge—particularly on the basis of distortions that can be countered by the 46 This leads, for example, to the establishment of firm commitments not to waive the contract by participating contracting authorities in some schemes in Belgium; see, for example, the discussion in the Belgian chapter. 47 See e.g. the case on fuel procurement discussed in the Finnish chapter by K.-M. Halonen in this book.

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contracting authority as only having emerged with hindsight. There is also no guarantee that a ‘well-designed’ division of a contract into lots will result in multiple awards (to SMEs), as there are a number of factors at play, such as the evaluation rules and, in particular, the rules on bundle/total tenders and overall discounts, the actual size of the lots (where designed, for example, geographically or around different specialisms), or the timing of the tender of different contracts for all of which a single contractor would have an interest, but with insufficient capacity to fulfil them all—to mention but a few. There is also a further issue of potential deviations between the advertised (and awarded) needs and those that arise during the execution of the contract, which could create uncertainty as to whether being awarded a lot will mean any business at all where CPBs (or rather, the end users) do not commit to placing any call-off contracts (or where there is a ‘cascade system’ based on excessive capacity and/or with a first-ranked contractor with sufficient capacity) or, at the other end of the spectrum, whether contractual requirements will end up exceeding the material capability of the contractor. Once again, this is partially linked to some procurement rules—e.g. on the level of precision that must be met by value estimates (for framework agreements) and the ‘capping’ of the contractual validity at that level, as per the recent Autoritá case.48 But, once again, it seems that these operate as a rather poor substitute for proper (dynamic) competition analysis conducted in a more holistic manner. 3.3

The (Large) Irrelevance of Mandating Lot Division as an Output, but Not as a Process

Given the significant practical constraints on relying on lot division to control for effective competition for public contracts (from SMEs, but also more generally), it seems largely irrelevant whether countries decide to impose a positive obligation to divide contracts into lots or not. What is more interesting is the use of such a conditional obligation to create a procedural requirement for contracting authorities to undertake market analysis (and engagement), as seems to be the case in the Netherlands, where the relevant law requires contracting authorities to prevent unnecessary clustering or bunching of requirements and, where they opt to cluster requirements, imposes an obligation to split the contract into lots—all of this with the goal of avoiding restrictions of competition.49

48 Judgment of 19 December 2018 in Autorità Garante della Concorrenza e del Mercato – Antitrust and Coopservice, C-216/17, EU:​C:​2018:​1034. For discussion of additional distortions at domestic level of such an approach, see the Danish report. 49 See the Dutch chapter in this book.

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In systems with a self-regulatory approach to this issue, the premise is likely to be that, given a specific corporate policy in the CPB, as a matter of diligence and professionalism, the CPB workforce will engage in the same analysis. Moreover, at least in the case of some Swedish CPBs, there are informal and formal communications and complaints mechanisms that can generate the same type of timely (and effective?) challenge of equivalent decisions.50 Whether the same is achieved in jurisdictions with a legal obligation to split contracts into lots can be doubted, even where there are high levels of transparency of the justification of those decisions, as this approach does not truly encourage involvement of the contracting authority/CPB with the market— except where, separately, market consultations are promoted as a matter of general procurement design. 3.4

How Many SMEs Mean Effective Competition for Public Contracts?

As mentioned above, another of the weaknesses in the emerging model is that it focuses on the short term and is, at the same time, largely oriented towards ‘large number’ controls based on proxies for the competitiveness of procurement markets (e.g. such a percentage of CPB contracts/lots were awarded to SMEs during this financial year). Most reports included in this book stress that a large percentage of the contracts (or lots) tendered by CPBs were awarded to SMEs as a recognised sign that CPB activity does not necessarily negatively impact on them. However, even if this information can give some indication of the extent to which SMEs are (or are not) negatively affected by centralised procurement at the time of reporting, this information is insufficient. First, it is insufficient because it is not benchmarked against the ‘SME population’ in the relevant markets. Even if, say, 80 per cent of CPB contracts/lots are awarded to SMEs, that is a major (negative) deviation compared to the general economy where SMEs are, for example, 94 per cent of the business fabric of a given economy. Conversely, it is also a major (unclear) deviation if, in a specific sector, only 60 per cent of active undertakings are SMEs. Therefore, aggregate and decontextualised figures are insufficient to assess whether there is an SME accessibility issue. Abstract figures by number of contracts are also not very useful and disaggregation, e.g. by value, innovative character, sustainability aspects, etc., could be much more useful. Second, and more important, it is worth stressing that most concerns about the impact of CPB activity on market competition are not focused on the short See the Swedish chapter in this book.

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term, but rather on the medium and long run. From this perspective, what is relevant is to be able to identify trends to see if over time centralisation does (or does not) have the effect of driving (unsuccessful) undertakings out of business. It is also important to see if the trends vary in different markets as it is possible that, for example, CPBs generate more concentration in some sectors than others. 3.5

Preliminary Conclusion

On the whole, it is submitted here that, even if the emerging model evidences engagement with issues of SME access and some competition concerns as far as they are related to SME participation (or its possibility), there is still limited awareness at national level of the medium- to long-term potential negative effects of (excessive) CPB reliance—and of the potential ensuing distortions of market structures. Moreover, most current checks and balances are static and offer partial snapshots that make it difficult to assess the real impact of CPB activity.

4

CONCLUSION—A CALL FOR A MORE DYNAMIC MODEL

Given the analysis above, I would extract two related conclusions. The first one is that there are elements of the potential impact of CPBs on market competition and some aspects of CPB market behaviour that cannot be satisfactorily tackled by procurement rules alone, even in the (current) absence of competition between CPBs and (private) undertakings for the provision of centralised procurement services. In that regard, I renew the call for the inclusion of (centralised) procurement as an ‘economic activity’ for the purposes of the application of EU competition law.51 CPBs need to be treated like undertakings and, as such, be potentially subjected to investigations for exclusionary and abusive practices, as well as anticompetitive practices under Articles 101 and 102 TFEU.52 The second conclusion, which is closer to the core of the discussion in this chapter, is that—once the above is in place—there is promise in the emerging model of CPB regulation in so far as it can be improved through incorporating 51 See Opinion of AG Campos Sanchez-Bordona in ASMEL, C‑3/19, EU:​C:​2020:​ 254, paras 72–73. 52 For discussion of the implications this could have on the treatment of CPBs under the Directive, see M. Comba, ‘Article 37’ in R. Caranta and A. Sanchez-Graells (eds), European Public Procurement Law: Commentary on Directive 2014/24/EU (Edward Elgar Publishing, forthcoming 2021).

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more dynamic analysis. A combination of the requirements that emerge from the Scandinavian and Dutch experiences with a longer-term analysis of market trends could generate a good regulatory benchmark. As stressed above, the Dutch approach resulting in a proceduralisation of the obligation to consider market (and SME) impacts of procurement decisions at design stage is appealing. From the Scandinavian, and in particular the Swedish experience, it would be interesting to follow the approach to CPB-run supplier/SME engagement mechanisms, including the existence of an ombudsperson for pre-contentious engagement. More generally, and in common with Finnish, German and Spanish approaches, it would also be necessary to have access to judicial remedies based on competition considerations where those other dispute resolution mechanisms failed—and, in particular, to have effective enforcement of the principle of competition in Article 18(1) of the Directive.53 In addition, there would be a necessary additional layer of regulation to cover longer-term effects. This would require CPBs to generate, and to share with the relevant competition authority, more detailed and specific reports on the evolution of market structures and dynamics in the areas in which they are active. This could then lead to the publication of more limited versions for public analysis. Of course, with the advent of more advanced and open procurement data architectures—such as those that should result from the transposition of the new rules on eForms,54 and perhaps also from the further development of the Open Data Directive55—it should be progressively easier for CPBs to discharge this burden. Such developments could also allow third parties— including competition authorities themselves, or procurement oversight or audit bodies—to develop the relevant indicators. However, this will all be dependent on complex decisions at national level about the transparency of procurement information and the availability of (big) data on the relevant economic sectors against which to match it. Therefore, for now, it would seem best to impose the obligation to document and to take those dynamic medium- and long-term trends into account on the CPBs themselves. It may well be that some of them already do, in which case the proposal is largely one of mandating limited disclosure to the relevant competition authority or

53 A. Sanchez-Graells, ‘Some reflections on the “artificial narrowing of competition” as a check on discretion in public procurement’ in X. Groussot, J. Hettne and S. Bogojevic (eds), Law and Discretion in EU Public Procurement (Hart, 2019) 79 ff. 54 Commission Implementing Regulation (EU) 2019/1780 of 23 September 2019 establishing standard forms for the publication of notices in the field of public procurement and repealing Implementing Regulation (EU) 2015/1986 (eForms) [2019] OJ L 272/7. 55 Directive (EU) 2019/1024 of the European Parliament and of the Council of 20 June 2019 on open data and the re-use of public sector information [2019] OJ L 172/56.

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oversight body. Where CPBs do not do this, adding this regulatory burden is unlikely to generate a disproportionate impact, as long as CPBs have adequate record-keeping mechanisms, which they must have.

7. CPBs and their users: shared liability, contract management and remedies Carina Risvig Hamer 1 INTRODUCTION Whether the users of a central purchasing body (CPB) will actually purchase through a given agreement depends on many factors. First of all, it will depend on whether the agreement in question is mandatory for the contracting authority to use. As can be seen from the national chapters in this book, more agreements are becoming mandatory for certain contracting authorities.1 If an agreement is not mandatory, a contracting authority would in many cases only use an agreement if it were competitive and easy to use. Other factors could be whether the agreement still lives up to the contract terms (contract management issues) over time and the use of an agreement could also depend on whether there are any risks attached to using it. Such risks could include the risk of potential sanctions for breaching the procurement rules, either breaches that take place at the call-off stage or breaches related to the CPB’s conclusion of the framework agreement. In addition to the risk of sanctions, the recent cases from the CJEU, Autoritá,2 and Simonsen & Wehl,3 have sowed doubts in relation to several aspects of CPBs’ agreements and have created further risks particularly in relation to whether a framework agreement expires once the estimate has been reached. This chapter examines the relationship between CPBs and their users and undertakes a comparative survey of how this is managed in the different Member States.4 The chapter first takes a closer look at the elements related to contract management (section 2); secondly, it examines who is responsible (liable) if an agreement is entered into in breach of the procurement rules See also Chapter 4 in this book by M. Andhov and R. Vornicu. C-216/17, Autoritá, EU:​C:​2018:​1034. 3 C-23/20, Simonsen & Wehl, EU:​C:​2021:​490. 4 The chapter is based on part 5 of the questionnaire (Liability between CPBs and their Users), Questions 12–14. The questionnaire can be found at the end of Chapter 1. 1 2

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(section 3). Finally, the chapter explores the potential remedies that can be used when purchasing from a CPB (section 4). In addition to the analysis of the remedies, the chapter takes a closer look at what happens to a framework agreement if purchases take place beyond the estimated value of the framework agreement (section 5). Section 6 contains some conclusions to the chapter.

2

CONTRACT MANAGEMENT

The topic of contract management is not regulated in the procurement rules either at EU level or national level. Besides the rules on contract modification,5 what takes place between the contracting authority and the supplier, after the contract is signed, is generally not a subject for the procurement rules. It can often be difficult to know what takes place after the execution of a contract as there are generally no requirements for transparency in the EU rules regarding this phase, and while national law to some extent will provide for rules on access to information,6 the execution of the contract is often only a matter for the contracting authority and its contract parties. However, in the case of CPBs, the agreements will also need to be shared with the CPBs’ users and to some extent, one could argue that these agreements consequently need to be more transparent since they are intended for a broader group. However, the amount of transparency depends on national legislation, which can limit the amount of transparency available. In Denmark, for example, transparency has been reduced for the main CPB,7 whereas most CPBs in, for example, Sweden, are covered by the national rules on access to information.8 The users of a framework agreement and the CPB share responsibilities – how this is done in practice will often depend on the agreement established between the CPB and their users and to some extent legislation (see below section 3). This raises some questions in relation to who is responsible for following up on the contract requirements in the framework agreement. Such

5 Article 72 of the Directive. Bearing also in mind that in case of substantial modifications, a contract can be declared ineffective as this would be considered as a direct award under Article 2(d)(a) of the Remedies Directive. 6 For more on the rules on access to information in different Member States, see K.-M. Halonen, R. Caranta and A. Sanchez-Graells (eds), Transparency in EU Procurements (Edward Elgar Publishing, 2019). 7 In Denmark the main CPB, called SKI, has been excluded from the rules on access to information. See C. Risvig Hamer, “Transparency and access to information in public procurement procedures in Denmark”, in K.-M. Halonen, R. Caranta and A. Sanchez-Graells (eds), Transparency in EU Procurements (Edward Elgar Publishing, 2019), pp. 106–128. 8 See chapter on Sweden.

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requirements could relate to many aspects of the contract and could also include social and environmental requirements. Generally, it is for the CPB to follow up on the contract terms relating to the framework agreement whereas it is the users’ responsibility to follow up on the call-off contract.9 Often the CPB has an interest that the agreements are in fact used by the contracting authorities, particularly if the CPB will profit from the use of the agreements. Thus, CPBs will often assist the individual contracting authority in the contract management of the framework or on elements regarding the interpretation of the conditions in the framework agreement.10 It is also possible for the CPB to conduct different types of audits.11 If a supplier does not deliver the goods or services, or a conflict occurs, a CPB can choose to assist the contracting authority in this regard or kick suppliers out of the framework agreements. It is not often that there are disputes between a supplier who has been awarded the contract and the CPB. In Denmark, there has been one example of a dispute ending up in arbitration.12 In that case, the main CPB, SKI, had a supplier in a framework agreement who wanted to be released from the agreement. In order to win the contract, the supplier had bid with extremely low prices on certain products. During the lifetime of the agreement, the sale of these products subsequently increased, and the supplier wanted to be released from the agreement. However, the conclusion in the arbitration case was that the supplier could not avoid selling these at a fixed low price to the Danish municipalities and hence could not be released from the agreement.13 The case shows that it is the economic operator who bears the responsibility if its tender is (too) low. Another aspect of contract management in relation to CPBs’ agreements is that CPBs will often have a better capacity to follow up on contract requirements as well as being more experienced and often more professional. In October 2017, the European Commission adopted a “recommendation on the professionalisation of public procurement” to encourage the EU Member States to take steps to increase the professionalism of contracting authorities.14 Professionalisation is not only relevant when conducting a procurement proce

See e.g. the chapters on Finland and Denmark. See chapter on Denmark. 11 See also the chapter on Sweden, in which Edman states: “The suppliers and their respective framework agreements are also usually audited from an economic, quality and sustainability perspective, at least once during the duration of the agreement. These are planned audits exercised by professional auditors.” 12 MediqDanmark A/S v. SKI A/S, 14 March 2019. 13 See chapter on Denmark. 14 European Commission Recommendation (EU) 2017/1805 on the professionalisation of public procurement — Building an architecture for the professionalisation of public procurement, C/2017/6654, OJ L 259, 7.10.2017, pp. 28–31. 9

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dure, but also in regard to the execution of the contract and, as stipulated in the recommendation, the Commission encourages the Member States to support coordination strategies, including cooperation among contracting authorities and CPBs, as these tend to be more professional.15

3 LIABILITY Having clear rules on liability is important for the trust and use of CPBs. Most Member States do not regulate the liability between CPBs and their users and the topic has not found its way into the case law of the Member States. In some cases the agreement between the CPB and the users will regulate the issue,16 whereas other Member States just state that the national legislation has identical wording to the Directive.17 The reason why there might not be any litigation in the Member States regarding liability could be due to a high level of trust that contracting authorities have between each other and there presumably would not be any political will to start litigation against another contracting authority (the CPB). Some Member States have mandatory agreements for certain contracting authorities, but it’s not common for there to be any consequences for the non-use of a given agreement. However, in Portugal,18 a contract can be considered void if a contracting authority purchases outside the agreement. Also in Italy, there can be potential remedies for contracting authorities who purchase outside a mandatory framework agreement.19 Nevertheless, most Member States do not have any consequences if a contracting authority does not purchase through a (mandatory) agreement.20 However, bearing in mind that a contract can obviously be declared ineffective if a purchase is above the 15 In Belgium the Court of Auditors has even urged some CPBs to professionalise their activities, see the chapter on Belgium. 16 See chapter on France. 17 See e.g. the chapters on the Netherlands, Denmark and the UK. 18 See chapter on Portugal. 19 See chapter on Italy. In Italy there have also been challenges related to contracts awarded by regional CPBs for the regional hospitals, claiming that the regional hospitals should use the national CPB (Consip) instead, since Consip had already awarded the same type of contract. See Consiglio di Stato, Sez. III, 26/02/2019, n. 1329, Consiglio di Stato, Sez. V, 11/12/2017, n. 5826. The Council of State rejected the case, because in the specific field of health procurement a national law stated that the local health authority (in Italy the health service is organised on a regional basis) should purchase from the regional CPB and only in case of lack of that specific good or service, could it use the national CPB. Moreover, the Council of State declared that the service offered by the national CPB was not exactly the same as that offered by the regional CPB. 20 See e.g. the chapters on Finland and Denmark.

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threshold and no other public procurement procedure took place, as this will be considered a direct award contra Article 2(d)(a) of the Remedies Directive (see below section 4). From an EU perspective, the issue of liability between CPBs and their users became clearer with the 2014 Directive.21 The general rule is that a contracting authority will not be responsible for the mistakes made by a CPB when entering into the framework agreement itself. This even applies in cases where a CPB has made significant errors when entering into the framework agreement. As long as the contracting authority using the framework agreement has followed the conditions established in the framework agreement, it does not risk the contract (the call-off) later being declared ineffective. However, in cases in which the contracting authority does not follow the conditions in the framework agreement, for example, introducing a new award criterion in a mini-competition, which has not been foreseen in the framework agreement, or purchasing goods that are not covered by the framework agreement, the call-off contract is at risk of being declared ineffective. Such situations have occurred in Denmark in several cases, including situations where the user of the framework agreement and the undertaking made substantial modifications to the framework agreement22 or where the user’s choice of using a direct award instead of a mini-competition was not permitted.23 There are many grey areas in practice where it is not clear whether the mistake made lies in the framework agreement itself (and hence the responsibility lies with the CPB) or the mistake relates to the use of the framework agreement (and hence the responsibility lies with the contracting authority). The consequence of wrongful use of an agreement can lead to ineffectiveness of the contract or other potential sanctions and it is therefore important for the users that the way to use an agreement is transparent in order to reduce the risk of using an agreement. This also relates to whether the maximum estimate of an agreement has been reached. It must be for the CPB to communicate this to the users of the agreement.

This is elaborated on in Chapter 2 by Comba and Risvig Hamer. E.g. The Danish Complaints Board’s decision of 19 August 2020, EG A/S v. Egedal Kommune, in which the Complaints Board found that changes in the price were not permitted according to the agreement and hence the contract was considered to have been awarded outside the framework agreement, which constituted a direct award, and the contract was declared to be ineffective. See also the chapter on Denmark. 23 E.g. The Danish Complaints Board’s decision of March 2021, Assemble A/S v. Sorø Kommune. See the chapter on Denmark. 21 22

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4 REMEDIES The rules on enforcement and remedies against CPBs are as a starting point, no different than for any other contracting authorities who breach the EU procurement rules. This means that it is possible for a review body to annul a CPB’s decision to enter into a framework agreement, to declare a framework agreement ineffective and to award damages.24 CPBs’ agreements are generally of high value and important to many undertakings. Thus, it could be anticipated that this would also mean a high number of complaints regarding CPBs’ agreements. This is also the case in some Member States (Italy, Sweden and Denmark), and it has been pointed out that for the CPBs in these cases, there is often a successful outcome.25 However, most of the authors of the national chapters indicate that there is generally no extra focus on CPBs in relation to the number of complaints and in Portugal, the number is even below average.26 Section 4.1. below takes a closer look at the potential remedies relating to the CPBs’ agreements, while section 4.2. explores the remedies for call-off contracts made by the users. 4.1

Remedies Relating to the CPB’s Agreement

A framework agreement can be declared ineffective if a contract notice has not been published27 or if the framework agreement was entered into in the standstill period or a period of automatic suspension.28 Direct award of a contract covers both the situation where the contracting authority, on purpose, awards a contract directly to an undertaking without any form of competition or transparency as well as situations where the CPB mistakenly believes a contract not to be covered by the procurement Directives, and therefore does not publish a contract notice before entering into the contract. Given that CPBs’ agreements often are of high value and are used by a number of users, it is rare that agreements would be considered to be concluded without any pub24 The Remedies Directive Article 2(1) and Article 2(d)(1)(a). This chapter will focus on the two sanctions of annulment and ineffectiveness. 25 See e.g. the Italian chapter where it is stated that litigation regarding the main CPB in Italy (Consip), had a positive outcome for Consip in three out of four appeals. 26 See the chapter on Portugal where it is pointed out that the percentage of disputes regarding the main CPB (SPMS, E.P.E.) is only 0.3 per cent. 27 The Remedies Directive Article 2(d)(1)(a), states: “if the contracting authority has awarded a contract without prior publication of a contract notice in the Official Journal of the European Union without this being permissible in accordance with Directive 2004/18/EC”. If a contract is not declared ineffective, alternative sanctions apply. 28 The Remedies Directive Article 2(d)(1), (b) and (c).

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lication of a contract notice. However, it could happen in case of substantial modifications or, as pointed out in the UK chapter, if the users are not stated correctly on the notice.29 In the latter case, when a user who was not stated in the contract notice uses an agreement, this will be considered a direct award, but the agreement itself will not be considered ineffective since a contract notice has been published. Another example occurred in a Danish case, where a CPB’s framework agreement was declared ineffective as certain purchases in the agreement had not been put out for competition.30 Annulment (setting aside decisions) is the most common remedy, which has its connection to the standstill period and the requirement for automatic suspension. Most complaints will take place in the standstill period. The Remedies Directive, Article 2(1)(b), requires that review bodies have the power to “either set aside or ensure the setting aside of decisions taken unlawfully”. Whether setting aside a CPB’s decision affects the contract itself is a topic for discussion. In most Member States, setting aside a decision aims to nullify a decision before awarding the contract and not on the annulment of the contract.31 In some Member States, such as Denmark and France, a CPB will need to terminate the agreement if a decision is annulled.32 Many types of breaches of the procurement rules can lead to an annulment. This could, for example, be setting a longer period for a framework agreement than permitted, wrongful use of award criteria or issues relating to the evaluation. It could also be cases where the contract notice lacks information or the information is wrong. One reason why many Member States indicated that CPBs are not involved in a high number of complaints could be that CPBs create framework agreements on behalf of others and that potential implications of such agreements do not show up before the users are using them. Thus, more complaints could potentially occur in the call-off stage (see section 4.2.). However, Halonen points out to the contrary that the reason why there have not been issues regarding call-off contracts is due to the fact that challenges to the procurement rules take place regarding the framework agreement itself and before the agreement has been concluded.33

See chapter on the UK. See the Complaints Board’s decision of 15 February 2019, in the chapter on Denmark. 31 S. Treumer, “Enforcement of the EU public procurement rules: the state of law and current issues” in S. Treumer and F. Lichère (eds), Enforcement of the EU Public Procurement Rules (DJØF Publishing, 2011) p. 32. 32 See chapters on Denmark and France. In Denmark this is due to specific legislation in the Danish Procurement Act § 185(2). 33 See the chapter on Finland. 29 30

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4.2

Remedies Relating to the Call-Off Contract

As mentioned above in section 3, the contracting authority will be responsible for the part of the procurement procedure it conducts itself. This means that the contracting authority cannot make substantial modifications to the contract or introduce new technical specifications or award criteria. If the user does not follow the rules of the agreement for the call-off contract, such a contract can be declared ineffective. This recently occurred in a Danish case, where a municipality had negotiated with a tenderer, which was not permitted in the framework agreement and the call-off contract was declared ineffective. In the case EG A/S v. Egedal Kommune, decision of 19 August 2020, the Danish Complaints Board found that, in the case of a framework agreement, with a direct award to one undertaking, it was not permitted for the supplier to lower its prices substantially. The change in price had taken place based on negotiations between the contracting authority and the supplier, which was not permitted and hence the contract was considered to have been awarded outside the framework agreement, which constituted a direct award, and the call-off contract was hence declared ineffective. If a contracting authority uses an agreement from a CPB and it has doubts as to whether the call-off contract has been made correctly according to the agreement, it can publish a voluntary ex-ante transparency (VEAT) notice. A VEAT notice gives an exception to ineffectiveness, and is provided for by the Remedies Directive.34 If such a VEAT notice is published and no economic operators have challenged the validity of the direct award of the contract during a minimum ten-day waiting period (a sort of standstill period) the contract can be concluded and its ineffectiveness can no longer be invoked at a later stage. In that regard, it is a requirement that “the contracting authority considers that the award of a contract without prior publication of a contract notice in the Official Journal of the European Union is permissible”. Bear in mind in this regard, that the CJEU case Fastweb opens up the possibility of declaring a contract ineffective despite the fact that a VEAT notice has been published.35

5

CONSEQUENCES IF THE ESTIMATED VALUE OF A FRAMEWORK AGREEMENT HAS BEEN REACHED

In most Member States, it has not been the practice that a framework agreement will expire once the estimated value of that framework agreement has

Article 2d(4) of the Remedies Directive. Case C-19/13, Fastweb, EU:​C:​2014:​2194.

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been reached.36 Thus, the CJEU case Autoritá has naturally stimulated discussion in many Member States, and not surprisingly this discussion has taken place in some of those Member States where framework agreements are often used.37 The discussion has concerned several aspects of the case in relation to the estimate for the framework agreement and the need for transparency regarding the amount to be purchased under the agreement, but also in relation to potential remedies in case these estimates have been wrong, which will be discussed further in this section.38 Finland and Spain have even introduced new legislation based on the case.39 In other Member States, such as Sweden and Denmark, the official authorities have issued guidance on the case interpreting the case strictly.40 However, there are also Member States such as the Netherlands where the reflections on Autoritá are that the case does not lead to substantial issues in practice.41 Autoritá also allowed the Danish Complaints Board for Public Procurement to ask the CJEU for a preliminary ruling,42 which will be elaborated on below. In Sweden, several cases are pending43 and in Belgium case law after Autoritá still aimed for a flexible approach and found that it was not required for a contracting authority to also disclose a maximum quantity.44 In Spain, prior to Autoritá it was not uncommon for the framework agreement not to respect the proper estimated value and various administrative and jurisdictional bodies related to public procurement had considered that the estimated value of a framework agreement did not operate as a maximum. Some practitioners had considered this unsatisfactory.45 Prior to Autoritá, it was generally the understanding that a contracting authority, when estimating the value of a framework agreement, should do so with their best bid and discretion, with the knowledge the contracting authority has at that time. Estimating the value as precisely as possible will give the

See e.g. the chapters on Finland, Sweden, Denmark and Germany. See e.g. the chapters on Denmark, Finland and Sweden. 38 In this section the focus will be on the issue of remedies, more specifically what happens to a framework agreement once the estimate of the value of the framework agreement has been reached. For a discussion on how precisely the estimate should be stated, see, for example, M. Andhov and R. Vornicu, in Chapter 4 of this book. 39 See the chapters on Finland and Spain. Also, the chapter on France mentions that the case can result in new legislation as the interpretation is stricter than national law. 40 See the chapters on Denmark and Sweden. 41 See the chapter on the Netherlands, where it is, however, mentioned that “The Dutch Courts have not provided clarity on the legal consequences of when the absolute volume of a framework agreement has been reached.” 42 Case C-23/20, Simonsen & Weel [2020] OJ C 95. 43 See chapter on Sweden. 44 See chapter on Belgium. 45 See chapter on Spain. 36 37

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tenderers the necessary information in order to determine whether they are interested in the contract. Taking a closer look at Autoritá, the CJEU stated that a “contracting authority that is an original party to the framework agreement can make commitments on its own … only up to a certain quantity and once that limit has been reached the agreement will no longer have any effect” (emphasis added).46 This statement from the CJEU has been criticised widely and therefore close attention was paid to the case Simonsen & Wehl and whether the CJEU would interpret that statement as limited to the former case,47 or whether the CJEU would repeat its statement. It was even discussed whether the requirement for stating an estimate not only related to the overall estimated value of the framework agreement, but also to certain categories of products (quantities) under the framework agreement.48 In Simonsen & Weel A/S, the CJEU found that it was necessary to state both an estimate of the value of the framework agreement as well as a maximum value (or quantities). The CJEU found that although a literal interpretation of the Public Procurement Directive did not lead to such a conclusion, it followed from the principle of equal treatment and the principle of transparency and the general structure of this Directive. The CJEU also found that it was not necessary to estimate the individual contracting authority’s estimated purchases separately, including estimates of product lines/sub-agreements. Regarding ineffectiveness of the framework agreement itself, the CJEU found that in a case where a contract notice has been published, the framework agreement itself cannot be declared ineffective. The remedy of ineffectiveness is intended for serious breaches of the procurement rules, such as not publishing a contract notice, and it would be disproportionate to extend the application of ineffectiveness to a situation such as that at issue in the main proceedings, where the contracting authorities had published a contract notice despite the

C-216/17, Autoritá, paragraph 61. Arguments for a limited interpretation of the case are elements such as the fact that the statement (Autoritá, paragraph 61) was an obiter dictum and that the General Advocate had not made any comments on this particular point. Furthermore, the case was decided by only three judges. It could also be argued that the interpretation of the case should at least be limited to framework agreements with only one supplier. The reasoning behind this is that in the case of a framework with multiple suppliers there would be competition for the following contracts, including cases where the estimated value of the framework agreement had been reached. Finally, it is worth pointing out that the case related to Directive 2004/18/EC and that the 2014 Directive aimed to ensure a more flexible approach towards framework agreements; see Council of the European Union Document 6907/12, Cluster 6 “Aggregation of demand” (28 February 2012). 48 See also the chapters on Finland and Sweden. 46 47

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failure to mention the estimated quantity and the maximum value to be delivered under the framework agreement.49 The CJEU repeated the statement in Autoritá that once that limit “has been reached the agreement will no longer have any effect”.50 However, it did not elaborate on what this means. Some flexibility was added in the sense that the CJEU referred to the rules on contract modification and that these to some extent allow for changes in the maximum value of a framework agreement, but explicitly mentioned that contract modifications required the approval (acceptance) of the supplier. Thus, the first issue would be to determine what the maximum value of a framework agreement is, and this require that CPBs keep track on what has already been purchased as well as whether the rules on contract modification can apply. If the maximum value is reached, the CPB will need to terminate the agreement as it can no longer be used. If the agreement is still used, this will most likely be considered as a direct award, and if the purchase is above the threshold, such an award could be declared ineffective by a review body. If the contracting authority is in doubt as to whether the maximum value has been reached, it is possible to publish a VEAT notice, which may protect against ineffectiveness of the contract (see above, section 4.2. on VEAT notices). In Simonsen & Wehl, an estimated value had not been stated in the contract notice, but the estimated value was stated in other procurement documents. It seems obvious that not stating the estimated value in the contract notice will constitute a breach of the Directive51 as well as the principles of equal treatment and transparency, as the tenderers have no possibility to determine whether a framework agreement is relevant to them. However, since a contract notice had been published, it is difficult to see that the failure to state an estimated value should lead to ineffectiveness of the framework agreement, including the call-off contracts, which was also the CJEU’s conclusion. However, it is possible that the failure to state an estimated value at all could lead to annulment if this means that it is not possible for tenderers to determine whether they should bid for the framework agreement due to lack of transparency. Generally, the case leaves many issues undecided, such as how to determine the maximum value of the framework agreement, including how to make modifications during the lifetime of the agreement, and whether there could also be consequences for stating too high a maximum value. Where C-23/20, Simonsen & Wehl, paragraphs 85–87. C-216/17, Autoritá, paragraph 61, C-23/20, Simonsen & Wehl, paragraph 68. 51 According to the Directive Article 49 and Annex V, Part C(8), a contracting authority shall state in the contract notice, the “Estimated total order of magnitude of contract(s)”, as well as, according to Annex V, Part C(10), “as far as possible, indication of value or order of magnitude and frequency of contracts to be awarded”. 49 50

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should the maximum value be stated? Does the reasoning in the case also apply to dynamic purchasing systems? And how to deal with framework agreements established before the ruling? The Danish Complaints Board still has to rule in the specific case and some of these questions might be answered. However, the cases have definitely created uncertainty on many aspects relating to CPBs’ framework agreements, which potentially will create more transparency on CPB agreements, but has certainly also reduced the flexibility.

6 CONCLUSIONS Remedies for breaches of the EU procurement rules play an important role in the interpretation of the procurement rules. An effective enforcement system is an important tool to ensure that the rules are complied with. Case law is important in the interpretation of the procurement rules. Thus, it is also a little surprising to this author that this study has shown that most of the Member States involved do not have any case law on issues that are of particular relevance for CPBs. In a few Member States, where CPBs are often used, there are also more complaints relating to the procurements carried out by CPBs. Autoritá has sowed doubts in relation to several aspects of CPB agreements and has created further risk in estimating the maximum value of a framework agreement. CPB agreements will often be voluntary to use and therefore it can be more difficult to determine the estimated value for CPBs beforehand. Autoritá and Simonsen & Wehl, have certainly influenced the way in which framework agreements are used and in the future this will require more emphasis to begin with on what (and who) the framework agreement is intended for, as well as contract management becoming even more important for CPBs in order to assess whether the maximum estimated value of a framework agreement has been reached. Estimating specific purchases over time can be difficult – and not only in times of crisis where the use of certain medical equipment increases, but also in general when dealing with joint procurement. Thus, there is a need for flexibility relating to estimating the value of purchases and there should be room to make modifications during the lifetime of the framework agreement. If the CPB makes substantial errors in estimating its purchases, which thereby excluded other undertakings that might otherwise have been interested in the agreement,52 this could also lead to other consequences, such as annulment. The legal uncertainty has significant consequences for the use of framework agreements due to the potential risk of remedies in case of breaches of the procurement rules. Thus, it is essential for the use of CPB agreements that the CPBs are transparent regarding the purchases made under the agree See e.g. C-298/15, Borta, EU:​C:​2017:​266.

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ment or they risk users stopping using them due to the risk of ineffectiveness of the call-off contract if the estimated value of the framework agreement has been reached.

8. Public purchasing in the EU during the COVID-19 pandemic Judy Yueh Ling Song 1 INTRODUCTION The severe acute respiratory syndrome coronavirus 2 (COVID-19) shocked the world in early 2020 and affected almost all countries worldwide, including the European Union (EU) and its Member States. The initial pandemic outbreak in Europe first arrived in Italy in January 2020. The impact of the pandemic was huge, with a high death toll and too few intensive care units. With the rise of the contagion, the health-care sector in Italy struggled with health-care supplies, in particular, supplies of personal protective equipment (PPE) and medical ventilators, which made it difficult to treat the high number of critical patients. It did not take long before Italy requested assistance for additional health-care supplies in terms of PPE and ventilators from the Emergency Response and Coordination Centre1 and other Member States. The pandemic continued to spread across Europe and the various EU Member States soon faced similar challenges to Italy. Public purchasing plays a vital role in fighting the difficulties that arise from COVID-19. The most acute problem was the unprecedented demand for health-care supplies throughout the world. Throughout the pandemic, the EU has been put to the test to accentuate its role of cooperation relating to the pandemic response across its Member States. It is during this medical emergency that the need for collaboration between Member States is heightened, particularly in the areas of health-care procurement, management, allocation and storing of medical equipment as well as the procurement and delivery of

1 The European Response Coordination Centre is the coordination hub for the delivery of emergency assistance in terms of relief items, expertise, civil protection teams and equipment to disaster-stricken countries. See: European Civil Protection and Humanitarian Aid Operations, European Response Coordination Centre https://​ ec​.europa​.eu/​echo/​what/​civil​-protection/​emergency​-response​-coordination​-centre​ -ercc​_en, accessed 16 April 2021.

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COVID-19 vaccines. However, on the flip side, there are divergent responses by individual Member States in tackling the pandemic through national preferences and political legitimacy. This chapter will first discuss the legislation and governance mechanisms available to the EU prior to the pandemic (Section 2). The chapter then takes a closer look at the response by the EU and its individual Member States in tackling the situation that arises from COVID-19 (Section 3). Here, the chapter will focus on the area of joint procurement as well as the action undertaken by the CPBs across the Member States. In Section 4 the adoption of the guidance on public procurement in the emergency situation at the EU level and steps undertaken by the Member States in relation to the public procurement framework will be discussed. The subsequent Section 5 examines the assistance and cooperation among Member States. Section 6 discusses elements relating to joint procurement and centralisation relating to the procurement of vaccines in the EU and its Member States. Section 7 contains conclusions to the chapter.

2

PRIOR TO COVID-19: THE ROLE OF THE EU IN HEALTH-CARE PROCUREMENT

The role of the EU in relation to health care is narrow, and limited by national governments who are keen to retain control of their health policies and systems.2 The EU, in terms of other areas of health, including crisis response, pharmaceutical procurement and infectious disease management, is limited to supporting national policies and encouraging coordination. The progress of EU policies in health care can be seen throughout the history of the health crises. During the outbreak of SARS in 2003, the EU established the European Centre of Disease Prevention and Control (ECDC) and following the 2009 swine flu epidemics, the EU created both a mechanism for joint procurement of vaccines and the Health Threats Decision.3 Prior to COVID-19, the EU already had governance frameworks in case of health crises. The Health Threat Decision framework was established in 2013 and it governs the roles of Member States and EU institutions in (a) emergency planning and preparedness, (b) ongoing surveillance and data collection, and 2 According to the Treaty on the Functioning of the EU (TFEU), the EU has a shared competence with Member States in public health matters and according to Article 168 TFEU, the EU is called to act on global health issues by encouraging cooperation between countries and international organisations; however, it also states that the responsibility of organising health systems remains in the hands of Member States. 3 Commission, Decision 1082/2013/EU on serious cross-border threats to health and repealing Decision No. 2119/98/EC OJ 2013 L 293/1.

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(c) crisis response and coordination.4 An alert is raised during a crisis, triggering a risk assessment from the ECDC and the start of coordination of national responses via the Health Security Committee. Another way of governance is through the European Civil Protection Mechanism. The mechanism facilitates cooperation between Member States in the event of disaster. Article 11(4) of the Health Threat Decision orders Member States to activate the mechanism if a Member State is overwhelmed by the situation. In 2019, the EU upgraded the Civil Protection Mechanism with the introduction of rescEU,5 which has the objective of protecting citizens from disasters and the management of emerging risks. With this, a new European reserve of resources was founded, with a common stockpile of transport, medical equipment and field hospitals. The Health Threat Decision also establishes the Joint Procurement Agreement (JPA) for joint purchases of ‘medical countermeasures’.6 The JPA was introduced in 2014 as an innovative tool to coordinate the procurement of vaccines and medications in preparation for serious cross-border crises, following the aftermath of the H1N1 pandemic.7 As enunciated in the Explanatory Note,8 the JPA is not an international treaty but a budgetary implementation measure,9 which is an arrangement with executive functions intended to encourage voluntary cooperation in the health system to provide 4 A. Alemanno, ‘The European response to COVID-19: from regulatory emulation to regulatory coordination?’ (2020) European Journal of Risk Regulation 11(2), 307–316, available at https://​doi​.org/​10​.1017/​err​.2020​.44, accessed 9 May 2021. 5 European Commission, ‘rescEU’ (11 January 2021) https://​ec​.europa​.eu/​echo/​ what/​civil​-protection/​resceu​_en, accessed 28 March 2021. 6 Article 5 provides for participating Member States to engage in a joint procurement procedure conducted pursuant to the third subparagraph of Art. 104(1) of Regulation (EU, Euratom) No. 966/2012 on the financial rules applicable to the general budget of the Union and pursuant to Art. 133 of Commission Delegated Regulation (EU) No. 1268/2012 on the rules of application of Regulation (EU, Euratom) No. 966/2012 on the financial rules applicable to the general budget of the Union, with a view to the advance purchase of medical countermeasures for serious cross-border threats to health. 7 E. McEvoy and D. Ferri, ‘The role of the Joint Procurement Agreement during the COVID-19 pandemic: assessing its usefulness and discussing its potential to support a European Health Union’ (2020) European Journal of Risk Regulation 11(4), 1–13. 8 See European Commission, ‘Explanatory Note on the Joint Procurement Mechanism’ (December 2015) https://​ec​.europa​.eu/​health/​sites/​health/​files/​ preparedness​_response/​docs/​jpa​_explanatory​_en​.pdf, accessed 4 February 2021. 9 E. McEvoy and D. Ferri, ‘The role of the Joint Procurement Agreement during the COVID-19 pandemic: assessing its usefulness and discussing its potential to support a European Health Union’ (2020) European Journal of Risk Regulation 11(4), 1–13.

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better health protection at the European level.10 The common rules of the JPA are outlined in the explanatory note.11 The governance and operation of the JPA are conducted by the JPA Steering Committee (JPASC), which consists of the signatory States, and the Specific Procurement Steering Committee (SPSC), comprised of members participating in specific procurement as well as the Commission.12 The former is responsible for the administrative tasks of the JPA while the latter is responsible for the organisation of the specific procurement procedures such as technical decisions, type of procurement procedure and type of contract.13 The participation in the joint procurement procedure is voluntary and thus the members of the SPSC can vary. Thus, it can be emphasised that the JPA initiative is a great tool for accessing the high-quality medicine and supplies and the advantages of centralised purchasing in the EU setting provide the possibilities of purchasing at reduced cost by enjoying the advantages of economies of scale14 and saving administrative costs, compared to purchases by individual Member States. The downside of the JPA is that the Member States are also able to conduct separate procurements despite being members of the specific JPA procurement.15 This provides the Member States in question with a head start and the possibility of stockpiling goods in a greater quantity compared to those who are not part of the JPA procurements. With all the possibility of the EU governances in place, there is no doubt that the EU has been viewed as being at the forefront of international joint procurement schemes.16

10 N. Azzopardi-Muscat, P. Schroder-Bäck and H. Brand, ‘The EU Joint Procurement Agreement for cross-border health threats: what is the potential for this new mechanism of health system collaboration?’ (2017) Health Economics, Policy and Law 12(1), 43. 11 See above, note 8. 12 Ibid. 13 See above, note 3. 14 E. McEvoy, and D. Ferri, ‘The role of the Joint Procurement Agreement during the COVID-19 pandemic: assessing its usefulness and discussing its potential to support a European Health Union’ (2020) European Journal of Risk Regulation 11(4), 1–13. 15 Ibid. 16 Roel Beetsma, Brian Burgoon, Francesco Nicoli, Anniek de Ruijter and Frank Vandenbroucke, ‘Public support for European cooperation in the procurement, stockpiling and distribution of medicines’ (2021) European Journal of Public Health 31(2), 253–258.

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3

PURCHASING HEALTH-CARE EQUIPMENT DURING COVID-19

3.1

Purchasing Healthcare Equipment during COVID-19 at EU Level

As can be seen from the national chapters in this book, there were various approaches and responses to tackling the crisis by the Member States (see below, Section 3.2). On the EU level, as discussed above in Section 2, the EU could provide an immediate response to the crisis through two frameworks; the Health Threat Decision and the Civil Protection Mechanism. The Civil Protection Mechanism was activated on 28 January 2020 at the request of France, to repatriate EU citizens in China.17 By the end of January, almost 500 EU citizens had been repatriated. Subsequent to that, various EU Member States have requested the Civil Protection Mechanism to organise the repatriation of its citizens. In addition to repatriation assistance, the Civil Protection Mechanism has supported the supply of 56 tonnes of PPE to China from Austria, the Czech Republic, Estonia, France, Germany, Hungary, Italy and Slovenia and this was done between the end of January and the end of February 2020.18 The outbreak of the pandemic started in Europe in Italy and by 26 February, the Italian representative in the EU Commission made a request through the Civil Protection Mechanism for additional PPE.19 The Commission relayed this request but none of the EU Member States assisted. On 10 March 2020, the European Council convened via video conference to discuss the joint EU approach to COVID-19.20 In the conference, the importance of solidarity,

17 European Commission, ‘Coronavirus: EU Civil Protection Mechanism activated for the repatriation of EU citizens’ (28 January 2020) https://​ec​.europa​.eu/​commission/​ presscorner/​detail/​es/​ip​_20​_142, accessed 28 March 2021. 18 C. Beaucillon, ‘International and European emergency assistance to EU Member States in the COVID-19 crisis: why European solidarity is not dead and what we need to make it both happen and last’ (2020) European Papers – European Forum, Insight, 25 April 2020. 19 M. Massari (Italian Permanent Representative to the European Commission), ‘Italian ambassador to the EU: Italy needs Europe’s help’, politico.eu, 10 March 2020, www​.politico​.eu/​article/​coronavirus​-italy​-needs​-europe​-help/​, accessed 28 March 2021. 20 European Council, ‘Conclusions by the President of the European Council following the video conference on COVID-19. 2020’, www​ .consilium​ .europa​ .eu/​ en/​ press/​press​-releases/​2020/​03/​10/​statement​-by​-the​-president​-of​-the​-european​-council​ -following​-the​-video​-conference​-on​-covid​-19/​, accessed 1 February 2021.

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cooperation and information exchanges was reiterated in addition to the identification of four areas of concern, which were (1) limiting the spread of the virus, (2) provision of medical supplies, (3) promotion of research, and (4) consequences of socio-economic problems caused by the pandemic. In the conference itself, Italy’s ambassador to the EU called for the activation of the Civil Protection Mechanism.21 Despite the EU’s high-level political commitment, progress towards having a comprehensive response seemed to face many hurdles as the EU is limited to its treaties relating to existing arrangements relating to public health issues.22 The Commission, on 14 March 2020,23 directed that the exportation of medical equipment outside the EU would be subject to an export authorisation by the Member States.24 On 19 March, the Commission initiated the strategic rescEU stockpile of medical equipment to assist the EU Member States.25 RescEU has been playing a vital role in battling the pandemic, whereby the Commission has set up a common stockpile of medical equipment to support its Member States who are facing a shortage of equipment.26 Ninety per cent of the common stockpile would be funded by the Commission and the stockpile is managed by the Emergency Response and Coordination Centre. The procurement of the equipment is carried out by the hosting state. The first hosting states for the rescEU stockpile were Romania and Germany and they were responsible for procuring the equipment, with the Commission financing 100 per cent of the assets.27 Through the JPA, the Commission has initiated at least seven procurement procedures28 since March 2020, acquiring medical equipment and ventilators to tackle the outbreak. The earliest procurement procedure on lot 1: eye

Ibid. European Council. Decision No. 1082/2013/EU of the European Parliament and of the Council of 22 October 2013 on serious cross-border threats to health and repealing Decision No. 2119/98/EC Official Journal of the European Union, 2013. 23 Commission Implementing Regulation (EU) 2020/402 of 14 March 2020, making the exportation of certain products subject to the production of an export authorisation. 24 Ibid. 25 European Commission, ‘COVID-19: Commission creates first ever rescEU stockpile of medical equipment’, https://​ec​.europa​.eu/​commission/​presscorner/​detail/​ en/​ip​_20​_476, accessed 1 February 2021. 26 Ibid. 27 European Commission, ‘Coronavirus: rescEU masks delivered to Spain and Croatia’, https://​ec​.europa​.eu/​commission/​presscorner/​detail/​en/​IP​_20​_785, accessed 27 March 2021. 28 TED, ‘COVID-19 related tenders’, https://​simap​.ted​.europa​.eu/​web/​simap/​covid​ -related​-tenders, accessed 27 March 2021. 21 22

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protection and lot 2: respiratory protection was around February 2020,29 and was initially unsuccessful as ‘no tenders or requests to participate were received or all were rejected’,30 but on the second attempt, successfully made awards to two undertakings.31 In this joint procurement, six Member States (Bulgaria, Denmark, France, Lithuania, Portugal and Finland) have opted out.32 Subsequently, further joint procurements for PPE equipment, ventilators, medicines, laboratory equipment and vaccines have been initiated.33 With only one unsuccessful tender attempt (which on the second attempt succeeded), it is safe to say that these JPA initiatives were regarded as successful following the earlier joint procurement procedures.34 Since the participation in the JPA is voluntary and relies on the political will of the Member States, it is believed that the decision is usually based on the level of trust and confidence of the individual Member States is the likely result of the joint procurement scheme.35 Another downside of the JPA is the possibility of parallel procurement by Member States, which potentially can distort the potential of the Commission to work as a united front and reap the benefits of having a strong position in the market (and buying power). The Commission also activated the Emergency Support Instrument (ESI) in April 2020 to finance the expenditure needed to address the pandemic.36 The ESI provides direct assistance to the Member States, in particular to the health-care sector, mitigating the immediate critical consequences and anticipating the need for recovery.37 With the ESI, the Commission could procure directly for the Member States and coordinate the transport of medical equipment and patients across the region. The Commission also initiated joint procurement projects with the Member States for PPE, ventilators, laboratory 29 European Commission, ‘Timeline of EU Action’, https://​ec​.europa​.eu/​info/​live​ -work​-travel​-eu/​coronavirus​-response/​timeline​-eu​-action​_en, accessed 27 March 2021. 30 Contract Award Notice: 2020/S 051-119976. 31 Contract Award Notice: 2020/S 100-238631. 32 Ibid. 33 European Commission, ‘Public health’, https://​ec​.europa​.eu/​info/​live​-work​ -travel​-eu/​coronavirus​-response/​public​-health​_en, accessed 28 March 2021. 34 Ibid. 35 E. McEvoy and D. Ferri, ‘The role of the Joint Procurement Agreement during the COVID-19 pandemic: assessing its usefulness and discussing its potential to support a European Health Union’ (2020) European Journal of Risk Regulation 11(4), 1–13. 36 Council Regulation (EU) 2016/369 L70/1, https://​eur​-lex​.europa​.eu/​legal​ -content/​EN/​TXT/​?qid​=​1587029030516​&​uri​=​CELEX:​32016R0369, accessed 16 February 2021. 37 European Commission, ‘Emergency Support Instrument’, https://​ec​.europa​.eu/​ info/​live​-work​-travel​-eu/​coronavirus​-response/​emergency​-support​-instrument​_en, accessed 1 February 2021.

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equipment, and funds from the Horizon 2020 research programme were made available for medical research to develop a vaccine.38 Despite various criticisms,39 it is imperative to note that the EU has done its best to support the Member States, particularly in the procurement of medical equipment and providing coordination throughout the pandemic, at least its approaches from April 2020 onwards. A way in which the EU could tackle a future crisis would be by initiating a stockpile for medical equipment, using the existing rescEU platform, at the first stage of an outbreak anywhere in the world, rather than waiting for the pandemic to hit EU Member States, and if this had been done in the current pandemic, there would have been enough supplies to tackle the earlier stage of the pandemic. In addition, the Commission, through this experience, could take a stronger role in providing a learning proposal on crisis response and providing a platform for the Member States to study the oversights that arise through this pandemic. In addition, this pandemic could be a lesson to the Member States of the need for increased preparation for crisis response, particularly in respect of an epidemiology emergency. The Commission could indeed make some institutional changes in the area of civil protection and its lesson of crisis foresight. In its way forward, the EU should strengthen its role with the aim of better organisation and coordination on a united front, as well as providing a guideline to tackle such a crisis that is clear and concise and applicable to all member states, rather than multiple guidelines from different member states. No doubt, it is important also to recognise the efforts put forward by the Commission in lending a hand through providing some spare funding to support Member States’ health care and businesses. 3.2

Purchasing Health-Care Equipment during COVID-19 at National Level

Taking a closer look at the purchases carried out at national level, most Member States have moved to centralised purchasing of health-care equipment and PPE, either at state level, regional level or through CPBs. Some Member States have initiated centralised procurement for PPE for health-care organisations at state level or through CPBs on behalf of the 38 See European Commission, ‘Public health’, https://​ec​.europa​.eu/​info/​live​-work​ -travel​-eu/​coronavirus​-response/​public​-health​_en, accessed 28 March 2021. 39 A. Gostyńska-Jakubowska and L. Scazzieri, ‘The EU needs to step up its response to the COVID-19 outbreak’, Centre for European Reform (23 March 2020) accessed 27 March 2021; D.G. Dimitrakopoulos and G. Lalis, ‘The European Union’s reaction to the COVID-19 pandemic – a preliminary assessment’, LSE Blog (27 March 2020) accessed on 27 March 2021.

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state.40 In some cases, these procurements may also be done in parallel41 or individually at the regional level.42 In relation to procurement of PPE for non-professional use, various national and regional CPBs are responsible for conducting such purchases.43 It is noted in the national reports that many of these CPBs have conducted purchases using framework agreements.44 Even when the governments have established primary authorities for the purchase of PPE, there have been occasions where the appointed authority is unable to cope with the demand for PPE and medical devices. In Sweden,45 for example, the initial agency, Socialstyrelsen, was appointed as the CPB for purchasing PPE and as a representative at European level for PPE procurement. This newly appointment CPB was puzzled about its role and there was confusion as to what and where the items should be procured. It was later established that this newly appointed CPB should not be the only purchaser of PPE, but an additional one. The regular CPB, SKL Kommentus, was given the mandate to handle COVID-19 requirements and noted that due to large scale demand for PPE, there were difficulties in sourcing supplies, and resorted to taking the risk of sourcing from the world market. Various efforts have been implemented to ease the need arising from lack of PPE supplies, such as (1) a joint agreement to purchase large amounts of supplies was entered into between the Swedish Association of Local Authorities and Regions, which owns Kommentus, larger municipalities and central government agencies responsible for COVID-19; (2) a loan of €0.5 billion to provide financial support to Kommentus; and lastly (3) an agreement to coordinate between regions, through Kommentus, in terms of sharing information and ensuring there is no competition between the regions.46 Similarly in Finland, the National Emergency Supply Agency also confronted the problem of lack of supplies and this led to various hospitals sourcing via direct awards.47 In Spain, despite the imposed centralisation, the Autonomous Communities CPBs concluded their own contracts due to the difficulties faced by the state CPBs.48

40 See particularly the chapters on France, the Netherlands, Germany, Poland, Spain, Romania, the United Kingdom and Finland. 41 See the chapters on Germany and the Netherlands, in respect of COVID-19. 42 See the chapter on Denmark, in respect of COVID-19. 43 For example, France. 44 See the chapters on Denmark, Sweden, Italy and Finland. 45 See chapter on Sweden. 46 Chapter on Sweden. 47 Chapter on Finland. 48 Chapter on Spain.

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In the United Kingdom,49 a combination of centralised procurement functions and a centralised response was needed to process thousands of offers of PPE at the start of the pandemic. The procurement of PPE for the National Health System was done at national level to avoid competition between the individual organisations, but procurement by NHS Trusts could be carried out if it dealt with new, local or small suppliers. In procurement relating to all contracting authorities, there was centralised purchasing on their behalf. The Crown Commercial Services also provided centralised support for procurement by individual contracting authorities. A feature to note is the private undertakings who were involved in the purchase of PPE from other foreign suppliers. It is noted that in Denmark, a textile company, Bestsellers, helped in the purchases of supplies of PPE for the regions,50 while in Germany, a large German company procured supplies from a Chinese company on behalf of the Federal Ministry of Health and arranged for the supplies to be flown in cooperation with an airline.51 The situation is slightly complicated in Italy52 due to the multilevel governance of the national health system and because public procurement in Italy is administered at three governmental levels. In general, the regional authorities are the main procurement bodies that purchase medical supplies.53 As the state of emergency was announced on 31 January 2020, the Civil Protection Department started to procure and deliver critical goods. During this time, the regional authorities had to coordinate with the Civil Protection Agency. Consip, the national CPB, conducted procurement procedures54 on behalf of the Civil Protection Agency for supplies of PPE and medical devices and was responsible for handling the framework agreements. However, as COVID spread and the situation worsened, the agencies were conflicting with each other, and with a severe lack of coordination, there were problems in the acquisition of these supplies. The regional authorities thereafter acted independently and took initiatives to purchase critical goods and services. Most regions used their regional CPBs to purchase PPE and medical devices for the local health authorities, while the local health authorities and hospitals also purchased the Chapter on the United Kingdom in respect of COVID-19. Chapter on Denmark in respect of COVID-19. 51 Chapter on Germany in respect of COVID-19. 52 Chapter on Italy in respect of COVID-19. 53 R. Raudla, J.W. Douglas, T. Randma-Liiv and R. Savi, ‘The impact of fiscal crisis on decision-making processes in European governments: dynamics of a centralization cascade’ (2015) Public Administration Review 75(6), 842–852. 54 See: MedTech Europe, ‘COVID Procurement Actions’ (25 May 2020) www ​ . medtecheurope​ . org/​ w p​ - content/​ u ploads/​ 2 020/ ​ 0 3/ ​ C OVID ​ - 19 ​ - Procurement​ -Actions​_20052025​.pdf, accessed 29 March 2021; and Consip, ‘COVID-19’, https://​ www​.consip​.it/​bandi​-di​-gara/​covid​-19, accessed 29 March 2021. 49 50

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necessary supplies on their own account, to fill any gaps in regional supplies.55 Some CPBs in Italy, such as ARIA S.p.A, launched various calls for tenders for the purchase of PPE.56 It is worth pointing out that the situation in Poland is rather peculiar, as the Polish government has stated that the contracting authorities can be exempted from applying the provisions of the Polish Public Procurement Act in relation to contracts that are necessary to fight COVID-19, where there is a high probability of rapid and uncontrolled spread of the disease, or when it is required to protect public health.57 Further discussion on this can be found below in Section 4.

4

EU SUPPORT TO THE MEMBER STATES IN TERMS OF GUIDANCE

In addition to the establishment and activation of the procedure stated above (Section 3), the Commission also published guidance relating to the public procurement framework in case of an emergency related to the COVID-19 crisis on 1 April 2020.58 It is not the first time that the Commission has issued guidelines that can help tackle an emergency/crisis. For instance, during 2015/2016, the EU was facing a refugee crisis and the European Commission issued guidance on meeting asylum seekers’ needs in line with public procurement law.59 In the guidance of 1 April 2020, the Commission provides options and flexibilities under the Directive to contracting authorities. It concentrates on procurement in cases of emergency and urgency, allowing public buyers to buy within a short time frame if necessary. Amongst others, it provides flexibilities in terms of time frame, the choice of using the negotiated procedure without prior publication or direct award to the pre-selected operator (if it is

55 V. Vecchi, N. Cusumano and E.J. Boyer, ‘Medical supply acquisition in Italy and the United States in the era of COVID-19: the case for strategic procurement and public–private partnerships’ (2020) American Review of Public Administration 50(6–7), 642–649. 56 MedTech Europe, ‘COVID Procurement Actions’ (25 May 2020), www​ .medtecheurope​ . org/​ w p​ - content/​ u ploads/​ 2 020/ ​ 0 3/ ​ C OVID ​ - 19 ​ - Procurement​ -Actions​_20052025​.pdf, accessed 29 March 2021. 57 Article 6 of Act of 2 March 2020. See also the chapter on Poland. 58 European Commission, Guidance on using the public procurement framework in the emergency situation related to the COVID-19 crisis [2020] OJ C108I/1. 59 European Commission, ‘Guidance on meeting asylum seekers’ needs in line with public procurement law’ (9 September 2015), https://​ec​.europa​.eu/​growth/​content/​ guidance​-meeting​-asylum​-seekers​-needs​-line​-public​-procurement​-law​-0​_en, accessed 29 March 2021.

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the only operator able to deliver within the technical and time constraints), and the contracting authorities may consider finding alternative solutions and engaging the market.60 The guidance was indicated as being a ‘deactivation’ of the procurement rules.61 The usage of exceptional procedures, such as the negotiated procedure, without prior publication, and the alternative solution of engaging with the market are also envisaged.62 The Commission also pointed out that despite the possibility for contracting authorities to negotiate directly with potential suppliers, a direct award to one preselected supplier would remain an exception, where only one supplier was able ‘to deliver within the technical and time constraints imposed by the extreme urgency’. Thus, it is vital to show that all relevant conditions for the use of this procedure are met cumulatively and are interpreted restrictively. The Commission also enunciated that this method can only be used to cover the gap until a more secure situation can be found. In regard to the alternative solutions and engaging the market, the vital point is that the contracting authorities can contact potential contractors directly, hire agents with direct market knowledge, or send representatives to the relevant countries to ensure delivery and to communicate with potential suppliers. In responding to the outbreak of COVID-19, many Member States63 issued guidelines prior to the guidance at EU level on measures concerning the application of public procurement provisions. This was due to the urgency of the situation and various needs to deal with the practical procedures and review process. Amongst a variety of measures, most EU Member States spelt out in their guidelines the possibility of adopting the negotiated procedure without prior publication during the pandemic, based on extreme urgency. In this regard, it is imperative to note that the conditions laid down in choosing this procedure vary across the Member States. In a unified approach, however, most Member States indicated that the use of the negotiated procedure without prior publication could be carried out if it were a situation of extreme urgency, particularly in respect of contracts to purchase goods and services that are necessary to contain the pandemic. However, notably, Italy, in its earlier Ordinance,64 also provided a similar approach to the use of this procedure, which specifically spelt out circum-

Ibid. A. Sanchez-Graells, ‘Procurement in the time of COVID-19’ (2020) Northern Ireland Legal Quarterly 71(1), 81–87. 62 Ibid. 63 For example: Belgium, Denmark, Germany, Italy, Portugal, Spain and Sweden. 64 Ordinance No. 630 of 3 February 2020. 60 61

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stances of ‘extreme urgency and civil protection’.65 In addition, Decree-Law 18/2020 further include contracts on supply, works and services in relation to the containment of the negative effects of globalisation, and contracts relating to the purchase of IT goods and services.66 In the case of below-the-threshold contracts to be made by health-care services, a direct award route could be used. In addition to the use of negotiated procedures, various Member States also allowed shorter timelines67 for procurement in relation to extremely urgent situations, an extension of deadlines68 and implementation of the simplified procedure69 for below-the-threshold procurements. Another aspect to be pointed out amongst the measures taken by the EU Member States is whether the pandemic is considered to constitute an event of force majeure. In Italy70 and France,71 the COVID emergency fulfils the conditions of force majeure, and in the former country, the pandemic could justify a delay in performance but does not affect the liability of the debtor.72 Further, in Finland73 and Germany,74 the pandemic may constitute a situation Ibid. See: Decree Law 18/2020 of 17 March 2020, www​.gazzettaufficiale​.it/​eli/​gu/​ 2020/​03/​17/​70/​sg/​pdf, accessed 27 March 2021; Decree Law 18/200 thereafter being known as Law No. 27/2020 of 24 April 2020 www​.gazzettaufficiale​.it/​eli/​id/​2020/​04/​ 29/​20G00045/​sg/​pdf, accessed 27 March 2021. 67 For example: France, Sweden. 68 For example: Italy, France, Denmark, the Netherlands, Poland and Sweden. 69 For example: Italy and Germany. 70 See: Decree Law 18/2020 of 17 March 2020, www​.gazzettaufficiale​.it/​eli/​gu/​ 2020/​03/​17/​70/​sg/​pdf, accessed 27 March 2021; Decree Law 18/200 thereafter being known as Law No. 27/2020 of 24 April 2020 www​.gazzettaufficiale​.it/​eli/​id/​2020/​04/​ 29/​20G00045/​sg/​pdf, accessed 27 March 2021. 71 Direction des Affaires Juridiques Bercy, ‘La passation et l’exécution des marches en situation de crise sanitaire’ (19 March 2020), www​.economie​.gouv​.fr/​files/​ files/​directions​_services/​daj/​marches​_publics/​conseil​_acheteurs/​fiches​-techniques/​ crise​%20sanitaire/​Passation​_et​_exécution​_des​_marchés​_publics​_en​_situation​_de​ _crise​_sanitaire​.pdf, accessed 3 September 2021. 72 Decree Law 18/2020 of 17 March 2020, www​.gazzettaufficiale​.it/​eli/​gu/​2020/​ 03/​17/​70/​sg/​pdf, accessed 27 March 2021. 73 Finland does not issue any guidance, but the Public Procurement Advisory Unit presented a few interpretations and recommendations. It include a suggestion relating to situations of force majeure. DLA Piper, ‘COVID-19 Public Procurement Guide’, https://​lens​.dlapiper​.com/​covid​-19​-public​-procurement​-guide/​?wpv​-country​=​finland​&​ wpv​_aux​_current​_post​_id​=​1015​&​wpv​_aux​_parent​_post​_id​=​1015​&​wpv​_view​_count​ =​953, accessed 27 March 2021. 74 BMI, ‘Handhabung von Bauablaufstörungen’ (23 March 2020) www​.bmi​.bund​ .de/​SharedDocs/​downloads/​DE/​veroeffentlichungen/​2020/​corona/​erlass​-bauwesen​ -corona​-20200327​-hinweise​.pdf​?​_​_blob​=​publicationFile​&​v​=​2, accessed 27 March 2021. 65 66

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of force majeure, but this situation must be determined on a case-by-case basis. In Belgium, it is to be noted that the Council of Ministers stated that in public contracts and concessions, no penalty or contractual liability for the delay of performance would be imposed if the operators could prove it was due to COVID-19.75 A contrast can be drawn whereby, in Romania, the state of emergency declared by Presidential Decree does not qualify the situation as force majeure, but the decree set out emergency measures that became immediately applicable.76 There are some similarities between the Member States on the issue of the suspension of procedures relating to public procurement. In Portugal,77 Decree-Law No. 10-A/202078 of 13 March and Law No. 1-A/202079 of 19 March provide that the public procurement procedure is not automatically suspended but foresees suspension of the administrative deadline, although not of the procedural deadline, under the Public Contract Code. Similarly, Spain also ordered the suspension of all administrative proceedings by public entities while France stated that there is no automatic suspension of the public procurement procedure.80 A rather contrasting and significant perspective in dealing with this area is the position of the Polish government in its COVID-19 legislation, whereby it set out exemptions to the application of its Public Procurement Act in certain circumstances concerning goods and services, where such contracts are necessary to combat COVID-19, where there is a high probability of rapid and uncontrolled spread of the disease, or when it is required to protect public health.81 In addition, the Polish government stated that the Public Procurement Act will not apply to contracts awarded by Bank Gospodarstwa Krajowego, the Polish Development Fund or regional development funds that are related to implementing the actions of special funds established to counteract the negative economic impact of COVID-19, nor to contracts relating to Employee Capital Plans or contracts for the management of Employee Capital Plans if 75 Sigma, ‘Application of public procurement rules during COVID-19 crisis from the perspective of the European Union’s Procurement Directives and the Government Procurement Agreement’ (8 April 2020), https://​cdn​-assets​.inwink​.com/​c7d28a73​ -09a1​-4d13​-bae3​-6ebeb1af7f69/​c7c8c9d3​-1e75​-4223​-b451​-b0805a86ab29, accessed 19 August 2021. 76 See: Presidential Decree 195 of 16 March 2020, https://​rm​.coe​.int/​16809e375d, accessed 21 February 2021. 77 See chapter on Portugal, Section 6. 78 Decreto-Lei No. 10/2020. 79 Lei No. 1-A/2020. 80 DAJ Bercy, La passation et l’exécution des marches en situation de crise sanitaire (19 March 2020). 81 Article 6 of Act of 2 March 2020. See also: chapter on Poland.

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the value of the contract is lower than the EU threshold.82 In addition to temporarily halting the application of the Public Procurement Act, the COVID-19 legislation also suspended the application of legal norms relating to liability in a situation of infringement of public finance rules, such as unlawful public contract provision. Through this, it seems that the Polish government has taken a step further than other Member States, whereby it decided to disable its Public Procurement Act in situations which meet certain criteria. The aforesaid decision has been said to cause many public contracts, which do not relate to COVID-19, to have been awarded outside the scope of the Public Procurement Act.83 With these measures outlined above, it is vital to note that the core areas of concern, such as the adoption of negotiated procedures, simplified procedures, the extension of time and shorter time frame, are somewhat similar across the Member States and in line with the Directives. Most of these procurement guidelines merely reflect the existing remedies provided by the Member States’ legislation and/or the Directive. Despite most Member States’ approaches being mostly in line with the Directive, a rather shocking position was taken by the Polish government in allowing the deactivation of the Public Procurement Act in specific circumstances, which led to many contracts being awarded outside the scope of COVID-19. The different approach taken by Poland, compared to that spelt out by the Directive and the EU guidelines, has generated confusion for contracting parties in Poland and it was stated that some contracting parties have continued to use procedures in compliance with the EU public procurement law. It would be interesting in the future to see what the Commission might say about the Polish deviation and the streams of litigation that could arise through this approach.

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ASSISTANCE AMONG MEMBER STATES AND COOPERATION WITH OTHER MEMBER STATES

Whilst the Health Security Committee eventually became a valuable hub, coordination meetings were infrequent and poorly attended in the initial weeks of the crisis and many Member States did not report on their preparedness and response plans as required.84

Ibid. See: chapter on Poland. 84 A. Beaussier, and L. Cabane, ‘Strengthening the EU’s response capacity to health emergencies: insights from EU crisis management mechanisms’ (2020) European Journal of Risk Regulation 1–13, doi:​10​.1017/​err​.2020​.80. 82 83

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The glaring fragility of the EU’s poorly organised and slow response can be seen in the case of Italy. Italy spoke out about their shortage of equipment and appealed for additional supplies from the EU on 26 February 2020. However, despite the activation of the Civil Protection Mechanism, there was no assistance from the EU. The first assistance came from China on 12 March 2020. A flight carrying nine medical experts and 31 tonnes of medical equipment and a truck with 230 boxes of medical equipment arrived in Rome. Following China’s help, more assistance came from Russia, Cuba, India, Egypt and Venezuela.85 On 13 March 2020, the President of the Commission, Ursula von der Leyen, stated that the EU was ready to help Italy, but no assistance was forthcoming until the end of March.86 Italy resorted to seeking assistance from NATO’s Euro-Atlantic Disaster Response Coordination Centre (EADRCC) on 26 March 202087 and through this means, Italy received some help from other countries, including those within the EU. It is quite evident that the assistance received by Italy was mainly on a bilateral basis or through the EADRCC.88 The assistance was rarely via the Civil Protection Mechanism.89 As in Italy, the situation in France and Spain was deteriorating in March 2020. Spain requested assistance from the EADRCC on 24 March 202090 and the assistance was extended by various countries such as the Czech Republic, Turkey and Germany, through the EADRCC. The decision to initiate a specific rescEU medical stockpile on 19 March 2020 came quite late, considering that the creation of the rescEU reserve dates back to March 2009 and it was only implemented after COVID-19 was declared a pandemic by the World Health Organization on 11 March 2020. 85 C. Beaucillon, ‘International and European emergency assistance to EU Member States in the COVID-19 crisis: why European solidarity is not dead and what we need to make it both happen and last’ (2020) European Papers – European Forum, Insight, 25 April 2020. 86 E. Braw, ‘The EU is abandoning Italy in its hour of need’, Foreign Policy, 14 March 2020, https://​foreignpolicy​.com/​2020/​03/​14/​coronavirus​-eu​-abandoning​-italy​ -china​-aid/​, accessed 19 August 2021. 87 See NATO updated situation report No. 20: www​.nato​.int/​nato​_static​_fl2014/​ assets/​pdf/​2021/​2/​pdf/​200807​-EADRCC​-0110​_sitrep20​.pdf, accessed 15 February 2020. 88 See NATO updated situation reports: www​.nato​.int/​cps/​en/​natohq/​news​_174854​ .htm?, accessed 15 February 2020. 89 C. Beaucillon, ‘International and European emergency assistance to EU Member States in the COVID-19 crisis: why European solidarity is not dead and what we need to make it both happen and last’ (2020) European Papers – European Forum, Insight, 25 April 2020. 90 See NATO, ‘EADRCC Request for International Assistance’, www​.nato​.int/​ nato​_static​_fl2014/​assets/​pdf/​2020/​3/​pdf/​OPS​-EADRCC​-2020​-0066​-request​-spain​ .pdf, accessed 16 February 2021.

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With the initial response being poorly managed, the EU struggled to coordinate with its EU Member States to reduce the outbreak of the pandemic. However, a note to be underlined, as previously discussed, is that the EU has limited powers in the field of health care. Nonetheless, despite its limited power, the Commission could have played a larger role in the initial phase before the pandemic became a massive problem in the EU Member States.91 The Member States started to tackle the pandemic individually by banning exports of PPE to other Member States around February 2020. Amongst others, Member States such as Belgium, Germany, Hungary, Bulgaria and the Czech Republic put the export ban in place to avoid national shortages.92 In addition, despite the EU’s efforts to convince the Member States to reverse their initial ban on the export of medical equipment to other Member States, the action was criticised as being too late.93 It was not until 15 March 2020 that the Commission decided to intervene, and France and Germany decided to allow the export of PPE to Italy.94 Subsequently, more supplies and assistance were extended by the Member States through the NATO EADRCC mechanism and the Civil Protection Mechanism to the various Member States who were in a dire situation, such as Spain and France.95 It is prudent to deduce that from the slow response of the EU at the earlier stage of the pandemic, the EU has struggled to pull together a unified front to address the scarcity of supplies and instead, the external support of NATO has been a valuable helping hand.

91 J. Wise, ‘COVID-19: EU has lessons to learn from early response to pandemic, say auditors’ (2021) BMJ 372; A. Bongardt and F. Torres, ‘Lessons from the coronavirus crisis for European integration’ (2020) Inter Economics, 55(3), 130–131. 92 B. Pirker, ‘Rethinking solidarity in view of the wanting internal and external EU law framework concerning trade measures in the context of the COVID-19 crisis’ (2020) European Papers – European Forum, Insight, 25 April 2020. See also: H. Boland, L. Catrain, A. Doussin, R. Fruscalzo, F. Schöning and E. Theodoropoulou, ‘The EU and various Member States measures on personal protective equipment in response to the COVID-19 outbreak’ (30 March 2020) www​.jdsupra​.com/​legalnews/​ the​-eu​-and​-various​-member​-states​-75221/​, accessed 27 March 2021. 93 European Commission, ‘European Coordinated Response on Coronavirus: Questions and Answers’ (13 March 2020), https://​ ec​ .europa​ .eu/​ commission/​ presscorner/​detail/​en/​qanda​_20​_458, accessed 2 April 2021. 94 C. Beaucillon, ‘International and European emergency assistance to EU Member States in the COVID-19 crisis: why European solidarity is not dead and what we need to make it both happen and last’ (2020) European Papers – European Forum, Insight, 25 April 2020. 95 Ibid.

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JOINT PROCUREMENT AND CENTRALISATION OF VACCINES IN THE EU

Another area where joint procurement and centralisation is vital in tackling the pandemic is the procurement of vaccines. A programme for this, EU4Health, was launched with the goal of strengthening the EU’s role in health care. The Commission outlined a European Vaccine Strategy in June 2020 to fast-track the procurement, manufacturing and distribution of vaccines.96 Hence, it used the ESI regulation together with the JPA and the rescEU regime to create an ad hoc and temporary centralised procurement capacity,97 to make advance purchase agreements98 through a budget under the ESI which had been set aside to secure the vaccines. Through this strategy, the Commission could directly negotiate on behalf of the Member States for the purchase of health supplies and, particularly, of COVID-19 vaccines, to get maximum benefit in terms of economies of scale and risk–benefit sharing.99 Up to March 2021, four vaccines had been approved and six advance procurement agreements had been secured. The secured vaccines are allocated to the Member States by the Commission and are based on the distribution of population; if the governments decide not to take up their allocation, the surplus may be shared among the other Member States.100 In this joint procurement initiative, the EU took a stern position whereby the Member States who adhered to the strategy could not enter parallel negotiations with the same vaccine manufacturers with which talks were ongoing at the EU level.101 In December 2020, the German health minister stated that Germany had separately purchased the vaccine from Pfizer-BioNTech in September, after agreeing to the strategy. This caused controversies as the annex to the strategy clearly stated that Member States agreed ‘not to launch

96 European Commission, ‘Public health’, https://​ec​.europa​.eu/​info/​live​-work​ -travel​-eu/​coronavirus​-response/​public​-health​_en, accessed 28 March 2021. 97 R. Beetsma, B. Burgoon, F. Nicoli, A. de Ruijter and F. Vandenbroucke, ‘Public support for European cooperation in the procurement, stockpiling and distribution of medicines’ (2021) European Journal of Public Health 31(2), 253–258, doi:​10​.1093/​ eurpub/​ckaa201. 98 Commission, ‘Decision of 18.6.2020 approving the agreement with Member States on procuring COVID-19 vaccines on behalf of the Member States and related procedures’ C(2020) 4192 final. 99 S. Sciacchitano and A. Bartolazzi, ‘Transparency in negotiation of European Union with Big Pharma on COVID-19 vaccines’ (2021) Frontiers in Public Health. 100 European Commission, ‘Question and Answers: Coronavirus and the EU Vaccines Strategy’ (24 September 2020), https://​ec​.europa​.eu/​commission/​presscorner/​ detail/​en/​qanda​_20​_1662, accessed 28 March 2021. 101 Ibid.

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their own procedures for advance purchase of that vaccine with the same manufacturers’. The situation is currently under investigation by the Portuguese EU presidency.102 Following this, the EU also had problems with the late delivery of vaccines, particularly the AstraZeneca vaccine. The Commission initiated a court case against AstraZeneca on 26 April 2021 for the failure to deliver millions of doses.103 Another issue that the Commission must deal with, in addition to the delivery issues, is the potential risk of rare blood clots.104 The potential blood clot issue has caused wariness of its citizens on the consequences of vaccines and the Commission has been taking a key role in assuring safe vaccines to everyone. Despite the lawsuits, many Member States have reduced their orders on AstraZeneca’s vaccine to only use it for older populations due to side effects while Denmark permanently ceased the use of the vaccine.105

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CONCLUSIONS – LESSONS LEARNT FROM THE PANDEMIC

The global pandemic has challenged the transnational governance in the EU specifically on the management and organisation of health care. At the height of the pandemic, despite the initial divided start, the EU managed to pull together and act in solidarity in the procurement of health equipment. The scarcity of this life-saving equipment, together with interruptions to supply chains, logistical chaos, border lockdowns and disruptions to production, really highlights how defenceless and unprepared the EU was in terms of health-care procurement and its dependency on supplies from other countries.

102 See: TG, ‘German Health Ministry to invest €6.2bn in vaccines’ (9 February 2021) European Biotechnology, https://​european​-biotechnology​.com/​up​-to​-date/​latest​ -news/​news/​german​-health​-ministry​-to​-invest​-eur62bn​-in​-vaccines​.html, accessed 28 March 2021. 103 Binoy Kampmark, ‘Going to court: The EU sues AstraZeneca’ (5 May 2021) International Policy Digest, https://​intpolicydigest​.org/​going​-to​-court​-the​-eu​-sues​ -astrazeneca/​, accessed 8 May 2021. See also Stella Kyriakides, ‘Our priority is to ensure #COVID19 vaccine deliveries take place to protect the health of “EU”’ (26 April 2021) Twitter, https://​twitter​.com/​skyriakideseu/​status/​1386646730876366850, accessed 8 May 2021. 104 European Medicines Agency, ‘AstraZeneca’s COVID-19 vaccine: EMA finds possible link to very rare cases of unusual blood clots with low blood platelets’ (7 April 2021), www​.ema​.europa​.eu/​en/​news/​astrazenecas​-covid​-19​-vaccine​-ema​-finds​ -possible​-link​-very​-rare​-cases​-unusual​-blood​-clots​-low​-blood, accessed 8 May 2021. 105 BBC News, ‘AstraZeneca vaccine: Denmark stops rollout completely’ (14 April 2021), www​.bbc​.com/​news/​world​-europe​-56744474, accessed 8 May 2021.

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As the well-being of EU citizens is of utmost importance, the procurement rules must not get in the way of achieving this result. Based on the above, it is evident that the EU has been slow in dealing with procurement rules, as the Commission only published its guidelines after almost all the Member States had dealt with the issue themselves. That said, it is worthwhile to point out that most of the EU and Member States’ guidelines merely spelt out the existing provisions under the Directive and/or the national procurement legislation. Based on the national reports, most countries adopted, amongst others, the provision of negotiated procurement without publication, simplified procedures, an extension of time and a shorter time frame for procurement procedures. Nothing much changed from the provisions based on the Directive or the national procurement legislation in relation to circumstances of extreme urgency, with the exception of those measures pointed out in Section 4 above. With the guidelines in place, there would be no doubt that some contracts would be awarded without any transparency and consequently engender many criticisms and, possibly, litigation. Thus far, it is vital for those authorities who used the emergency procedure to comply with the ex post transparency requirement and perform their duty to publish notices and detailed records of justifications and decisions. The Commission should use this pandemic as a learning experience, to prepare and plan for a better coordination effort in future crisis responses, particularly with regard to procurement aspects. In terms of health equipment, the Commission has made a respectable effort in coordinating various aspects of organisation, governance, and procurement of health equipment between the Member States with the existing mechanisms of the JPA, the ESI and rescEU. The effort of the Commission should not be disregarded, despite its shortfalls at the start of the pandemic, since the world was battling with periodic interruptions to production, restrictions on movement of people and goods, and shortages in the supply chain. The JPA, the ESI and rescEU have solidified the EU position by calling for solidarity and cooperation between its Member States to ensure security, continuity, and equitable distribution of vaccines. Another commendable effort of the Commission is its EU Vaccines Strategy, in which the Commission has reinforced its role by playing a greater part in the safeguarding of its citizens by ensuring sufficient supplies of the vaccines. Despite all the efforts undertaken by the Commission, there are still hurdles to be crossed, such as the late delivery of vaccines and the rare blood clots that are a potential side effect of the AstraZeneca vaccine. Throughout this pandemic, the successful use of centralised procurement can be seen not only at EU level, but the Member States have also increasingly turned to the use of centralised procurement in this challenging time; it is possible that the lessons learned regarding cross-border procurement could

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be used in other areas and that we shall see a general increase in cross-border procurement in the future.

9. Central purchasing bodies (and other forms of joint procurement) – Belgium Steven Van Garsse 1 INTRODUCTION Joint procurement and the use of central purchasing bodies (CPBs) are not new phenomena in Belgium.1 Municipalities have been using joint public contracts for road works for decades. In such cases, utility companies (water, cables, etc.) and municipalities agree to (re)construct streets together, with new sewers and other utility lines, sharing the costs. The use of CPBs is not new either. For example, in the 1990s the Belgian federal government had a federal purchasing office integrated in its Ministry of Civil Service which acted as a CPB, although this was phased out in 2002.2 By Royal Decree of 11 May 2001, a new dedicated Federal Framework Agreements Unit was implemented in the Federal Public Service Personnel and Organisation Department. In practice, this unit acted as a kind of CPB. It had a very broad remit when it was set up, although there did not appear to be a specific legal basis, as the Cour des Comptes (Court of Audit) confirmed.3 The Cour des Comptes also found that the transposition of the 2004 Directive would improve the situation, since it included a provision for framework agreements as well as for CPBs.

1 C. Dubois and I. Van Kruchten, Les Marchés publics groupés. Centrales d’achat et marchés conjoint occassionels (UVCW, 2020), 117; P. De Mayeer and M. Vastmans, ‘La centralisation des commandes publics’ in C. De Koninck et al. (eds) Chronique des marchés publics (EBP, 2012), 651; V. Ost and M. Vanderstraeten, ‘Les centrales d’achtat et de marchés’, in L. Durviaux (ed.), La Réforme des marchés publics (Bruylant, 2014), 273. 2 P. Flamme, M.A. Flamme and C. Dardenne, Les Marchés Publics Européens et Belges (Larcier, 2009) 107. 3 Cour des Comptes, Les Contrats-cadres: Le fonctionnement du service Contrats-cadres multi-SPF examiné sous l’angle de la bonne gestion et de la légalité. Rapport de la Cour des comptes transmis à la Chambre des représentants Rapport adopté le 13 avril 2005 par l’assemblée générale de la Cour des comptes.

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The transposition of the 2004 Directive in 2006 proved to be a significant impetus for (the use and creation of) CPBs. Since then, there has been an unprecedented expansion of CPBs at all levels of government and semi-public organisations in Belgium. Nonetheless, the Belgian legislator has not gone much further than simply transposing European procurement law in the area of purchasing techniques.4 Consequently, there is as yet no effective regulation of specific purchasing techniques in Belgium. This should come as no surprise. Although public procurement in Belgium accounts for a substantial share of GDP, as is the case in the rest of Europe, up until recently it received little attention from policymakers. With the trend towards sustainable and innovative procurement, as well as the fight against social dumping, this is slowly but surely changing. Continual spending cuts also force governments to look for greater efficiency and thus creative solutions to do the same with less. The initiatives recently taken by the federal government are interesting, with procurement policy being reformed both strategically and operationally. The aims were to increase the penetration rate of joint procurement by between 20 and 40 per cent, increase the participation of SMEs in federal procurement, and devote more attention to sustainability in public procurement.5 The coalition agreement for the period 2019–2024 of the Flemish regional government can also be highlighted.6 This agreement notes that opportunities are being missed to bundle volumes and to take more of a market stimulus approach, and it asserts that a more centralised purchasing policy is called for. This would not only increase efficiency within the Flemish regional government, but also encourage the choice of sustainable and circular purchasing. To bring this about, the Flemish government agency, ‘Facilitair Bedrijf’ (Facility Services Agency), was appointed as the sole CPB for common and customary support goods and services for the Flemish government and its agencies.

4 D. Batselé, T. Mortier and A. Yerna, Réussir ses marchés publics (Larcier, 2015), 59. 5 See ‘Doelstellingen Federaal Aankoopmodel’ (Public Procurement), www ​ . publicprocurement​ . be/​ n l/​ f ederale​ - diensten/​ h et​ - federaal​ - aankoopoverleg/​ doelstellingen​-federaal​-aankoopmodel, accessed 22 April 2021, Royal Decree of 22 December 2017 on federally centralised public contracts in the context of the federal purchasing policy, published in the Belgian Official Gazette on 16 January 2018. 6 Coalition Agreement of the Flemish Government 2019–2024 (Regeerakkoord van de Vlaamse Regering 2019–2024), www​.vlaanderen​.be/​publicaties/​regeerakkoord​ -van​-de​-vlaamse​-regering​-2019​-2024.

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STRUCTURE AND USE OF CPBS AND OTHER FORMS OF JOINT PROCUREMENT

How Are CPBs Structured? Belgium has witnessed an increase of CPBs since 2006. Over the years, CPBs have been set up at all levels, and various existing government bodies have assumed the function of CPBs. For example, the federal government uses a specific structure for IT and information management in the social sector in the form of a cost-sharing non-profit association.7 Also at the federal level, the Ministry of the Interior (Federal Police division) was active as a CPB, with framework agreements for supplies, through which the local police could make purchases. In addition, a large CPB was established for the federal services, the FOR (Federal Central Purchasing Office).8 The FOR is responsible for launching and monitoring framework agreements which it concludes for the benefit of federal public services, including: for supplies and services; for large quantities; with a repetitive character (per order form); if an economy of scale can be achieved. Among other things, the FOR offers framework agreements for:9 i.

Insurance: comprehensive insurance for the personal vehicles of personnel on job-related missions; mobile telephony services; petroleum products: motor fuels to be purchased at the pump via magnetic cards, heating gas, oil and bulk fuels for filling storage tanks, etc. ii. Furniture: tables, chairs, cabinets (including reinforced cabinets), metal shelving (for archives), coat racks, etc. The list of agreements can be found in an electronic catalogue. Through a Royal Decree of 22 December 2017 on federal centralised public contracts, which came into force on 26 January 2018, the FOR recently

7 See: Smals ICT for society, ‘Bestuursorgaan’ (Smals), www​.smals​.be/​nl/​content/​ bestuursorgaan, accessed 22 April 2021. 8 ‘De Federale Opdrachtencentrale – FOR’ (Public Procurement), www​ .publicprocurement​.be/​nl/​federale​-diensten/​de​-federale​-opdrachtencentrale, accessed 22 April 2021. 9 Ibid.

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acquired a role in a broader hybrid procurement model and procurement policy, based on three pillars:10 A purchasing consultation: which identifies, coordinates and takes decisions on the common needs of the various federal entities. To this end, a consultative body called the SFA (Strategic Federal Purchasing Consultative Body) has been set up, bringing together participants from the main federal institutions. ii. Centralisation and professionalisation of purchasing within the vertical entities: a TOFA (Tactical and Operational Federal Procurement Consultative Body) is set up for each topic for which a joint contract is launched, consisting of the entity that will execute the public contract and participants from other federal institutions that will jointly draw up the specifications and, if desired, take joint decisions on the award of the contract. iii. A horizontal entity: the procurement service centre, which provides support to the vertical entities throughout the procurement process: coherent regulations, legal support, collecting and providing policy information, training, e-procurement, central contracting bodies, etc. i.

CPBs are also found at the regional level. For example, the situation in Flanders highlights this. The Facilitair Bedrijf, which as we know is a government agency of the Flemish government, has played an important role in Flanders.11 For a number of years, it has awarded framework agreements for services and supplies through which all Flemish agencies can make purchases. Various framework agreements have also been made available to local authorities. Furthermore, very specific framework agreements awarded by specialised government services or ministries as ‘CPBs’ can be highlighted. One example is the Ministry of the Environment of the Brussels–Capital Region, which acts as a CPB for soil remediation studies or by OVAM, the environmental government agency of the Flemish government which,12 as a CPB, awarded a framework agreement for soil studies and soil remediation projects to be used by local authorities and Flemish authorities.13 Also, 10 ‘Het federaal aankoopoverleg’ (Public Procurement), www​.publicprocurement​ .be/​nl/​federale​-diensten/​het​-federaal​-aankoopoverleg, accessed 22 April 2021. 11 ‘Het Facilitair Bedrijf’ (Vlaaderen), https://​overheid​.vlaanderen​.be/​ facilitairbedrijf, accessed 22 April 2021. 12 ‘Aankoopcentrale voor de bodemverontreinigingsstudies (professionnels)’ (leefmilieu), https://​leefmilieu​.brussels/​themas/​bodem/​opdrachtencentrale​-voor​-de​ -bodemver​ontreinigi​ngsstudies, accessed 22 April. 13 ‘Opdrachtencentrale voor opmaak van bodemonderzoeken en bodemsaneringsprojecten bij lokale besturen en Vlaamse overheden’ (OVAM), www​.ovam​.be/​ raamcontract​-bodemonderzoeken, accessed 22 April 2021.

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within the Flemish government, a contract for the construction of websites, hosting and supporting services awarded by the Communication Service of the Department of Services of General Government Policy can also be mentioned. Another example is the operation of the Flemish Energy Company as a CPB.14 In this case, which is exceptional in Flanders, this government agency takes on a wholesaler role. The government agency sells the energy on to Flemish local contracting authorities and provides additional services. Attempts by an energy producer and provider to stop these wholesale operations and ancillary services through the courts has failed. Among other things, the court found that the agency simply fulfilled its role as a CPB for orders and that the provision of services was inextricably linked to this. A separate tender for relationship management was therefore not necessary. Indeed, without customer management, no wholesale business would be possible.15 Exceptionally, examples can also be found of CPBs which tender out works. For example, the Flemish Agency for Social Housing procures building projects for local social housing companies.16 At the local level, various city-based CPBs can be highlighted, including those of the city of Antwerp, one of the first and largest city-based CPBs. The city-based CPBs usually serve the city and its agencies. The CPB in Bruges also deserves a mention. Indeed, this city has drawn up numerous framework agreements which are open to (all) other local authorities. Various CPBs can also be found at the inter-municipal level. More often than not, CPBs have a very broad scope and take the form of inter-municipal associations.17 A typical example is Farys/Creat. This organisation not only tenders out large framework agreements for supplies and services as a CPB, but also realises tailored building projects for local authorities as a CPB. Provincial authorities have also proven to be very active as CPBs for ICT equipment and data communication, as well as traffic research. CPBs can also be found in very specific sectors. In the health-care sector, various hospitals, among others, have started to work together systematically in recent years. Some hospitals take turns to act as a CPB for specified supplies

See: VEB, www​.veb​.be/​, accessed 22 April 2021. President, Brussels Commercial Court of first instance, 22 June 2017. 16 ‘Constructieve benadering overheidsopdrachten (CBO)’ (Vlaamse Maatschappij Voor), www​.vmsw​.be/​Home/​Ik​-ben​-professioneel/​Woningbouw​-en​ -renovatie/​Informatie​-voor​-priv​%C3​%A9​-initiatiefnemers/​Constructieve​-benadering​ -overheidsopdrachten, accessed 22 April 2021. 17 ‘Ons aanbod’ (CREAT), https://​creat​.farys​.be/​products​-and​-services/​aanbod​ -creat, accessed 22 April 2021. 14 15

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and services contracts.18 In other cases, an entity has been jointly set up in the form of a non-profit association to award contracts for the participating hospitals. Examples include Hospilim, a Flemish non-profit association bringing together seven regional hospitals and four psychiatric centres.19 The non-profit form is also used for group purchases for care and well-being associations. For example, various non-profit associations are active within this sector as CPBs.20 The same applies to the education sector.21 We can see from the foregoing that CPBs are active in Belgium and have been set up specifically for this function. These CPBs often have their own legal personality and sometimes take a public-law form (such as inter-municipal cooperation or public-law government agencies) and sometimes take the form of a non-profit association, i.e. a legal entity under private law.22 The founders of these non-profit associations can be governments, natural persons, or occasionally even private companies or other not-for-profit private organisations. However, there is no actual private shareholder because Belgian non-profit associations (‘VZW’) do not have shareholders.23 18 ‘Voorwaarden’ (HospiLim), www​.hospilim​.be/​overheidsopdrachten, accessed 22 April 2021. 19 HospiLim, www​.hospilim​.be/​, accessed 22 April 2021. 20 ‘Samenaankoop overheidsopdrachten’ (koopkoepel), https://​koopkoepel​.be/​ samenaankoop​-overheidsopdrachten, accessed 22 April 2021. 21 DOKO, www​.doko​.be/​content/​aankoopcentrale​-en​-raamovereenkomsten, accessed 22 April 2021. 22 In the classic sectors it is required that a CPB qualifies as a contracting authority. In the special sectors they can be contracting authorities or contracting entities. A private operator that by nature does not qualify as a contracting authority or entity can never take up the role of a CPB. Lombaert (ed.), Droit des marches publics (La Charte, 2020), 405 See also V. Ost and M. Vanderstraeten, ‘Les centrales d’achtats et des marches’ in A. Durviaux and N. Thirion (eds), La Réforme du droit des marches publics (Bruylant, 2014), 290, stating it is not possible: ‘qu’une société purement privée applique volontairement la legislation sur les marches publics, et transfère ensuite … le benefice des marches ainsi passes aux pouvoirs adjudicateurs qui geraient appal à ces services’. See also Council of State 2 June 2017, No. 238.402. Le fait de confier à un opérateur privé la constitution d’une centrale d’achtat ou de marches au services de pouvoirs adjudicateurs se heurterait aux principes d’égalité, de concurrence et de non-discrimination … L’activité … agissant au profit de pouvoirs adjudicateurs, placerait l’opérateur économique privé en situation priviligié par rapport à ses propres fournisseurs et par rapport à ses concurrents sur le marché concerné par la centrale. 23 The situation is different in mixed (semi-)public/private companies. Mixed companies can have public and private shareholders. Some of those companies qualify as contracting authority (bodies governed by public law) and can therefore operate as CPBs. See also E. van Nuffel, ‘Article 15, T II’, in S. Van Garsse (ed.), Artikelsgewijze commentaar wetgeving overheidsopdrachten (Politeia), No. 6; also C. Dubois and I. Van Kruchten, Les Marchés publics groupés. Centrales d’achat et marchés conjoint

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In many other cases, the CPB is a function that is embedded in an existing government organisation. Specialised personnel are then brought together in a specific cell, department, or team to manage the activities of the CPB. The group of users of these CPBs can be very broad, ranging from Flemish government agencies to all regional and local governments.24 The large number of CPBs means that in practice, governments are shopping around between framework agreements of CPBs. The contracting authorities are allowed to be members of several CPBs and have the choice of which agreements to use. Some agreements or CPBs do not even require membership. A typical example is the framework agreements of the city of Bruges. This city generally included a clause in its framework agreements that other contracting authorities in Flanders could also purchase through them.25 Interested parties could then purchase through the contract relatively easily, on their own account. More recently, partly due to developments in European legislation and case law, CPBs are organising more and more preliminary surveys. Whoever is interested can register in advance and indicate their requirements. These are then consolidated and included in the organisation of the competitive/procurement procedure. In most cases, the contracting authorities subsequently have the choice whether or not to actually purchase. However, this is not always the case. Sometimes, it is explicitly stipulated that contracting parties are obliged to purchase the indicated goods and volumes that were mentioned in the tender documents of the CPB. The reasoning is that otherwise this would have a negative impact on volumes and would put pressure on pricing. There have also been cases where the interested government body remains free to choose whether or not to purchase through an agreement concluded by the CPB, but if they decide not to purchase they are obliged to compensate the private undertaking that made the offer.

occassionels (UVCW 2020), 32: ‘il n’est pas interdit qu’une personne de droit privé ou une société d’économie mixte assume ce role’. 24 For example: Vito Securitas, www​.vito​-securitas​.be/​, accessed 22 April 2021. 25 The framework agreements are open to a broad category of geographically defined contracting authorities. Examples include: all local governments in Flanders, all inter-municipal cooperation in Flanders, etc. See also Council of State, 11 December 2020, No. 249.203: Il s’ensuit que l’obligation d’identifier les adjudicateurs dès le depart peut se faire soit en les désignant nommément, soit par la détermination de catégories précises, fondées, par exemple, sur le renvoi à une catégorie donnée de pouvoirs adjudicateurs dans une zone géographique clairement délimitée. Le cahier spécial des charges identifie, en l’espèce, clairement les bénéficiaires de l’accord cadre en les désignant nommément ou en renvoyant à des catégories précises dans un périmètre géographique déterminé.

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If it is a tender for a specific contract tailored to the needs of a contracting authority, it is assumed that a specific contract must be concluded in advance with a mandate to the CPB to procure the specific goods or services. This contract will then govern the rights and obligations, as well as the liability of the contracting authority, if it decides not to award the contract. Although contracting authorities usually have the freedom to choose whether to make use of a CPB and if so, which one,26 or to make their own purchases, some governments do not, in principle, have that freedom anymore. We refer in this regard to what was mentioned above about the Flemish government. Nonetheless, there does not appear to be any sanction for the time being. In practice, however, governments are reluctant to give up their autonomy. How Are CPBs Financed? A large proportion of CPBs, especially if they are part of a city or a ministry, are financed from the general government budget and do not require additional remuneration. Other dedicated – ‘full time’ – CPBs generally appear to charge for their services and seek to cover costs. Usually, an annual fee is charged to members, whether or not combined with a fee on turnover to be paid by the purchasing contracting authority or, in some cases, by the supplier. Percentages between 3 and 10 per cent of the turnover/value are not uncommon. For specific contracts and additional services, hourly and daily rates are also sometimes used to pass on specific and general costs. There are also cases where the actual costs for the tender and a percentage for the overheads of the CPB are simply divided among the purchasers. Other Roles of CPBs Most CPBs are not limited to their activities as CPBs. Usually, technical advisory services and sometimes even training services are offered for a fee. The large CPBs at the Flemish and federal levels are also involved in policymaking and policy implementation (drafting of ministerial orders, etc.).

26 When taking this decision they will have to state the reasons for using the CPB. In practice, however, they just refer to economies of scale and the fact that by using a CPB they are not obliged to organise an award procedure themselves. There is no obligation to compare several options.

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Cross-Border Procurement CPBs are focused on activities within Belgium and on Belgian contracting authorities. Large infrastructure projects such as the Ghent–Terneuzen New Lock, or EU projects, sometimes involve joint cross-border procurement. In the cases we have identified, this was done via a contractual cooperation agreement and subsequently a treaty between the authorities (countries) involved.27 There is also cooperation at the European level regarding the purchase of medicines, among other things (for example, in relation to Covid-19 vaccines). Efficiency and Policy Issues At present, there are no scientific studies on the impact and benefits of CPBs in Belgium. Nevertheless, the Association of Flemish Cities and Municipalities has made an analysis of several cases. Due to economies of scale, it was indicated that savings of 20 to 30 per cent could be achieved. The savings could even rise to 50 per cent by cost sharing.28 The fact that so far relatively little research has been done comes as no surprise. Little public information is available regarding CPBs. There are no overviews on the numbers of CPBs, on who purchases what, and from where. Nor is there information about the contracts they enter into. The information is generally kept confidential in order to protect the economic, financial or commercial interests of the companies concerned, and is therefore not published. In 2014, the Cour des Comptes published a report on a study into the framework agreements tendered out by the Facilitair Bedrijf of the Flemish government.29 This study claimed that insufficient attention was given to customer needs, the efficient management of contracts, and the evaluation of contracts. It also found that framework agreements were sometimes not renewed in time, which consequently jeopardised continuity. It was also unclear who was buying through the framework agreements, what the purchased quantities were, and how suppliers executed contracts. In the absence of a robust contract man-

27 ‘Verdrag tussen het Koninkrijk der Nederlanden en het Vlaamse Gewest betreffende de aanleg van de nieuwe sluis Terneuzen, Terneuzen, 05-02-2015’ (Overheid, 1 March 2016), https://​wetten​.overheid​.nl/​BWBV0006449/​2016​-03​-01, accessed 22 April 2021 (Treaty between the Netherlands and the Flemish Region relating to the new lock of Terneuzen). 28 ‘Samenwerken-loont: Samenaankopen en raamcontracten (Docplayer.nl), https://​ docplayer​.nl/​127946765​-Samenwerken​-loont​-samenaankopen​-en​-raamcontracten​-ir​ -luk​-van​-beneden​-freelance​-stafmedewerker​-vvsg​.html, accessed 22 April 2021. 29 Cour des Comptes, Raamcontracten van het Agentschap voor Facilitair Management Verslag van het Rekenhof aan het Vlaams Parlement Brussels, June 2014.

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agement system, it was not possible to assess and improve the management of framework contracts. Moreover, no clear reporting was available for this management. The functioning of the agency has been overhauled accordingly, but the observations remain relevant for other CPBs in Belgium.

3

PROCUREMENT TECHNIQUES

Types of Techniques and Agreements Framework agreements are generally used and often with multiple lots. A non-exclusivity clause is also included in the tender documents and the main framework agreement. Therefore, in most cases the awardee of a framework agreement is not granted an exclusive right. Contracting authorities remain free to use other suppliers and/or to start a new procurement procedure for the same goods or services. Sometimes, individual contracts are also put on the market, tailored to the needs and demands of specific contracting authorities. Exceptionally, governments work with e‑catalogues. Belgium has limited experience with dynamic purchasing systems and electronic auctions. Very often, the framework contracts or lots are awarded to one party. Some framework contracts still work with mini-competitions and subsequent negotiations. The legislation, which has limited itself to the mere transposition of the Directive, leaves both options open. However, in practice, this creates ambiguities. For example, the Belgian authorities have already alerted the European Commission to the following problem and suggestion: In cases where a framework agreement is concluded with multiple economic operators and this framework agreement does not contain all the conditions relating to the execution of the works, supplies and services, it is not always easy for the purchasers to determine the award criteria for the award of the framework agreement, particularly if, for example, several types of supplies or services are purchased. Indeed, at the time the framework agreement is launched, it is not always clear exactly which types and quantities will actually be purchased. Given that the price or cost may also have to be applied (as the case may be, together with other award criteria) in the context of the award of the framework contract, the purchaser needs to use a ‘basket’ of fictitious products and quantities in the context of the award of the framework contract. This approach of working with a fictitious scenario requires a degree of inventiveness on the part of the purchasers. It is surely advisable to provide guidelines on how best to approach this in practice.30

30 ‘Toezichtrapport inzake de overheidsopdrachten en de concessies België – 2018’ (Publis Procurement, 2018), www​.publicprocurement​.be/​sites/​default/​files/​documents/​

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It was also observed that it is unclear for certain purchasers what the possibilities for negotiation are in the context of the so-called ‘mini-competition’. Article 33(5) of the Directive (and corresponding provision in Procurement Statute of 17 June 2016) sets out very concisely the procedure to be followed in this mini-competition. In this regard, the contracting authority must consult in writing the economic operators who are capable of performing the contract, among other things. The European Commission was therefore asked the following question by the federal government:31 Article 33 lays down the requirements which govern the conclusion of framework agreements and the contract based on those frameworks. Are contracting authorities authorised, in case of reopening of the competition (Article 33(4)(b) or(c) and 33(5) – mini-competition), to negotiate between the contracting authorities and each economic operator capable of performing the contract? Under what conditions can such negotiations be held? It seems to us that, if the possibility for the organisation of such negotiations is provided for in the procurement documents, they may be held, even if the framework agreement is concluded using an open or restricted procedure. Nevertheless, some doubt could be generated by the fact that the mini-competition in principle needs to be ‘based on the same terms’ as applied for the award of the framework agreement (this competition may also be based on more precisely formulated terms where this is necessary and, where appropriate, other terms referred to in the procurement documents for the framework agreement). The question is whether this implies that the procedure for the mini-competition also needs to be, in principle, similar to the one used for the award of the framework agreement. The federal government added that in their opinion Article 33(5) only enumerates the minimum requirements for the mini-competition and that the contracting authorities have a large discretion as to how they will organise the mini-competition. It would mean that the procedure of the mini-competition can contain negotiations, even if the procedure for the award of the framework agreement did not allow for negotiations. Article 35(5)(a) also stipulates that contracting authorities need to consult the economic operators capable of performing the contract ‘in writing’. Therefore according to the Belgian government, this doesn’t preclude the possibility of providing for the organization of negotiations in the mini-competitions in the procurement documents. Article 35(5)(a) probably only refers to the initial consultation of the economic operators capable of perform20180418​_toezichtrapport​_overheidsopdrachten​_belgie​_2018​.pdf, accessed 22 April 2021. 31 Ibid., 19.

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ing the contract. Of course, the negotiations may not lead to substantial modification of the terms laid down in the framework agreement itself.

The European Commission answered that the use of procedures in which negotiations may take place (competitive procedures with negotiations, competitive dialogues and innovation partnerships) is exhaustively regulated in Article 26 of Directive 2014/24/EU, according to which these three procedures may be used only in the cases explicitly listed. In the case mentioned (i.e. framework agreements with reopening of competition), the substantial procurement takes place when the contracts based on the framework agreements are awarded – and allowing these to be awarded through negotiations in cases where the conditions set out in Article 26(3) and (4) are not met in respect of the framework agreement as such will simply mean circumventing the conditions of Article 26. How Do Users Use the Agreements? In Belgium, there are general rules on the implementation of public contracts. These rules apply without prejudice to CPBs. However, framework agreements are only subject to a limited number of these general rules. This creates more flexibility to regulate the contractual relationship with the party or parties to the framework agreement. Indeed, the framework agreement often only covers the framework within which the contracts will be called. We are not currently aware of any major disputes regarding implementation. However, reference should be made to a case dealt with by the Belgian competition authority. The Belgian competition authority imposed fines totalling €1,779,000 on a cartel in the context of a framework agreement. Several companies that were party to a framework agreement with the Belgian railway operator appeared to have made price agreements among themselves for the mini-competition, and thus on who would win the contract.32 Changes of Agreements Most framework agreements in Belgium have a duration of four years or more. In the latter case, this longer duration is always accompanied by a justification, for example, related to important investments. The problem of modifications during the term of the contract does not differ at all from conventional contracts. In accordance with the general rules applicable to public contracts,

Press release No. 7/2017, 3 May 2017.

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framework agreements in principle contain price revision formulas and various clauses to anticipate changes (e.g. de minimis, etc.). Requirements Relating to Estimates of Purchases and their Consequences The contract notices or tender documents usually identify the specific or maximum need, so that tenderers can have an idea of potential purchases. Case law is quite lenient. In a case where presumed quantities were mentioned, the Belgian Council of State did not require a contracting authority to also disclose a maximum quantity.33 In yet another case, the Council of State ruled that there was no legal obligation to disclose the total budget in relation to the framework agreement.34

4

COMPETITION AND SME ASPECTS

Concern about Competition Law In Belgium, it is generally assumed that contracting authorities (including CPBs) have a large margin of discretion in aggregating needs.35 Nonetheless, there is at least one pending case where an economic operator seized a judge, complaining, inter alia, that the aggregation by the CPB was ‘disproportional’, ‘abusive’ and small(er) lots should have been used. Having said that, in most cases CPBs in Belgium do not have a dominant position, therefore their behaviour will seldom trigger competition law. On the private side, it is assumed that there is a large margin to set up the necessary partnerships to bid for contracts, if necessary. At the time of writing, there are currently no competition law-related problems of which we are aware.

Council of State, 11 December 2020, No. 249.203. Council of State, 13 July 2020, No. 248.043. 35 A contracting authority has a duty to consider the appropriateness of dividing contracts above the European thresholds into lots and to state its reasons not to split contracts into lots. Such reasons could, for instance, be that the contracting authority finds that such division could risk restricting competition, or risk rendering the execution of the contract excessively technically difficult or expensive, or that the need to coordinate the different contractors for the lots could seriously risk undermining the proper execution of the contract (cf. Recital 78, Directive 2014/24). 33 34

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Are CPBs Solely for Public Sectors? It is interesting to stress that a distinction is made in Belgium between CPBs acting for contracting authorities and group purchases.36 Group purchases for the benefit of private individuals are sometimes also set up by the government (e.g. for the purchase of solar panels or energy).37 In the latter case, it is arranged on the basis of mandates from subscribers to the group purchase and it is assumed that, strictly speaking, the rules on public contracts do not apply. However, it is believed that the organisation of group purchases needs to be accompanied by some form of competition. In practice, it can be seen that group purchases are organised via intermediate platforms which are entrusted with a service contract by the contracting authority. Group purchases are also organised into several lots in order to facilitate access for SMEs. Can private parties, who are not regulated by public procurement law, use CPBs? Case law and the preparatory works of the Belgian Public Procurement Statute tend to argue that no provision prohibits their use.38 However this question remains controversial.39 Participation of SMEs in CPBs The participation of SMEs in contracts launched by CPBs remains an important focus point. In political terms, this has been on the agenda for some time. In practice, it can be observed that smaller companies experience a barrier to participation, due to the larger volumes caused by aggregation. The division into lots does not solve this problem. In this case too, the lots are often much larger than the usual individual purchases that often took place before CPBs were approached. For this reason, the volumes and selection criteria are often more ambitious and not always feasible for smaller companies to meet.

36 Furthermore, one could differentiate between the ‘classical’ public sector (public works contracts, public supply contracts and public service contracts) and the utilities sector. What happens if a CPB has participants of both sectors. In Belgium literature on this topic is controversial. Some argue that if a framework agreement will have mixed users, the regime of the ‘classical’ public sector should be applied. Others argue that one should look at the regime of the main users. See B. Lombaert (ed.), Droit des marches publics (La Charte, 2020), 406. 37 For example, https://​oost​-vlaanderen​.be/​content/​ovl/​nl/​wonen​-en​-leven/​bouwen​ -en​-wonen/​duurzaam​-wonen​-enbouwen/​groepsaankoop​-groeneenergie​.html. 38 Council of State, 22 November 2011, No. 216.388; Parl. Doc. 4 January 2016, 1541/001, 54. 39 C. Dubois and I. Van Kruchten, Les Marchés publics groupés. Centrales d’achat et marchés conjoint occassionels (UVCW, 2020), 51, arguing that this could trigger state aid issues.

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LIABILITY BETWEEN CPBS AND THEIR USERS

Contract Management Central contract management at the level of the CPB is relatively unusual and in any case often limited (for example, limited to monitoring volumes). Therefore, most of the time contract management is situated at the level of the subsequent contracts by users. Recently, however, an evolution has been noticeable. This does not come as a surprise, given the fact that the Cour des Comptes urged some CPBs to professionalise their activities.40 Rules Relating to Enforcement and Remedies In Belgium, any person who has a legal interest in obtaining the contract may start proceedings to suspend the implementation of or annul a decision to award a contract. If the contracting authority is an administrative authority, these proceedings should be brought before the Council of State. In other cases (for example, if the contracting authority is a subsidised school), a procedure before the civil courts should be started. Discussions between contracting parties relating to the performance of a public contract (poor performance, etc.) should be brought before the civil courts. As to CPBs, it is worth mentioning that there is a debate in Belgium on the competence of the Council of State in connection with the award of framework agreements. Indeed, as stated, in general the Council of State is competent to rule on the suspension and annulment of award decisions by administrative authorities. The civil courts have jurisdiction to rule on disputes concerning the award of public contracts concerning contracting authorities which are not administrative authorities by nature. Nonetheless, not all CPBs qualify as administrative authorities. Consequently, discussions have arisen regarding situations in which a CPB that is not itself an administrative authority awards a contract on behalf of contracting authorities.41 It is argued that the CPB is then acting as an extension of that administrative authority, meaning that the

40 Inter alia: Cour des Comptes, Raamcontracten van het Agentschap voor Facilitair Management Verslag van het Rekenhof aan het Vlaams Parlement (Brussels, 2014). 41 For example Council of State, 11 January 2018, No. 240.401. See also Council of State, 14 August 2017, No. 238.947. Contra: Council of State, 20 May 2013, No. 223.650.

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Council of State would still be competent. The courts appear to share this view.42 All in all, there are relatively few disputes regarding framework agreements in Belgium. Consequently, the question of liability is also a rather theoretical exercise, whereby the agreements made between the CPB and the user often need to be examined. However, most of the time there is a distinction between the award of the contract and its execution. Disagreements regarding the award are addressed to the CPB. The problem does not differ at all from conventional contracts. Disputes regarding implementation are usually conducted against the user. The question arises as to what happens if a framework agreement is unlawful? The CPB will be held liable as far as the framework agreement is concerned. Furthermore, the CPB and its participants will no longer be allowed to use the framework agreement. Moreover, participants to the framework agreement can also be held liable for (individual) subsequent contracts following an unlawful framework agreement.43

6

COVID-19 AND JOINT PROCUREMENT

Covid-19 did not have a positive or negative impact on the use of CPBs and/ or joint procurement. Belgium used the European framework agreements for vaccines. A joint procurement by the regions was also implemented at federal level to purchase the Covid alert app.

7 CONCLUSION CPBs have become very popular in Belgium in recent years. On the whole, it can be seen that there are many CPBs, and that they take various forms. They are often also contracting authorities that take on the function of a CPB. Sometimes they are also specifically created entities. 42 President of the Brussels Court, 9 May 2018, unpublished; President of the Commercial Court of Brussels, 17 January 2019, unpublished. 43 And as to the relation with the CPB, depending on the specific situation they may or may not be entitled to claim damages resulting from these circumstances. See also art. 47, § 2(2) Belgian Procurement Statute of 2016: … le pouvoir adjudicateur concerné est responsable de l’exécution des obligations relatives aux parties dont il se charge lui-même, telles que : 1° la passation d’un marché dans le cadre d’un système d’acquisition dynamique mis en place par une centrale d’achat; 2° la remise en concurrence en vertu d’un accord-cadre conclu par une centrale d’achat; 3° … le choix de l’opérateur économique partie à l’accord-cadre qui exécutera une tâche donnée en vertu de l’accord-cadre conclu par une centrale d’achat.

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Policymakers have only discovered this approach relatively recently as a technique to purchase more efficiently, especially in combination with framework agreements. Comprehensive regulation has not yet been achieved. Belgian law is limited to the transposition of European law. However, various initiatives have been taken at federal and Flemish level to professionalise their CPBs and to better embed them administratively and legally. Disputes also remain relatively limited. This should not come as a surprise. In practice, at least until recently, it was obvious that since there were so many CPBs, and so many framework agreements, it was possible to shop around. Nevertheless, the various lots and contracts ensured that there was a broad supply and that, as a result, suppliers were given various opportunities to sell their products or services. However, now that, under the influence of European law, more and more agreements are made pertaining to the organisation of procurement, participation and purchasing, and governments increasingly (re)organising their purchasing policy from a standpoint of efficiency, it remains to be seen whether the landscape will change in the future.

10. Central purchasing bodies in Denmark Carina Risvig Hamer 1 INTRODUCTION The first central purchasing body (CPB) in Denmark was established in 1994 with what is today called Staten og Kommunernes Indkøbsservice A/S (SKI).1 The establishment was notified to the EU Commission, who accepted the terms and structure of SKI as being in accordance with the EU procurement rules in October 1993. At that time nothing was mentioned in the EU procurement rules on either CPBs or framework agreements.2 Today SKI is the main CPB in Denmark and has over 40 types of agreements (mainly framework agreements) with more than 270 suppliers in total and almost all contracting authorities in Denmark can use SKI’s agreements. Other CPBs in Denmark include SamAqua, Amgros, KomUdbud, AlmenIndkøb and Energinet.dk, among others. It is also very common to conduct a joint procurement or, like Statens Indkøb (State Purchasing), to be responsible for certain types of procurement at the State level and in practice function as a CPB. Generally, the political environment is positive regarding CPBs, although it has been pointed out that SMEs should have better access to the large framework agreements, and questions have been asked in Parliament regarding the possibility of using lots.3 Another political focus is green procurement, where SKI is often used as a positive example for having a focus on environmental SKI was, however, not called a CPB, but merely an association. In 1994 the relevant Procurement Directive was mainly Council Directive (88/295/EEC) of 22 March 1988, amending Directive 77/62/EEC relating to the coordination of procedures on the award of public supply contracts and repealing certain provisions of Directive 80/767/EEC. 3 Regarding a specific SKI framework agreement for supply of food to 51 municipal kitchens with an estimated value of DKK 1.6 billion (approximately €21.4 billion), the Minister for Industry, Business and Financial Affairs was, in an open consultation in Parliament, asked questions on whether small undertakings were excluded from participating in the competition, see Folketinget, “Åbent samråd om udbud af levering af fødevarer”, www​.ft​.dk/​udvalg/​udvalgene/​mof/​kalender/​35402/​samraad​.htm (accessed January 2021). 1 2

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considerations in their purchases. Furthermore, the tendency is that purchases are conducted by CPBs or by joint procurement in general, even making some of the framework agreements mandatory for the State and municipalities to use. The Public Procurement Directive is implemented by the Danish Procurement Act,4 which contains a few specific rules relevant to CPBs relating to procurements containing a large product range (see Section 3), as well as a few clarifications and interpretations mainly relating to the provisions on framework agreements (see Section 3). Besides these, the Danish Enforcement Act also contains a specific provision regulating the consequences when a decision to enter into a framework agreement by a CPB is annulled (see Section 5). In Denmark, the public sector purchases goods and services for DKK 300 billion every year (approx. €40 billion) and of these some DKK 12 billion (approx. €1.6 billion) involve purchases through the main CPB, SKI, hence making SKI an important player in public procurement in Denmark.5

2

STRUCTURE AND USE OF CPBS AND OTHER FORMS OF JOINT PROCUREMENT

How Are CPBs Structured? In Denmark the various CPBs are structured in different ways. Some are organised as a cooperation between municipalities and in that sense function more as a community (joint procurement), others are shareholding companies (with no private participation) and are considered as bodies governed by public law.6 On a geographical point, some of the CPBs are local in the sense that only a small proportion of municipalities in a certain area can use the CPB (e.g. Fælles Indkøb Fyn, Fælles Udbud Sjælland, KomUdbud). Amgros has been established for the Regions, Statens Indkøb for the State and SKI covers almost all contracting authorities in Denmark. The main CPB, SKI, has many different types of agreements, whereas others are established for specific types of purchasing, such as Amgros I/S, whose agreements involve medicines, hearing aids and other medical equipment

4 An unofficial English translation of the Act is available here: Danish Competition and Consumer Authority, “The Public Procurement Act”, www​ .en​ .kfst​ .dk/​ public​ -procurement/​the​-public​-procurement​-act/​ (accessed 3 March 2021). 5 SKI also plays an active role in policymaking as it is involved in advisory boards, working groups, etc. 6 The national legislation does not specify that private participation is not allowed, but this is the general assumption in line with the rules on in-house procurement. The issue has not been addressed in the courts.

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primarily for hospitals. The CPB Almenbolig is, to the author’s knowledge, the only CPB, which creates framework agreements for works, but framework agreements for works are often used by a single contracting authority. The CPB Amgros I/S acts as a wholesaler. Who Are the Users of the CPB? Since there are different types of models for the use of a CPB (see above), it will often depend on the specific framework agreement as to who can use it, and not only on who the CPB’s users are. Who can use the agreement must be stated in the contract notice for the framework agreement and it is not possible to add new contracting authorities to the agreement. A reference to a list of contracting authorities is sufficient, as well as specific categories. If a contracting authority is not a user of the CPB (member), a contracting authority can be permitted to use the CPB only if the contract notice also refers to the contracting authority. In addition, the contracting authority must to some extent have committed itself to using the agreement.7 Some framework agreements are mandatory for the State and municipalities to use and the tendency is for more agreements to become mandatory. These mandatory agreements are established mainly by SKI, but there are also some that apply to the State at Statens Indkøb.8 There is no case law or practice regarding potential consequences if a municipality does not use an agreement. However, if a contracting authority purchases outside the agreement without conducting a procurement procedure of its own, the regular procurement sanctions such as ineffectiveness and annulment can be used. In areas where there are no mandatory requirements to use an agreement, each contracting authority is free to establish its own framework agreement. Many municipalities are users of more than one CPB and in this regard, they can themselves choose which agreement to use. In this situation, the term parallel framework agreements is used, and in the preparatory works to the Danish Procurement Act, it is stated that a contracting authority can have access to two framework agreements where the product range is the same. This could also be the case where a municipality is allowed to use a CPB’s framework agreement and also to have a framework agreement itself. The product range will most 7 See also the Complaints Boards for Public Procurement, decision of 25 September 2012, UV data A/S v. Copenhagen municipality. 8 It is the Danish Finance Ministry and the Association of Municipalities (Kommunernes Landsforening, KL) who decides which types of agreements are mandatory. At the moment SKI has 23 mandatory frameworks covering only goods (computers, paper, office supply, furniture and more). A full list can be found here: SKI, “AFTALEOVERBLIK”, www​.ski​.dk/​sider/​aftaleliste​.aspx (accessed 3 March 2021).

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often not be completely identical in the two framework agreements, which gives the contracting authority a high level of flexibility when purchasing specific products. However, this also raises some concerns in relation to various competition aspects and how the individual contracting authority may specify its purchase through such frameworks. In principle, the two framework agreements compete, which in theory could lead to better agreements. However, it might also be the other way around, as a supplier might not want to give better prices on one agreement than the other and might not see an incentive to participate in the competition for one of the agreements. The debate on how precise an estimate of the purchases under the framework agreement must be (see below section 6) also raises questions in relation to how precisely a contracting authority needs to specify which purchases must be made under specific framework agreements. However, at this moment, there is no case law on these aspects. It is very likely that the contracting authority will need to specify when to use which agreement. Table 10.1

Main CPBs in Denmark Owners

Structure

Users

Types of agreements

The Ministry of

Shareholding

Most

Various goods and

Finance and KL

company

contracting

services

– an organisation

authorities in

consisting of all

Denmark

98 municipalities in Denmark (it is the intention that the regions at some point should be owners too) Statens Indkøb

The Ministry of

Part of the State

State

Finance

Various, but many agreements are moved to SKI when they expire

Amgros I/S

The five regions

Partnership

(regions are

business

Hospitals

Medicines, hearing aids and other medical equipment for hospitals

responsible mainly for hospitals in Denmark) KomUdbud

Community of 15

Community,

15

Mainly goods, but also

municipalities

subscription

municipalities

a few servicesa

fee. Board of Directors

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Owners AlmenIndkøb Energinet.dk

Structure

Users

Types of agreements

The general housing

General

Building trades

sector

housing sector Various

The Danish

Independent

The

Ministry of Climate,

public

undertakings

Energy and Utilities

enterprise

owned by

Utility undertakings

A “shared

Utility sector

IT services, business

services”

on Fyn

development,

Energinet.dk SamAqua

communication, payroll

undertaking

administration Indkøbsfællesskab

Five municipalities

Fyn

Joint

Municipalities

Many areas relating to goods and services

cooperation (board with members from each of the municipalities)

FUS

16 municipalities

Joint cooperation

Municipalities

Many areas relating to goods and services

(board with members from each of the municipalities)

Note: A full list can be found here (in Danish): Komudbud, “Gældende aftaler”, https://​ komudbud​.dk/​udbud/​gaeldende​-aftaler/​ (accessed 3 March 2021). a

How CPBs Are Financed Normally a fee is involved when purchasing through a framework agreement from a CPB. At SKI the contracting authority pays a small annual fee, but most of the revenue comes from suppliers who pay a fee to the CPB, based on what it has sold to a user of the agreement.9 This fee also applies to purchasing through a dynamic purchasing system (DPS). Other Roles of CPBs SKI participated in the legislative work for the recent Procurement Act and is very active in seeking to influence the Danish legislation on public procure-

9 Regarding the fees at SKI, see www​.ski​.dk/​videnssider/​abo​nnementsbe​tingelser/​ (accessed 3 March 2020).

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ment. Another task for the CPBs can also be to assist the users when making a specific call-off contract under an agreement. Cross-Border Procurement The only cross-border procurement a Danish CPB has taken part in was conducted by SKI.10 In short, it was an agreement regarding the purchase of Citrix software and appliances conducted by SKI and BBG (Austrian CPB). BBG acted as lead procurer and SKI as a participating contracting authority. The two CPBs concluded a common framework agreement with three economic operators. The call-offs (contract awards) would follow the national rules in each Member State. In Austria, BBG conducted the call-off on behalf of their users whereas SKI in Denmark left it to the users to conduct the mini-competition. Potential complaints regarding the mini-competition conducted by Danish users were to be submitted to the Danish Complaints Board for public procurement (no complaints have been submitted). No users from outside Denmark can use the CPB agreements, but in a recent procurement by SKL (Sweden), SKI is mentioned as a user of the framework agreement. SKI participates in informal cooperation with other CPBs – a network for European CPBs. Efficiency and Policy Issues Transaction costs and value for money In 2015 an analysis was published by the Danish Competition Authority on elements involving competition and framework agreements. The report is long and has several relevant analyses of competition aspects for CPBs. A few of its conclusions are: mandatory agreements lead to better prices and more tenders; a mini-competition does not necessarily mean better competition and better prices; more standardisation would result in better competition; no sign that the agreements affect the market structure in general; 60 per cent of the users state that their experience is that the agreements involve lower transaction costs and result in better prices. The analysis also concludes that better prices (more competition) exist under the framework agreements with only one supplier.11 10 For more on the project, see: European Commission, “Feasibility study concerning the actual implementation of a joint cross-border procurement procedure by public buyers from different Member States” (15 March 2017), https://​ec​.europa​.eu/​ docsroom/​documents/​22102/​(accessed 3 March 2021). 11 See the report available in Danish from the Danish Competition Authority, “Offentlige indkøb via centrale rammeaftaler” (2015), www​ .kfst​ .dk/​ media/​ 2759/​ 20150416​-offentlige​-indkoeb​-via​-centrale​-rammeaftaler​.pdf (accessed 3 March 2021).

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Strategic procurement – CSR The tendency in Denmark is that strategic procurement focusing on social and environmental considerations is gaining more focus and this also involves procurements by CPBs. All agreements at SKI have a corporate social responsibility (CSR) annex.12 Of the sustainable development goals (SDGs), 14 of them are referred to (including 45 sub-goals). In addition to the CSR annexes, SKI have specific requirements for each specific contract area, for example, ecology of food, certified sustainable wood and furnishing fabrics in the furniture agreements, eco-labelling requirements for hand soap, packaging requirements that reduce the use of plastic and many more. The tendency is that particular environmental considerations are being taken into account and that more and more of the users are purchasing products under the agreements which are considered environmentally friendly. SKI is considered to be an expert on these matters and is often consulted by the users and the legislator on the practical aspects of including environmentally friendly products. Corruption In June 2018, Denmark was facing a historical case on bribery in the public sector, in which the undertaking Atea received a DKK 10 million (approximately €1,350,000) fine and seven employees were convicted for bribery. This made the debate on corruption more relevant than ever in Denmark. For SKI it also meant that when Atea submitted a tender for a framework agreement later on, it became necessary for Atea to undergo a self-cleaning process. SKI has been very active in making sure sufficient requirements for self-cleaning were set, but it still raised some political concerns regarding the situation and debate as to whether it should, in fact, be an option for undertakings to self-clean.13

12 See the annex to SKI, “Bilag G CSR”, www​.ski​.dk/​media/​0qydmt4u/​skis​-csr​ -bilag​_06062019​.pdf (accessed on 3 March 2021). 13 See for example the following news article (in Danish): Dan Jensen, “Sophie Løhde (V) vil revidere udbudsregler i kølvandet på Atea-sagen”, Computerworld (11 September 2018), www​.computerworld​.dk/​art/​244662/​sophie​-loehde​-v​-vil​-revidere​ -udbudsregler​-i​-koelvandet​-paa​-atea​-sagen (accessed 3 March 2021).

Central purchasing bodies in Denmark

3

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PROCUREMENT TECHNIQUES

Types of Techniques and Agreements In Denmark, framework agreements are often used14 and have been for a long time, but the use of dynamic purchasing systems (DPSs) is increasing as well.15 Almost all procurements are conducted electronically, and several e-supplier systems exist. Dynamic purchasing systems (DPSs) DPSs are used for works, supply and services; examples include caretaker services, medical equipment, e-learning systems, horses for the police, passenger cars, emergency and security equipment and playground equipment. Use of DPSs has increased since the entry into force of Directive 2014/24/ EU, showing that the aim of making this procedure more flexible (and more widely used) is succeeding in Denmark.16 Some of the challenges in relation to DPSs are how precisely the different categories must be described and how to create a fast procedure in the call-off phase, as it is also necessary for the contracting authority to state reasons to the undertakings that have not been awarded the contract. There is also an issue as to how the undertakings can supply documentation for elements relating to the selection phase in order to make the award of the contract fast and efficient. Finally, the challenge that a DPS can cover many undertakings should be mentioned. The solution for this is often dividing the DPS into smaller categories. The award criteria must be stated beforehand, and this means that over time the DPS risks losing its flexibility as it is not possible to place emphasis on other criteria later on. Finally, the debate as to how precise an estimate for a specific purchase must be (see below, Section 6) is also relevant to DPSs.

14 In a recent analysis by the Competition Authority it was estimated that in 2019 47 per cent of all Danish EU procurement procedures involve framework agreements, www​.kfst​.dk/​media/​bk4ej5gt/​status​-for​-offentlig​-konkurrence​-2020​.pdf (accessed April 2021). 15 In 2015–2019 133 EU procurements in Denmark involved a DPS; www​.kfst​.dk/​ media/​bk4ej5gt/​status​-for​-offentlig​-konkurrence​-2020​.pdf (accessed April 2021). 16 For more on the aim of the new rules on DPS see C. Risvig Hamer, “Regular purchases and aggregated procurement: the changes in the new Public Procurement Directive regarding framework agreements, dynamic purchasing systems and central purchasing bodies” (2014) Public Procurement Law Review, 4, 201–210.

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E-catalogues A search in Tenders Electronic Daily shows only one procurement procedure in Denmark with reference to e‑catalogues (involving the acquisition of grenades). However, this does not mean that some sort of e‑catalogues are not being used, since there is no definition of e‑catalogues and since most procurements are conducted electronically, involving some sort of e‑catalogues. Evaluation of framework agreements with large product range Two main challenges arise in particular in relation to large product ranges (assortment tenders). Firstly, how the contracting authority can describe its technical specifications when many product lines are involved, and secondly, how the contracting authority can subsequently evaluate the incoming tenders, especially in relation to the many product lines, but also in relation to the situation where the tenderers do not necessarily have a concurrent assortment. Regarding the technical specifications, the Danish Procurement Act, section 45(1) states: “A contracting authority may refer to product categories in the procurement documents when the reference clearly indicates to the potential tenderers the specific products in the included product categories which may subsequently become included in the contract or the framework agreement.” An example could be referring to a category called “pens”. Here the contracting authority does not need to specify colours, types or quality, but merely the category “pens”. Regarding evaluation of tenders, the Danish Procurement Act, section 45(2) states: “In relation to the performance of a procurement procedure with reference by the contracting authority to specific product categories, a contracting authority may perform the evaluation of the tender, cf. section 160, based on a typical example of comparable products in the product ranges offered by the tenderers” (emphasis added). What should be considered a “typical example of comparable products” must be assessed in the light of the circumstances prevailing in the tender in question. The evaluation model must be representative of the expected purchase or volume in order to identify the winning tender.17 It is also possible to create a framework agreement where an award criterion relates to “the tenderer’s assortment of products”.18

17 See e.g. decision of 15 February 2019, KONE A/S v. SKI; decision of 9 February 2018, Dansk Cater A/S v. SKI; decision of 15 June 2018, AGA A/S v. Aalborg Universitet m.fl; and decision of 3 January 2020, A-Sport A/S v. Københavns Kommune. 18 See e.g. decision of 22 April 2015, Mediq Danmark A/S v. KomUdbud v/Kolding Kommune.

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Types of Framework Agreements It is well known that a framework agreement will only last for four years, unless it can be justified to run for a longer period (Directive, Article 33(1)). Setting a longer period can lead to an annulment.19 Very often framework agreements are created for a shorter period with an option to use it for a longer period. All three types of framework agreements mentioned in Article 33 of the Directive are used in Denmark. Sometimes the CPB will assist the users in their purchase, but most often it is for the users themselves to make the call-off contract. If the user does not follow the rules of the agreement for the call-off contract, such a contract can be declared ineffective (see Section 6). How Do Users Use the Agreements? The provisions on framework agreements follow the structure of the Directive, hence making it possible to conclude a framework agreement with one supplier or with multiple suppliers, based on either direct award or mini-competition. Regarding the latter, it is possible to have both types of call-offs in the same framework agreement. Regarding the choice between the two options, the Procurement Act, section 98(2) states: The choice between direct award and reopening of the competition shall be based on objective criteria, including the quantity, value or characteristics of the sought supplies or services and other specific procurement needs of the contracting authority. The objective criteria shall be determined in the procurement documents related to the framework agreement.

Compared to Recital 61 of the Directive, the Danish Procurement Act goes further by adding “other specific procurement needs of the contracting authority”. In the preparatory works, this is further elaborated on, stating that a specific procurement need could, for example, be the need for a specific product. This is quite a flexible approach and goes further than the practice of the Complaints Board before the Procurement Act entered into force.20 It remains to be seen how narrowly the “specific procurement needs” can be construed without ceasing to be objective criteria. In a recent case,21 the complaints board stated that in a specific SKI agreement (called 02.19) the contracting authority

19 Which was the case in a decision of 22 February 2018, Axcess A/S v. Region Hovedstaden. 20 See mainly decision of 5 December 2011, Konica Minolta A/S v. Erhvervsskolen Nordsjælland. 21 Decision of 12 March 2021, Assemble A/S v. Sorø Kommune.

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was not allowed to define its needs so narrowly that competition was excluded and that the construction of the agreement gave rise to considerations as to whether the model was in accordance with the Public Procurement Act, section 2, subsection 2, according to which a public tender may not be designed for the purpose of unjustifiably restricting competition (Directive Article 18(1)). The Complaints Board annulled the contracting authority’s decision to enter into a contract. Denmark allows the creation of a framework within a framework agreement. Thus, a CPB may establish the framework for an agreement and the users can then submit a call-off (mini-tender) in order to enter into a longer-running framework with one supplier.22 Modification of Framework Agreements CPBs regularly ensure that the framework agreements are up to date and that the suppliers live up to the requirements in the agreements. It is for the users to interpret whether the modifications may take place in the call-off contracts. In a decision of 19 August 2020, EG A/S v. Egedal Kommune, the Complaints Board found that, in case of a framework agreement, with a direct award to one undertaking, it was not permitted for the supplier to lower its prices substantially. The change in price had taken place based on negotiations between the contracting authority and the supplier, which was not permitted, and hence the contract was considered to have been awarded outside the framework agreement; it therefore constituted a direct award, and the contract was hence declared ineffective. Requirement Relating to Estimates It has generally been the practice that an estimate of value of a framework agreement must be stated in the contract notice and that there are no consequences for estimating wrongly. This also applies to specific purchases of product lines. Case C-216/17, Autoritá, has created some debate in Denmark. The Danish Competition Authority has issued a statement saying that once the maximum value of the estimate has been reached in a framework agreement, it is no longer possible to use it.23 If the conclusion of the Competition Authority is correct, many (already established) framework agreements are at

22 This could also be seen as a contract, but without mandatory requirements for purchases. 23 The Competition Authority’s statement is available in Danish here: www​.kfst​ .dk/​media/​55711/​autorita​.pdf.

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risk of being without effect, and the consequence in such cases would be that many contracts already entered into could be declared ineffective. The CJEU statement is quite a “bomb” in relation to the Danish use and interpretation of the procurement rules so far. The interpretation has been that the contracting authority is required to give an estimate of value and that this estimate should be as accurate as possible, but leaving some flexibility for the estimate to be exceeded (see also below, Section 5).

4

COMPETITION AND SME ASPECTS

Concerns Relating to Competition Law In 2015, the Danish Competition Authority published an analysis of the market and competition for framework agreements. It was concluded that the CPBs’ framework agreements did not show any negative impact on competition (see above, Section 3). Very often consortia bid for CPBs’ framework agreements.24 Often the need for consortia is due to the fact that one undertaking will not be able to cover the whole range of products by themselves. Competition concerns have been raised regarding consortia in public procurement. An important case was decided by the Supreme Court in 2019 in the so-called road marking case. In this case, the Supreme Court found that joint bidding by undertakings that could have submitted independent bids for several lots in the same tender constituted an anticompetitive agreement between competitors.25 The case raised concerns about when undertakings can submit joint bids, and the case will certainly have an impact on consortia in the future. Are CPBs Solely for the Use of Public Sector Entities or Also for Private Users? CPBs in Denmark are solely for the use of public sector entities.

24 A report from 2015 (“Offentlige indkøb via centrale rammeaftaler”) showed consortia in 14 out of 41 framework agreements at SKI. 25 For more on this case see Heidi Sander Løjmand, “The Danish Supreme Court’s ruling in the ‘Road Marking Case’: the end of a joint bidding era [guest post by Heidi Sander Løjmand, MSc]”, howtocracknut.com (28 November 2019), www​ .howtocrackanut​.com/​blog/​2019/​11/​28/​the​-danish​-supreme​-courts​-ruling​-in​-the​-road​ -marking​-case​-the​-end​-of​-a​-joint​-bidding​-era​-guest​-post​-by​-heidi​-sander​-ljmand​-msc (accessed February 2021).

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Participation of Small and Medium Enterprises in CPB SMEs are very important players in the Danish procurement market, where most undertakings are considered to be SMEs. As an example, 44 per cent of SKI’s suppliers in 2018 had fewer than 50 employees and 75 per cent of the suppliers had fewer than 250 employees.26 There are no mandatory requirements to use lots. The provision in Article 46 Directive 2014/24/EU is applicable, with similar wording found in the Danish Public Procurement Act, section 49. As mentioned in the introduction to this chapter, it has been pointed out that SMEs should have better access to large framework agreements and questions have been asked in Parliament regarding the possibility of using lots.

5

LIABILITY BETWEEN CPBS AND THEIR USERS

Contract Management The CPBs are responsible for establishing framework agreements. In that regard, it is for the CPB to ensure that the suppliers conform to the agreement when entering into it; thereafter it is the responsibility of the individual supplier. However, since the CPBs profit from the use of the agreements, they will often assist the individual contracting authority in the contract management of the framework. Thus, they assist with, for example, interpretation of the conditions in the framework. If a supplier does not deliver the goods or services, or a conflict occurs, the CPB will also assist the contracting authority in this regard. This has resulted in expulsion of suppliers from the framework agreements as well as arbitration cases regarding the interpretation of the framework. One of these cases (March 2019) concerned a supplier, Mediq, who wanted to be released from an SKI framework agreement. In order to win the contract, Mediq had made a bid with extremely low prices on disposable gloves. During the lifetime of the agreement, the sale of disposable gloves subsequently increased, and Mediq wanted to be released from the agreement. However, the conclusion in the arbitration case was that Mediq could not avoid selling nursing supplies at a fixed low price to the Danish municipalities. Rules Relating to Enforcement and Remedies The rules on enforcement and remedies in respect of CPBs are, as a starting point, no different than for any contracting authorities in breach of the procure-

26 SKI, “Leverandørsammensætningen i SKI”, www​.ski​.dk/​videnssider/​levera​ ndorsammen​saetningen​-i​-ski/​ (accessed February 2021).

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ment rules. This means that it is possible to annul a CPB’s decision to enter into the framework agreement, to declare a framework agreement ineffective27 and to award damages.28 Liability between a CPB and its Users Since the CPB are responsible for one part of the procurement process and the users for another part questions have been raised regarding liability in these cases. The Danish Procurement Act, Section 121 states that a contracting authority fulfils its obligations where the contracting authority acquires supplies, services or works at a CPB, but that the contracting authority shall be responsible for the parts of the purchasing process carried out by the contracting authority itself. Examples of such include 1) award of a contract based on a DPS operated by a CPB, 2) reopening of competition under a framework agreement, 3) the decision as to which of the suppliers participating in a framework agreement with several suppliers shall perform a given task. Consequences When Using a Framework Entered into in Breach of the Procurement Rules The consequence of using a framework agreement which has not been entered into legally by the CPB may be that the contracts placed under that framework agreement risk being considered ineffective. The award of such contracts is considered as a direct award. This will also be the case where the user awards the contract without following the terms of the framework agreement. In the decision of 19 August 2020, EG A/S v. Egedal Kommune, the Complaints Board found that in respect of a framework agreement, with a direct award to one undertaking, it was not permitted for the supplier to lower its prices substantially. The change in price had taken place based on negotiations between the contracting authority and the supplier, which was not permitted and hence the contract was considered to have been awarded outside the framework agreement, which constituted a direct award, and the contract was hence declared ineffective. The case Autoritá, as also elaborated on above, has led to a discussion as to what will happen to a framework agreement once the estimated value of 27 Remedies Directive Article 2(d)(a). In the Complaints Board decision of 15 February 2019, an SKI framework agreement was declared ineffective (ex nunc) because certain products in the agreement had not been tendered for (direct award). This also resulted in an economic sanction. 28 When awarding damages, an estimate for the whole contract period will be taken into account, see Decision of 6 October 2015, Human Care ApS v. Brøndby Kommune.

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the framework agreement has been reached. In January 2020, SKI decided to terminate two framework agreements early and launch a new competition for the framework agreements. This was done as a precaution as the framework agreements had reached their estimated value. Autoritá has also allowed the Danish Complaints Board to ask the CJEU for a preliminary ruling.29 In the case of Simonsen & Weel A/S v. Region Nordjylland og Region Syddanmark, three questions were asked. In brief, the Complaints Board asked whether the contract notice for a framework agreement should state the estimated quantity and/or value as well as the maximum quantity and/or value to be purchased under the agreement and if yes, then whether the lack of doing so can lead to the ineffectiveness of the framework agreement. The Enforcement Act includes a special provision for a CPB’s framework agreement in relation to ineffectiveness. Section 17(5) states: “If the decision to award a central purchasing body’s framework agreement is annulled …, at the time of launching the award procedure for a contract based on the framework agreement, the contract cannot be declared ineffective on the grounds that the central purchasing body has made mistakes” (my translation). According to the Remedies Directive, it is not an option to limit the ineffectiveness of contracts to situations where the review body has previously annulled a CPB’s decision to award the framework agreement. So far no case law exists on the topic and it remains to be seen how the Complaints Board will interpret the provision. The ineffectiveness sanction has only had limited use in Denmark and therefore the “traditional sanction” of setting aside a contracting authority’s decision (annulment) is still considered the most important remedy. When a CPB’s decision to enter into a framework agreement is annulled, this does not mean that the framework agreement is also annulled. However, the Procurement Act §185(2) deals with the consequences for a contract if a decision to enter into the contract has been annulled by the review bodies. Before this provision entered into force, contracting authorities did not consider themselves to be obliged to bring a contract to an end if an award decision was annulled by the Complaints Board. Section 185(2) of the Danish Procurement Act states that if a decision to enter into a contract has been annulled by a review body, the contracting authority must seek to terminate the contract unless “particularities apply”. If case the contracting authority is of the opinion that such “particularities” are present, it must publish the decision not to terminate the contract in the same place it published the procurement documents. In a decision of 9 February 2018, Dansk Cater A/S v. SKI, a framework agreement was annulled, leading to the questions of whether SKI was obliged to terminate the framework agree Case C-23/20, Simonsen & Weel [2020] OJ C 95.

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ment, as well as whether the users could use the agreement for a short period until a new (legal) framework was established. The case was appealed, but SKI still decided that it would launch a new procurement procedure for a new framework agreement.

6

COVID-19 AND JOINT PROCUREMENT

The Danish prime minister announced a lockdown in Denmark on 11 March 2020. On 12 March the Danish Competition Authority issued its first guidance on public procurement and COVID-19.30 The guidance involves information on the possibilities of extending time limits, modifying contracts and on the use of Article 32 of the Directive. As a special initiative, the Minister of Growth announced that payments to contractors should, when possible, be made in advance in order to help businesses at a difficult time. In Denmark, the regions are responsible for hospitals and one region (Region Hovedstaden) became responsible for all purchases of protective equipment and gear; and they were also provided with the necessary finances by the State. In the area of medical equipment, different types of purchases took place. Also, private undertakings became involved in purchasing protective equipment directly from suppliers abroad. A set-up that has involved some attention was when the undertaking Bestseller, which normally operates in the textiles industry, became involved with the regions’ purchases, and in November 2020, they even announced that they would operate more permanently in this type of market. In addition, the municipalities needed protective equipment and had difficulties early on in purchasing this. A joint purchasing unit in which all 98 municipalities participated was set up.31 As regards the role of SKI, they already had a long line of framework agreements through which it was possible to purchase different types of equipment. SKI itself experienced some difficulties with the suppliers of various products.32 However, SKI did not have a role in the new purchasing unit but merely in administering already existing agreements.

30 The guidance is available in Danish, at https://​statensindkob​.dk/​media/​9468/​ udbudsretlige​-udfordringer​-covid​-19​.pdf. 31 See Aarhus Kommune, “Fælleskommunalt Indkøb Af Værnemidler”, www​ .aarhus​.dk/​corona/​faelleskommunalt​-indkoeb​-af​-vaernemidler/​. 32 SKI, “Coronavirus og indkøb på SKI’s aftaler (opdateres løbende)”, www​.ski​ .dk/​nyheder/​coronavirus​-og​-indkob​-pa​-ski​-s​-aftaler/​ (accessed 3 March 2021).

11. Central purchasing bodies in Finland Kirsi-Maria Halonen 1 INTRODUCTION The first State Procurement Centre in Finland, the predecessor to the current Hansel Oy, was established in 1941, was transformed into a limited liability company, Kauppatalo Hansel Oy, in 1995 and into the modern Hansel Oy in 2003.1 Between 1941 and 1994, the State Procurement Centre served the whole public sector, which was under the obligation to purchase certain goods from it. Until the establishment of Hansel Oy in 2003, the State Procurement Centre and Kauppatalo Hansel operated as wholesalers of goods. The State Procurement Centre was not one of a kind: centralised procurement functions and centres have existed across local government for decades. Currently in Finland, there is one national central purchasing body (CPB), Hansel Oy. Since September 2019, the previously separate KL-Kuntahankinnat Oy (the CPB for Finnish local and church authorities) merged with Hansel Oy, forming a CPB giant able to serve the public sector as a whole. In addition to all State authorities and State-owned companies, the new Hansel gained hundreds of new users for its agreements and services, 600 municipal and congregation authorities, and companies owned by the aforementioned authorities. In addition to Hansel, there is a handful of other regional CPBs usually serving users within a certain geographical area. Further, there are still centralised procurement functions operating within city administrative structures in many large cities such as Helsinki, Espoo, Vantaa, Jyväskylä and Oulu. In addition to these institutionalised procurement functions, there are many joint procurement projects between different contracting authorities. The political environment in Finland seems to support centralisation of procurement and large contract volumes. One sign of such support is the abovementioned merger of the two largest CPBs. The reasons for this pro-centralisation approach are likely twofold: professionalisation and

1 Hansel, ‘70 years press release’, www​.sttinfo​.fi/​tiedote/​hansel​-oy​-tayttaa​-70​ -vuotta​?publisherId​=​1842​&​releaseId​=​51300, accessed 3 September 2019.

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savings. Public procurement is complex. This is due to the economic impact and expectations set by politicians and budgetary limits as well as a vast variety of objectives that are attached to public sector purchasing. In order to procure effectively, and gain value for money, while taking into consideration the market conditions and sustainability goals, procurement is moving in a direction where these functions are taken care of by a group of professionals, whose expertise and resources exceed those of individual procurement experts. Such an approach is also supported by the European Commission’s public procurement professionalisation initiative.2 Secondly, centralisation is considered necessary in order to generate savings through larger purchase volumes, but also savings in the procedural costs of running public procurement procedures and contract management. The Act on Public Procurement and Concession Contracts (laki julkisista hankinnoista ja käyttöoikeussopimuksista 1397/2016) (hereafter referred to as the ‘Public Contracts Act’) transposes, among others, Articles 37–39 of the Directive. These Articles are implemented in ss. 20–22 of the Public Contracts Act. Interestingly, there are also national peculiarities regarding the rules applicable to CPBs. First, the definition of central purchasing units under s. 4(1)(12) of the Public Contracts Act requires that a Finnish CPB provides services only to its direct or indirect owners3 or entities whose right to use the services or contracts of the central purchasing unit have been specifically stipulated. Such requirement does not exist in the Directive, which defines a CPB as ‘a contracting authority providing centralised purchasing activities and, possibly, ancillary purchasing activities’. The Finnish requirement regarding ownership between a CPB and its users does not only set limits for a CPB to provide services to certain entities in Finland, but also in practice renders it difficult to actually offer their agreements to foreign contracting authorities as it is unlikely that these entities have direct or indirect ownership of a Finnish CPB. Another requirement under the Finnish Public Contracts Act is a requirement set out also in s. 4.1(12) that the CPB is to be established to carry out centralised procurement.4 2 European Commission, ‘Commission Recommendation (EU) 2017/1805 on the professionalisation of public procurement – Building an architecture for the professionalisation of public procurement’ (7 October 2017) C/2017/6654, OJ L 259, pp. 28–31. 3 Here indirect owners stands for a body governed by public law (a contracting authority), e.g. state- or municipality-controlled company which does not directly own any shares in Hansel, but is considered as its user through its ownership structure via state, municipality or another public authority. 4 In practice this sets out a requirement that the CPB’s company by-laws shall define centralised procurement as its field of operation. The difficulty of a foreign contracting authority in using the services of a Finnish CPB is also discussed in Kirsi-Maria Halonen, ‘Transposition of Directive 2014/24 in Finland: a minimum approach with

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The Hansel Act (laki Hansel Oy -nimisestä osakeyhtiöstä 1096/2008) sets out the main duties of Hansel and defines the users of its agreements. The duty for State authorities to use certain of Hansel’s agreements is stipulated under the State Budget Act (laki valtion talousarviosta 423/1988).

2

STRUCTURE AND USE OF CPBS AND OTHER FORMS OF JOINT PROCUREMENT

How Are CPBs Structured? The CPBs need, in accordance with the Directive and the Finnish Public Contracts Act, to fulfil the characteristics of a contracting authority. Usually, the Finnish CPBs operate in a non-authority form, i.e. as a limited liability company governed under private law rules in Finland and thus their contracting authority status is subject to the criteria of ‘body governed by public law’ set out in Article 2(1)(4) of the Directive. The concept of the body governed by public law has often been addressed in the CJEU case law. One of these cases is C-283/00 SIEPSA, where the CJEU found that an entity that aims first and foremost to make a profit cannot be considered as non-commercial by nature and thus could not be considered a contracting authority.5 According to s. 5 of the Finnish Company Act (osakeyhtiölaki 624/2006) a limited liability company’s principal purpose is to generate profit for its owners unless otherwise stated in the company by-laws. In the case of Hansel Oy, the Hansel Act sets out the basic duties of this central and local governmental CPB and explicitly states that the company’s aim is not to generate profit, which is reinforced in the company’s by-laws. Hansel is the only CPB whose activity is stipulated at a legislative level. However, it is assumed that in the corporate by-laws of other CPBs there is a similar statement on the non-profit nature of the CPB, creating an exemption to the Company Act’s starting point, as otherwise it can be questioned whether a CPB even fulfils the general characteristics of a contracting authority. The Finnish Public Contracts Act contains several requirements relating to CPBs that go beyond the requirement under the Directive. According to s. 4.1(12), a CPB means a contracting authority, which offers central purchasing and potential ancillary purchasing activities to contracting entities that are its direct or indirect owners or to contracting entities, whose right to use the func-

a lot of national specialities’, in Steen Treumer and Mario Comba (eds), Modernising Public Procurements: The Approach of Member States (Edward Elgar Publishing, 2018), 65. 5 Case C-293/00 Commission v Spain (SIEPSA), EU:​C:​2003:​544, paras 88–89.

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tions of the CPB is separately provided (by law or statute); moreover, a CPB is required to operate for the purpose of discharging these aforementioned functions and was expressly established to discharge such functions or that discharging these functions has been prescribed or ordered as the operating field of the CPB. As stated above, such requirement does not exist in the Directive. The aforementioned criteria under the Finnish Public Contracts Act thus require that there is a certain in-house relationship between the CPB and its users and that the CPB has been established for the purpose of fulfilling the centralised procurement activities. In the government’s legislative proposal, it is stated that such conditions have traditionally been part of the Finnish CPB regulations even though these are not required under EU law. However, it should be pointed out that even the Finnish government points out that in-house requirements are not to be followed to the full extent. In other words, there can be purchases from minority owners or sister organisations even though a CPB is owned by multiple contracting authorities.6 This national in-house requirement between CPBs and their users seems to preclude private ownership in them although this is not explicitly stated in the Public Contracts Act or the preparatory legislative work. Since September 2019, there has only been one national CPB, Hansel Oy. In addition to the national CPB, there are smaller, mainly regionally operating CPBs such as Sansia Oy (operating on behalf of 100 different contracting authorities, mainly in Eastern Finland, including municipalities, congregations, and local authority owned companies), Kuntien hankintapalvelut Oy (operating on behalf of seven municipalities in central Finland) and Kuntien Tiera Oy (concentrating on centralised purchasing for IT solutions and services for local government). Since the beginning of 2019, there has been another large CPB with 240 owners (mainly municipalities and local entities) called Sarastia, which, along with its CPB functions, also offers other purchasing, HR and management support functions to its users. In Finland, there are no geographical limitations for CPB operations, but the ownership requirement indirectly sets geographical and/or legal limits to CPBs’ operation. There are no functional limitations regarding which products or services CPBs’ agreements can cover, but it is for the CPBs and their users to decide which categories should be procured through centralised agreements. However, there are certain CPBs that concentrate only on certain service categories such as Kuntien Tiera Oy, whose agreements focus solely on IT solutions and services. The requirement of ownership under Finnish law, as discussed above, limits contracting authorities’ possibilities to use CPB agreements and services in

6

Government’s legislative proposal HE 108/2016 vp., at 79–80.

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Finland. However, this is no longer an obstacle for Hansel agreements as Hansel is considered to be directly and indirectly owned by the whole Finnish public sector (State, local authorities and congregations), but the potential users of other CPBs are more limited and interested users are required to acquire ownership in other CPBs in order to use their agreements. In Finland, contracting authorities have a wide discretion on how to organise their procurement activities. At the State level, according to the State Budget Act (laki valtion talousarviosta 423/1988) and the Budget Decree (asetus valtion talousarviosta 1243/1992), the ministries, offices and institutes have their own budgets. The procurement is partly centralised and partly decentralised among the Finnish State authorities. The Finnish CPBs merely provide procurement services and do not act as wholesalers. Usually, they do not engage in public works, nor centralise these, but instead focus on supplies and service agreements. However, CPBs are consulting as a part of their ancillary activities in works contract awards. Many CPBs provide ancillary procurement services to their owners. Most typically these include consulting services for a contract award. In 2019 Hansel provided procurement consulting services to its customers in 189 procurement projects with a value of €1,700,000, including mini-tendering services (€170,000) provided to framework agreement users.7 Who Are the Users of the CPBs? Each contracting authority has a discretion regarding whether or not to use the services of a CPB or award a contract by themselves. There is less discretion for State authorities than for others. There is no general obligation to use the framework agreements or DPS’s of a CPB under public procurement rules. Nevertheless, State authorities are required to use the agreements of Hansel Oy for certain supplies and services under State budgetary rules. The State authorities shall, under s. 22a(2) of the State Budget Act, purchase certain bulk products, services, IT equipment and software through the framework agreements concluded by Hansel Oy. Hansel Oy’s mandatory agreements are defined by the Ministry of Finance’s decision of 7.9.2006, 799/2006. Nevertheless, Hansel has multiple other agreements, but their use is non-mandatory for all authorities. The Ministry decides which agreements are mandatory for State authorities and it may remove or add certain product and service categories thereto. However, if, for a particular reason, the purchase cannot be made through centralised agreements, the government authorities may organise the

7 Hansel, ‘Procurement for the entire public administration’ (2019), https://​ annualreport2019​.hansel​.fi, accessed 9 January 2021.

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procurement in a different manner. Regardless of the obligation to purchase through certain centralised agreements, many authorities of the Finnish State do not follow the mandatory rules, but purchase their products and services elsewhere. Violation of the obligation to adhere to a CPB, however, does not have any consequences as such and hence it does not affect a contract’s effectiveness either. Even though Hansel, since September 2019, has acted as a CPB for the whole public sector, it is only the central government authorities that have an obligation to use its agreements for specified products and services. The use of all Hansel agreements is voluntary for all others except State authorities. The State lacks the competence to ‘impose’ the obligation to use Hansel agreements on local government authorities, hospital districts and church authorities and other entities due to the municipal and church autonomy established at the level of the Finnish Constitution. The use of agreements of all other CPBs (Sarastia, Sansia, Kuntien Tiera, Kuntien Hankintapalvelut) is voluntary, although it is possible that certain commitments have been made between the CPB and its owners in the shareholders’ agreements. As mentioned above, the possibility of using contracts awarded by a CPB is subject to the ownership requirement set out in national law. Thus, each contracting authority can use contracts by any CPB provided that the ownership requirement is fulfilled. For example, if a municipality owns a part of a local CPB, it can, in principle, decide whether it will use the contract of the said CPB, or of Hansel, or whether it will award the contract independently. How Are CPBs Financed? The CPBs are usually funded through fees from the awardees. As part of the procurement terms, the contractor to whom a contract is awarded is required to pay a certain fee to the CPB, which in practice is a percentage of the sales of the contract in question. To the best of this author’s knowledge, there are no court cases in Finland related to these fees. Moreover, CPBs are paid for the ancillary activities (often consultancy services or procurement-related development services) provided to their customers. Other Roles of CPBs CPBs and especially Hansel are actively taking part in different policy and legislation preparation activities. A representative of Hansel has been a member of every legislative working group and policy group relating to public procurement since Finland became a member of the EU in 1994. Hansel has also been very active in developing procurement tools and services such as the national

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contract notice service HILMA8 and establishing the open access spending database.9 Cross-Border Procurement There are no known real CPB cross-border procurement projects in Finland. Nonetheless, there is a lot of informal co-operation especially among the Nordic CPBs, and Finnish representatives participate in the work of European CPB networks. As mentioned above, Finnish CPBs’ agreements can be used only by their owners (the in-house requirement) and thus there are no foreign users. But regardless of the in-house requirement in the Finnish Public Contracts Act, according to s. 3 of the Hansel Act, cross-border collaboration agreements of Hansel can also be used by other users, but this applies only to Hansel agreements and not to the agreements of other Finnish CPBs. Efficiency and Policy Issues There is very little research in Finland on how effective CPBs are in terms of costs, and to conduct reliable calculations in this regard is challenging. In research conducted in 2008 on State purchases, it was suggested that the use of CPBs provided 20–25 per cent savings to its users, varying between product and services categories.10 As most Finnish CPBs are operating as companies and thus in a non-authority form, the openness principle and Finnish Freedom of Information Act (laki viranomaisten toiminnan julkisuudesta 621/1999) do not apply to CPBs. The same applies to all non-authority buyers in Finland, not just CPBs. This has been considered problematic due to the lack of transparency and post-award access to tenders, contracts and contract amendments.11 According to the current rules, only the interested parties, i.e. the fellow tenderers, have access to the tender documents and award decision and thus there is no third-party or media access. Hansel, however, is an exception as since September 2020, s. 8 Hilma, ‘Tutustu julkisten hankintojen mahdollisuuksiin!’ (Hankintailmoitukset), www​.hankintailmoitukset​.fi, accessed 26 March 2021. 9 Tutkihankitoja, www​.tutkihankintoja​.fi, accessed 26 March 2021. 10 See Katri Karjalainen et al., Yhteishankintojen kustannusvaikutus. Valtion hankintatoimen kustannussäästöjen selvittämine (Helsingin Kauppakorkeakoulun, 2008), available in Finnish at http://​epub​.lib​.aalto​.fi/​pdf/​hseother/​b94​.pdf, accessed 3 September 2019, and Hansel Oy’s, ‘Annual report 2018’ (2018) at 22. 11 This topic is discussed in Kirsi-Maria Halonen, ‘Many faces of transparency’, in Kirsi-Maria Halonen, Roberto Caranta and Albert Sanchez-Graells (eds), Transparency in EU Procurement. Disclosure within Public Procurement and during Contract Execution (Edward Elgar Publishing, 2019) 8.

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3b of the Hansel Act has stipulated that freedom of information rules as well as other administrative laws apply to Hansel’s activities. The new rules apply only to Hansel, but there are plans to extend the application of freedom of information rules to other public authority owned companies too.12 Hansel, as the largest CPB, is a forerunner in adopting practices that decrease the risk of corruption. These include the use of project groups, ethical rules and detailed operational guidelines. Prior to initiating a new contract award procedure, potential conflicts of interests are examined, and project personnel are changed if necessary. Only the members of the project group are entitled to access the project files. Also, the requirement to use electronic invoicing in all Hansel contracts has, according to Hansel’s annual report, reduced the risk of fake invoicing significantly.13

3

PROCUREMENT TECHNIQUES

Types of Techniques and Agreements Finnish CPBs often provide supplies and services through framework agreements, but lately also the use of DPSs and, at times, single contracts, have become more common. During the past five years, most Finnish contracting authorities, including CPBs, have been using e‑tendering systems for awarding contracts. Due to the fact that Cloudia’s e-tendering system won both local government CPB and Hansel contracts, almost all Finnish contracting authorities are currently using one and the same e-tendering system. The use of DPSs is increasing, and by the end of 2020, Hansel had established approximately 21 different DPSs. It is now expected that after the merger with KL-Kuntahankinnat in September 2019, the use of DPSs will grow in order to keep the market open while only one large CPB remains.14 The use of e‑catalogues in Finland is very rare. As mentioned above (Section 2), it is the Ministry of Finance’s decision 799/2006 which determines which product and service categories are mandatory for central government authorities to purchase through Hansel. These include electricity, fuels, office furniture and supplies; computers, laptops and related equipment; vehicles; travel services; occupational health; and different leasing services.15 In addition to these mandatory categories, Hansel has (vol12 Different possibilities for amending the current rules have been presented and it is likely that a formal government legislative proposal will be submitted during 2021–2022. 13 Hansel Oy, ‘Annual report 2018’ (2018) at 71–72. 14 In 2020 Hansel has established nine new DPSs. 15 Ministry of Finance’s decision 7.9.2006, 799/2006.

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untary) agreements on other categories such as IT consultancy services and cleaning or security services.16 How the Users Use the Agreements The purchases within framework agreements can be made through call-off contracts, or direct purchasing based on either single supplier contract or ranking. In some framework agreements, a hybrid model of the aforementioned methods is in use. Hansel also provides a call-off support function to its users, meaning that it assists its customers in the use of framework agreements’ execution phase by providing support in organising a mini-competition or in choosing the correct supplier from the ranking list. Also, in Hansel’s vehicles framework agreement, there is a specific automated ranking model in use, which resembles car hire search engines. Their buyer fills in certain basic information on the vehicle needed (purpose of use, size, emissions, etc.) and the e‑system then chooses the most suitable and most economically advantageous vehicle for the need in question, according to the criteria entered into the system. Most CPB agreements are multi-supplier agreements and include a mini-competition model. There is very little case law regarding the use of agreements and the actual call-off methods: one case concerned a direct call-off to a certain framework supplier17 and the other related to unclear award criteria and tender evaluation at the call-off stage.18 Most of the cases concerning call-offs relate to typical procurement issues such as accepting tenders that do not fulfil the requirements or other types of alleged unequal treatment in tender evaluation.19 It seems that there is a loophole regarding smaller purchases in framework agreements. According to many Hansel framework agreements, call-off methods laid out by the framework agreement are applied for purchases/ contracts above national thresholds only (€60,000 for supplies and €150,000 for services), thus opening up a possibility to make smaller purchases less

Hansel Oy (above, n. 13). In the Market Court case MaO 710/17 the contracting authority had made a direct call-off from one framework agreement supplier, which infringed procurement rules and a compensatory payment to the aggrieved other supplier was granted. The call-off was under EU thresholds, and thus the remedy of contractual ineffectiveness was not ordered. 18 See MaO 688/17. 19 See Market Court cases MaO 525/20 (unequal treatment) and MaO 320/20, MaO 216/20, MaO 129/19 (tenders did not meet the requirements and should have been rejected). 16 17

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transparently from any of the framework agreement suppliers. Such possibility is also to some extent accepted by Article 5(10) of the Directive. Thus, this can encourage some users to make separate smaller purchases during the agreement term in order to avoid competitive call-offs. Changes in Agreements The amendments to a framework agreement are subject to the same contract modification rules as procurement contracts, which are set out in s. 137 of the Act on Public Contracts and transpose Article 72 of Directive. To the best of author’s knowledge, there is no case law on modifications of framework agreements thus far. DPSs are not specifically mentioned in relation to the contract modification rules, but the contracts concluded on the basis of DPSs are. Probably the purpose of the Finnish legislators was that DPSs would also be covered by the same rules, but they have transposed the rules by using the same wording as in the Directive, which does not specifically identify DPSs in the provision covering contract amendments. Requirements for Estimates In December 2020 the Finnish government made a new legislative proposal on the obligation to specify the users of the framework agreements as well as the maximum quantity of supplies, services or works, or the maximum value of all purchases based on the framework agreement.20 Such maximum amount or value is binding. The new provision on framework agreements entered into force in July 2021. The new requirements are based on the CJEU case C‑216/17, Autorità.21 Prior to Autorità, the practice relating to framework agreements had been quite flexible. In Finland it was generally considered that the estimated value of the framework agreement given in the contract notice was purely a best (not binding) estimate. This estimate was made with the best knowledge at hand at the time of the contract notice, but which was not binding for the CPB nor the users of the framework agreement. If such estimate was exceeded, it was not considered to have an effect on the continuation of the framework agreement. There were many reasons for such an approach including aspects such as the uncertainty of actual purchases and the fact that, in Finland, it was considered important from tenderers’ perspective to make as accurate an estimation as

Finnish government’s legislative proposal HE 244/2020 vp., pp. 15–18. Case C-216/17, Autorità Garante della Concorrenza e del Mercato – Antitrust and Coopservice (EU:​C:​2018:​1034), paras 60 and 64. 20 21

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possible in order to give them adequate information for tendering purposes. For these reasons, the contracting authorities were not eager to ‘over-estimate’ the value, but due to the recent developments in both EU and national case law, the CPBs have been forced to change their approach, and now even the national procurement rules on framework agreements set out such a requirement. Previously there was also more flexibility regarding the identification of the future users of agreements, but the recent national case law suggests that CPBs are already required to specify the users at the awarding stage instead of just using general references to all potential users. In the Supreme Administrative Court’s case KHO 2019:84, the court addressed the question of how detailed the identification of framework agreements’ users should be.22 In the procurement documents, Hansel attached a list of all 186 entities that were their customers and thus able to use the framework agreement in question. According to s. 42.2 of the Finnish Public Contracts Act and Article 33(3) of the Directive, contracts based on a framework agreement shall be made only between those contracting authorities clearly identified for this purpose in the procurement documents and those economic operators to whom the framework agreement is awarded. One of the tenderers argued that Hansel failed to indicate the scale of the framework agreement in a clear enough way. It was further submitted that most of the 186 contracting authorities did not intend to purchase through the framework and some already had their own contracts on fuel. Hansel argued that under the procurement rules there is no obligation for all indicated contracting authorities to use the agreement and that a list of all potential users suffices. The court did not support this and concluded that Hansel had breached procurement rules by not providing adequate and clear enough information on the agreement when suggesting a significant number of contracting authorities as users of the framework agreement, even though their earlier behaviour and Hansel’s experience indicated that they would not use the framework agreement in question.

4

COMPETITION AND SME ASPECTS

For a long time, framework agreements or CPBs, in general, did not raise concerns over the nature of competition in Finland. However, this was changed by the Finnish Supreme Administrative Court case KHO 2016:182, which also raised international interest as it was perhaps the first case which specifically

22 This is not the only case. Previously, similar issues has been addressed in Supreme Administrative Court case KHO 2016:182, where it was established that all users need to be identified by the time of the call for tenders and that no new users can join after that time.

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addressed Recital 61 of the Directive, which states that ‘framework agreements should not be used improperly or in such a way as to prevent, restrict or distort competition’.23 In KHO 2016:182 the court found that the decision to award ‘too large’ a framework agreement for health-care and hospital supplies created barriers to bidding for most undertakings and was unduly restrictive of competition. In the case at hand, KL-Kuntahankinnat Oy (then a CPB for Finnish municipalities), on behalf of a hospital district and three municipalities, ran an award procedure for health-care and hospital supplies in 12 different product categories, including stock management and home delivery services. According to the terms of the call for tenders, the CPB’s other customers could also join the agreement at a later stage. The bidders could not tender for separate lots, but were required to submit a full-scale bid covering stock management and home delivery services, and all 12 product categories, with a minimum of 5,000 items. As a cherry on top, this agreement on all possible health-care supplies (and with the possibility for any municipality or hospital district to join in later) was to be awarded to a single economic operator. In short, then, the agreement was bound to create a funnel for all hospital supplies to be concentrated on a single supplier for a period of four years. When submitting their bids, tenderers were to provide two references from contracts of similar nature during the past three years. Both of these references were required to include products of at least eight of the 12 product categories included in the current contract award. These requirements could not be met by suppliers: a majority of potential tenderers only operated within a maximum of three product categories. Thus, the contract award in question did not at all represent the status quo of the market. As a result, these reference requirements led to the exclusion of all bidders except for two wholesale distributors. When this contract award was challenged by the excluded suppliers, the CPB objected to the claims of undue restriction of competition, emphasising that it had informed the potential bidders of the terms of the contract award in advance and encouraged them to establish consortia or subcontracting arrangements in order to meet the requirements. The court did not support such views and stated that the scope of the agreement and the requirements for a common IT system, and common logistics and customer services, were too extensive to ensure equal opportunities for economic operators. Consequently, these requirements had led to an undue restriction of competition. According to the 23 Kirsi-Maria Halonen, ‘Framework agreements should not be used improperly or in such a way as to prevent, restrict or distort competition’, How to crack a nut (9 December 2016), www​.howtocrackanut​.com/​blog/​2016/​12/​8/​framework​-agreements​ -should​-not​-be​-used​-improperly​-or​-in​-such​-a​-way​-as ​-to​-prevent​-restrict​-or​-distort​ -competition​-guest​-post, accessed 8 September 2019.

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court, the possibility of relying on the capacities of others did not remove the discriminatory, disproportionate and competition-restrictive features of the procedure. These negative effects of the agreement with a single provider were considered especially severe due to the length of the contract term. This case is an ultimate example of a framework agreement that is not taking into account market realities. The case created a lot of discussion in Finland on how market conditions should be taken into consideration. It also increased suppliers’ awareness of the limits of authorities’ discretion. The ‘CPB market’ significantly changed in 2019 when the two largest CPBs, Hansel (previously central government CPB) and KL-Kuntahankinnat (previously a local government CPB), merged. Currently, there is one large CPB representing the whole public sector. The merger was justified by further centralisation of both contract volumes and expertise leading to additional savings in procedural costs.24 During the merger process, only a few presented opposing views on how this merger could potentially impact the procurement market or the position of SMEs due to further centralised contract volumes (fewer local contracts in the market) and demanded stricter guidelines on ensuring that SMEs could successfully tender for Hansel agreements in the future.25 It seems that these views did not have any impact on the process. In the public sphere, Hansel submitted that after the merger, a lot of attention will be paid to the functioning of the markets and dividing contracts into lots.26 To the best of author’s understanding, the CPBs are only offering their agreements to their owners, which are public entities. Thus, there are no sales to the private sector. Mostly this is due to the in-house requirement set out under the national procurement rules; see above, Section 2. Participation of the SMEs in CPBs According to Hansel’s yearly report, SMEs are taken into account by dividing the framework agreements into lots and by increasing the use of DPSs, which provide continuous entrance possibilities for new suppliers. Sixty-four per

24 Miettinen Ville, ‘KL-Kuntahankintojen ja Hanselin fuusiolle sinetti’, Kuntalehti (23 May 2019) , https://​kuntalehti​.fi/​uutiset/​talous/​kl​-kuntahankintojen​-ja​-hanselin​ -fuusiolle​-sinetti/​, accessed 6 September 2019. 25 Statements of Suomen yrittäjät, Confederation of Industries, Competition and Consumer Authority and Ministry of Employment and Economy to the legislative proposal to amend the Hansel Act. Statements available in Finnish at: Vanltiovarainministerio Finansministeriet, ‘Hansel Oy –nimisestä osakeyhtiöstä annetun lain muuttaminen’ (2018), https://​vm​.fi/​hanke​?tunnus​=​VM101:​00/​2018, accessed 6 September 2019. 26 Kirsi-Maria Halonen (n. 23).

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cent of all Hansel agreements were divided into lots, of which 14 per cent were divided by geographical areas of users, 39 per cent by product or service category and 10 per cent by areas of expertise. In 2018, 42 per cent of all Hansel suppliers and 87 per cent of all subcontractors were SMEs.27 It seems that the large framework agreement context offers more possibilities for SMEs as subcontractors than as the main contractor. Suomen Yrittäjät (an SME interest organisation) has been criticising Hansel’s procurement practices in the media and many Parliament representatives have also expressed their concerns. The criticism relates partly to ‘too-large agreements’, but especially to single supplier framework agreements. Such practices are making SME or micro-companies’ participation very difficult and are forcing competitors to form consortia if they do want to participate, which in turn can be risky from a competition law perspective.

5

LIABILITY BETWEEN CPBS AND THEIR USERS

Contract Management The division of responsibilities between CPBs and the users of the framework agreement clearly creates risks relating to contract management and control of contract changes. CPBs do follow up the requirements in the framework agreement and DPSs and remind their users to execute their own contracts based on the framework in question. The contract management responsibility for individual contracts based on the CPBs’ agreements lies on the users. Contracting authorities using CPB framework agreements and DPSs are asked to forward information on bad contract performance or breaches of contract terms to the CPB, but there is no systematic CPB follow-up scheme regarding the users’ contracts and it is likely that not all information on contractor’s breaches, during the actual supply and service provision to the users, reaches the CPB. Rules Relating to Enforcement and Remedies In case MaO 172/20 the Finnish Market Court declared a framework agreement of an IT service ineffective as the contracting authority (not a CPB) had entered into the agreement during court proceedings. The agreement was declared ineffective ex nunc, but such ineffectiveness entered into force only six months after the court’s decision due to the need to secure orders and payments already made on the basis of the prospectively ineffective agreement.

Hansel Oy (n. 13) 72.

27

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Most of the Finnish case law on CPB agreements, where breaches have been made at the awarding stage, have just led to annulment of the award decision as the framework agreement had not yet been entered into due to automatic suspension during court proceedings. The possible consequences of the unlawful framework agreement are subject to whether the legal proceedings against such agreement have been started in due time and whether the framework agreement exceeds EU thresholds, as automatic standstill and certain remedies such as ineffectiveness and shortening of contract period are only available above for contracts above the EU value threshold. Consequences in the Event the Agreement Was Unlawfully Entered into by the CPB Even though there is no case law on the matter in relation to CPBs, the potential effect of unlawful framework agreements can be examined. In the aforementioned case MaO 172/20, although not a CPB agreement, the Finnish Market Court declared the framework agreement ineffective, but only after a six-month delay, as it wanted to secure the orders already made and their payments. These contracts remained valid as the ineffectiveness concerned only prospective obligations. But the court did not state anything about whether the contracts based on the framework agreement were to remain valid after the six-month period had elapsed. Framework agreements and DPSs usually exceed EU thresholds and thus are subject to standstill periods and automatic suspension, which suspends the execution of the agreement until the case is dealt with by the court. Due to this, it is rare for individual contracts to be awarded on the basis of a framework agreement before a court has examined their compliance with the procurement rules. Therefore it is also rare for there to be contracts based on agreements that are later found to be in breach of procurement rules, unless the CPB breaches standstill obligations or makes illegal modifications of existing framework agreements. It can be submitted that if a complaint is targeted only towards a framework agreement, it is unlikely that the process would automatically impact the contracts based on that agreement as the contractual ineffectiveness only applies to prospective duties (ex nunc) in Finland. Many framework agreements also include a provision on consequences for contracts based on that framework agreement in case the framework agreement in question has to be terminated or is declared ineffective – even though the validity of such

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clauses can be questioned where the ineffectiveness could render the whole agreement ineffective.28

6

COVID-19 AND JOINT PROCUREMENT

In Finland, as in many other EU Member States, COVID-19 resulted in urgent need for PPE and other medical products. The responsibility for security of supply lies with the National Emergency Supply Agency, which, however, was unable to fulfil the needs of public authorities in 2020. Thus, all hospital districts and municipalities had to try to make their own agreements as a matter of urgency, many of these through direct awards. In 2020 the number of voluntary ex ante transparency notices and contract amendment notices was double that of 2019, amounting to 9 per cent of all contract notices.29 The State did not issue any procurement guidelines in 2020, but procurement practices and direct awards were based on the EU Commission’s guidance issued on 1 April. In October 2020, Hansel’s DPS for PPE also became available to all public authorities and Finland has also joined the EU joint procurement of PPE. The pandemic has not so far resulted in any amendments to CPB structures nor in the creation of new CPBs. Further, and to the best of author’s knowledge, the pandemic has not increased the powers of CPBs’ employees.

28 Kirsi-Maria Halonen, ‘Shielding against damages for ineffectiveness: the limitations of liability available for contracting authorities – a Finnish approach’ (2015) Public Procurement Law Review 4, 110, 118–120. 29 Statistics retrieved from national procurement notice service, where all EU and national contract notices are advertised. Hilma, ‘Tutustu julkisten hankintojen mahdollisuuksiin!’ (Hankintailmoitukset), www​.hankintailmoitukset​.fi, accessed 26 March 2021.

12. Central purchasing bodies in France Fanette Akoka and François Lichère 1 INTRODUCTION The centralisation of public procurement is a process that took place in France before its formalisation at European level. The Army Commissioners (économats de l’armée) were established by the law of 17 July 1942, and were ‘responsible for providing supplies to military communities in difficult times’.1 The Army Commissioners were later ratified during the course of 1950s and are now known as the Armed Forces Commissioners (Economat des armées). The centralised purchasing is intended for the operation of public services and administrative activities that go beyond the military sphere and to avoid the lack of supply in the event of trade unrest. In 1968, UGAP was created as a purchasing group service responsible for supplying the materials necessary for the equipment and operation of administrations and public services.2 There is a fear of incompatibility between UGAP and EU law; this can be seen in the case law. In the CAMIF judgment of 2001,3 the Council of State modified the conditions of compatibility between the central purchasing body (CPB) and the requirements of competition law in the EU. The exemption from the procurement procedure is only legitimate if the amount of the contract does not exceed the EU thresholds. At present, the two main public CPBs are the Armed Forces Commissioners and the UGAP (l’Union des groupements d’achats publics), and they are public industrial and commercial establishments.4 Other CPBs have emerged subsequent to the 2004 Directives, and 1 P. Metayer, ‘Rapport du Sénat sur le projet de loi, adopté par l’Assemblée nationale’, portant statut de l’Economat de l’armée, n° 130, 1959. 2 Decree No. 68-54 of 17 January 1968 relating to ‘l’Union de Groupement des Achats Publics’, states: ‘service de groupements d’achats chargé d’approvisionner les matériels … nécessaires à l’équipement et au fonctionnement des administrations et services publics’. 3 CE, 27 July 2001, CAMIF, n° 218067. 4 Decree n° 2004-216 of 11 March 2004 on the organisation and functioning of the army commissary and decree n° 2008-1464 of 22 December 2008 modifying decree n° 85-801 of 30 July 1985 relating to the status and the functioning of the Union of public

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these CPBs are mainly created in regard to specialised purchasing sectors (such as IT or public transport), geographical sectors (departmental scale) or user profiles (hospital network).5 The need for economies of scale6 and rationalisation of purchasing is rising and today the centralisation of public purchases can take both conventional and institutional forms.7 The French legislative provisions of the Public Procurement Code provide that ‘centralised purchasing’ only relates to CPBs, groups of purchasers (groupements de commandes) and joint transnational entities.8 Therefore, they do not deal with other forms of centralisation such as public interest groups or public joint ownership.9 The Public Procurement Code clearly specifies that it is the users who can use these procurement techniques. The use of CPBs is encouraged10 because they benefit from certain flexibilities relating to their legal status,11 promising favourable protection to the sustainability of a long-standing system in France.

2

STRUCTURE AND USE OF CPBS AND OTHER JOINT PROCUREMENT

How Are CPBs and Joint Procurement Structured? The main CPB in France is UGAP. There are also other CPBs, but UGAP remains a heavyweight when it comes to centralised purchases. Decree n° 85-801 of 30 July 1985 provides that UGAP is a public industrial and commercial establishment placed under the supervision of the Minister of Finance and the Minister of Education12 and Decree n° 2008-1464 of 22 December 2008 clearly specifies that UGAP is a CPB.

purchasing groups provided that they are CPBs within the meaning of the public procurement code. 5 T. Rouveyran, ‘Association, GIE, SEM ou SPL, GIP, ... quel outil privilégier pour créer une centrale d’achat ?’ (2020) Public Contracts, 208, p. 27. 6 Cour des Comptes, ‘La mutualisation des moyens départementaux de la sécurité civile’(Communication à la Commission des finances du Sénat, September 2013). 7 Y.-R. Guillou, F. David and C. Gérard, ‘Stratégies d’optimisation de la gestion des services publics’ (2010) Contrats Publics, 100, p. 144. 8 Article L.2113-2 to L.2113-9 Public Procurement Code. 9 B. Dacosta, ‘Mutualisation de l’achat’, in L. Richer (ed.), Encyclopédie du droit de la commande publique (EFE, 2019). 10 F. Allaire. ‘La nouvelle réforme du droit des marchés publics’ (2016), Revue de Droit Immobilier, p. 524. 11 V. 01 a. (iii). 12 Official text: ‘établissement public industriel et commercial placé sous la tutelle du ministre chargé du budget et du ministre chargé de l’éducation nationale’.

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Along with UGAP, the Armed Forces Commissioners are the primary CPB for centralised public procurement at the national level. Article L.3421-1 of the Army Code provides that its object is to provide logistical support and the supply of services, foods and general merchandise to military formations in France and abroad as well as to collective and individual stakeholders authorised by the Minister of Defence.13 The Directives allow for the emergence of other structures in relation to the formalisation of the legal regime for CPBs. The local initiatives are still rare, but nonetheless, a possible example is the Dijon Métropole. More than 20 municipalities have come together to form the ‘Dijon Métropole’ (EPCI). The EPCI wanted to create a CPB for the municipalities involved in the project. Halfway between the national central purchasing and the local central purchasing, the region seems to be the level where most action is emerging. There are a few more central purchasing initiatives at regional scale than local initiatives. In 2009, the Cap’Oise Hauts-de-France association was created and presented itself as a CPB for the users of the region. The other regions have also created CPBs for their local users. In the same vein as the Picard initiative, the Approlys CPB is open to all users located in the Centre-Val de Loire region. The Auvergne-Rhône Alpes region and the Ile-de-France region have also each set up a CPB for users located in their territories, with the main targets being the municipalities and schools. CPBs can also be created to respond to specific themes. This is the historical motivation for the establishment of CPBs in France, where the very first CPB was the Armed Forces Commissioners, which dealt with the centralisation of military purchases. Other sectors can now use the CPB and are not necessarily limited to the geographical area. The CPB of CAPAQUI, which brings together users from the Nouvelle-Aquitaine region, offers centralisation of purchases for ten general items of supplies (stationery, IT, work and sports equipment, etc.) and services (maintenance, catering, etc.). There are other CPBs that are more specific to certain categories of needs. The CATP is a public transport CPB that offers centralisation to its members in terms of public transport, which covers both vehicles and ticketing media. If the CPBs are limited only by their activities and not geographically restricted, any user can become a member. This also poses delicate questions in terms of interventions for the benefit of contracting entities. CPBs mainly use framework agreements and loosely interpret the notion of defining needs in order to integrate contracting entities to the signing of the framework agreement after-

13 www ​ . defense​ . gouv​ . fr/​ e nglish/​ p ortail​ - defense/​ m inistry/​ o rganisation/​ organisation.

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wards. However, Directive 2014/25 is not as restrictive for contracting entities as the provisions of Directive 2014/24 for contracting authorities.14 There are other specialised CPBs, such as the EPSILON IT, which functions as a CPB for 15 regions in France for IT purchases. Another unique CPB which is limited to its category of users is RESAH, which is a network of hospital users. This CPB is accessible by organisations in the health, social and medico-social sector. It is therefore neither geographically restricted nor restricted in the purpose of its purchases because of its competency in energy, buildings, health products and information systems. The Public Procurement Code is silent about the legal structure of CPBs. It only specifies in article L.2113-2 that a CPB is a purchaser whose object is to exercise permanently, for the benefit of purchasers, at least one of the following centralised purchasing activities: (1) the acquisition of supplies or services; (2) the procurement of works, supplies or services.15 It is the case law and doctrine that explore the different possibilities of setting up CPBs. The first possibility is the hypothesis in which a contracting authority constitutes itself as a CPB when it respects the principle of speciality,16 as if it were a public establishment,17 and thereby the scope of its competences and its statutes.18 The second possibility is the hypothesis of the creation of an ad hoc CPB. As the Public Procurement Code is silent about the legal structure, this question of the legal structure seems to be subject to discussion. The CPB can take a public law or private law form, as long as it is a user according to the legal requirements.

Recital 60 of the Directive: p:footnotes_quotation_1 Likewise, a framework agreement should not be open to entry of new economic operators once it has been concluded. This implies for instance that where a central purchasing body uses an overall register of the contracting authorities or categories thereof, such as the local authorities in a given geographical area, that are entitled to have recourse to framework agreements it concludes, that central purchasing body should do so in a way that makes it possible to verify not only the identity of the contracting authority concerned but also the date from which it acquires the right to have recourse to the framework agreement concluded by the central purchasing body as that date determines which specific framework agreements that contracting authority should be allowed to use. /p:footnotes_quotation_1 15 Official text: ‘une centrale d’achat est un acheteur qui a pour objet d’exercer de façon permanente, au bénéfice des acheteurs, l’une au moins des activités d’achat centralisées suivantes : 1° L’acquisition de fournitures ou de services ; 2° La passation des marchés de travaux, de fournitures ou de services’. 16 The principle of speciality means that public establishments do not have general competence, but it is restricted by their legal status. 17 Tels que l’UGAP et l’Economat des armées, v. Introduction op. 18 CAA de Marseille, 5 July 2004, Syndicat d’agglomération nouvelle Ouest Provence, n° 04MA01109. 14

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These CPBs can be a public establishment, a public interest group, or a European group of local authorities. In addition, the CPB can also take a private law form. It could be an economic interest group, a public–private company or a local public company (SPL) – although one should be cautious about the latter possibility.19 Finally, CPBs can also be an association. The Court of Auditors strongly questioned this association form in a summary note sent to the Prime Minister on 13 March 2019.20 They called for the implementation through regulation of the provisions relating to the form of legal personality that is administered by public law for CPBs.21 The Prime Minister finally validated the association form for CPBs on 17 June 2019. In practice, there has been quite widespread use of such association form. Some CPBs mentioned above were formed from an already existing inter-municipal cooperative structure. These new powerhouses took the form of an association. This allows users who join the EPCI to go further in cooperation through centralising their purchases – and by facilitating them as well. The use of CPBs can be carried out in two ways. The first is the use of the CPB as a wholesaler. The advantage here is that when a user subject to the Public Procurement Code resorts to a CPB, he is considered to have complied with his publicity and competition obligations.22 The only contract that binds him in this purchasing process is the one with the CPB. The second model is the use of the CPB as an intermediary. The Legal Affairs Department recommends the establishment of an agreement between the public purchaser and the

19 The possibilities to create SPL are limited by law (L.1521-1 CGCT); T. Rouveyran, ‘Association, GIE, SEM ou SPL, GIP, ... quel outil privilégier pour créer une centrale d’achat?’ (2020) Contrats Publics, 208, p. 27. For an overview of the advantages and disadvantages of the possible different structures, see T. Rouveyran and A. Stratula, ‘Quels organismes peuvent être qualifiés de centrale d’achat ?’ (2014) Contrats Publics, 149, p. 30. 20 See Cour de Comptes, ‘Référé relative à la centrale d’achat Cap Oise Hauts-de-France’ (Ccomptes.fr, June 2019), www​.ccomptes​.fr/​system/​files/​2019​-06/​ 20190611​-refere​-S2019​-0508​-Cap​-Oise​-Hauts​-de​-France​.pdf, accessed 17 March 2021. 21 See Cour de Comptes, ‘Référé relative à la centrale d’achat Cap Oise Hauts-de-France’ (Ccomptes.fr, June 2019), www​.ccomptes​.fr/​system/​files/​2019​-06/​ 20190611​-refere​-S2019​-0508​-Cap​-Oise​-Hauts​-de​-France​-rep​-PM​.pdf, accessed 17 March 2021. 22 Direction des Affaires Juridique (DAJ), La mutualisation des achats publics (April 2019); art. L.2113-4 Public Procurement Code. Official text: ‘lorsqu’un acheteur soumis au code de la commande publique recourt à une centrale d’achat …, il est considéré comme ayant respecté ses obligations de publicité et de mise en concurrence’.

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CPB in order to determine the scope of the latter’s tasks.23 The UGAP operates almost exclusively as a wholesaler.24 These CPBs may offer ancillary purchasing activities which consist of providing assistance in the award of contracts, in particular in the following forms: (1) provision of technical infrastructure support for the conclusion of works, supplies or services; (2) advice on the choice, organisation and conduct of procurement procedures; (3) preparation and management of procurement procedures in the name of the concerned user and on his behalf.25 However, these activities (remain) limited to current purchases and are not to be used for very complex purchases.26 Public users can use CPBs to carry out work, even if it is specified that it is not possible to use a CPB directly for carrying out works. On the other hand, a CPB can award works contracts on behalf of users.27 The role of the CPB can be limited to the signing of the contract or, on the contrary, be exhaustive where the CPB, in addition to ensuring the signing of the contract, monitors the execution of the work.28 The most widespread hypothesis is where the CPB organises the procedure for choosing the users, from the publication of the advertisement until the award, or even until the signature and the notification of this contract to its users.29 In the event that the CPB executes the works contract on behalf of another contracting authority, the statutes of the CPB must define the conditions of execution of the contracts and framework agreements concluded.30

Ibid. S. Taupiac, ‘Externalisation des achats, un cadre juridique finalement pas si souple’ (Actualité Weka, 23 December 2016). 25 Art. L.2113-3 Public Procurement Code. Official text: … consistent à fournir une assistance à la passation des marchés, notamment sous les formes suivantes : 1° Mise à disposition d’infrastructures techniques pour la conclusion des marchés de travaux, de fournitures ou de services; 2° Conseil sur le choix, l’organisation et le déroulement des procédures de passation de marchés; 3° Préparation et gestion des procédures de passation de marchés au nom de l’acheteur concerné et pour son compte. 26 N. Ricci, ‘Les achats centralisés et groupés’ (2015) Contrats Publics, 158, p. 48. 27 DAJ, La mutualisation des achats publics (April 2019). 28 See art. L.2113-4 Public Procurement Code. 29 N. Ricci, ‘Achats groupés et exécution des marches’ (2014) Contrats Publics, 149, p. 52. 30 Ibid. 23 24

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Who Are the Users of the CPBs? Both the public and private users of CPBs are subject to the Directive and the Public Procurement Code. When the contracting authority resorts to a CPB as an intermediary to meet a need in terms of works, supplies or services, the establishment of an agreement is not obligatory between the purchasers and the CPB. Nevertheless, it is recommended in order to precisely determine the scope of the missions entrusted to the CPB.31 More generally, the principle that prevails in the relationship between public users and central purchasing is freedom of choice. For several years, the state and its public establishments, other than those of industrial and commercial natures, have been mandated to use the CPB, UGAP, in order to purchase vehicles. This obligation had been incorporated into article 34 of the Public Procurement Code32 but was repealed in 2001.33 Since then, centralised as well as decentralised contracting authorities have been able to use public CPBs freely. The statutes of the CPBs may stipulate that their services are open to members only. The regional CPBs in the form of associations are only accessible to the users located in the geographical territories concerned.34 Likewise, CPBs can be specific to certain categories of contracting authorities (in the socio-medical sector) and cannot offer their services to users who do not meet the conditions of their statutes. It would be possible to perceive a form of competition between the various CPBs. A user who is located in the geographical area where a regional CPB operates with a fairly broad offering, while several other CPBs also offer solutions, certainly has a choice between the different CPBs from the regional CPB, the general national CPB, and the specialised national CPB for the relevant sector. However, even when the user chooses to be part of a CPB, for example, a regional CPB, he remains free to enter into public contracts outside the structure of the CPB.35 Conversely, if the statutes of the CPB provide for it, the contracting authorities can also benefit from framework agreements concluded by the CPB without joining it, provided that they have been clearly identified as the beneficiaries of the contract through the consultation documents. In this

31 DAJ, La mutualisation des achats publics (April 2019). Official translation: ‘l’établissement d’une convention n’est pas obligatoire entre les acheteurs et la centrale d’achat. Néanmoins, il est recommandé afin de déterminer précisément l’étendue des missions confiées à la centrale d’achat.’ 32 Décret en Conseil d’Etat du 7 janvier 1982. 33 Décret n° 2001-210 du 7 mars 2001 portant code des marchés publics. 34 See above; this is for example the case for the Cap’Oise and CAPAQUI CPBs. 35 The prime Minister mentions that ‘la liberté des acheteurs de s’adresser à la centrale d’achat de leur choix doit être maintenue’. Prime Minister, Réponse au référé relatif à la centrale d’achat Cap’Oise Hauts-de-France (0968/19/SG, 17 June 2019).

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case, the CPB applies the Public Procurement Code applicable to the users on behalf of whom the CPB is contracting.36 How Are CPBs Financed? The financing of CPBs depends on their legal status. CPBs that take the form of an ‘établissement public’37 are subject to the relevant legal and financial regime. The contracting authorities who wish to use UGAP, for example, can sign an agreement with it in order, in particular, to determine the terms of advance payment for orders.38 CPBs in the form of an association or a public interest grouping may request a contribution from their members in addition to ad hoc contributions for the contracts. However, the administrative courts have scrutinised their financing: only the members should contribute, not the suppliers. The Paris Administrative Court of Appeal specified that it is not for the contract holders supplying medicines to a CPB of public establishments to contribute directly to the financing of the operation of the CPB or to the reduction of contributions due by its members to the CPB.39 The reason is that the CPB does not prove any link between the subject-matter and the contribution, and the contribution is not adjusted to the CPB’s needs. In this, RESAH does not establish that the perception of this contribution would be related to the subject of the contract and would correspond to its needs.

36 Prime Minister, Réponse au référé relatif à la centrale d’achat Cap’Oise Hauts-de-France (see 0968/19/SG, 17 June 2019), www​.ccomptes​.fr/​system/​files/​2019​ -06/​20190611​-refere​-S2019​-0508​-Cap​-Oise​-Hauts​-de​-France​-rep​-PM​.pdf (accessed 17 March 2021). Official text: … peuvent également bénéficier des accords-cadres conclus par la centrale d’achat sans y adhérer, à condition d’avoir été clairement identifiés comme bénéficiaires de ce contrat dans les documents de la consultation. Dans ce cas, la centrale d’achat applique les règles de la commande publique applicables aux acheteurs pour le compte desquels elle passe le marché. 37 A body governed by public law with a specific public service task, such as public hospitals or public universities. 38 Art. 25 du décret n°85-801 du 30 juillet 1985 relatif au statut et au fonctionnement de l’Union des Groupements d’Achats Publics. 39 CAA de Paris, 18 November 2016, RESAH IDF, n° 16PA02766. Official text: ‘il n’appartient pas aux titulaires des marchés fournissant des médicaments à une centrale d’achats d’établissements publics de contribuer directement au financement du fonctionnement de cette centrale d’achats ou à la réduction des cotisations dues par ses adherents’.

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Other Roles of CPBs? Some CPBs offer training services. The UGAP, for example, offers thematic training services on its website, for contracting authorities. Cross-Border Procurement Public contracts may occasionally bind a French party and a foreign party. Several French communities are involved in the European Groupings for Territorial Cooperation (EGTC). These groups bring together the structures of France and Spain, Belgium, Luxembourg, Germany and Italy. Nevertheless, to date there is no CPB that would bring together French players and other players from neighbouring states. However, article L.2113-5 of the Public Procurement Code gives the possibility for a French contracting authority to use a foreign CPB. The conditions for the creation of regional CPBs discussed above prevent any integration of members outside the geographical borders of the region. Likewise, it turns out that the low profit margins that central purchasing organisations generally achieve make foreign markets unattractive to French public entities.40 Efficiency and Policy Issues One of the main benefits of using CPBs, since it is not compulsory, is cost-efficiency. This is explained by the achievement of economies of scale, via higher purchase volumes, allowing prices to be reduced.41 The centralisation of purchases by CPBs also increases the value for money for smaller users who do not necessarily have the technical skills to correctly define their needs. The quality and reduction of purchasing costs for the benefit of users are also ensured by the competition caused by CPBs among suppliers. A founder of a CPB notes that in their dealings with a CPB, companies compete with each other a lot more to optimise their responses, which is reflected in their offer.42 40 A. Taillefait, ‘Coordination, Groupement de commandes et Centrales d’achats’(2017) Jurisclasseur Contrats et Marchés Publics, 50, 1. Official text: ‘la faible marge que prennent en général les centrales d’achats, rend les marchés étrangers peu attractifs pour [les personnes publiques françaises]’. 41 B. Dacosta, ‘Mutualisation de l’achat’, in L. Richer (ed.), Encyclopédie du droit de la commande publique (EFE, 2019). Official text: ‘la réalisation d’économie d’échelles, via des volumes d’achat plus élevés, permettant de diminuer les prix’. 42 J. Tacconet, quoted in R. Cayrey, ‘Centralis : la centrale d’achats publics qui gagne du terrain’ (2020) Le Moniteur, 20 July. Official text: ‘pour une centrale d’achats, les entreprises se mettent beaucoup plus en compétition entre elles pour optimiser leurs réponses, ce qui se ressent sur leur offer’.

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The procurement procedure is considered transparent when the contracting authority uses a CPB.43 In this sense, it is possible to perceive it as a form of reduction of the risks of corruption, the agents not having to implement the procedures of publicity and competition themselves. This simplification of the procedural and technical aspects for the user would also make it possible to stimulate innovative purchases by identifying innovative or standardised offers, which will then be offered to users.44 The European Commission also notes that ‘the large procurement volumes of CPBs could be used to leverage strategic procurement, e.g. by setting targets for innovative or green procurement’45 and that they create a ripple effect for other users. CPBs are the subject of a consensus on their advantages which are as follows: the reduction of costs relating to the public procurement process; the achievement of economies of scale and, consequently, the reduction of the cost of the service; the benefit of the expertise in the purchasing process and the improvement of the efficiency of public procurement; and increased competition. For providers, the central purchasing office also offers the advantage of increasing their visibility and scope of intervention with multiple users.46

43 ‘Pour les seules opérations de passation et d’exécution qu’il lui a confiées’; art. L.2113-4 Public Procurement Code. 44 DAJ, OECP, Guide pratique de l’achat public innovant (April 2019), p. 13; F. Akoka, Contrats de la commande publique et environnement (Presses Universitaires d’Aix-Marseille, 2020), §340 and on the benefits of CPBs for the environment. Official text: ‘en repérant des offres innovantes ou standardisées, qui seront ensuite proposées aux acheteurs’. 45 European Commission, ‘Public Procurement’, European Semester Thematic Factsheet (22 November 2017). 46 DAJ, La mutualisation des achats publics (April 2019). Official translation: … la réduction des coûts relatifs à la procédure de passation des marchés publics ; la réalisation d’économies d’échelle et, en conséquence, la réduction du coût de la prestation ; le bénéfice de l’expertise du processus d’achat et l’amélioration de l’efficacité de la commande publique ; l’élargissement de la concurrence. Pour les prestataires, la centrale d’achat offre également l’avantage d’accroître leur visibilité et leur champ d’intervention auprès de multiples acheteurs. For a perspective on this, see M. Terraux and C. Méric, ‘Les centrales d’achats : avantages et inconvénients’ (2020) Contrats Publics, 208, p. 23.

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PROCUREMENT TECHNIQUES

The Types of Techniques and Agreements Digitisation entered French law under the influence of the Directive.47 The transposition texts, namely the ordinance of 23 July 2015 and the decree of 25 March 2016, provided a timetable for the digitisation of procurement procedures. Since 1 October 2017, CPBs have been subject to digitisation through the ESPD. Already in place since 2012 at UGAP, the results of digitisation in public procurement seem encouraging.48 Digitisation in public procurement is also leading CPBs to offer e‑catalogues to users. Users can shop online: with a user account, they can choose the products they want and order them directly.49 The Public Procurement Code provides for the possibility for public users to use dynamic purchasing systems (DPSs).50 This purchasing technique does not seem to be widespread in France despite their introduction into French law in 2006.51 However, RESAH wanted to make DPSs one of its basic purchasing techniques.52 Digitisation has been compulsory for public contracts exceeding €25,000 excluding tax since 1 October 2018. Framework contracts and other subsequent contracts awarded by CPBs are no exception to this rule. Article L.2132-2 of the Public Procurement Code indeed provides that communications and information exchanges carried out within the framework of the procurement procedure must be carried out electronically.53 How Do Users Use the Framework Agreements? Many public CPBs offer their products for sale online: this applies to both supplies and also services. For the latter, the user is invited to indicate their expectations before placing an order. The success of the formula lies in its simplicity for the users of the CPBs who no longer have to cope with the cumbersome

47 For a more comprehensive overview of the past, see. N. Fouilleul, Le Contrat administratif électronique. L’exemple des marchés publics (Presses Universitaires d’Aix-Marseille, 2007). 48 N. Khalid, ‘Ils ont testé la démat’ obligatoire’ (2018) Le Moniteur, 6 April. 49 This is possible on the UGAP, CAPAQUI or Centralis websites. 50 Art. L.2125-1 Public Procurement Code. 51 The DPS was introduced in the 2006 Public Procurement Code. 52 DAJ, OECP, Guide pratique de l’achat public innovant (April 2019), p. 43. 53 Official text: ‘les communications et les échanges d’informations effectués dans le cadre de la procédure de passation d’un marché sont réalisés par voie électronique’.

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procurement procedure. However, despite the multiple possibilities offered by CPBs, the contracting authority may not find the answer to its needs. Changes to Agreements CPBs can implement framework agreements; each CPB determines its own framework agreements. The contracting authorities will then be responsible for the subsequent procurement. Only the undertakings initially selected will participate. It is advisable to provide, particularly when this structure has a large number of members and the pooled needs are complex, that ‘the CPB will be responsible for placing and concluding the subsequent contract(s)’ (my translation).54 Requirements Relating to Estimates and its Consequences Contracting authorities benefiting from a framework agreement signed by the CPB may decide to award subsequent contracts themselves. The issue of advertising and competition for these subsequent contracts following a framework agreement signed by a CPB was highlighted by the Hauts-de-France regional chamber of accounts. During an audit carried out at Cap’Oise, the magistrate raised the lack of transparency of the subsequent contracts, where the amount does not exceed European thresholds.55 The report was published before C-216/17, Autorità, which is more demanding than the French law relating to the details of the amount of the framework agreement.56 This gap could lead to modifications of the procurement code.57

4

COMPETITION AND SME ASPECTS

Concern about Competition Law The advantageous position of UGAP in French CPBs has led several economic operators to contest the provisions relating to it. The judges never directly questioned the advantages of UGAP on the market, even if they could find legal justification. In a case presented to the Council of State in the early 54 N. Ricci, ‘Achats groupés et exécution des marchés’ (2014) Contrats Publics, 149, p. 52. 55 CRC Hauts-de-France, ‘Rapport d’observations définitives et ses réponses’, Association Cap’Oise Hauts-de-France (9 August 2018), pp. 32–33. 56 M. Ubaud-Bergeron, ‘Communication du prix global de l’offre retenue aux concurrents évincés’ (2019) Contrats et Marchés publics, 8–9, comment 259. 57 Ibid.

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2000s, the provisions in the UGAP statute providing for an exemption from calling for competition for contracts of an amount equal to or greater than ECU 200,000 excluding VAT, under which a contracting authority purchases supplies from the UGAP,58 had been declared non-compliant with the European provisions then in force with regard to aspects of competitive tendering.59 On the other hand, ruling on the many advantages available to the UGAP as a result of the contested decree (large lump-sum advances for its suppliers and exemption from advertising and competition for public entities who joined the UGAP), he ruled that they found their basis in the public service missions of the UGAP. The Council of State had in fact considered that the fact of creating such a dominant position by granting an exclusive right is incompatible with the rules of competition law only if the company in question proceeds, by the simple exercise of the exclusive right conferred on it, to exploit its dominant position in an abusive manner.60 In an earlier case, the Paris Court of Appeal61 had ruled that the UGAP was not in a dominant position in the public procurement market, but that it had a monopoly over centralised purchasing.62 While these advantages have now disappeared, they have facilitated the creation of the existence of the dominant position. Participation of SMEs in CPBs SMEs’ participation in CPB agreements is a recurring problem. Voices are raised to denounce the difficulty for SMEs of integrating into the field of CPBs.63 However, a briefing report by the Senate states that concentration is not automatically unfavourable to SMEs. Thus, 62 per cent of UGAP’s suppliers are, for example, SMEs, which represents 25 per cent by volume of the orders of this public establishment, the extent of whose purchasing reached

58 Official text: ‘d’appel à la concurrence les marchés d’un montant égal ou supérieur à 200 000 écus hors taxe sur la valeur ajoutée, par lesquels un pouvoir adjudicateur achète des fournitures à l’UGAP’. 59 CE, 27 July 2001, CAMIF, n° 218067. 60 Official text: ‘le fait de créer une telle position dominante par l’octroi d’un droit exclusif n’est incompatible avec les règles du droit de la concurrence que si l’entreprise en cause est conduite, par le simple exercice du droit exclusif qui lui est conféré, à exploiter sa position dominante de façon abusive’. 61 CA de Paris, 13 January 1998, UGAP c/ SA CAMIF, n° 93/09481. 62 A. Ménéménis, ‘UGAP : modification du décret du 30 juillet 1985’ (2002) Droit Administratif, 1, comment 8. 63 Question écrite n° 44053, Journal Officiel de l’Assemblée nationale, 27 March 2000.

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€2.147 billion in 2014.64 In addition, CPBs are subject to the obligation on division into lots, favouring SMEs’ access to contracts with public CPBs.

5

LIABILITY BETWEEN CPBS AND USERS OF THE CPB

Contract Management Public CPBs which have the legal form of a public industrial and commercial establishment are subject to the economic and financial control of the State.65 A large group of contracting authorities can lead to issues relating to contract management. It limits the possibilities of integrated execution of the contract, as the contracting authorities may have different operations rules. When there is a large group of contracting authorities, it is better to clarify the respective upstream roles.66 Rules Regarding Enforcement and Remedies The CPBs or their users may be held liable either at the award stage or at the stage of contract execution. The Public Procurement Code provides that a user who uses a CPB is deemed to have complied with the obligations of publication and competition. If this is not the case, they could be held liable. In terms of execution, the CPB can typically be held liable for any breaches it may commit in the execution of agreements concluded with its suppliers and its users.67 It is therefore strongly recommended that a CPB and its users enter into an agreement in order to determine each other’s responsibilities.68

64 M. Bourquin, ‘Passer de la défiance à la confiance : pour une commande publique plus favorable aux PME’ (2015–2016), Rapport d’information fait au nom de la mission commune d’information sur la commande publique, Sénat, n° 82 p. 110. Official text: ‘massification n’est pas automatiquement défavorable aux PME. Ainsi, 62 % des fournisseurs de l’UGAP sont par exemple des PME, ce qui représente 25 % du volume des commandes de cet établissement public dont la surface d’achat a atteint 2,147 milliards d’euros en 2014.’ 65 G. Clamour, ‘Contrôle économique et financier de l’État sur l’Économat des armées’ (2019), Contrats et Marchés publics, 6, comment 18. 66 N. Ricci, ‘Achats groupés et exécution des marchés’ (2014) Contrats Publics, 149, p. 52. 67 L. Bonnard, ‘Responsabilités engagées et achats groupés’ (2020) Contrats Publics, 208, p. 71. 68 Ibid.

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Consequences if the Agreements Were Entered into Unlawfully by a CPB In the event that an agreement with a CPB turns out to be void, the subsequent agreement is expected to be cancelled. If the requirements of publication and competitive tendering specified in article L.2113-4 of the Public Procurement Code were not respected, the purchase could therefore be annulled by the administrative judge.

6

COVID-19 AND JOINT PROCUREMENT

Contracting authorities may struggle to use the R2194-3 Public Procurement Code69 for their ongoing contracts because of the price volatility of face masks. The French government requisitioned the UGAP in order to buy protective face masks. The Ile-de-France region set up a special CPB to fight COVID-19. Companies and contracting authorities can now afford face masks, hand sanitiser and serological tests.70 The use of the CPB has been limited since the end of the first state of emergency on 10 July 2020.

69 Codifies Art. 72 of the Directive: ‘any increase in price shall not exceed 50% of the value of the original contract’. 70 See Ile de France, ‘Centrale d’achat pour produire/acheter fournitures contre l’épidémie de covid-19’ (SmartIdf), https://​smartidf​.services/​fr/​industrie​-solidarite​ -covid19 (accessed 17 March 2021).

13. Country report on Germany Martin Burgi and Christoph Krönke 1 INTRODUCTION In Germany, the landscape of contracting authorities is traditionally highly fragmented, as a reflection of federal and municipal structures. The legal framework for central purchasing bodies (CPBs) and other forms of joint procurement in Germany should hence be viewed against the background of the general German administrative system, in particular, the role of local government structures. German local governments, including municipalities (Gemeinden) as well as second and third-tier local governments, such as counties (Kreise) and districts (Bezirke), are considered to be part of the administration of the respective federal state but have distinct legal personality, with their own (substantive) administrative tasks and competences. In principle, German local governments have strong legal status and play an important role in carrying out public responsibilities and offering public services, and the right of local governments to self-govern (i.e. to carry out all responsibilities falling within their “general competence”) is constitutionally enshrined at the federal level in article 28(2) of the Basic Law (BL).1 As a consequence, each of these local government entities is a distinct and independent contracting authority. Considering that there are 11,012 Gemeinden and 294 Kreise in Germany as of late 2018,2 each of them being an autonomous administrative and contracting body, the starting point for CPBs and other forms of joint procurement appears to be quite unfavourable, regarding their hesitation to “give away” their power in the form of responsibility. And indeed, even though one of the first CPBs in Germany, the Procurement Office of the Federal Border 1 See Martin Burgi, “Federal Republic of Germany”, in Nico Steytler (ed.), Local Government and Metropolitan Regions in Federal Systems (McGill-Queens University Press, 2009), p. 136, at pp. 143–146. 2 See “Gemeinden in Deutschland”, www​.gemeindeverzeichnis​.de/​dtland/​dtland​ .htm, accessed 23 March 2021, for the number of municipalities; Wikipedia, “Liste der Landkreise in Deutschland”, https://​de​.wikipedia​.org/​wiki/​Liste​_der​_Landkreise​ _in​_Deutschland, accessed 23 March 2021, for a list of districts.

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Guard (Beschaffungsstelle des Bundesgrenzschutzes), was established as early as in 1951,3 instruments of joint procurement are still rather rarely used in practice today.4 Despite, or rather, because of this fragmented situation, particularly at the level of local government, public contracting authorities are increasingly encouraged to switch to bundling their demand through forms of joint procurement. This is done in the hope of improving know-how in carrying out the increasingly complicated award procedures and with the expectation of achieving price advantages. Important fields for an actual application of joint procurement are the contracting of delivery services, standardised services and, above all, IT procurement. In line with this general, albeit only gradual, trend towards more joint procurement, the procurement law legislators in Germany have also been supporting the forms of joint procurement with specific rules since 2016. At the federal level, §120(4) of the German Act against Restraints of Competition (ARC, or in German: Gesetz gegen Wettbewerbsbeschränkungen – GWB)5 and the more detailed provisions in §4 of the German Public Procurement Regulation (PPReg, or in German: Vergabeverordnung – VgV)6 set out the fundamental rules governing joint procurement, as implementations of Articles 37, 38 and 39 of the Directive. It is important to note that these provisions only concern issues of public procurement. They do not, however, affect other legal rules which can be relevant for joint procurement, especially the law governing administrative organisation – in particular, the rules and principles of intermunicipal cooperation,7

3 Later, the office became the Procurement Office at the Federal Ministry of the Interior, the most important CPB at the federal level. See: Beschaffungsamt des BMI, “Das Beschaffungsamt” (Bescha), www​.bescha​.bund​.de/​DE/​DasBeschA/​node​.html, accessed 23 March 2021, and below in section 2(i). 4 In Germany, the data on procurement issues is traditionally in poor shape. Exact data on CPBs and other forms of joint procurement have not yet been obtained. 5 The question of the admissibility of CPB under administrative organisation law and antitrust law is not the subject matter of this provision, but the answers to it result from the relevant administrative organisation law and general antitrust law. 6 In §4(1) sentence 3 PPReg it is made clear that “the possibilities of using central purchasing bodies shall remain unaffected”. In addition to the procurement law provisions on joint procurement, the antitrust limits must also be observed when purchasing jointly. 7 The local governments’ right to self-government pursuant to article 28(2) BL encompasses a right to self-organisation, including a right to cooperate with other local government entities. As a matter of fact, cooperation between local municipalities plays an important role and is especially common between adjacent small rural municipalities, but also within major conurbations. Some of the most common fields of intermunicipal cooperation are: IT, waste disposal, water supply, public transport, regional marketing and tourism promotion. Cooperation is mostly formed on either a contractual

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including the various support schemes for these forms of cooperation8 – and the conflicts that may arise with respect to competition law. As a matter of principle, the choice between single or joint procurement is always based on a political decision (and not on a legal obligation). Finally, we should point out that joint procurement is only one of several means of promoting the professionalisation of public procurement.9 In many cases, the attempts to professionalise public procurement are carried out in a tentative and experimental manner. A clearly visible trend is the “boom” in consulting and competence centres as well as the many individual service providers and project support offices, which are literally called upon as third parties before, during and alongside the actual award procedure. In fact, the involvement of (mostly private10) procurement service providers, in particular, is a means of professionalisation that is used much more in Germany than joint procurement. The functions of these providers range from occasional consulting services, the carrying out of market analyses and the preparation of procurement documents to the management of the entire procurement

basis or as joint institutions (Zweckverbände) with specific public responsibilities. The details are regulated at the Länder level, in the respective laws on local governments. 8 The Bavarian government, for example, grants funding to each project of intermunicipal cooperation (up to €50,000 in general and up to €90,000 in areas with specific development needs), See: Bayern Recht Bayerische Staatskanzlei, “Richtlinie für die Zuwendungen des Freistaats Bayern zur Förderung der interkommunalen Zusammenarbeit” (1 January 2019), www​.gesetze​-bayern​.de/​Content/​Document/​ BayVV​_2020​_6​_I​_2327/​true, accessed 23 March 2021. 9 For the idea of professionalising public procurement as one of the “trending topics” of public procurement see Martin Burgi, “Entwicklungstendenzen und Handlungsnotwendigkeiten im Vergaberecht” (2018), Neue Zeitschrift für Baurecht und Vergaberecht, p. 579, at pp. 584 et seq. 10 Within the group of private procurement service providers in the sense meant here, a distinction can be made between genuinely and non-genuinely private procurement service providers. Genuinely private providers are regular market actors, i.e. mainly architects, engineers, project managers, IT consultants, lawyers, etc., who do not have any affiliation with public administration. Non-genuinely private companies, on the other hand, are public companies in private legal form, which are managed by themselves or by another sovereign or cooperative body. In contrast to the genuine private companies, they have an additional possibility of influence (in addition to the service provider contract), namely through company law regulations based on the state ownership of the company. There are several public contracting authorities and public enterprises active as procurement service providers on the market. For example, the public Dataport enterprise (see below in section 2(ii)) and the Central Office for Information Technology in the Security Sector (in German: Zentrale Stelle für Informationstechnik im Sicherheitsbereich – ZITiS) also carry out advisory activities with regard to public procurement by other public clients in their respective fields.

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process.11 Of course, this sort of “privatisation of public procurement” creates entirely different legal problems and doesn’t involve any transfer of public power to private parties.12 We should also take note of the fact that, besides the various economic advantages, the different forms of professionalising procurement, including CPBs and other joint procurement, do also entail legal and political risks. Many contracting authorities fear that their possibilities for determining and defining the object of procurement will be weakened if they hand over the procurement process to another government agency. Moreover, the transfer of the responsibility for the procurement procedure can create legal problems: the specific requirements for carrying out certain public tasks following from substantive law (e.g. health law) can be challenged if the authority responsible for the implementation of the substantive law does not control the procurement

11 For the typical services of a “procurement service provider” within the meaning of Article 2(1)(17) of Directive 2014/24/EU, Article 2(1)(15) of the Directive provides more detailed guidance. It defines the term “ancillary purchasing activities” contained in the definition of a procurement service provider. In the preparatory stage, these ancillary procurement activities may range from the description of the task, the compilation of the tender documents, the verification of whether the threshold value has been exceeded to the preparation of the draft service specifications. Procurement service providers are often also entrusted with comprehensive project management, i.e. the organisational implementation of the actual award procedure. Likewise, the conclusion of a procedure with its announcements, information, etc. is often placed in the hands of a procurement service provider. All in all, a procurement service provider is virtually omnipresent in the practice of the award procedure. 12 In addition to the requirements following from public procurement law (e.g. from Article 24 of Directive 2014/24/EU), the involvement of private procurement service providers has to be compatible with the general rules on privatisation. As a consequence of these rules, the contracting authority bears a legal control responsibility with regard to the entire procurement procedure, including any “privatised elements”, and it cannot completely evade its responsibility by way of privatisation. This control responsibility means, on the one hand, that the awarding authority must ensure the legality of the procedural acts carried out and of all official decisions taken. Errors on the part of the service provider can have an impact on the procedural results and the decisions taken by the awarding authority, and they can render these results and decisions illegal. On the other hand, the awarding authority is responsible for ensuring that the contributions made by the service provider are actually provided within the envisaged time and scope. The authority is obliged to monitor the service provider in order to ensure the effectiveness of his or her actions. Compliance with the control responsibility can be achieved by virtue of the contract concluded between the awarding authority and the respective procurement service provider. Cf. for a more thorough discussion of these issues Martin Burgi, Vergaberecht (2nd edn, C.H. Beck, 2018), p. 253 (passim); with respect to the involvement of private procurement service providers specifically in the context of IT procurement Christoph Krönke, “Vergaberecht als Digitalisierungsfolgenrecht” (2019), Die Verwaltung, 52, p. 65, at pp. 82 et seq.

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processes directly. These risks are certainly another reason for the reluctance specifically towards joint procurement. All in all, there is still a huge agenda in Germany with respect to professionalising public procurement in general and with regard to CPBs and other forms of joint procurement in particular. First and foremost, it is an enormous conceptual challenge to further develop the legal framework for cooperative and centralised procurement structures and for knowledge management. The regulations on joint procurement and on CPBs in §120(4) ARC and in §4 PPReg are certainly an important foundation for this development, as it enables cooperative procurement without having to carry out an award procedure at the stage of starting the cooperation. German courts will hopefully review cases involving these cooperative forms of public procurement with a certain degree of goodwill, and they should not reject cooperative approaches overly strictly. As a general rule, the idea of competition will be better served by a professionally operating procurement agency rather than by small, individual contracting authorities who act on their own, often in blunt ignorance of the applicable procurement rules. In our opinion, the federal government could and should consider, for example, significantly extending – at the federal level – the mandate of the Procurement Office of the Federal Ministry of the Interior (see below in section 2(i)) and developing it into a comprehensive consulting and knowledge agency.13 The Office would not be concerned with the planning and carrying out of procurement, but rather with providing all other federal, state, local and other contracting authorities with information and guidelines on individual procurement areas or carrying out research projects; at the same time, the Office could be responsible for networking with the European Commission and with other procurement bodies in Europe, which the EU has repeatedly called for.14 Of course, the far greater potential for professionalisation of public procurement lies at the municipal level. The currently existing, fragmented contracting authority landscape is a direct consequence of the right of municipalities to local self-government. In principle, this right is constitutionally provided for very good reasons. However, what is 13 A model for this could be the role of the Federal Environment Agency (Umweltbundesamt) in relation to environmen­ tal issues. This mandate of the Procurement Office would be an addition to its current function as the central procurement office of the Ministry of the Interior and other offices attached to the federal administration. 14 All this would require, on the basis of German constitutional law, a formal parliamentary law consisting of a regulation for a so-called independent higher federal authority (selbständige Bundesoberbehörde) according to article 87(3)(1) of the German Basic Law. Alternatively, such a body could also be located at the Federal Ministry of Economics. Lower-threshold options would involve the establishment or promotion of sector-specific counselling agencies.

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good for municipalities with regard to the carrying out of substantive tasks and their quality is not necessarily equally good for non-political (and also easily scalable) procurement tasks. With regard to these latter tasks, cooperation is the order of the day. A lot of cooperation is already happening on a voluntary basis, but the German Länder could encourage this cooperation more actively and – under certain circumstances – even force municipalities to cooperate. Such an encroachment on the right of local governments to self-government may be justified as it does not constitute an absolutely protected right. All these issues could be addressed in a sound and comprehensive “Public Procurement Professionalisation Act” which would combine changes to the law of state organisation, to municipal regulations and to budget law.

2

STRUCTURE AND USE OF CPBS AND OTHER JOINT PROCUREMENT

How Are CPBs and Other Joint Procurement Methods Structured? As to structural questions, the taxonomy of joint procurement in Germany follows the categories set out in Articles 37 and 38 of the Directive. (i) Occasional joint procurement The simplest instrument is cooperation based on individual contracts – or as Article 38 of the Directive puts it: occasional joint procurement, in which one contracting authority acts on behalf of all contracting authorities (e.g. a Gemeinde is commissioned by one or more other Gemeinden and simultaneously procures for itself and the other Gemeinden), either on behalf of the other contracting authorities or in its own name (see §4(1) and (2) PPReg). Central purchasing bodies (CPBs) (ii) The establishment and/or involvement of a CPB, as the second instrument of joint procurement, can be both more complex and diverse. In principle, the CPB is a third party – not necessarily a distinct legal entity, acting independently of the authority/authorities or department/departments on behalf of whom the CPB is being asked to procure. This can mean that a CPB is formed by way of a concentration of competences within one and the same legal entity and/or one and the same public authority. This way, for instance, the equipment for all Bavarian police departments can be procured by one single office assigned to the Bavarian Ministry of the Interior, which is responsible for the police. Another prominent example for this kind of CPB is the Procurement Office (PO, in German:

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Beschaffungsamt) at the Federal Ministry of the Interior.15 Today, the PO is the largest non-military procurement agency of the federal government. It is responsible for purchasing (all) goods and services throughout the Ministry’s entire area of operations. The PO makes purchases for around 20 different federal agencies,16 with a total procurement volume of €1.887 billion in 2018 (more than 60 per cent of which were spent on IT services and products).17 A second type of CPB is formed by way of establishing a distinct legal entity, either as an institutionalised form of intermunicipal cooperation (e.g. as a special-purpose association, in German: Zweckverband), or as a public or private enterprise (e.g. a private limited company, in German: Gesellschaft mit beschränkter Haftung – GmbH). An example for this sort of CPB is Dataport, a public enterprise organised under public law (in German: Anstalt des öffentlichen Rechts) and founded by several northern German Länder.18 Dataport serves, inter alia, as the CPB specifically in IT matters for the Länder administrations of Schleswig-Holstein, Hamburg and Bremen, offering to carry out their entire IT procurement procedures (concerning, e.g. hardware, software and network components). Moreover, Dataport advises public authorities on the selection and combination of components and on the carrying out of award procedures, and it offers basically all kinds of IT-related services needed in public administration.19 In 2018, Dataport had more than 3,000 employees and a turnover of €636 million. The funding of CPBs falling within this category is provided by the entities establishing and/or contracting with the respective CPB. The CPB may carry out purchasing in two ways: either it may purchase goods or services itself and subsequently resell them, or it may carry out award procedures on behalf and on the account of other contracting authorities. In the former case, the CPB is solely and directly responsible for the legality of the award procedure. In the second case, the contracting authority itself remains responsible for the measures of the award procedure which it carries out or instructs itself. What is special about the commissioning of a CPB is that 15 See: Official website, Beschaffungsamt des BMI, www​.beschaffungsamt​.de, accessed 23 March 2021. 16 See for the users of the PO: Beschaffungsamt des BMI, “Eine Behörde, die Kunden hat?”, www​.bescha​.bund​.de/​DE/​DasBeschA/​UnsereKunden/​node​.html accessed 23 March 2021. 17 For these and more data, see: Beschaffungsamt des BMI, “Daten und Fakten”, www​.bescha​.bund​.de/​DE/​DasBeschA/​DatenFakten/​node​.html, accessed 23 March 2021. 18 The legal basis is a treaty concluded between Schleswig-Holstein, Hamburg, Mecklenburg-Vorpommern, Bremen, Niedersachsen and Sachsen-Anhalt, see www​ .dataport​.de/​Download/​staatsvertrag​.pdf. 19 Cf. www​.dataport​.de/​Seiten/​Unternehmen/​Über​-uns​.aspx.

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contracting authorities are allowed to involve them without having to carry out an award procedure. Who Are the Users of the CPBs and Other Joint Procurement Methods? In principle, German law follows a free adherence model, so the use of a given CPB or other mechanisms of joint procurement is not compulsory. The fundamental difference between the two forms is whether they are carried out only selectively/ad hoc (occasional joint procurement) or permanently (CPB). It is in the hands of each contracting authority whether and what form of joint procurement they will use. The occasional joint procurement seems sensible for contracting authorities with similar procurement needs (i.e. small municipalities). A CPB can, on the one hand, bundle inquiries within a higher-level legal entity in order to relieve subordinate, smaller legal entities, or specialise in a certain subject area (which can only be realised at state or federal level). How Are CPBs and Other Joint Procurement Methods Financed? Financing depends on the choice of structure. In the case of contractual cooperation, a fee is usually agreed. In the case of the first type of CPB, the CPB’s funding is provided by the legal entity responsible for the CPB. As for the second type of CPB, it again depends on the structure of the intermunicipal cooperation or the participation in the shares of the public or private enterprise. Do CPBs Have Other Roles? CPBs may also engage in other roles as well as central purchasing activities. For example, the PO at the Federal Ministry of the Interior has had its own contact person for corruption prevention for many years now. This person regularly sensitises employees to the topic of corruption prevention and is available as a conversation partner for citizens (also anonymously) on questions in this area.20 A sub-unit of the PO, the Competence Centre for Sustainable Procurement (in German: Kompetenzstelle für nachhaltige Beschaffung) serves as an advisory body for any public contracting authority with regard to issues of sustainable procurement. Furthermore, the PO provides online publications on various topics related to procurement issues for free download.

20 See: Beschaffungsamt des BMI, “Ansprechperson gegen Korruption”, www​ .bescha​.bund​.de/​DE/​Service/​Korruption/​korruption​_node​.html, accessed 23 March 2021.

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Cross-Border Procurement The 2016 amendments to the ARC and the PPReg made it clear that these two forms of joint procurement (occasional joint procurement and CPBs) are also open to cross-border procurements. Thus, an occasional joint procurement can be carried out with one or more partners from the other EU Member States (see §4(1)(2) and §4(2)(4) PPReg), and German contracting authorities, which can entrust CPBs in other EU countries with the task of carrying out procurement procedures. Of course, contracting authorities from Germany and the other Member States may also set up a joint CPB, as provided by Article 39(5) of the Directive. Before the 2014/2016 public procurement law reform in Europe/ Germany, some major difficulties for cross-border procurements resulted from the lack of specific “conflict of procurement laws” rules to designate the applicable procurement law regime. While these difficulties were tackled by the reform, the issue of the competent review authority was not addressed.21 This might certainly be one of the legal reasons why German public authorities are still reluctant when it comes to cross-border procurement. A practical reason is probably that Germany is one of the largest EU Member States with various opportunities for joint procurement at home, without a pressing need to go across borders.22 Accordingly, successful cross-border joint procurements carried out with German participation seem to be limited to individual projects with a specific cross-border dimension (e.g. for the purpose of transboundary flood protection in the Upper Rhine region23).

21 Cf. Marc Opitz, “Das neue internationale Vergaberecht”, in Hermann Pünder and Hans-Joachim Prieß (eds), Vergaberecht im Umbruch II (Bucerius Law School Press, 2009), p. 91, at p. 100. 22 See, for the size of a Member State as a decisive factor in favouring (or disfavouring) cross-border procurement Severin Klink­müller, Die grenzüberschreitende gemeinsame Vergabe öffentlicher Aufträge (Kommunal- und Schul-Verlag, 2014), p. 49. 23 In order to be able to provide appropriate assistance in the event of floods in or near water bodies, the German “Technisches Hilfswerk” and the French “Protection Civile” have jointly procured an amphibious vehicle and developed a coordination mechanism for its specific cross-border use (for more information see: Öffentliche Dienste, Zusammenarbeit Der Verwaltunge, “Amphibienfahrzeug: Verbesserung des grenzüberschreitende Katastrophenschutzes durch die gemeinsame Beschaffung und Nutzung eines amphibischen Fahrzeugs” (InterregOberrhein Rhin Superiur), www​.interreg​-oberrhein​.eu/​projet/​amphibienfahrzeug​-verbesserung​-des​-​grenzubers​ chreitende​-​katastroph​enschutzes​-durch​-die​-gemeinsame​-beschaffung​-und​-nutzung​ -eines​-amphibischen​-fahrzeugs/​?cat​=​193, accessed 23 March 2021.

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Efficiency and Policy Issues With regard to efficiency and policy issues, as far as they are entrusted with procurement procedures, CPBs in Germany can obviously play their advantages to the fullest. While there is generally no robust data available, the federal PO, for example, points to a user satisfaction rate of over 90 per cent,24 which suggests that going through the PO is more favourable than a single procurement with respect to transaction costs and value for money. The PO also emphasises that they have a vital role in preventing corruption, as CPBs separate those who have a demand from those who fulfil this demand.25 Moreover, the assignment of the Competence Centre for Sustainable Procurement to the PO illustrates that CPBs are able to link demand-side power with strategic procurement goals.

3

PROCUREMENT TECHNIQUES

Types of Techniques and Agreements The main specific procurement instruments for CPBs are undoubtedly forms of electronic procurement in a broad sense and the conclusion of framework agreements. The PO, for example, has been publishing its invitations to tender exclusively electronically since 2006 and now provides its users with a central portal for electronic procurement (Zentrales Portal für die elektronische Beschaffung).26 The portal forwards them to other, more specific electronic procurement tools, in particular to the general Federal E‑Procurement Platform (E-Vergabe-Plattform des Bundes),27 to the Demand Assessment Tool (Bedarfserhebungs-Tool)28 and to the Federal Department Store (FDS,

24 See: Beschaffungsamt des BMI, “Daten und Fakten”, www​.bescha​.bund​.de/​DE/​ DasBeschA/​DatenFakten/​node​.html, accessed 23 March 2021. 25 See: Beschaffungsamt des BMI, “Informationen für Bedarfsträger”, www​ .bescha​.bund​.de/​DE/​Beschaffung/​InfoBedarfstraeger/​node​.html, accessed 23 March 2021. 26 See: Beschaffungsamt des BMI, “Das zentrale Portal für die elektronische Beschaffung” (e‑Beschaffung), https://​ e​ -beschaffung​ .bund​ .de, accessed 23 March 2021. 27 See Evergabe, “Elektronische Vergabe leicht gemacht!”, www​.evergabe​-online​ .de, accessed 23 March 2021. 28 See Beschaffungsamt des BMI, “Das zentrale Portal für die elektronische Beschaffung” (e‑Beschaffung), https://​ e​ -beschaffung​ .bund​ .de, accessed 23 March 2021.

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in German: Kaufhaus des Bundes – KdB).29 In contrast to these two specific instruments, dynamic purchasing systems (DPSs) and e‑catalogues are not used by CPBs in Germany. Types of Framework Agreements As to the conclusion of framework agreements, the FDS is a particularly interesting institution: it is a joint electronic platform of four federal CPBs, including the PO,30 on which they offer users those services and products for procurement for which they have already concluded framework agreements. In total, around 500 framework agreements with over 96,000 products are bundled in this way in the FDS. The four participating CPBs have divided the responsibilities for the conclusion of framework agreements among themselves according to different service and product groups. For example, the PO is responsible for concluding framework agreements for information and communication technology and services across all federal departments. The CPBs are not bound by any specific requirements as to the conclusion of framework agreements (see §120(4)(1) ARC), and they principally award all types of framework agreements. They can use the aforementioned electronic Demand Assessment Tool in order to anticipate the demand; hence authorities participating in the FDS are asked to submit their demand through the electronic tool. How Do Users Use the Framework Agreements? The implementation of an existing framework agreement depends on the individual type of framework agreement. Most agreements available in the FDS, for example, can be used by simple call-offs. Framework agreements enable contracting authorities to bundle numerous individual procurement processes by using recurring services and thus to procure them more effectively and easily. The framework agreement defines the legal framework for the essential conditions of individual orders to be issued in the future, while the synallagmatic obligation should only arise through the individual call-off leading to the conclusion of a contract.

29 See Kaufhaus des Bundes, “Informationsportal Kaufhaus des Bundes (KdB)”, www​.kdb​.bund​.de, accessed 23 March 2021. 30 The following CPBs have joined forces in the FDS: the General Directorate of Customs – Central Procurement Office of the Federal Finance Administration, the Federal Institute for Materials Research and Testing, the PO and the Federal Office for Equipment, Information Technology and Exploitation of the Bundeswehr.

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Changes in Framework Agreements The changing of framework agreements follows the general rules on contract changes. There are no specific rules or practices applicable to changing framework agreements under German law other than those provided in the Directives. Requirements for Estimates and their Consequences The contracting authority must determine the volume of the contract as precisely as possible in preparation for the award procedure. The value of a framework agreement is calculated on the basis of an estimated total value of all individual orders that are planned during the entire term of a framework agreement (imputed order value).31 There are no specific requirements in respect of (wrongful) estimates of the value.

4

COMPETITION AND SME ASPECTS

Concern about Competition Law The antitrust dimension of joint procurement is well recognised in Germany. With respect to municipal purchasing cooperations (kommunale Einkaufsgemeinschaften), for example, the German Federal Court of Justice (Bundesgerichtshof) reasoned as to the prohibition of agreements restricting competition (Kartellverbot), laid down in §1 ARC: A significant impairment of competition exists … if the purchasing cooperation itself achieves too much buyer power. The limit of admissibility is below the threshold of market dominance …. It must be determined in individual cases on the basis of an overall assessment of quantitative criteria. In qualitative terms, the nature and intensity of the restriction of competition play a decisive role …. Quantitatively, the share of turnover attributable to the cooperative in comparison to the total volume of demand existing on the market constitutes the decisive decision criterion in this respect.32

31 See Tobias Osseforth, “Rahmenvereinbarungen und andere besondere Instrumente des Vergaberechts”, in Marc Gabriel, Wolfram Krohn and Andreas Neun (eds), Handbuch Vergaberecht (2nd edn, C.H. Beck, 2017), §13 para. 32 ff. 32 Bundesgerichtshof, Judgment of 12 November 2002 – KZR 11/01 – Ausrüstungsgegenstände für Feuerlöschzüge, 152, 347. See also Michael Kling, “Vergaberecht und Kartellrecht: Eine Analyse der Entscheidungspraxis im Zeitraum 2015–2018” (2018), Neue Zeitschrift für Baurecht und Vergaberecht, p. 715, at pp. 721 et seq.

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Accordingly, the legislator of the PPReg expressly points out in the explanatory memorandum that the limits of cooperation under cartel law remain unaffected by the regulations on joint procurement.33 However, while the fact that antitrust law in principle also applies to public procurement is almost universally accepted in practice, decisions on the precise limits of joint procurement under antitrust law have so far hardly been found. The Federal Public Procurement Chamber, for example, raised the question whether a joint procurement ran contrary to antitrust law and amounted to an abuse of a dominant market position (Marktmissbrauchsverbot),34 but could not find any inadmissible exclusion effect at the expense of parts of the market in that case, since the contracting authorities – the joint procurement was about framework contracts for X-ray contrast media, initiated by the German public health insurance funds – “clearly and correctly relativised the potential exclusion effect by fulfilling the requirement of lot allocation, §97(4)(2) ARC”.35 Are CPBs Solely for the Use of the Public Sector or Also for the Private Sector? Depending on the type of CPB, some of them also offer services to private users. In particular, CPBs organised as public undertakings can be (1) a CPB for contracting authorities but also (2) act as regular market participants and provide services to private customers as well. Dataport, for example, does not only act as a CPB with respect to IT products, but also offers a wide range of general IT services. Participation of SMEs in CPBs This discussion refers to the second problem of bundling buyer power through joint procurement, namely the consideration of the interests of SMEs. It should first be pointed out here that, as previously mentioned, the German ARC in §97(4)(2) provides for a principal requirement to award lots.36 This require-

Cf. Bundestag-Drucksache, 18/7318, p. 149. The general prohibition of an abuse of a dominant market position is set out in §19 ARC. For framework agreements, §21(1)(2) PPReg provides a more specific rule: “A framework agreement shall not be abused or applied in a manner which impedes, restricts or distorts competition.” 35 Cf. 2. Vergabekammer des Bundes, VK 2 – 65/16, Decision of 27 July 2016, p. 12 and p. 20 et seq. 36 The provision is specifically designed as a means to promote the interests of SMEs. Section 97(4)(1) and (2) ARC read as follows: “The interests of small and medium-sized undertakings shall primarily be taken into account in public procurement 33 34

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ment, which can be fully invoked in a review procedure, in principle mitigates the negative effects of joint procurement to the detriment of SMEs. In practice, the available data do not suggest that there is any discrimination against SMEs. The data published by, for example, the PO, show that approximately 70 per cent of the contracts awarded by the PO in fact are accounted for by SMEs.37

5

LIABILITY BETWEEN CPBS AND THE CONTRACTING AUTHORITIES WHO USE THE CPB AGREEMENTS

Contract Management As to contract management, CPBs usually make sure that the requirements stipulated in the agreements are complied with. The PO, for example, serves as a single point of contact in matters concerning IT procurement.38 It purchases products and services for the federal agencies and supports its customers throughout the entire procurement process, from the initial notification of requirements to the awarding of contracts and the completion of services. It provides an “all-round service package”, including all elements from customer and supplier management to contract and licence management and receivables management. The procurement process is IT supported. The survey of procurement needs, for example, is carried out using the Demand Assessment Tool (Bedarfserhebungs-Tool).39 The concluded contracts are made available for electronic retrieval at the Federal Department Store (FDS, in German: Kaufhaus des Bundes – KdB).40 Rules Relating to Enforcement and Remedies The CPBs have no specific obligation to report to German parliaments or – at the municipal level – to local government agencies (e.g. city councils). Their activities are, of course, subject to regular control by the federal and state

procedures. Contracts shall be divided into individual lots (partial lots) and awarded separately according to the type or area of specialisation (trade-specific lots).” 37 See www​.bescha​.bund​.de/​DE/​DasBeschA/​DatenFakten/​node​.html. 38 See for the following, Beschaffungsamt des Bundesministeriums des Innern, “Tätigkeitsbericht 2018”, www​.bescha​.bund​.de/​SharedDocs/​Downloads/​ Publikationen/​Taetigkeitsberichte/​taetigkeitsbericht​_2018​.pdf, accessed 23 March 2021. 39 See Beschaffungsamt des Bundesministeriums des Innern, Bedarfserhebungs-Tool, https://​e​-beschaffung​.bund​.de. 40 See Kaufhaus des Bundes, www​.kdb​.bund​.de.

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courts of auditors (Rechnungshöfe) as well as to the general legal supervision (Rechtsaufsicht) through the respective superordinate state authority. And finally, where joint procurement is implemented on the basis of agreements, the contracting authorities will usually reserve contractual control and monitoring rights. With respect to the liability of CPBs towards their users, we are not aware of any specific regulations or case law in Germany. In fact, with regard to the challenging of award procedures by CPBs, the procedural balance of the PO, for example, illustrates the advantages of a high level of professionalisation in procurement. A total of six review procedures were applied for before the Federal Public Procurement Chamber (Vergabekammer des Bundes) in 2019, which corresponds to just 1.7 per cent of the entire EU award procedures. None of the review procedures was successful. Consequences in the Event the Agreement Was Unlawfully Entered into by the CPB The consequences of unlawful agreements are governed by the general principles. If, for example, a CPB concludes a framework agreement in an unlawful manner and this is declared invalid in the review procedure, no services can be called off on the basis of the framework agreement without these being put out to tender if required under the general public procurement rules. The liability issues which may arise in the relationship between the CPB and its users must be assessed in accordance with the general rules applicable in the event of breaches of contract.

6

COVID-19 AND JOINT PROCUREMENT

The federal government took measures to eliminate the shortages of protective equipment and disinfectants that occurred at the beginning of 2020 and during the coronavirus pandemic: first of all, protective equipment was procured through CPBs like the POs of the Federal Ministry of Defence, of the Federal Ministry of Finance and of the Federal Ministry of the Interior (and later of the Federal Ministry of Health) and then distributed according to a fixed quota to the federal states, which passed the goods on, primarily to hospitals and care facilities. In addition to a large number of individual procurement measures, the PO of the Federal Ministry of Health initiated a temporary open-house procedure which worked as follows: every company that accepted the specified contractual conditions (e.g. a minimum quantity) and prices had a right to conclude a contract. The deadline for submitting offers corresponded to a specified period of just under two weeks. In total, the federal government will receive deliveries of a total of 233 million FFP2 masks and 63 million

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surgical masks through this open-house procedure.41 Regarding procurement on the Chinese market, an instrument for framework agreements with large German companies was concluded: the companies bought on behalf of the Federal Ministry of Health, and in respect of transport, cooperation with an airline that could fly, for example, to Shanghai every day, was arranged. Similar central procurement measures could be located at the state level: for example, in Bavaria the State Office for Health and Food Safety (Bayerisches Landesamt für Gesundheit und Lebensmittelsicherheit) took over the procurement of protective equipment at the peak of the pandemic. After the national and international markets eased, central procurement was terminated at the end of June 2020. While the structure of CPBs was not modified, there was a recognisable tendency towards increased centralisation, but no will to establish this as a permanent structure.

41 Over 700 awards have been made through the open-house procedure. Almost half of the partners could not meet the delivery deadlines, and left the contract. The Federal Ministry of Health fully withdrew from one in six of the remaining contracts due to the poor quality of the goods. So far, 361 companies have delivered personal protective equipment as part of the open-house process. For more information, see Bundesministerium fur Gesundheit, www​.bundesge​sundheitsm​inisterium​.de/​ coronavirus/​faq​-schutzmasken​.html.

14. Centralised procurement in the Netherlands: a mixture of procurement autonomy, decentralisation and diversified collaborative purchasing W.A. Janssen and M.A.J. Stuijts 1 INTRODUCTION In the Netherlands, the administrative landscape consists of a plethora of different individual public authorities, which in return cooperate to a great extent amongst themselves for the organisation of public tasks and their public procurement activities. However, despite their apparent inclination to cooperate, these authorities are still individually responsible for satisfying their own needs relating to works, services and goods, notwithstanding the potential interrelatedness of their public tasks, such as different health-care services for a citizen in need of multiple types of mental health care or environmental challenges that surpass their geographical borders. As a consequence, there are no Dutch laws or regulations that mandate how these entities must fulfil those needs. Purchasing decisions are made at the contracting authority’s discretion. Therefore, the starting point of a discussion on central purchasing bodies (CPBs) in the Dutch context means that collaboration for public procurement also occurs at the discretion of these authorities themselves, based on their own ‘procurement autonomy’. The current state of CPBs in the Netherlands can be partially explained by its constitutional structure, the principle of local autonomy and a general focus on collaboration between public authorities, which are further detailed below. Traditionally, four administrative levels of government are provided for in the Grondwet (Dutch Constitution), namely 13 ministries, 12 provinces, 355 municipalities and 21 water boards.1 These administrative levels of gov-

1 Chapters 2 and 7 Grondwet (Dutch Constitution). The number of these authorities is not defined in the Dutch Constitution and is subject to change over time due to

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ernment, which govern over 17 million citizens, are further complemented by various agencies, such as the Dutch Central Bank, and private entities, such as the social housing corporations, which are often established by law to execute specific tasks. The tasks of these aforementioned authorities are manifold. The water boards are tasked with the governance of the Dutch water system on a regional level, which is a task not to be underestimated given the sub-sea-level position of most the Netherlands.2 The municipalities concern themselves on a local level, for example, with the issuing of official documents, the provision of social security payments, the construction and maintenance of municipal infrastructure, such as roads and bicycle paths, and the collection of household waste. Furthermore, since 2015, this level of government has been tasked with the responsibility to organise various health-care services for citizens, which has not been without challenges.3 Inevitably, these assigned tasks influence their individual purchasing needs, or the desire to establish or work with a CPB. In addition to the constitutional divisions between layers of government vested in the Dutch Constitution, the autonomy to procure individually appears to relate to the administrative law principle of local autonomy. The Code Interbestuurlijke Verhoudingen (Code for inter-administrative relations) governs the internal relations between levels of government and explicitly refers to the European Charter of Local Self-Government, which emphasises in Article 3 that ‘Local self-government denotes the right and the ability of local authorities, within the limits of the law, to regulate and manage a substantial share of public affairs under their own responsibility and in the interests of the local population’. Collaboration for public procurement by public authorities fits well within a broader picture of collaboration between public authorities in the Netherlands. Limited budgets, environmental challenges, or expected economies of scale have created a web of public collaboration for the performance of public tasks in addition to CPBs.4 A 2018 study, which concluded that municipalities are reorganisations. The number of municipalities has steadily dropped since 1991, when there were 647 municipalities. Gemeentewet (Municipality Act), Staatsblad (1992), 415 or the Wet Basisregistratie personen (Citizens Registration Act), Staatsblad (2013), 494. 2 Waterschapswet (Water Boards Act), Staatsblad (1991), 444. 3 N. Uenk, ‘Commissioning of social care services: municipal commissioning approaches for social care services – evidence from a countrywide live experiment’ (dissertation, 2019). 4 M. Boogers et al., ‘Effecten van regionaal bestuur voor gemeenten Bestuursstructuur, samenwerkingsrelaties, democratische kwaliteit en bestuurlijke effectiviteit’ (Working Paper, April 2016); F. Theissen, M. Noordink and J. Westerbeek, Inventarisatie samenwerkingsverbanden decentrale overheden (Ministerie van Binnenlandse Zaken en Koninkrijkrelaties, 2017).

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involved in 27 collaborations on average, used a broader definition of collaboration by also including non-institutionalised contractual collaboration. This is unlikely to change in the coming years, given the political push from the central government to cooperate for the fulfilment of tasks. In 2020, the Ministry of Health, Welfare and Sport even announced that collaboration between municipalities for the fulfilment of health-care tasks would become obligatory, but public procurement remained unmentioned.5 In light of the procurement autonomy discussed before, the Dutch setting of CPBs can be characterised as heavily decentralised, non-obligatory and diverse in terms of how integrated the purchasing activities of cooperating contracting authorities are. Various authorities at different levels of government have opted to join forces when it comes to public procurement. One of the oldest examples concerns the Rijksinkoopbureau, later Nederlands Inkoop Centrum (NIC). It was established in 1921 as a fully owned entity of the Dutch State. Over the years, its activities expanded gradually from procurement of goods to services, and from obligatory purchasing arrangements for the ministries only, to providing optional purchasing activities for other authorities, including pension funds, fire departments and municipalities. After a restructuring in 1989 in which it became a Naamloze Vennootschap (public company), it was fully privatised in 2002, when the State sold all of its shares, and continues to operate independently.6 At present, an example of a CPB on the central level of government is the Haagse Inkoop Organisatie (The Hague Procurement Purchasing Organisation), which is part of the executive administrative organisation of the Ministry of the Interior and Kingdom Relations, which currently organises procurement activities for six ministries. However, CPBs are mostly found at the decentralised level. Dutch municipalities cooperate on a substantial scale for their procurement activities, as is further detailed below. At this level of government, CPBs are sometimes seen as a predecessor to reclassifications of municipalities, whereby, if municipalities were to continue to increase their collaboration, a merger of municipalities would become inevitable.7 Furthermore, the organisation of CPBs takes place in a broader 5 Kamerbrief inzake verzoek om beantwoording van specifieke vragen met betrekking tot de sluiting van diverse jeugdzorginstellingen [Letter to Parliament], 15 January 2020. 6 ANP, ‘Voormalig Rijksinkoopcentrum houdt beursgang weer voor mogelijk NIC denkt dieptepunt voorbij te zijn’, Volkskrant, 5 December 1995; ‘Minister Pronk terug als klant bij Inkoopcentrum’, Volkskrant, 21 January 1995. 7 The Wet Gemeenschappelijke Regelingen (Joint Arrangements Act), Staatsblad (2019), 173 is currently under review. R.J.M.H. de Greef, ‘De gemeenschappelijke regeling: onbegrepen, onbekend en onbemind!’ [The ‘joint arrangement’: misunderstood, unknown and unloved!] (2008) De Gemeentestem, pp. 107–111. R.J.M.H. de Greef, ‘De bedrijfsvoeringsorganisatie in de Wet gemeenschappelijke regelingen: een

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context of discussions about the democratic legitimacy of collaboration between municipalities in which democratically elected city councils appear to struggle with their checks and balances role if activities are outsourced to external entities, such as CPBs.8 Dutch public procurement law consists of the Aanbestedingswet 2012 (Awet 2012, Dutch Public Procurement Act 2012), which was reformed on 1 July 2016 by implementing the Directive, and the Gids Proportionaliteit (Proportionality Guide).9 In addition, there are various related policy documents, including the Aanbestedingsregelement Werken 2016 (Procurement Regulations Works 2016).10 These rules apply in full to a CPB’s procurement activities. At present, there is no specific legislation for CPBs other than the implementation of the relevant Articles of Directive 2014/24/EU.11 It appears even that joint procurement arrangements in the Netherlands do not use the terminology of ‘centralised purchasing body’ in a general or legal sense, even though these entities might in fact qualify as central CPBs under the Awet 2012 and the Directive and could benefit from their use. This is further confirmed by the Explanatory Note of the Awet 2012, which states that the Dutch legislature has chosen to not make CPBs obligatory, which was provided for as an option in Article 37 of the Directive, because CPBs are only ‘sporadically’ used in the Netherlands, unlike in other EU Member States.12 The latter conclusion appears relevant for the use of a wholesaler option (Article 37(1)), but not for the intermediary option (Article 37(2)). This conclusion might have been caused by the fact that the institutionalised exemption, now vested in Article 12 of the Directive, was seen as the predominant manner of structuring CPBs in accordance with the public procurement rules prior to the introduction of Article 37. Consequently, the control, activities and private participation criteria, as established by the CJEU in its long line of case

nieuwe vorm van samenwerking?’ [The operating entity in the Joint Arrangements Act: a new form of collaboration?] (2013) De Gemeentestem, pp. 674–681. 8 R. Nehmelman, ‘De Staat achter de Dijken’, Inaugural Lecture Utrecht University, 20 March 2015; Raad voor het openbaar bestuur, ‘Democratische legitimiteit van samenwerkingsverbanden’ (The Hague, 19 January 2015). 9 Respectively and most recently, Staatsblad (2018), 1, and Staatsblad (2016), 242. 10 Both the Proportionality Guide and the Procurement Regulations Works 2016 were last amended on 1 July 2020. 11 Section 2.1.1.1A of the Awet 2012 contains articles 2.11, 2.11a, and 2.11b, which are implementations of, respectively, Articles 37, 38, and 39 Directive 2014/24/ EU. The definitions of centralised purchasing body, centralised purchasing activities and ancillary purchasing activities are implemented in article 1.1 Awet 2012, and do not differ substantively from Directive 2014/24/EU. 12 MvT, Kamerstukken II (2015/16), 34329, 3, p. 29.

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law starting with Teckal, often provided the structural basis for collaboration between contracting authorities and a CPB. Consequently, in this contribution, we consider ‘centralised’ as a concept that can refer to regional centralisation between public authorities as well as centralisation on the national level.

2

STRUCTURE AND USE OF CPBS AND OTHER FORMS OF JOINT PROCUREMENT

How Are CPBs Structured? As detailed by Schotanus and Telgen, the Dutch landscape of CPBs can be best described by means of a highway matrix, ranging from (combinations of) non-intense cooperative forms, such as the ‘hitchhike model’ in which contracting authorities sometimes tag along on each other’s procurements, or more intense cooperative forms, such as ‘carpooling’ or ‘F1 teams models’ in which procurement responsibilities are transferred entirely to a separate legal entity and processes are standardised.13 More recently, PIANOo, the Dutch Expertise Centre for Public Procurement, counted 51 municipal purchasing collaborations. Their purchasing activities range from student transport services, cleaning and security services, to office supplies and furniture. This methodology distinguishes between five types of ‘structural collaborative local procurement’.14 In this light, five Shared Services Centres, 15 administrative mergers,15 and one example of outsourcing with another municipality exist on the municipal level. Municipal purchasing bureaus conduct the most extensive type of collaboration, which can also be referred to as structural collaborative procurement. Examples of these latter bureaus are BIZOB, a collaboration that works for over 35 municipalities and other authorities in the province of Noord-Brabant, and Stichting Regionaal Inkoopbureau IJmond en Kennemerland, a collaboration working for 17 municipalities that are located in the provinces of Noord-Holland, Zuid-Holland and Utrecht. 13 F. Schotanus and J. Telgen, ‘Implications of a classification of forms of cooperative purchasing’, in J.Y.F. Wynstra, K. Dittrich and F.P.H. Jaspers (eds), Dealing with Dualities. Proceedings (CD-ROM) of the 21st IMP Conference, 1–3 September 2005, Rotterdam, The Netherlands (Rotterdam School of Management, 2005); F. Schotanus, ‘Horizontal cooperative purchasing’, dissertation, 2007. 14 This concerns ‘a situation where a number of organisations collaborate on a particular function, such as procurement, by using one organisation to provide that service for them’. M. Stuijts, ‘Structural local authority collaboration in the Netherlands’ (dissertation, August 2019), pp. 1–7. 15 Administrative mergers concern administrative collaborations in which the civil servants and/or support services are shared, whereas councils of aldermen, policy and municipal boards remain separate.

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Most of the collaborations included in this overview concern collaborations between municipalities, but some types of collaboration also include other partners, such as tax collaborations between public authorities, shared service centres, regional security authorities,16 or public collaborations based on public law. Structural collaborative procurement has increased significantly between 2011 and 2015. Local authorities that were responsible for approximately 38 per cent of all Dutch citizens were involved in structural collaborative public procurement. In other words, 64 per cent of local authorities in the Netherlands were involved in some type of structural collaborative local procurement for their procurement activities.17 From a legal perspective, the Explanatory Memorandum of the Awet 2012 describes the possibility of using article 2.11 of the Awet 2012 as a wholesaler or as an intermediary. The Dutch legislature explicates the most substantial difference between wholesaler and intermediary as being that the former concerns a scenario in which procurement is made without prior involvement of the beneficiary contracting authorities, whereas the latter concerns a situation in which these beneficiaries request the intermediary to procure on their behalf.18 In addition, it is noted that a contracting authority can, at all times, join the existing activities of an intermediary. Contrarily, this is not possible during a public procurement procedure that has already started on behalf of other contracting authorities. The legislature notes that the intermediary option requires the users to instruct the CPB, and that the user is free to depict the level of detail in relation to these instructions.19 Furthermore, the Explanatory Note states that the wholesaler option is mostly useful for large quantities of commodities, such as office supplies.20 Seemingly, this memorandum also appears to discourage the wholesaler option by adding that wholesalers run a stock risk, because purchases are made prior to the non-obligatory procurements from contracting authorities, thereby risking value fluctuations. In addition, the legislature appears to imply that obligatory procurement from wholesalers would overcome or at least diminish this risk. Furthermore, it is noted that, if the wholesaler option is indeed pursued at the central level of government, financial laws and regulations, including the Comptabiliteitswet 2001 (Governments Accounts Act 2001), must be taken into account.21 Finally, the autonomy of the wholesaler or intermediary is explicitly mentioned. As 16 A public authority in which local government joins forces with police, fire service and medical service, including ambulance services. 17 Stuijts 2019, supra note 14, p. 5. 18 MvT, Kamerstukken II (2015/16), 34329, 3, p. 30. 19 MvT, Kamerstukken II (2015/16), 34329, 3, p. 30. 20 MvT, Kamerstukken II (2015/16), 34329, 3, p. 30. 21 Staatsblad (2017), 253.

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a consequence, it is noted that wholesalers are free to decide which contracting authorities it will work for and which ones it will not.22 In practice, it appears that the wholesaler option is not used in the Netherlands or that it is currently only being explored by contracting authorities. The legal structure of Dutch CPBs differs greatly. Some municipal purchasing bureaus are stichtingen (foundations), gemeenschappelijke regelingen (legal entity based on public law), or where one local authority assumes a leading role in procurement activities, whereas, for instance, knowledge-sharing and joint (one-off) procurement arrangements are often based on contractual agreements. Furthermore, CPBs are not limited in their operations by law, but supply of goods and services does seem to be more common in practice. The geographical jurisdiction of a CPB is generally linked to the geographical borders of the cooperating parties, whether that be regional for provinces or water boards, or local for municipalities. Intensive regional (political) connection between the members also appears to support the degree of success of the collaboration arrangement.23 Institutionalised collaborations, for which a separate legal entity is established, will most likely qualify as bodies governed by public law, whereas inter-ministerial collaboration arguably falls under the remit of the State as a single legal personality, but this is contested in literature and before the Committee of Public Procurement Experts, as detailed below.24 There are no known examples of private shareholdings in these entities even though national law does not explicitly forbid it. Who Are the Users of the CPBs? The Dutch contracting authorities are free to pursue collaboration for their procurement activities and are under no general legal duty to justify their purchasing decisions. Accordingly, there are no mandatory legal requirements, meaning that a ‘free adherence model’ appears mostly in line with the Dutch context. A contractual agreement between separate contracting authorities is deemed to be a public contract under the Awet 2012 if the relevant criteria are met. According to article 1.1 of the Awet 2012, it must relate to a bilateral agreement for works, services or supplies between one or more economic operators and one or more contracting authorities based on a relationship for pecuniary interest. Furthermore, it is assumed, based on the jurisprudence of the CJEU, that it must be based on an agreement of wills, it concerns a par MvT, Kamerstukken II (2015/16), 34329, 3, p. 30. Stuijts 2019, supra note 14. 24 See following section, ‘Who Are the Users of the CPBs?’, for a brief discussion about collaboration within the State and the question of whether the State is a divisible entity or not under EU public procurement law. 22 23

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ticular relationship, there is a duty to perform the contract and the contract is enforceable.25 In the Dutch context, much debate has taken place before the District Court and the Hague Court of Appeal, the Committee of Procurement Experts) and in the Dutch Parliament regarding whether contractual agreements between separate ministries are also under a duty to tender, should they pursue collaboration, including procurement activities, amongst themselves. In summary, the District Court of the Hague has argued that the legal personality under private law of the State depicts the indivisible nature of the State, meaning that collaboration can occur freely.26 However, others have pointed towards a divisible State based on a grammatical reading of the Directive, which amongst other things refers to ‘centralised government authorities’ in Annex I,27 or a functional interpretation of State based on the CJEU cases Beentjes and Teckal.28 The need to ask preliminary questions of the CJEU does appear to be a point of consensus.29 On 30 January 2020, the appeal before the Hague Court of Appeal has confirmed the ruling of the District Court of the Hague by concluding – and explicitly dismissing the suggested preliminary

25 See, amongst others, Case C-451/08, Helmut Müller, [25 March 2010] CJEUECLI:​EU:​C:​2010:​168 and Case C-410/14, Dr Falk Pharma, [2 June 2016] ECLI:​ EU:​C:​2016:​399. 26 S. Hötte, ‘The State as Contracting Authority – One Whole or a Cluster of Smaller Contracting Authorities?’ (2019) Public Procurement Law Review, 2, pp. 27–41. 27 W.A. Janssen, ‘Zelfvoorziening door de Rijksschoonmaakorganisatie: tijd voor prejudiciële vragen?’ (2018) Jurisprudentie Aanbestedingsrecht, pp. 274–281; A. Fischer-Braams, ‘Commentaar op de annotatie van mr. J.F. van Nouhuys bij advies 198 van de Commissie van Aanbestedingsexperts (met naschrift van Nouhuys)’, Tijdschrift Aanbestedingsrecht, 2015, pp. 169–172; E. Steyger, ‘Overheid, bestuursorgaan en aanbestedende dienst onder de nieuwe aanbestedingsrichtlijnen’, Tijdschrift Aanbestedingsrecht, 2017, 5, pp. 138–146. Also see the two advisory opinions by the Dutch Committee for Public Procurement Experts (CvAE). CvAE, 20 March 2015, Advice nr. 198: www​.co​mmissievan​aanbestedi​ngsexperts​.nl/​advies/​advies​-198​-hier​ -sprake​-van​-een​-situatie​-van​-inbesteden​-vanonderhands​-gunnen​-van​-een, accessed 10 February 2021; CvAE, 17 December 2015, Advice nr. 255, available at www​ .co​mmissievan​aanbestedi​ngsexperts​.nl/​advies/​advies​-255​-aa​nbesteding​splichtige​ -opd​rachteninb​estedingen, accessed 10 February 2021. 28 E.R. Manunza and W.A. Janssen, ‘De Inbesteding van Scanwerkzaamheden’ [In-house procurement of scanning activities], PPRC Research Report 2015, available at www​.pianoo​.nl/​sites/​default/​files/​documents/​documents/​pprc​-inbestedingvan​ -scanwerkzaamheden​-september2015​.pdf; W.A. Janssen, EU Public Procurement Law & Self-Organisation: A Nexus of Tensions & Reconciliations (Eleven Publishers 2018), pp. 123–136. 29 Steyger 2017, supra note 27; Janssen 2018, supra note 28, p. 136; Hötte 2019, supra note 26, p. 41.

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questions on this topic – that activities within the legal personality of the State are exempted from the public procurement rules.30 How Are CPBs Financed? Generally speaking, the members of a CPB pay for the services provided based on the contractual agreement amongst themselves. This is merely based on hours or days actually worked; the CPB covers their costs and no profit is made. No models in which suppliers pay fees are currently known in the Dutch context. The amount payable can relate to the number of inhabitants for which a public authority is responsible, which means that larger municipalities would pay more than smaller municipalities. Costs can also be divided based on the number of services, works or goods that are procured on behalf of a member or multiple members, for which the user pays its share. Non-members can use these services to obtain regular commodities by ‘hitchhiking’, as detailed above.31 Should their involvement become more structural, it is common practice that a declaration of intent is signed, after which full membership could be the next step. Other Roles of CPBs The chosen cooperative arrangement outlines in turn the services that are offered by a CPB. Whereas administrative fusions are often combinations of former individual municipal back-offices that have been merged for the sake of efficiency, municipal purchasing bureaus are fully independent organisations that offer procurement advice, training and standard procurement models. At the level of municipalities, professional procurement services are often offered as an additional service. These services relate to provision of resources and procurement capabilities, but also legal advice, standardisation of procurement services, harmonisation of procurement systems, hiring personnel with a specific technical expertise, and pooling of knowledge. This also seemingly makes these entities less dependent on external procurement experts. In addition, these entities can also be involved in shaping the public procurement policies of their members, including their focus on public policy objectives, such as sustainability or local employment.

30 The Hague Court of Appeal, 12 May 2020, ECLI:​NL:​GHDHA:​2020:​898, paras 5.3–5.11. 31 Schotanus and Telgen, 2007, supra note 13.

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Cross-Border Procurement Cross-border procurement is still in its infancy in the Netherlands. It is regulated by article 2.11b Awet 2012. The Explanatory Memorandum of the Awet 2012 provides no further guidance.32 There are very limited examples of cross-border procurements, but worth a mention are a collaboration between the teaching hospital in Nijmegen, Radboud UMC, which worked with a German CPB, EK Unico, on some procurements, and the Dutch Central Bank ran a public procurement procedure for a framework agreement, for software portfolio management and reseller services, together with other central banks in the EU.33 Efficiency and Policy Issues CPBs have no different a role in the fight against corruption or strategic public procurement than individual contracting authorities. Public procurement procedures are seen as a means to prevent corruption or conflicts of interest and as a lever to achieve public policy goals, which was recently emphasised again by the Manifest Maatschappelijk Verantwoord Inkopen (manifest for socially responsible public procurement) and the new purchasing strategy of the central government, Inkopen met Impact (Procuring with Impact).34 The contractual agreements between CPBs and third parties are not openly accessible, but the public procurement procedures must be in line with the Awet 2012. In terms of governance, it is common practice to jointly conduct and periodically implement amendments to the annual joint procurement plan. In addition, annual output reports for the management, aldermen and councillors of the municipality appear to contribute to the reputation of the CPB and to the perception of the municipalities and their council in relation to the CPB. It appears that the chosen cooperative arrangement has an effect on the performance of the municipality. In the Dutch context, synchronisation of local procurement objectives, including social policies, access for SMEs, green procurement, sustainability and the size of demand, have been identified as factors for effectiveness.35

MvT, Kamerstukken II 2015/16, 34329, 3, p. 31. Tenders Electronic Daily (TED), Contract notice 2016/S 011-014881, Netherlands–Amsterdam: Software package and information systems. 34 Kamerbrief, ‘Voortgangsbrief maatschappelijk verantwoord inkopen’ [Letter to Parliament on socially responsible public procurement], 4 July 2019. 35 Stuijts 2019, supra note 14, p. 273 onwards; G. Murray et al., ‘Procurement as a shared service in English local government’ (2008) International Journal of Public Sector Management, pp. 540–555; J. Meehan et al., ‘Collaborative public procurement: 32 33

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PROCUREMENT TECHNIQUES

The Types of Techniques and Agreements The current CPBs use all the public procurement techniques that an individual contracting authority would also be able to use in light of the Awet 2012. This is seemingly allowed by their intermediary role. It means that cooperating contracting authorities sign their own public contracts following a public procurement procedure that is run by a CPB and are, subsequently, often also responsible for their required contract management. Dynamische Aankoopsystemen (dynamic purchasing systems, DPSs) are regulated by article 2.144–2.149 of the Awet 2012. Whereas the Directive contains no definition of DPSs, the Awet 2012 refers to ‘an electronic process for common procurements’. It was welcomed in practice as a method to increase efficiency for contracting authorities and economic operators.36 The reference to gangbare aankopen (common procurements) has led to a debate in practice. The question was raised whether these electronic systems can be used in the case of inhuur van externen (hiring of third-party personnel), such as procurement officers or policymakers. The legal question involved is whether contracting authorities can use interviews to select the relevant candidate via a DPS. It has been argued that this does not sit well with the requirement that DPS purchases must be of frequently procured items, or as the Directive’s preamble states ‘commonly used or off-the-shelf products’, which appears to imply that interviews would not be required if such hiring processes were indeed common and off-the-shelf. PIANOo states that the use of interviews does not comply with the law due to above reasons. Accordingly, it refers to the alternative of a framework agreement in which an interview round would be possible in a mini-competition.37 In practice, this procurement method is also applied to secure the availability of health-care services and to lower the entry barriers for SMEs, and is explored in light of smaller construction works below the EU thresholds.

institutional explanations of legitimised resistance’ (2016) Journal of Purchasing and Supply Management, 22(3), pp. 160–170. 36 The full definition in Dutch reads: Een elektronisch proces voor het doen van gangbare aankopen van werken, leveringen of diensten, waarvan de kenmerken wegens de algemene beschikbaarheid op de markt voldoen aan de behoeften van de aanbestedende dienst of het speciale-sectorbedrijf, dat is beperkt in de tijd en gedurende de gehele looptijd openstaat voor ondernemers die aan de eisen voor toelating tot het systeem voldoen. (Article 1.1 Awet 2012) 37 PIANOo, Handreiking Dynamisch Aankoopsysteem, May 2017, pp. 4–5.

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Types of Framework Agreements CPBs use framework agreements for a variety of procurements, amongst many other things, software licences, fire extinguishers, aerial photos, regional demand-dependent elder transport, public debt assistance services, office supplies, office furniture built from bio-based and recycled materials, multicopy machines, health-care services and tools, hiring of personnel, printing paper, and the transport of students. Framework agreements are regulated by articles 2.44–2.47 and 2.139–2.143 of the Awet 2012. The same public procurement procedures are available for these agreements as for public contracts, and framework agreements can be initiated by either one or multiple economic operators.38 Following a legally compliant public procurement procedure, agreements are distributed according to the criteria of the framework agreement, whether that be through direct awards or a mini-competition in the case of multiple contracted parties.39 The Proportionality Guide further details these rules, and requires that these criteria are published and that sufficient time is allowed for parties in the framework agreement to submit their bids in a mini-competition.40 As such, it is often supplemented with a forecast of the quantities of the purchase. A contracting authority cannot join a framework agreement after the contractual agreement has been signed.41 Contracts within a framework agreement can only be granted to third parties that were originally selected to be part of this agreement.42 The length of a framework agreement for public contracts is set at four years, unless duly motivated otherwise, whereas the time limit for framework agreements awarded within the remit of the Utilities Directive is set at eight years.43 The standard of ‘duly motivated’ is influenced by the required length of an extension. A longer extension will merit a more explicit motivation.44 Furthermore, according to the Explanatory Note of the Awet 2012, a contracting authority is not allowed to award public contracts outside the framework agreement if their substance falls within the scope of the framework agreement even when there is not an explicit contractual obligation to act accordingly. The Dutch legislature deemed these awards to be a violation of pre-contractual principles of good faith, the principles

Article 2.44 Awet 2012. Article 2.45–2.46 Awet 2012. 40 Proportionality Guide 2016, voorschrift 3.3B and paragraphs 3.3.3 and 3.6. 41 A.C.M. Fischer-Braams, ‘Raamovereenkomsten en overheidsopdrachten’ (2004) Tijdschrift Aanbestedingsrecht, p. 65. Preamble, Recital 60, Directive 2014/24/EU. 42 MvT, Kamerstukken II 2015/16 34329, 3, p. 90. 43 Article 2.140(3) Awet 2012. 44 MvT, Kamerstukken II 2009/10, 32440, 3, p. 96. 38 39

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of good administration and the principles of reasonableness and fairness.45 Uncertainty exists based on the CJEU’s Antitrust and Coopservice case on what happens to the contract after a four-year framework agreement is not extended with a due motivation,46 but it is generally accepted in practice that framework agreements must include an absolute volume indication.47 There are no specific rules on evaluation of these agreements or mandatory framework agreements. How Users Use the Agreements Framework agreements are used in a variety of ways, including call-offs, direct purchasing and mini-competitions. At this point in time, there are no specific Dutch cases before the courts that shed further light on their interaction with the public procurement rules. Changes in Framework Agreements Article 2.140 of Awet 2012 explicitly states that modifications to the criteria of framework agreements are in principle not allowed, unless an exemption can be made based on article 2.5 of Awet 2012. Article 2.163a–2.163g of Awet 2012 stipulates when a contract can be changed without the need to initiate a new public procurement procedure, which is a codification of Article 72 of the Directive. Requirement Relating to Estimates and the Consequences of Wrongful Estimates Article 2.15(3) of Awet 2012 obliges contracting authorities to calculate the value of a framework agreement based on the estimated value of all contracts that are intended to be awarded during the existence of such an agreement. There is currently no Dutch case law that reflects on the decision of the CJEU in the Autorità case, but the general tendency of the debate seems to be that this ruling does not lead to substantial issues in practice.

Kamerstukken II 2009/10, 32440, 3, p. 67. Article 2.140(3) Awet 2012. 47 C-216/17 Autorità Garante della Concorrenza e del Mercato – Antitrust and Coopservice (19 December 2018), ECLI:​EU:​C:​2018:​1034. 45 46

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COMPETITION AND SME ASPECTS

Concerns about Competition Law The Autoriteit Consument & Markt (ACM, Authority for Consumers & Markets) is tasked with the enforcement of the Mededingingswet (Dutch Competition Act), which has predominantly focused on tackling bid rigging in the public procurement context. Joint bidding is limited by the policy rules of the ACM dating from 2013.48 These rules provide clarity about when a ‘combination agreement’ violates article 6 of the Dutch Competition Act. The policy rules point to the possibility of exempting a violation of these rules under section 3, which relates to Article 101(3) TFEU, but are interesting in that they note that competitive problems are unlikely to exist if (1) the collaborating entities are not competitors, (2) they are competitors but unable to perform the contract independently, (3) the agreement does not limit competition and (4) if they are part of the same holding. Noteworthy, however, is the discussion on joint procurement activities of hospitals, health insurers or a combination of those entities for medicine that is used in medical specialist care. From a public procurement perspective, the Dutch courts have established in a line of cases that teaching hospitals are indeed bodies governed by public law, whereas non-teaching hospitals do not fall under the remit of the Awet 2012.49 In addition, health insurers are also currently not seen as contracting authorities by the courts.50 In 2016, the ACM published guidance on joint purchasing of medicines by the aforementioned groups of entities, for which no alternatives (monopoly) or limited alternatives (oligopoly) exist, through the document ‘Leidraad gezamenlijke inkoop geneesmiddelen voor de medisch-specialistische zorg’ (guideline collaborative procurement of medicines for medical specialist care).51 The document considered collaboration on procurement of medicine to be in ‘safe zones’, presumably in relation to articles 6 and 24 of the Dutch Competition Act and their EU counterparts, Articles 101 and 102 TFEU, given the reference to concurrentieregels (competition rules), if three criteria were fulfilled. Firstly, harmonisation of costs only occurs within a limited part of the arrangement. Secondly, access to a procurement arrangement is possible based on objective and non-discriminatory criteria published beforehand. Thirdly, Beleidsregels combinatieovereenkomsten 2013, Staatsblad (2013), 9223. Hoge Raad (Supreme Court), 1 June 2007, ECLI:​NL:​HR:​2007:​AZ9872. 50 Gerechtshof Den Bosch (Court of Appeal), 12 May 2015, ECLI:​NL:​GHSHE:​ 2015:​1697. 51 Autoriteit Consument & Markt, Leidraad gezamenlijke inkoop geneesmiddelen voor de medischspecialistische zorg (June 2016) pp. 2–3. 48 49

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the procurement arrangement does not impose unnecessary de jure or de facto limitations on its participants concerning the length of a contract, obligatory purchasing commitments, or departure from the arrangement. In 2019, this document was evaluated and was perceived as a helpful clarification of the legal conditions for negotiations with pharmaceuticals, but that it did not constitute a panacea for these negotiations.52 It was deemed an important stimulus for hospitals and health insurers to join forces in oligopolistic markets, but that this also caused complexity and decreased effectiveness as a consequence. Finally, health insurers in particular were able to gain a stronger position in monopolistic markets, which engendered lower costs.53 Are CPBs Solely for the Public Sector or Also for Private Users? CPBs are not limited by the Awet 2012 or other laws in relation to who their users are. Nonetheless, CPBs do not operate on behalf of economic operators. However, sociale werkplaatsen (sheltered workshops) have on occasion used the services of CPBs. These workshops provided, for instance, maintenance services for public parks in return. Needless to say, should cooperating authorities rely on the institutionalised exemption from the public procurement rules, vested in article 2.24a–2.24b Awet 2012, their activities on the market should be limited to less than 20 per cent of their turnover. Participation of SMEs Access for SMEs in public procurement procedures is an important topic in the Netherlands. This is exemplified by various policies geared towards ensuring access on the level of contracting authorities themselves, but also through the Awet 2012, which contains specific rules that go beyond what is prescribed by Directive 2014/24/EU. The Explanatory Memorandum of the Awet 2012 refers to the general requirement for CPBs to comply with the general public procurement principles when it comes to clustering of contracts, but makes no specific comment on the aggregate volume of contracts and the potential risks relating to access for SMEs.54 However, the Dutch Parliament has strongly focused on ensuring access for SMEs in a general sense. It is a topic that dominated the last two reforms of the Awet 2012, and appears to be one of

52 Cozijnsen et al., ‘Duiding helpt, maar is geen panacee Evaluatie ACM leidraad gezamenlijke inkoop geneesmiddelen’ (2019) SiRM, October. 53 Ibid., pp. 11–20. 54 MvT, Kamerstukken II 2015/16, 34329, 3, p. 29.

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the main issues why the first Act failed to get past the Eerste Kamer (Dutch Senate) in 2008. Two important legislative measures that were introduced during the adoption of the Awet 2012 are the so-called clusterverbod (cluster ban) and the splitsinggebod (splitting obligation). Article 1.5 Awet 2012 obliges contracting authorities to prevent onnodig clusteren (unnecessary clustering) by taking into account the following three criteria, namely (1) the composition of the relevant market and the influence of clustering on the access for SMEs, (2) the organisational consequences and risks due to the clustering of contracts for the contracting authority and the economic operator, and (3) the level of cohesion between the respective contracts. The legally binding Gids Proportionaliteit (Proportionality Guide) adds to these criteria that clustering cannot lead to an appreciable limitation of competition on the market and that a balance must be made between the advantages and disadvantages of clustering, including the calculation of the total cost of ownership and the complexity of a procurement. If clustering of contracts is preferred, the same article includes a subsequent splitsingsgebod (splitting obligation) that obliges contracting authorities to divide the clustered contracts into lots. Both decisions, to either cluster a contract or to not split a clustered contract into lots, must be duly motivated and published accordingly in the announcement on the Dutch electronic publication system called TenderNed. In practice, CPBs and ‘normal’ contracting authorities frequently use market consultations to determine the scope of a procurement and the division into lots. At this point in time, the legal added value of this provision can, however, be questioned and is up for debate. It has been referred to as a ‘paper tiger’, implying that this provision has ‘no teeth’.55 Generally, the case law in the Dutch courts until now has emphasised the discretionary power of contracting authorities to structure their own public procurement procedures and in practice the motivations appear to provide limited insights into the reasoning of the involved contracting authority.56

55 Werkgroep Clusteren, ‘Advisory letter to the State Secretary on clustering of contract’, 26 June 2018, and the respective letter to Parliament. See: www​ .rijksoverheid​.nl/​documenten/​kamerstukken/​2018/​07/​05/​kamerbrief​-over​-actieagenda​ -beter​-aanbesteden, accessed 10 February 2020. 56 See: Advisory opinions by the CvAE nrs. 43, 53, 125, 159, 182 and 345, or rulings by the Dutch courts (ECLI:​NL:​GHSHE:​2015:​4943, ECLI:​NL:​GHARL:​2015:​ 122 or ECLI:​NL:​RBMNE:​2015:​4685).

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LIABILITY BETWEEN CPBS AND THEIR USERS

Contract Management It depends on the type of collaboration to know whether contract management is part of the agreement between contracting authorities and a CPB. Generally speaking, contract management remains within the responsibility of the users of the CPBs. A notable exception is BIZOB’s contract management of health-care contracts relating to the health-care services that were decentralised in 2015, the contract management being executed by SIW (Stichting Inkoopbureau West-Brabant), Drechtsteden, and cities that fulfil a central regional function for municipalities in terms of procurement, such as Breda and Maastricht. There are no prescribed e‑procurement tools for contract management, but the announcements of national and European procurement procedures do need to be placed on TenderNed (www​.tenderned​.nl). Rules Relating to Enforcement and Remedies The Awet 2012 contains rules on remedies for contracts that fall within its remit, including public contracts and framework agreements. There are no specific rules or regulations for CPBs in terms of remedies. This means that the general rules on legal protection in the public procurement context apply. Claims can be submitted to the civil courts, which predominantly means that claims are filed in interim procedures in which it is not possible to have a contract annulled or to claim damages. In general, the Burgerlijk Wetboek (Civil Procedure Code) applies to these proceedings before the Court, in which aggrieved tenderers must prove that a wrongful act has been committed. Damages in bodemprocedures (regular court proceedings) are rarely awarded, given the apparent need to prove that a plaintiff would have won the contract if the public procurement rules had not been violated. The Dutch courts have not provided clarity on the legal consequences of when the absolute volume of a framework agreement has been reached. Consequences if CPB Entered into the Agreement Unlawfully Article 2.11(3) of Awet 2012 states that a contracting authority has fulfilled its obligations under the Awet 2012 if it uses a CPB, whether that be an intermediary or a wholesaler, that has complied with these rules in its own procurement activities. Consequently, this appears to imply that a contracting authority has not complied with the Awet 2012 if a CPB has violated these rules. Relevant Dutch case law on this issue is, however, absent.

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COVID-19 AND JOINT PROCUREMENT

At present, there is no conclusive data available that can provide an understanding of the responses of contracting authorities to the COVID-19 crisis, or their use of the relevant legal possibilities that provided discretion to deal with this crisis within Awet 2012 and Directive 2014/24/EU. It is clear though that the Awet 2012 contains all of the possibilities that are granted by the latter Directive to respond to this crisis, including the urgency procedure (art. 2.23), shortened procedures (art. 2.74), derogation of mandatory exclusion (art. 2.88),57 and the modification of contracts (art. 2.163e). Additionally, the Dutch legislature has also opted to implement the possibility for the courts to decide that a contract is not ineffective, despite a violation of public procurement law, in case of overriding reasons in the public interest (art. 4.18). Similar to the EU Commission’s Communication of 1 April 2020, PIANOo also published a notice confirming these options.58 It has been argued that these legal possibilities were sufficient to deal with the crisis.59 In practice, PIANOo called on contracting authorities to extend their procedural deadlines in March 2020.60 It seemed to be common practice for Dutch contracting authorities to extend deadlines due to the COVID-19 crisis, which is shown by the data derived from TenderNed, the Dutch announcement platform for tenders.61 Extensions were, for instance, granted due to limited access to the courts in the first couple of months, because the courts were only dealing with urgent matters online, or due to the fact that employees needed to work from home. Most of the purchasing of emergency care was coordinated by the national government. The armed forces have provided emergency assistance in hospitals and for the transport of COVID-19 patients. In addition, Gemeentelijke Gezondheidsdiensten, GGDs (regional public health services) used their CPBs to procure medical and operational instruments for the COVID-19 testing sites (masks and protective clothing, back-office services and IT equipment) and bed capacity in hotels in case of hospital overflow, 57 The explanatory Memorandum explicitly refers to pandemics. Parl. Docs. II 2009/10, 32 440, nr. 3, p. 81. 58 PIANOo, ‘Gevolgen corona voor lopende aanbestedingen’ (16 March 2020), www​.pianoo​.nl/​nl/​actueel/​nieuws/​gevolgen​-corona​-voorlopende​-aanbestedingen, accessed 6 January 2021. 59 M. Pinto and W.A. Janssen, ‘Redactionele bijdrage: COVID-19 en aanbesteden: breekt nood wet?’ (2020) Actualiteiten Bouwrecht in Tijdschrift voor Bouwrecht, 30 March. 60 PIANOo, ‘Gevolgen corona voor lopende aanbestedingen’ (16 March 2020), www​.pianoo​.nl/​nl/​actueel/​nieuws/​gevolgen​-corona​-voorlopende​-aanbestedingen, accessed 6 January 2021. 61 Ibid.

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all of which were also procured for the regional hospitals. These GGDs used procurement resources and the capacity of the structural collaborative procurement organisations through the framework agreements. Finally, the Dutch central government joined the Joint Agreement to procure medical countermeasures in 2014. In addition, and in response to the COVID-19 crisis, the Netherlands initially also joined forces with Germany, France and Italy to purchase vaccines, as announced on 3 June 2020. However, it ended up taking part in the EU Commission’s efforts on a broader EU level.

15. Central purchasing bodies in Italy: reluctance and challenges Gabriella M. Racca 1 INTRODUCTION As the 2014 Procurement Directive recalls, a trend is emerging in the EU as well as in Italy towards cooperation in public procurement and aggregation of public demand.1 Joint procurement, if correctly addressed, makes it possible to obtain economies of scale, lower prices and better quality while reducing transaction costs and improving the professionalism of procurement officials.2 Professionally “adequate” organisations, capable of pursuing the public interests with efficiency and integrity, are required by art. 118(1) of the Italian Constitution.3 Conversely, a lack of professionalism and skills causes waste, inefficien-

1 G. M. Racca and C. R. Yukins (eds), Joint Public Procurement and Innovation: Lessons Across Borders, in Droit Administratif / Administrative Law Collection (Directed by J. B. Auby), Bruxelles, Bruylant, 2019, available at https://​publicproc​ urementint​ernational​.com/​joint​-public​-procurement​-lessons​-across​-borders/​, accessed 17 March 2021. The relevance of joint procurement was already pointed out in 2010 in G. M. Racca, “Aggregate models of public procurements and secondary considerations”, in R. Caranta and M. Trybus (eds), The Law of Green and Social Procurement in Europe, Djøf Publishing, Copenhagen, 2010, pp. 165–178. 2 European Commission, Making Public Procurement work in and for Europe, COM(2017) 572 final, October 2017 and Europe 2020 A strategy for smart, sustainable and inclusive growth, COM(2010) 2020 final, March 2010. 3 G. M. Racca and S. Ponzio, “La scelta del contraente come funzione pubblica: i modelli organizzativi per l’aggregazione dei contratti pubblici”, in Diritto Amministrativo, XXVII, 1, 2019, p. 36; R. Cavallo Perin and G. M. Racca, “Administrative cooperation in the public contracts and service sectors for the progress of European integration”, in F. Merloni and A. Pioggia (eds), European Democratic Institutions and Administrations, Giappichelli Editore, Turin, 2018, p. 266.

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cies and risks in terms of integrity and inefficiency in public procurement activities.4 Only efficient organisational models and qualified structures can pursue adequate market analyses and develop strategies for better procurement coordination in specific sectors. Hence the need for increased professionalisation and qualification of public demand, which imply significant organisational changes and the overcoming of the traditional model whereby each public entity awards all its own procurements. Economic factors (e.g., the impact of the economic crisis) strongly favoured procurement aggregation because of its related savings, although in Italy it resulted in a set of contradictory regulatory frameworks unable to effectively reorganise public procurement demand. Joint procurement is considered risky due to excessive concentration of purchasing power and to the limits to participation of SMEs.5 The political environment, especially at the local level, is often against aggregation, and very recently a turn back from aggregation has been approved.6 Public officials, on the contrary, often understand both their lack of skills and the advantages of aggregation in avoiding the risks and costs of individual awarding procedures.

2

STRUCTURE AND USE OF CPBS AND OTHER FORMS OF JOINT PROCUREMENT

Structure of CPBs In Italy, the public procurement system includes 36,000 contracting entities, 32 qualified CPBs (Soggetti aggregatori), some at national level and others at regional level, approximately two for each of the 20 Italian regions, and up to 600 minor aggregations at local level.7 At the national level, the most relevant CPB is Consip S.p.A., set up in 1997, which provides national agreements (Convenzioni), originally within the IT 4 G. M. Racca and C. Yukins (eds), Integrity and Efficiency in Sustainable Public Contracts, Bruylant, Brussels, 2014. 5 M. Immordino and A. Zito, “Aggregazione e centralizzazione della domanda pubblica di beni: stato dell’arte e proposte di migliorie al Sistema vigente”, Nuove autonomie, XXVII, 2, 2018, p. 371. 6 Art. 1(1) of Law of 14 June 2019, no. 55 suspended the requirement for municipalities to purchase in an aggregate way which was previously in force under art. 37, para. 4 of the Italian Public Contract Code (“IPCC”). Recently, art. 8(7)(a) of Law of 11 September 2020, no. 120, extended the suspension until 31 December 2021. 7 European Commission, ProcurCompEU. Study on Professionalisation of Public Procurement in the EU and Selected Third Countries, Publications Office of the European Union, Luxembourg, 2020, p. 91.

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sector, and then extended to other sectors and new contractual models, partly mandatory for a number of public administration bodies.8 More recently, at the regional level, similar aggregation mechanisms have been introduced in order to control spending in strategic sectors, given the mandatory joint procurement provision. The regions intend, with their CPBs, to select suppliers, since most Italian expenditure takes place at sub-national level.9 With the 2014 “Spending Review” provisions, a National List of “qualified” CPBs (Soggetti aggregatori) – including the Minister of Infrastructure and Transport, Consip S.p.A., Invitalia (i.e. the National Investment and Entrepreneurship Development Agency) and regional CPBs – was provided by the Italian National Anti-Corruption Authority (A.N.A.C.), with the possibility of also including other CPBs that fulfil requirements of quality, efficiency, professionalism and territorial stability.10 For the time being, this list is made up of 32 “qualified” CPBs.11 A list of product categories and relevant thresholds above which public authorities are bound to resort to Consip or another “qualified” CPB was approved in 2018.12 The public expenditure through Consip instruments reaches approximately €15 million per year.13 In three years (2017–2019) the amount purchased increased by 82% compared to the previous three years, with savings of around €3 billion. In the same period, the amount of purchases through the qualified CPBs (Soggetti aggregatori) was about €20 billion per

8 Consip S.p.A. has been introduced by the Decree of the Ministry of Treasury of 22 December 1997 and started to provide “Convenzioni” in 1999 (Law of 23 December 1999, no. 488). The list of the available Convenzioni (January 2021) can be found at: Consip, “Mappe Offering Versione Light” (21 January 2021) www​.consip​.it/​sites/​ consip​.it/​files/​Mappe​%20Offering​%20Versione​%20Light​%20per​%20portale​%2021​ _1​_2021​.pptx, accessed 17 March 2021. Framework Agreements – the newer contracts used by Consip – are provided by art. 54 of the IPCC. Recently, the use of framework agreements for public administration has been made mandatory by art. 1, para. 583 of Law Decree of 27 December 2019, no. 160 (the 2020 “Finance Law”). 9 European Commission, ProcurCompEU. Study on professionalisation of public procurement in the EU and selected third countries, supra note 7, p. 91. 10 Law Decree no. 66 of 2014. 11 See Italian Anti-Corruption Authority, Decision of 4 September 2019, no. 781. 12 Decrees of the Ministry of Economy of 24 December 2015 and of 11 July 2018. 13 Consip, “Bilancio 2019”, www​.consip​.it/​sites/​consip​.it/​files/​CONSIP​ _Bilancio2019​_WEB​_0​.pdf, accessed 17 March 2021.

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year.14 In 2020, the impact of the health emergency on regional purchasing will presumably determine a further increase.15 Other subregional entities, such as the Stazione Unica Appaltante – SUA, were originally introduced in 2010, based on the ad hoc set of laws on organised crime, to meet integrity requirements in this sector, which is notoriously vulnerable to corruption.16 Other minor CPBs, such as the Centrale Unica di Committenza – CUC among municipalities, were provided to impose mandatory joint procurement to overcome the lack of capacity inside the smaller municipalities and to optimise public expenditure.17 Nonetheless, the outcome of these regulations was just to provide a summary of different award procedures, without being able to counteract the lack of effective aggregation of public demand or improve the skills of the procurement officers.18 Such provision led to the creation of around 800 small CPBs, 459 unions of municipalities, 94 mountain communities and another 50 CPBs at sub-national level.19 Nonetheless an efficient and qualified model for joint procurement at local level has yet to be found and such a regulatory gap is driving business to seek alternative market solutions, which are not always clearly regulated.20

14 Consip, “Consip: principali risultati del triennio 2017–19” (April 2020), www​ .consip​.it/​sites/​consip​.it/​files/​Triennale​_v1​_update​_sito​.pdf, accessed 17 March 2021. 15 Other e-procurement platforms on the model of the above-mentioned digital tools have been introduced by private entities that are not qualified as CPBs and might only provide ancillary services, with a growing number of procedures awarded and increasing litigation related to Asmel s.c.a.r.l.: ASMECOMM, MEPAL and SDAPAL. See, most recently: T.A.R. Salerno, decision of 2 January 2021, no. 1. See: G. M. Racca, “La Corte di Giustizia e le scelte nazionali per una efficiente e trasparente aggregazione dei contratti pubblici: una sfida per l’evoluzione digitale della “funzione appalti” nazionale, regionale e locale”, Riv. It. Dir. Pub. Com., 2, 2021, pp. 185-215. 16 Art. 13 of Law of 13 August 2010, no. 136. See also the Decree of the President of the Council of Ministers of 30 June 2011. 17 Art. 37, para. 4(b) of the IPCC. 18 According to an analysis by the University of Rome Tor Vergata and the Promo P.A. Foundation, in 2018, 863 contracting authorities were reported active in Italy (19% of which are single municipalities), plus 459 unions of municipalities, 94 Comunità Montane, 51 Stazioni Uniche Appaltanti, and nine metropolitan cities qualified as Soggetti aggregatori by A.N.A.C. 19 Accademia per l’Autonomia, “La riorganizzazione degli acquisti pubblici a livello locale per il contenimento della spesa pubblica e l’efficienza degli appalti: quale modello organizzativo?”, Rome, 22 January 2018. 20 See the case law brought by the A.N.A.C. before the courts against tender procedures carried out by a private entity (Asmel s.c.a.r.l.). The courts have repeatedly stated that Asmel cannot act as a qualified CPB as it is not a body entitled to carry out public tender procedures (see recently, T.A.R. Salerno, no. 1/2021). See: G. M. Racca, “La Corte di Giustizia e le scelte nazionali per una efficiente e trasparente aggregazione dei

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Users of CPBs Originally, recourse to the national CPB (Consip S.p.A.) was mandatory for national and sub-national authorities but the number of available Convenzioni was scarce.21 This was followed, as just recalled, by the creation of different CPBs in each region (e.g., Intercent-ER for Emilia Romagna Region, Soresa S.p.A. for Campania Region, SCR for Piemonte Region), without any commitment for some years by contracting authorities to use their contracts, but later providing a list of goods and services that the contracting authorities are obliged to buy through them.22 Currently, under the national provisions, contracting authorities may choose to independently manage the procurement of goods and services below €40,000 and public works below €150,000. For purchases above those values, contracting authorities must turn to centralised purchasing schemes offered by CPBs.23 The 2020 Finance Law aimed at the inclusion of a greater number of public administration entities by introducing a provision whereby purchases must be made using Consip’s agreements.24 For purchases below the European threshold, contracting authorities must turn to the e‑marketplace “MePA”.25 Financing of CPBs In Italy, CPBs are normally public agencies and/or in-house companies owned totally by public authorities, or bodies governed by public law.26 The possible private legal standing of CPBs may affect the selection of procurers that will

contratti pubblici: una sfida per l’evoluzione digitale della “funzione appalti” nazionale, regionale e locale”, supra note 15, pp. 185-215. 21 Under art. 1, para. 449, of Law 296/2006 all the health-care authorities must purchase by means of special agreements stipulated by the regional CPBs or through framework agreements stipulated by Consip S.p.A, if regional agreements are not available. See: G. M. Racca, “Collaborative procurement and contract performance in the Italian healthcare sector: illustration of a common problem in European procurement”, Public Procurement Law Review, 3, 2010, pp. 119–133, recalling that the Italian provision of mandatory joint procurement was ineffective as Consip had very few agreements in place at the time. 22 Italian Anti-Corruption Authority, Decision of 4 September 2019, no. 781. 23 Art. 37ff. of Title II, Part II of the IPCC. 24 Art. 1, para. 583 of Law Decree of 27 December 2019, n. 160 (the 2020 “Finance Law”). 25 Art. 1, para. 130, Law of 30 December 2018, no. 145. 26 Art. 3, point (i) in conjunction with point (a) of the IPCC.

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not acquire the full status of public officials and the related duties of “discipline and honour”, as provided by art. 54 of the Italian Constitution.27 Italian CPBs are funded through the State budget or by percentages calculated on the contractual instruments provided and utilised by public administrations, or by fees charged for the performance of their services. The latter method was used for a while in some regions. For example, SCR, the CPB of the Piedmont Region, used to charge a transaction fee to any successful tenderers.28 At present, neither the Italian Anti-Corruption Authority nor the courts allow such a mechanism for remuneration.29 The provision of service fees for contributions that cover the management costs of a CPB should be distinguished from other charges for ancillary purchasing activities. The introduction of a percentage amount (transaction fees) charged to the successful tenderers might divert from the goal of reducing costs and increasing efficiency, which is the ultimate reason for aggregation.30 The eventual choice of a private provider of ancillary purchasing activities might be made through a specific award procedure. Cross-Border Procurement Experience with CPBs The Directive envisages forms of joint cross-border cooperation through the establishment of joint entities (European Groupings of Territorial Cooperation or EGTCs), operating under European or national laws. Joint procurement strategies may be implemented, relying on joint award procedures or centralised activities offered by a central purchasing body from a different Member State.31 27 R. Cavallo Perin, “L’etica pubblica come contenuto di un diritto degli amministrati alla correttezza dei funzionari”, in F. Merloni and R. Cavallo Perin (eds), Al servizio della nazione, Etica e statuto dei funzionari Pubblici, Franco Angeli Edizioni, Milan, 2009, pp. 147–161; R. Cavallo Perin, “Codice di comportamento e sistema disciplinare”, in A. Corpaci, R. Del Punta and M. P. Monaco (eds), La riforma del lavoro pubblico. Riflessioni a due anni dalla legge Madia, Franco Angeli Edizioni, Milan, 2018, pp. 143–153. 28 Law of 6 August 2007, no. 19 of the Piedmont Region, art. 4, para. II-bis and Decision of the Regional Council of Piedmont of 20 January 2014, no. 7-7024 with regard to SCR. 29 Italian Anti-Corruption Authority, decision of 25 February 2015, no. 3; Decision of 8 March 2017, no. 247. See also: T.A.R. Salerno, decision of 2 January 2021, no. 1. 30 Italian State Council, decisions of 3 November 2020, no. 6787 and of 12 November 2020, no. 6975. See: G.M. Racca and S. Ponzio, “La scelta del contraente come funzione pubblica: i modelli organizzativi per l’aggregazione dei contratti pubblici”, supra note 3, p. 53. 31 Art. 39(1) and (4), Directive 2014/24/EU. On this topic: G. M. Racca, “Joint procurement challenges in the future implementation of the new Directives”, in F.

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Surprisingly enough, national provisions allow for the use of centralised purchasing activities from other Member States, but limited to the wholesalers and not intermediary providers.32 The reason for such a restrictive Italian implementation of the Directive is not clear (maybe it was related to the fear of creating a wide opening to other States’ efficient procurement tools) and hopefully it will be overcome in the near future. Nevertheless, such restrictive implementation does not prevent agreements for joint cross-border cooperation. It just limits the options available when buying under framework agreements jointly awarded with other Member States. Consequently, a reciprocal basis principle could limit cross-border cooperation opportunities. As is well known, the Directive prevents a distorted use of cooperation and “the application of mandatory public law provisions”, provided that the “mandatory public law provisions” are “in conformity with Union law to which they are subject in their Member State”.33 The first part of the provision seems to warn against the intentional distorted use of the national rules that implement the Directive in the different Member States. The cooperation agreements might establish sets of rules applicable in each country on mandatory exclusion grounds, thus enhancing harmonisation and requiring stricter qualifications. Choosing the provisions of one Member State does not prevent the addition of further provisions (in view of the cooperation) governing selection and award, according to the legal system in which the contract will be executed (e.g. the anti-mafia certificate which is required only under Italian law). The rationale of the aforesaid European provision is to avoid an intentional misuse of cooperation to allow the participation of suppliers that otherwise could not participate according to the national provisions. Should all this ever be proved, it might be a case of intentionally avoiding mandatory public law provisions.34 The joint procurement cooperation strategies might define templates that include clauses

Lichère, R. Caranta and S. Treumer (eds), Modernising Public Procurement: The New Directive, Djøf Publishing, Copenhagen, 2014, pp. 225–254. 32 Art. 37, para. 13 in connection with art. 43 of the IPCC. See: G. M. Racca, “La contrattazione pubblica come strumento di politica industriale”, in C. Marzuoli and S. Torricelli (eds), La dimensione sociale della contrattazione pubblica. Dalle esternalizzazioni alla contrattazione socialmente sostenibile, Editrice Scientifica, Naples, 2017, pp. 171ff. 33 A. Sanchez-Graells, “Is joint cross-border public procurement legally feasible or simply commercially tolerated? A critical Assessment of the BBG-SKI JCBPP Feasibility Study”, European Procurement & Public Private Partnership Law Review, 12, 2, 2017, pp. 97–111. 34 R. Cavallo Perin and G. M. Racca, “European joint cross-border procurement and innovation”, in G. M. Racca and C. R. Yukins (eds), Joint Public Procurement and Innovation: Lessons Across Borders, supra note 1, pp. 93-131.

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compliant with different national provisions and provide transparency in terms of the traceability of the effectiveness of public spending for EU citizens. One of the first Italian joint cross-border procurements occurred in respect of the Healthy Ageing – Public Procurement of Innovation Project (HAPPI Project).35 Even before the implementation of the Directives, in the HAPPI project, a highly innovative cross-border public procurement scheme was enforced and managed based on a consortium agreement among European partners, such as the Italian health-care CPBs (including SCR Piemonte for Italy and Resah for France), procurement experts, and academic institutions (including the University of Turin) with the objective of awarding EU joint procurement of innovative solutions for active and healthy ageing persons. After a market analysis and a legal study of several national and European models of aggregation, and before the implementation of the Directive, the award procedure was launched.36 The cooperation has been set forth in an agreement establishing European cooperation among the central purchasing bodies that are partners to the project.37 According to French law, the Groupement de commandes legal model was applied.38 By this agreement, the French CPB was entrusted under French law, in the name and on behalf of the other CPBs, to carry out the selection procedure (as an intermediary) for the award of a closed framework agreement, with several lots (without a commitment to buy), and with one economic operator, in compliance with both the European Union and French national law. A considerable effort for the harmonisation of the tender documents, requirements and award procedures of the different partners’ legal systems was made in order to overcome all legal barriers. A joint jury was provided, which prepared a proposal for the awarding committee. Following the above-mentioned experience, the European Health 35 See the detailed information at: Master di II livello in Strategie per l’efficienza, l’integrità e l’innovazione nei contratti pubblici “Progetto Europeo ‘Healthy Ageing in Public Procurement of Innovation’ – HAPPI”, www​.masterseiic​.it/​happi/​ , accessed 17 March 2021; European Innovation Partnership, “5. HAPPI Project: Joint Transnational EU Tenders” (European Commission), https://​ec​.europa​.eu/​eip/​ ageing/​public​-procurement​-platform/​aha​-innovative​-solutions/​5​-happi​-project​-joint​ -transnational​-eu​-tenders​_en, accessed 17 March 2021. 36 EU Commission, “Support of the internal market policy for growth: Feasibility study concerning the actual implementation of a joint cross-border procurement procedure by public buyers from different Member States”, report by BBG and SKI, Brussels, March 2017. See also S. Ponzio, “Joint procurement and innovation in the new EU Directive and in some EU-funded projects”, Ius Publicum Network Review, 2, 2014, p. 1. 37 R. Cavallo Perin and G. M. Racca, “Administrative cooperation in the public contracts and service sectors for the progress of European integration”, supra note 3, p. 266. 38 Art. 8 of the French Code des marchés publics.

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Public Procurement Alliance (EHPPA) was created as an alliance of non-profit central purchasing organisations, with the purpose to pool expertise, leverage performance and provide its members with a strategic position in the European health procurement market.39

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PROCUREMENT TECHNIQUES

Types of Techniques and Agreements Used by CPBs Consip, the national CPB, initially awarded Convenzioni only for predefined goods and services (similar to closed framework agreements with one economic operator). At the time of writing, Consip uses a wide range of framework agreements differing in the number of awardees (i.e., open, closed, single or multi-supplier framework agreements), in the subject matter and in the degree of completeness of the contractual conditions (closed or open).40 Consip also uses the additional innovative model of framework agreement (the so-called “mixed” or “hybrid” model). Such a model, whenever clearly described in the tender documents, allows agencies to buy directly through the framework agreement (as in a “closed” model) or to reopen the competition among the economic operators included in the ranking, under previously specified conditions. In the multiple awardees framework agreements, the choice between the winners ranked for a single lot can be made on the basis of quotas, rotation criteria or through an algorithm able to direct towards the best suppliers for each beneficiary. In order to enter into contracts under a framework agreement, the potential beneficiaries do not have to be direct signatories to the relevant framework

39 See for European Health Public Procurement Alliance, “What is EHPPA”, www​ .Ehppa​.com, accessed 17 March 2021; Master di II livello in Strategie per l’efficienza, l’integrità e l’innovazione nei contratti pubblici “Progetto Europeo ‘Healthy Ageing in Public Procurement of Innovation’ – HAPPI”, www​.masterseiic​.it/​happi/​, accessed 17 March 2021. 40 G. M. Racca and G. L. Albano, “Collaborative public procurement and supply chain: the European Union experience” in C. Harland, G. Nassimbeni and E. Schneller (eds), The SAGE Handbook of Strategic Supply Management, SAGE Publishing, London, 2013. See: G. L. Albano and C. Nicholas, The Law and Economics of Framework Agreements, Cambridge University Press, Cambridge, 2016. See Italian State Council, decision of 6 March 2018, no. 1455, concerning the supply of medical equipment, challenged due to the longer duration of the contract than that of the framework agreement. The Court admitted this difference since the framework agreement, considered by the jurisprudence to be a “normative contract”, and the subsequent contracts suit different purposes, which result in their different durations.

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agreement.41 CPBs must take into account the recent CJEU decision, Autorità. The CJEU stated that the tender documents should clearly specify which contracting authorities might potentially benefit under the framework agreement (although this was not binding) and the potential maximum amount of purchases to be covered by the subsequent contracts.42 Electronic Procurement and DPSs As recently highlighted by the A.N.A.C., the recovery strategy after the pandemic and economic crisis should facilitate the digitalisation of the public procurement cycle, from the definition of needs to the end of the execution.43 Overall digitalisation implies the aggregation of public demand and the setting of CPBs that can manage the whole process and guarantee efficiency and integrity through the use of electronic platforms with sufficient flexibility, reduced bureaucracy, and accessibility, especially for SMEs.44 Through the e‑marketplace “MePA”, contracting authorities can directly purchase through the e‑catalogue (www​.acquistinretepa​.it) for contracts below the European thresholds, accepting prices and technical specifications (e.g. delivery conditions and other contractual clauses). Occasionally, an informal request may be made among the suppliers registered in the system (RDO, Richiesta di Offerte). The advantages of MePA include greater involvement of SMEs: in 2020 more than 90% of almost €5 billion-worth of such contracts were awarded to micro-enterprises and SMEs. In general, recourse to the e-market MePA has grown by 23% from 2018 to 2019, reaching approximately €4 million in 2020.45 Some critical issues are still related to the digital divide and reluctance to invest in e-commerce services on the supply side.46 41 According to the Italian State Council, decision of 4 February 2016, no. 445, related to the supply of medical equipment. Some local health authorities decided to join a framework agreement already awarded by the regional central purchasing body. The court stated that the possible extension to other contracting authorities does not infringe the principle of fair competition. 42 ECJ, 19 December 2018, Case C-216/17, Autorità Garante della Concorrenza e del Mercato, Coopservice Soc coop arl v Azienda Socio-Sanitaria Territoriale della Valcamonica – Sebino (ASST). 43 Hearing of the President of the A.N.A.C. at the Italian Parliament on the Italian Recovery Plan, 2 February 2021. 44 Art. 8(5) of Law of 11 September 2020, no. 120 (which converted the Law Decree no. 76/2020 and amended art. 38 of the IPCC) has included the use of electronic platforms as one of the criteria for the qualification of the CPBs. 45 Consip, “Bilancio 2019” www​.consip​.it/​sites/​consip​.it/​files/​CONSIP​ _Bilancio2019​_WEB​_0​.pdf, accessed 17 March 2021. 46 Significant results in the first decade of activity were: €84 million of transacted volume; over 332,000 offered goods; 28,173 transactions, meaning contracts processed

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An evolution towards an Amazon-like model is foreseen, including a more integrated logistics system.47 The Sistema dinamico d’acquisto della Pubblica Amministrazione (SdaPA), managed by Consip, allows all public administration entities to negotiate, through a completely electronic process, tenders above the EU thresholds, by inviting selected economic operators to enter the system at any time. Public expenditure through SdaPA reached approximately €4 million in 2019, with a growth of 18% over the previous year.48 The SdaPA provides 21 major product categories, six of which are dedicated to the health sector. A specific tender for pharmaceuticals has been active since 2012 and has allowed public administration entities to negotiate 173 tenders for the purchasing of 6,360 pharmaceuticals, with a value around €10.3 billion, over the years.49 The 2020 Finance Law allowed the award of framework agreements through the DPS, including, for the first time, the purchase of biological drugs (which are required to be purchased through framework agreements under the 2017 Stability Law).50 Moreover, the 2020 Finance Law also provided for the use of the DPS for the award of service concessions.51 For below-threshold contracts, in addition to Consip’s MePA (e-market for public administrations) some regions and their “qualified” CPBs have developed similar instruments (e.g. “MERER” for the Emilia Romagna through the system; 2,750 active Ordering Points, meaning public buyers that have used the tool; 1,156 enterprises registered with the MEPA; 1,809 catalogues published; 90% of registered suppliers are small or medium-sized enterprises. See “Electronic Marketplace for Italian Public Sector” (27 February 2008), https://​joinup​.ec​.europa​ .eu/​collection/​eprocurement/​document/​electronic​-markeplace​-italian​-public​-sector, accessed 17 March 2021. 47 G. M. Racca, “La digitalizzazione necessaria dei contratti pubblici: per un’Amazon pubblica”, D.P.C.E. online, 45, 4, 2020, pp. 4669–4706; G. M. Racca, The role of IT solutions in the award and execution of public procurement below threshold and list B services: overcoming e‑barriers, in D. Dragos and R. Caranta (eds), Outside the EU Procurement Directives – Inside the Treaty?, Djøf Publishing, Copenhagen, 2012, pp. 373–395. 48 Consip, “Bilancio 2019”, www​.consip​.it/​sites/​consip​.it/​files/​CONSIP​ _Bilancio2019​_WEB​_0​.pdf, accessed 17 March 2021. 49 In the first half of 2019, the value of purchases through SdaPA was €1.9 billion, with an increase of 30% compared to the same period in 2018. See Consip, “Sistema dinamico d’acquisto della PA (Sdapa): nel I semestre 2019 il valore degli acquisti sfiora i 2 miliardi di euro”, www​.consip​.it/​media/​news​-e​-comunicati/​sistema​-dinamico​ -d​-acquisto​-della​-pa​-sdapa​-nel​-i​-semestre​-2019​-il​-valore​-degli​-acquisti​-sfiora​-i​-2​ -miliardi​-di​-euro, accessed 17 March 2021. 50 Before the Law 27 December 2019, no. 160, para. 586, biological drugs could not be purchased by framework agreement, as provided by Law of 11 December 2016, no. 232, art. 1, para. 407. 51 Law 27 December 2019, no. 160, para. 587.

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Region, “ME-VA” for the Valle d’Aosta Region, “Sardegna CAT” for the Sardegna Region, and “ME-PAT” and “MEPAB” for the Trento and Bolzano Provinces).52

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COMPETITION AND SME ASPECTS

Efficiency and Policy Issues As stated earlier, the procurement function in Italy is still highly fragmented (with around 36,000 registered contracting entities). The value of joint procurement might increase significantly if the above-mentioned 32 “qualified CPBs” were to cooperate in a special board (Tavolo Tecnico dei soggetti aggregatori) and avoid duplications of framework agreements on the same subject matter and specialise in order to cover more procurement sectors more efficiently. Unfortunately, even in times of crisis there is more competition than cooperation among public buyers, in the absence of clear political commitment. The process each year of mapping maladministration and corruption risks and managing them by the Piani di prevenzione della corruzione (anti-corruption plans) has an important role in supporting integrity and efficiency.53 Data analysis of the National Database of Public Contracts (BDNCP) managed by A.N.A.C. and traceability of financial flows allow the monitoring of the entire public procurement cycle, permitting the defining of red flags and indicators of maladministration.54

52 Mercato Elettronico Regione Emilia-Romagna: https://​ intercenter​ .regione​ .emilia​-romagna​.it/​agenzia/​cosa​-facciamo/​centrale​-di​-committenza/​servizi​-e​-strumenti​ -di​-e​-procurement/​mercato​-elettronico​-di​-intercent​-er/​mercato​-elettronico, accessed 17 March 2021; Mercato elettronico della provincia autonoma di Trento: www​ .mercurio​.provincia​.tn​.it, accessed 17 March 2021; Mercato elettronico della provin.ausschreibungen​ -suedtirol​ .it/​ marketplace, accessed cia autonoma di Bolzano: www​ 17 March 2021; Mercato Elettronico della Valle d’Aosta: https://​ cuc​ .invallee​ .it/​ home/​Funzioni/​centralizzazione​-degli​-acquisti/​cuc​-gestione​-meva, accessed 17 March .sardegnaautonomie​ .it/​ content/​ 2021; SARDEGNACAT Mercato Elettronico: www​ sardegnacat​-mercato​-elettronico, accessed 17 March 2021. 53 Art. 1, para. 7 of Law no. 190/2012, as amended by the Legislative Decree of 23 June 2016, no. 97. 54 Database accessible at https://​ dati​ .anticorruzione​ .it/​ #/​ home. On 18 October 2018 the BDNCP won the first prize in the Better Governance through Procurement Digitalisation competition, in the National Contract Register category. See: European Commission, “European Commission award for better governance through procurement digitalisation” (4 June 2018), https://​ec​.europa​.eu/​growth/​content/​european​ -commission​-award​-better​-governance​-through​-procurement​-digitalisation, accessed 17 March 2021. On innovation see: I. Locatelli, “Process innovation under the new

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Role of CPBs for the Public Sector and Private Users According to Italian legislation, only contracting authorities can have recourse to CPBs. The notion of contracting authorities refers to national public administration, local public authorities, other non-economic public authorities, bodies governed by public law, associations, unions, and consortia of public entities. Private entities might use qualitative and quantitative data and benchmarking from CPBs, but this option seems hardly feasible due to the different market prices of goods and services in the public and private markets. Concerns Relating to Competition Law and Participation of SMEs To the extent of favouring access by micro-, small- and medium-sized enterprises, the Italian CPBs are providing platforms for below-threshold contracts. For other procurements, CPBs are required to split contracts into functional lots to encourage SMEs’ participation while avoiding the artful aggregation of contracts.55 The preliminary phase of the award procedure is essential for a balanced design of the procurement strategy. This technique may be used as anti-collusive strategy for avoiding illegal business practices, such as the creation of cartels and splitting of markets into pre-assigned single lots. The Italian Antitrust Authority has fined some major accountancy and consultancy firms for illegal business practices, such as the creation of cartels and splitting of markets into pre-assigned single lots, in a procurement procedure carried out by Consip CPB for IT and audit services nationwide.56 As stated earlier, in Italy in 2019, national CPB framework agreements permitted the award of over €3 billion to SMEs. Moreover, almost €5 billion-worth of small contracts were awarded to micro-enterprises and SMEs in 2019 through MePA. Thus, despite possible concerns, the data confirm that aggregation, correctly addressed, can favour SMEs’ participation in and awarding of a considerable number of contracts.

public procurement Directives”, in G. M. Racca and C. R. Yukins (eds), Joint Public Procurement and Innovation: Lessons Across Borders, supra note 1, pp. 31–63. 55 Art. 51 of the IPCC. See also G. M. Racca, “Collaborative procurement and contract performance in the Italian health-care sector: illustration of a common problem in European procurement”, Public Procurement Law Review, 3, 2010, pp. 119–133. 56 Italian Antitrust Authority, Decision of 18 October 2017, no. 1796 as confirmed by T.A.R. Lazio, decisions nos. 10996, 10997, 10999, 11000, 11002, 11003 and 11004 of 2018, confirming the collusion among the concerned economic operators.

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LIABILITY BETWEEN CPBS AND THEIR USERS

Issues on Contract Management According to a recent case, bidders have the right to fairness and competition in the execution phase too.57 They are entitled to provide evidence regarding infractions during the selection process and could also be active in monitoring compliance during the execution phase. The unsuccessful tenderers may demonstrate whether the execution of the contract differs substantially from the conditions set forth in the award. After the award, litigation may occur, and the awardee of a national framework agreement might sue the regional CPBs that may award the same type of contract just with the aim of delaying the contract. The submission of opportunistic claims is still widespread in Italy and should be strongly opposed. Rules Relating to Enforcement and Remedies Data show that the tender procedures for high value contracts published by regional and National CPBs are frequently subject to claims, due to their high value.58 In 2017, there were 108 appeals against tender procedures announced by Consip involving amounts greater than €1 million, while in 2018 there were 105.59 The overall success rate for Consip in these proceedings is 78% (more than three in every four appeals were resolved with a positive outcome for Consip). The recourse to the State Attorney for Consip’s legal representation

57 Italian State Council, Decision of 2 April 2020, no. 10. On the same topic see: G. M. Racca, R. Cavallo Perin and G. L. Albano, “Competition in the execution phase of public procurement”, Public Contract Law Journal, 41, 1, 2011, pp. 89–108; G. M. Racca and R. Cavallo Perin, “Material amendments of public contracts during their terms: from violations of competitions to symptoms of corruption”, in European Procurement & Public Private Partnership Law Review, 4, 2013, pp. 279–293. 58 G. M. Racca, “Derogations from standstill period, ineffectiveness and remedies in the new tendering procedures: efficiency gains vs. risks of increasing litigation”, in S. Treumer and F. Lichère (eds), Enforcement of the EU Public Procurement Rules, Djøf Publishing, Copenhagen, 2011, pp. 95–102. 59 Italian State Council, “Analisi di impatto del contenzioso amministrativo in materia di appalti – biennio 2017/2018”, www​ .anticorruzione​ .it/​ portal/​ rest/​ jcr/​ repository/​ c ollaboration/ ​ D igital ​ % 20Assets/ ​ a nacdocs/ ​ A ttivita/ ​ P ubblicazioni/​ RapportiStudi/​CdS​.Appalti​.analisi​.impatto​.contenzioso​.amministrativo​.2017​.2018​ .pdf, accessed 17 March 2021.

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that is provided by the 2018 Finance Law has significantly reduced the excessive litigation.60 In order to promote the aggregation process, rules laying down the invalidity of contracts awarded by contracting authorities independently (without recourse to CPBs) have been introduced. In this case, contracting authorities’ public officials may be held liable and ordered to refund any losses.61 Moreover, the Italian Anti-Corruption Authority in such cases does not issue the ID code for the traceability of the award procedure (CIG), thus blocking the procedure.62 An exception to this rule emerged in case law whenever the resulting contractual terms were less favourable than those contained in the individual award.63 The fight between the incumbent suppliers and the choice of using a framework agreement of a CPB led to the previously mentioned EU case law that provoked a CJEU decision which clarified that, when a framework agreement is to be awarded, the tender documents should clearly specify which contracting authorities may benefit from the agreement and the maximum amount of purchases to be covered by the subsequent contracts.64 The Italian national anti-corruption authority can also submit claims in respect of serious infringements, and the first one was related to a private entity that acted illegitimately as a CPB for a number of municipalities. The case was also submitted to the CJEU, which held that EU law does not preclude that, under Italian law, small local authorities may have recourse to central purchasing bodies in order to purchase works, goods and services, as long as they use organisational models that are exclusively public.65

60 Art. 1, para. 771, Law of 30 December 2018, no. 145. See: Consip, “Bilancio 2019”, www​.consip​.it/​sites/​consip​.it/​files/​CONSIP​_Bilancio2019​_WEB​_0​.pdf, accessed 17 March 2021. 61 Art. 1, Law Decree of 6 July 2012, no. 95. 62 Decree of the Prime Minister of the Council of 11 July 2018. 63 Italian State Council, decision of 28 March 2018, no. 1937. 64 ECJ, 19 December 2018, Case C-216/17, Autorità Garante della Concorrenza e del Mercato, Coopservice Soc coop arl v Azienda Socio-Sanitaria Territoriale della Valcamonica – Sebino (ASST). 65 ECJ, Judgment of the Court, Second chamber, of 4 June 2020, Asmel società consortile a.r.l. v A.N.A.C. - Autorità Nazionale Anticorruzione, Case C-3/19. See: G. M. Racca, “La Corte di Giustizia e le scelte nazionali per una efficiente e trasparente aggregazione dei contratti pubblici: una sfida per l’evoluzione digitale della “funzione appalti” nazionale, regionale e locale”, supra note 15, pp. 185-215.

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COVID-19 AND JOINT PROCUREMENT

Impact on Joint Procurement of the COVID-19 Emergency Due to the COVID-19 crisis, the government temporarily withheld the previous requirement for municipalities to have recourse to joint procurement.66 Therefore, the goal of saving through aggregation has been further delayed, while the risks and costs of duplicating the same award procedures within the same territory and for the same items are likely to arise again. As shown by the Italian Anti-Corruption Authority, the COVID-19 emergency deeply affected public procurement in Italy.67 The amount related to the health emergency stands at around €3 billion, 95% of which refers to supplies of personal protective equipment (PPE). The pandemic has shown the need for joint procurement and a more coordinated approach to regional, national and European cooperation on emergency health care and purchasing in order to avoid internal competition between contracting authorities and consequent speculation.68 Balance of Competence among Central and Local CPBs in the COVID-19 Emergency In Italy, cooperation among public authorities has been extremely difficult as health care is regionally based and organised. The value of purchasing resulting from the aggregation of demand at national and regional level in the emergency period (March–April 2020) has been €2 billion, equal to 34.5% of the total expenditure relating to the emergency (€5.8 billion), of which €1 billion (€1,045,112,381) relates only to Consip S.p.A. The regions have made extensive use of the “qualified CPBs” (Soggetti aggregatori) especially in Tuscany, where 93.7% of the overall expenditure incurred for the emergency has been made through centralised procedures; in Lombardy, it is 80.9%

66 Art. 8(7)(a) of Law of 11 September 2020, no. 120 (which converted the Law Decree no. 76/2020), suspended the requirement for municipalities to purchase in an aggregate way – provided by art. 37, para. 4 of the IPCC – until 31 December 2021. 67 Italian Anti-Corruption Authority, Annual Report of 2020, available at www​ .anticorruzione​.it/​portal/​public/​classic/​Comunicazione/​News/​_news​?id​=​0e​b62cfb0a77​ 80422adf484faa600fe9. 68 L. Folliot Lalliot and C. R. Yukins, “COVID-19: Lessons learned in public procurement. Time for a new normal?”, in Concurrences, 3, 2020, pp. 46–58.

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of total regional expenditure; followed by Liguria on 76.8%, Campania on 74.6%, Piedmont on 74.1% and Veneto on 67.3%.69 Moreover, during the emergency phase, the extraordinary need for PPE led the Italian Civil Protection Department to appoint a Commissioner and a Special Unit to carry out emergency procurement procedures.70 After a first phase, the Civil Department started buying PPE and medical devices with direct and fast award procedures and organised the national production of such devices. Recently, the purchase of flu vaccines as a strategy to avoid the seasonal influenza stress on the health system was not coordinated at national level, with many regional procurements awarded and leading to wide and irresponsible differences in timing and prices, and to difficulties in meeting the public demand, as a dramatic consequence of public buyers’ miscoordination in emergency procurement. The same lack of coordination among regional CPBs occurred for the purchase of fridges for vaccine storage. Joint Procurement Entities Responding to the COVID-19 Emergency The EU, along with the Member States including Italy, has taken actions though the Joint Procurement Agreement (JPA) initiatives.71 The Italian Commissioner provided the supplies of PPE and school furniture (desks and 69 A.N.A.C., “Fact-finding survey on public purchases during the COVID-19 emergency period” (“Indagine conoscitiva sugli affidamenti in regime emergenziale di forniture e servizi sanitari connessi al trattamento ed al contenimento dell’epidemia da COVID 19 – Report di seconda fase”), August 2020, available at www​ .anticorruzione​.it/​portal/​rest/​jcr/​repository/​collaboration/​Digital​%20Assets/​anacdocs/​ Attivita/​Pubblicazioni/​RapportiStudi/​ContrattiPubblici/​IndagineCovid19​.fase2​.13​.08​ .20​_​.pdf, accessed 17 March 2021. 70 See G. L. Albano, “Homo homini lupus: on the consequences of buyers’ miscoordination in emergency procurement for the COVID-19 crisis in Italy”, Public Procurement Law Review, 4, 2020, pp. 213–219. 71 The Agreement is based on the Commission Delegated Regulation (EU) No. 1268/2012 of 29 October 2012 on the rules of application of Regulation (EU, Euratom) No. 966/2012 of the European Parliament and of the Council on the financial rules applicable to the general budget of the Union (now Regulation (EU, Euratom) 2018/1046). The JPA is an agreement between the Commission and the participating Member States which implements a provision of a legislative act, namely, Art. 5 of Decision 1082/2013/EU. The JPA was signed by Italy on 16 October 2014. R. Cavallo Perin and G. M. Racca, “European joint cross-border procurement and innovation”, in G. M. Racca and C. R. Yukins (eds), Joint Public Procurement and Innovation: Lessons Across Borders, supra note 1, p. 116. T. Kotsonis, “EU procurement legislation in the time of COVID-19: fit for purpose?”, Public Procurement Law Review, 4, 2020, pp. 199–212; G. Sdanganelli, “Il modello europeo degli acquisti congiunti nella gestione degli eventi rischiosi per la salute pubblica”, D.P.C.E. online, 2, 2020, pp. 2323–2346.

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chairs) necessary to ensure social distancing.72 Also, due to a lack of coordination in Italy, the regions continue to play a significant role in the emergency phase in the awarding of emergency procurement contracts. Procedures Applied by CPBs in Italy during the Emergency The COVID-19 emergency led to the admission of direct awards until 31 December 2021.73 The majority of public contracts over €40,000 have been awarded through procedures with no publication of the tender (77%) or through direct assignment (20%), mainly by CPBs or central bodies (around 57%).74 Due to unacceptable differences in prices for the same medical goods (e.g. surgical masks), a price cap was fixed for the purchase of such items. The Commissioner for the COVID-19 emergency adopted a series of measures aimed at converting Italian firms located within Italian territory to produce masks, as well as supporting national hospitals and the health-care system. Based on the European COVID-19 vaccine strategy, and following the conclusion of advance purchase agreements (APAs) with vaccine manufacturing companies and subsequent marketing authorisation, as of January 2021 more than 1 million vaccine doses had been delivered in Italy.75 An efficient and 72 Art. 122 of Law Decree of 17 March 2020, no. 18, converted into Law no. 27/2020. See the call notice for an extremely urgent simplified open procedure for the purchase and distribution of 3,000,000 individual school desks and innovative seats and 700,000 traditional chairs, published on 20 July 2020 by the Italian Ministry of Education and the Presidency of the Council of Ministers – Special Commissioner for the crisis. 73 In accordance with Law Decree of 17 March 2020, no. 18, converted into Law no. 27/2020. 74 Italian Anti-Corruption Authority, Annual Report of 2020. 75 The “European Vaccine Strategy” was launched by the EU Commission on 17 June 2020. See: European Commission, “Proposal for a Regulation of the European Parliament and of the Council on Serious Cross-Border Threats to Health and Repealing Decision No. 1082/2013/EU” (11 November 2020), https://​ec​.europa​.eu/​commission/​ presscorner/​detail/​en/​ip​_20​_1103, accessed 17 March 2021. On 2 December 2020, the Italian Minister of Health presented to the Italian Parliament the guidelines for Italy’s Strategic Plan for anti-SARS-CoV-2/COVID-19 vaccination, drafted by the Ministry of Health, the Extraordinary Commissioner for the COVID-19 Emergency, the Higher Institute of Health, the Italian National Agency for Regional Health-Care Services (AGENAS) and the Italian Medicines Agency (Aifa). The Italian Vaccines Plan is centred around eight axes: the first axis is related to the centralisation of and free access to the vaccine; the second concerns doses and administration of vaccines; the third one relates to the timing of authorisation of vaccines; the fourth axis identifies the categories to be vaccinated as a matter of priority, i.e. health and social/medical workers; the fifth axis is related to procurement, storage, and transport, which will be the respon-

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coordinated strategy to pursue the necessary sourcing for emergencies is not yet in place, but awareness of the necessity for such a change is increasing and hopefully such a strategy will be adopted by the new government.

sibility of the Extraordinary Commissioner; the sixth axis concerns the governance of the vaccination plan, ensured through coordination between the Ministry of Health, the Extraordinary Commissioner, the regions and autonomous provinces; the seventh axis concerns the monitoring of the vaccination campaign; the eighth axis relates to drug surveillance and immunological surveillance, to ensure the highest level of safety throughout the vaccination campaign. Nonetheless, the regions have continued to seek to buy the necessary vaccines autonomously.

16. Central purchasing bodies: the case of Poland Paweł Nowicki 1 INTRODUCTION The public procurement system in Poland is based on the Act of 11 September 2019 – Public Procurement Law1 (hereinafter: PPL) and, to a large extent, is determined by EU law. The Act specifies the principles and procedures for awarding public contracts, the authorities responsible for public procurement, and the provisions concerning remedies and legal protection measures. The field of concessions, covered by Directive 2014/23/EU, is subject to separate regulation,2 as also is the area of public–private partnerships.3 The PPL contains special provisions concerning central purchasing bodies (CPBs). CPBs may be appointed on the national (central) level by the government, whilst the legislative bodies of local government units on the regional and municipal level may designate or appoint an entity to act as a CPB. There are over 33,000 contracting authorities in Poland, of which over 50% come from local government administration and its units, whilst only 0.53% are contracting authorities from central government administration; there is one main CPB at the national level, and there are multiple CPBs at the regional and municipal level. Currently, the tasks of the CPB at the national level are performed by COAR – Centrum Obsługi Administracji Rządowej (Government Administration Service Centre), which is a public sector enterprise, appointed as a CPB on the basis of the order no. 100 of the Prime Minister, adopted 30 August 2017.4 However, COAR has a long history, starting in 1960 when “Baza Techniczna Urzędu Rady Ministrów” (Technical

Journal of Laws 2019, item 2019 (with further amendments). Act of 21 November 2016 on concession contract for works and services (Journal of Laws 2016, item 1920 with further amendments). 3 Act of 19 December 2008 on public–private partnerships (consolidated version: Journal of Laws 2020, item 711). 4 Monitor Polski, item 832. 1 2

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Base of the Office of the Council of Ministers) was established. After multiple changes, as a “Centrum Usług Wspólnych” (Shared Services Centre), it started to act as a CPB in 2010. However, the idea of CPBs was introduced to the Polish contracting authorities with the amendment to the Public Procurement Law of 7 April 2006,5 although at that time it wasn’t considered to be a significant change with a real impact on the functioning of the public procurement market. Nowadays, the environment in respect of CPBs has changed, especially on the regional level. Complicated procurement procedures, a frequently changing legal environment and the need to look for savings and much more economically effective purchasing techniques have forced contracting authorities to combine administrative, financial and human resources more often in order to award a procurement contract. Contracting authorities are constantly looking for the best way to execute purchasing in accordance with the principle of best value for money, regulated as the principle of effectiveness in article 17 of the PPL. It can be realised by having an appropriate level of buying power that serves to achieve economies of scale. Simultaneously, aggregation of purchasing on the market in accordance with the Polish public procurement law needs to be provided by the participation of micro-enterprises and SMEs, which could be ensured by the division of the procurement into lots. The most frequent use of CPBs is also caused by functions that are currently performed by public procurement and a symptom of changes taking place on the Polish public procurement market. With the development of public procurement in Poland and its increasing role as a tool of state’s impact on the economy, not just a purchasing one,6 CPBs have become more widely used and are treated not only as a tool enabling a contracting authority to deal with the formal and legal problems of public procurement, but as a way to ensure a wider and more effective implementation of the horizontal objectives. As a matter of fact, this is an emanation of transition from controlling state to entrepreneurial state7 in Poland. The state returns to the economic market8 and makes efforts to handle challenges of the 21st century dealing with globalisation, environmental destruction, climate change, shrinking resources, social inequality, inefficient allocation of resources, uneven distribution of income,

Journal of Laws 2006, no. 79, item 551. Paweł Nowicki, “Zamówienia publiczne jako instrument kształtowania gospodarki przez państwo” (Public procurement as an instrument for shaping the economy by a state) (2017) 497 Prace Naukowe Uniwersytetu Ekonomicznego we Wrocławiu (Research Papers of Wrocław University of Economics). 7 Mariana Mazzucato, The Entrepreneurial State. Debunking Public vs. Private Sector Myths (London, 2018). 8 Tomas Piketty, Le capital au XXIe siècle (Paris, 2013). 5 6

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problems in the labour market, ensuring market fairness as well as initiating research on innovations. This process of return may take various forms, from more sophisticated types of organising consensual state activities through more precise legal regulations, to the application of legal regimes to such fields that have not previously needed such intervention.9 The necessity to realise strategic goals in terms of the broadly understood principle of sustainable development is currently a significant part of public procurement policy in Poland. However, the need to achieve economic efficiency together with goals, other than purchasing, becomes a challenge for many contracting authorities, especially at the local and regional level. CPBs address these challenges by ensuring efficient conduct of public procurement procedures and removing administrative burdens from contracting authorities. It also gives a boost to increase professionalisation. Furthermore, CPBs standardise tendering procedures and documentation, which can become a significant anti-corruption factor. It must be underlined that the PPL is a new law, which only came into force on 1 January 2021. The new PPL is definitely a more extensive Act than the previous one, despite many simplifications (the previous version of the PPL included 227 provisions, while the new law includes 623 provisions). Under the new regulation it seems appropriate to expect a further development of CPBs at the local and regional levels. The new law is not only introducing the full-scale digitalisation of public procurement (both of below-threshold value and EU proceedings), but is also forcing contracting authorities to evaluate contracts and to apply guidelines for certain tenders in accordance with the state procurement policy (which is called the state purchasing policy). It is a completely new mechanism under which the state determines the priorities of the Republic of Poland in the field of public ​​ procurement, as well as the preferred direction for contracting authorities to take in terms of public contracts, which will include in particular the purchase of innovative or sustainable supplies and services, by taking into account standardisation aspects, life-cycle costing, corporate social responsibility, dissemination of good purchasing practices and tools, and social aspects. The procurement policy, updated every fourth year, will be related to the medium-term growth strategy of the state. It is anticipated that the obligations arising from the new law will increase interest in CPBs’ services at the local and regional levels in view of the fact that the law also imposes a more economic approach to public procurement.

9 Paweł Nowicki, Aksjologia prawa zamówień publicznych. Pomiędzy efektywnością ekonomiczną a instrumentalizacją (Toruń, 2018).

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STRUCTURE AND USE OF CPBS AND OTHER FORMS OF JOINT PROCUREMENT

How Are CPBs Structured? There is only one national CPB, appointed by the Prime Minister,10 and multiple regional and municipal CPBs, together with CPBs dealing with procurement for some specific units (for example, the CPB for the judiciary and public prosecution service). However, the data concerning the latter CPBs can be misleading. According to data for 2019 extracted from the Public Procurement Bulletin, there are over 650 contracting authorities that act as CPBs. In fact, many of them conduct a joint procurement procedure, without taking any actions that characterise CPBs. All of the CPBs are contracting authorities. There are no CPBs with private partners or shareholders. CPBs are owned by public authorities: government (on the central level), and regional and municipal administration units. It is worth mentioning that in accordance with public procurement law, all CPBs (including those at the municipal and regional level) can act not only as agents (intermediaries), but also as wholesalers. It means that contracting authorities using the services offered by CPBs can purchase supplies, services or works through CPBs, that is, from economic operators that were awarded public contracts by CPBs, or they can purchase directly from a particular CPB. They can also purchase services, supplies and works through call-off contracts on the basis of a framework agreement that was concluded by CPBs. Usually, the subject-matter of public contracts awarded by CPBs is supplies or services, but CPBs can also award public works contracts. The theory and practice of this issue show that in such a case public works are provided for single contracting authority, but CPBs can also follow the execution of the contract, coming to the assistance of contracting authorities. Furthermore, it is admissible for CPBs to provide ancillary purchasing activities, which are based on support to purchasing activities, in particular in the form of technical infrastructure and assistance, advice on the conduct or design of public procurement procedures, or preparation and management of those procedures on behalf and on the account of the contracting authority concerned.

10 However, there is a possibility of appointing a CPB strictly related to a specific department of government administration. An example of this is the appointment of the Purchasing Centre for the Judicary (Centrum Zakupów dla Sądownictwa), as a CPB for all judiciary units in Poland.

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Authorities appointing CPBs may provide that certain public contracts must be awarded through that CPB. It applies to all CPBs, whether at the national, regional or municipal levels. At the national level, according to article 47 of the PPL, the Prime Minister may appoint the CPB from among organisational units which are subordinate to or supervised by government administration bodies. Furthermore, the Prime Minister may oblige contracting authorities under government administration, by order, to obtain certain types of contract from the CPB or from economic operators selected by the CPB, and to award contracts on the basis of a framework agreement concluded by the CPB, and to define the mode of cooperation with the CPB. The CPB is a de jure contracting authority.11 Contracting authorities include natural persons, legal persons and organisational units not having legal personality, who are obliged to apply the PPL. All provisions of the PPL applicable to the contracting authority shall likewise apply accordingly to the CPB.12 As already mentioned, COAR is the only CPB appointed by the Prime Minister at the central level. COAR is a unit of the public finance sector, which has a legal personality separated from the Polish State Treasury and acts on its own behalf. COAR conducts business activities, and its services are provided to both public and private bodies. We can distinguish two types of activities: primary (core) activities and other activities (“secondary” or “peripheral” activities). One of the principal tasks of COAR is to act as a CPB. For this purpose, it can purchase supplies and services for government administration bodies. Apart from this, it can also award a public contract or enter into a framework agreement for public works, supplies and services for government administration bodies. It can also provide ancillary purchasing activities. COAR is a competent CPB for matters concerning implementation of public procurement for the needs of government administration bodies and other units. Various authorities and institutions, on both central and regional levels, benefit from the services of COAR, including the Chancellery of the Prime Minister, all governmental units, the Chancellery of the President of the Republic of Poland, etc. The implementation of public procurement for the needs of the government administration bodies covers preparation and execution of the procurement procedures, as well as the conclusion of a public procurement or a framework agreement. COAR, as a CPB, undertakes all actions related to the procurement procedures on behalf of particular government administration units. Polish legislation follows a conditioned compulsory adherence model for central

Article 44.1 of the PPL. Article 44.6 of the PPL.

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purchasing: all government administration units have to buy certain supplies or services through COAR, unless the Head of the Chancellery of the Prime Minister decides otherwise, under certain conditions. Each year, no later than 30 June, contracting authorities have to provide their procurement proposals to COAR, which, at the discretion of the Head of the Chancellery of the Prime Minister, will be implemented as central purchasing by COAR in the following year. COAR analyses each case in terms of the number of contracts with the same subject-matter, the period of implementation and the savings from economies of scale or standardisation. However, if the analysis reveals that the implementation of a given contract as a central contract may not deliver expected savings from economies of scale or standardisation, or if the period of contract performance prevents or significantly hinders the execution of the contract by COAR, the Head of the Chancellery of the Prime Minister may take a decision to cancel the central purchase. In any other case, if the entity does not wish to execute the purchase by COAR, it has to obtain the approval of the Head of the Chancellery of the Prime Minister, which may be received only in justified circumstances, in particular, in the case of necessity for the urgent execution of the purchase. COAR carries out procurements in the area of supplies, for example: electricity, passenger cars and personal computers. COAR also carries out the central procurement of services in the area of, inter alia, mobile telephony services, access to the internet, cleaning services, ensuring the safety of people and property, and postal affairs. COAR may also award contracts or enter into framework agreements for public works for the intended purpose. While COAR is the only CPB appointed by the Prime Minister, relevant ministers may also appoint CPBs from among organisational units which are subordinate to or supervised by certain members of the government.13 This may lead to a lower level of effectiveness of COAR: if fewer institutions and units are involved, the less savings COAR will achieve, with regard to economies of scale. When it comes to CPBs on the regional or municipal level, pursuant to article 49 of the PPL, an executive body of a local government unit may designate or appoint a CPB and oblige the units which are subordinate to it to obtain certain types of contract from that CPB and to award contracts on the basis of a framework agreement concluded by the CPB. The executive body of a local government unit may also define the mode of cooperation with the CPB. It must be stressed that previous regulations with regard to public procurement addressed this issue in a different and more complex manner, leaving the right to appoint a CPB to legislative (not executive) bodies of local government Article 48.3 of the PPL.

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units, which undoubtedly was in accordance with relevant administrative law. New provisions have already raised some questions and concerns with regard to the limitations of powers of executive bodies of local government units and the division of powers between executive and legislative bodies of local government units, indicating that previous provisions were more appropriate. What seems most conspicuous is that the PPL does not indicate any type of legal act (such as a decision or resolution), based on which a CPB should be appointed. Who Are the Users of CPBs? When a CPB is designated or appointed in accordance with article 49 of the PPL, it usually follows a compulsory adherence model (when all members of the CPB must buy through the CPB) or a conditioned compulsory adherence model, which means that members must buy through the CPB unless they prove they can purchase supplies or services at a lower price. Nonetheless, it all depends on the scope of the particular decision of the local government unit. How Are the CPBs Financed? The manner of cooperation with a CPB also covers the issue of its finances. Mostly CPBs get public funding or are financed with the fees paid by their members (which are related to the price of the contract awarded); however, unambiguous data in this regard are not available. It is worth underlining, though, that the method of financing of COAR was subject to several audits conducted by the Supreme Audit Office (Najwyższa Izba Kontroli). In 2015 the Supreme Audit Office indicated that the remuneration for procurement procedures in some cases eliminated the effect of economies of scale of central purchasing, due to its excessively high level, and recommended its settlement at a reasonable level, taking into account the needs and capabilities of contracting authorities. Other Roles of CPBs All CPBs have functions other than just acting as CPBs. Some of them provide financial, accounting or HR services, especially on the regional or municipal level. On the national level, COAR is conducting a business activity, with recipients of its services among public and private bodies and units.

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Efficiency and Policy Issues When it comes to efficiency and policy issues, CPBs are considered to be effective in most cases, thanks to their buying power and professionalisation. They can deliver value for money in a more effective manner than contracting authorities acting on their own. With the standardisation of procedures and clear division of tasks and responsibilities comes a more transparent way of delivering supplies, services and public works through public procurement, which has a huge impact on anti-corruption issues and policy.

3

PROCUREMENT TECHNIQUES

Types of Techniques and Agreements When it comes to CPBs, most contracts are awarded in accordance with an open procedure, pursuant to the relevant provisions of the PPL. Framework agreements may be concluded after a procedure, to which either the provisions on the award of contracts as part of an open procedure, a restricted procedure, a negotiated procedure with publication, a competitive dialogue or an innovative partnership apply (when the value of a contract is equal to or above EU thresholds), or the provisions on the basic procedure or innovative partnership apply (when the value of a contract is below EU thresholds).14 The PPL contains provisions concerning dynamic purchasing systems (DPSs) (articles 316–324). According to the PPL, any contracting authority may set up a DPS and award contracts under the system, applying relevant provisions concerning the awarding of contracts under a restricted procedure, with some exceptions from that procedure. However, with the new PPL in force, the use of a DPS is restricted to contracts of a value equal to or above EU thresholds. How Do Users Use the Agreements? Under framework agreements concluded by CPBs, contracting authorities may use call-off contracts, after conducting a competitive procedure among the economic operators covered by the agreement, or award a contract to an economic operator directly, in accordance with the provisions of a framework agreement.15 It is worth mentioning that only contracting authorities designated in the contract notice are allowed to award the contract on the basis of

Article 311.1 of the PPL. Article 314 of the PPL.

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a framework agreement. Furthermore, CPBs may allow or require the submission of tenders for the purposes of a framework agreement either in the form of electronic catalogues or by the enclosing of electronic catalogues with the tender.16 Despite the admissibility and clear advantages of framework agreements, according to annual reports on public procurement for the years 2017–2019, CPBs on the national level are not using them at all. No records related to CPBs on the regional and municipal level are available. DPSs haves been subject to multiple changes under the PPL, which led to a simplification of the procedure.17 Nevertheless, the use of DPSs in Poland is rather rare, with only a few procedures conducted in 2019 and 2020.18 In this regard, we can observe a clear downward trend, influenced by several factors, especially the so-called “psychological barrier” related to lack of sufficient knowledge and know-how concerning DPSs,19 all in all related to a low level of professionalisation. However, the statistical data don’t reflect the exact number of DPSs, as some contracting authorities have wrongfully referred to a DPS in the contract notice, regardless of the fact that the actual contract was awarded in an open procedure. Nonetheless, those DPSs that were conducted concerned mostly supplies of specific products, for example, supplies of medical equipment such as surgical gloves. Changes in the Framework Agreements All provisions of the PPL with regard to public contracts apply equally to framework agreements, which means that any amendments to the provisions of a framework agreement are prohibited, unless at least one of the circumstances regulated in the PPL occurs. The grounds for amendment of a public contract are listed in article 455 of the PPL. If an amendment to the provisions included in a framework agreement is considered to be significant, the contracting authority is obliged to conduct a new contract award procedure. This covers situations in which an amendment introduces conditions under which, had they been made in the contract award procedure, other economic operators could

Article 93 of the PPL. Ryszard Szostak, Informatyzacja procedur udzielania zamówień publicznych (Warsaw, 2018). 18 Below EU thresholds: in 2017: 0 DPS; in 2016: 5 DPSs; in 2015: 3 DPSs. There is no record available of DPSs in 2018 or 2019. Only 14 cases of DPSs had a value equal to or above EU thresholds in the years 2007–2019. From 1 January 2021, DPSs are only allowed for contracts with a value equal to or above EU thresholds. 19 Adam Wiktorowski, “Dynamiczny system zakupów” (Dynamic purchasing system)’ (2018) 166 Przetargi Publiczne (Public Tenders). 16 17

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have participated in the procedure or tenders of other content would have been accepted; or disturbs the economic equilibrium of the framework agreement in favour of the economic operator, in a manner not provided for originally in the framework agreement; or significantly extends or reduces the scope of benefits and liabilities resulting from the framework agreement; or consists in replacing the economic operator to whom the contracting authority has awarded the contract, in cases not regulated by the PPL.20 Requirements Relating to Estimates and the Consequences of Wrongful Estimates As all provisions of the PPL with regard to public contracts apply equally to framework agreements, their value must be determined with due diligence. Although there isn’t much practice regarding framework agreements in Poland, it must be observed that a contracting authority that is an original party to the framework agreement must state the total value for which the subsequent contracts may be awarded. The value of a framework agreement can be extended if the CPB responsible for an agreement has concluded the right to use options in the aforementioned agreement. The value of a framework agreement can also be reduced; however, provisions of such an agreement must also indicate the guaranteed minimum value.

4

COMPETITION AND SME ASPECTS

Concerns about Competition Law The use of CPBs is assumed to be guided by the need to get value for money, because CPBs grant stronger “buying power” on the market than that of a single customer. Buying power is maintained by aggregated purchasing, which may also have a negative effect on the public procurement market in relation to the potential violation of competition law. In turn, the public procurement market should be opened up to all, in particular SMEs, to apply for public contracts. Nevertheless, despite the fact that most of the economic operators present in the Polish public procurement market are SMEs, no concerns regarding competition law aspects of agreements by CPBs have been raised. It must be underlined that in most cases, CPBs divide contracts into lots, which allows economic operators with lower capacity to participate in a contract award procedure. Thus, the division into lots is assumed to have a significant impact on the final outcome in terms of market competitiveness. However, Article 454.1–2 of the PPL.

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pursuant to the PPL, contracting authorities are free to decide whether or not to divide a contract into lots – there is no obligatory division of contracts into lots under national law. Are CPBs Solely for the Use of Public Sector Entities or Also for Private Users? All CPBs are allowed to provide services both for public sector entities and private users. The type of user can have an impact on the way the CPB is remunerated, with regard to the fee or price for certain activities, but it all depends on the decision of the authority appointing a particular CPB. Participation of SMEs in CPBs The implementation of the procurement Directives of 2014 in the Polish PPL in 2016 was motivated by the will to promote the public procurement market among SMEs. The principle of “divide or explain” adopted in the PPL, applicable to all public sector procurements with a net value equal to or over 130,000 Polish Zloty, forced contracting authorities to adapt their contracts to the current market realities. This is an example of the transformation of public procurement into a mechanism that both shapes the market and the economy and interacts with them. As mentioned before, most of the economic operators present in the Polish public procurement market are SMEs. This does not mean that there is huge interest from SMEs in public procurement market: quite the opposite, as we can observe the low level of activity of SMEs in the market concerned. SMEs mostly don’t have the necessary financial resources and are discouraged by the one-sided and mostly non-negotiable contracts, the high level of formalities and bureaucracy, and the poor quality of tender procedure preparation.21 However, SMEs most often bid for contracts from CPBs, especially on the local and regional level. When it comes to COAR, according to the annual report of public procurement from 2019,22 SMEs bid for contracts only in approximately 40% of tenders, but won almost all of those tenders. SMEs bid mostly for contracts for supplies.

21 See: Raport z wyników badania „Ocena gotowości polskich przedsiębiorstw do realizacji zamówień publicznych” (Survey report on “ Assessment of readiness of Polish economic operators to provide public procurement”) Polska Agencja Rozwoju Przedsiębiorczości 2018, s. 14. 22 Data provided by the Public Procurement Office. However, there is no data for CPBs on the local/regional level.

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LIABILITY BETWEEN CPBS AND THEIR USERS

Contract Management It should be noted that there are no specific provisions in the PPL concerning contract management, apart from regulations addressing contract modifications. In most cases, contracting authorities emphasise tasks related to a procurement procedure, whilst activities concerning the performance of a contract seem less important. There are no e‑procurement tools for contract management, apart from business tools that are present on the private market. However, it isn’t common for contracting authorities to use them. Rules Relating to Enforcement and Remedies With regard to CPBs, the matter of liability is regulated in accordance with the general principles of the PPL. All CPBs are responsible for their actions, with exception of the obligations resulting from the PPL that are related to the parts of the procedure that contracting authorities using the services of CPBs are conducting on their own, in particular for awarding contracts covered by DPSs and operated by a CPB or for awarding contracts on the basis of a framework agreement entered into by the CPB. During the realisation of public procurement, the contracting authorities – which are obliged to use the services of a CPB – are responsible for covering claims in respect of non-performance of the contract concluded on their behalf and for reasons attributable to them. It is reflected by the fact that all rights arising from the contract concluded with the economic operator, including those in the field of quality and security, are exercised by the mentioned contracting authorities. Consequences if the CPB Entered into the Agreement Unlawfully If the CPB has entered into the procurement contract or a framework agreement in infringement of provisions of the PPL, the procurement contract or framework agreement can be terminated in accordance with the PPL. A framework agreement will be null and void if the contracting authority has entered into the agreement in breach of the provisions of the PPL.23 The right to apply to the court for annulment of the aforementioned framework agreement is granted to the President of the Public Procurement Office. It can also be the subject of an appeal to the National Appeal Chamber, which can be filed by any economic Article 457.1.1 of the PPL.

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operator or other persons if they have or had an interest in being awarded the agreement. The CPB can also withdraw from a framework agreement when the economic operator is subject to exclusion on the grounds listed in article 108 of the PPL, which covers the grounds for mandatory exclusion. In this situation, if a CPB has entered a framework agreement with only one economic operator, it withdraws from the entire agreement. However, if a CPB has entered into a framework agreement with more than one economic operator, it withdraws from the part of the agreement relating to the economic operator that must be excluded.

6

COVID-19 AND JOINT PROCUREMENT

Facing the pandemic of COVID-19, the Polish government acted very quickly, and proposed special legal regulation, the aim of which was to foster the fight against the virus. The Act of 2 March 2020 on special solutions related to the prevention, counteracting and combating of COVID-19, other infectious diseases and crisis situations caused by them24 (hereinafter referred to as the COVID-19 Act) was adopted promptly and covered a variety of legal areas, concerning more or less directly the issues of COVID-19. Among legal norms regarding public procurement, the COVID-19 Act presented some controversial measures. Article 6.1 of the COVID-19 Act authorises the contracting authority to refrain from applying the provisions of the PPL, if the conditions provided for within the COVID-19 Act are met. According to article 6.1 of the COVID-19 Act, if a contract is awarded to provide supplies or services necessary to counter COVID-19, the Public Procurement Law shall not apply when it is highly probable that the disease will spread in a fast and uncontrolled manner or when the protection of public health requires it. In this manner, the COVID-19 Act excluded certain contracts from the scope of application of the Public Procurement Law, regardless of their value. Therefore, there is no data available regarding joint procurement practice in respect of contracts covering COVID-19-related supplies or services. Nonetheless, it must be underlined that not only did many public purchases disappear from the public procurement system, but also the COVID-19 Act suspended the application of legal norms concerning liability for an infringement of public finance discipline, with regard to unlawful public contract modifications, or even some criminal law provisions in that regard. It is understandable that disabling the application of the Public Procurement Law gave great opportunities for quick action without currently unnecessary burdens, but going outside the PPL created huge challenges and temptations. No scientific data is available yet, but Journal of Laws 2020, item 374 (with further amendments).

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everyday practice has shown that many public contracts that were not related to COVID-19 were awarded outside the scope of the PPL. However, some contracting authorities were purchasing COVID-19-related supplies or services in accordance with the PPL. This was due to the Communication from the European Commission on “Guidance from the European Commission on using the public procurement framework in the emergency situation related to the COVID-19 crisis”,25 which was published on 1 April 2020. Pursuant to aforementioned Communication, the Commission presented a clear statement on the matter regarding the use of public procurement regulations in situations related to COVID-19. This statement had triggered some discussion on public procurement practice in Poland, leading to some doubts of a legal nature. Thus, some contracting authorities decided to act in compliance with the obligations arising from EU public procurement law.

OJ C 108I, 1.4.2020, pp. 1–5.

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17. Centralisation and central purchasing bodies in Portugal Pedro Cerqueira Gomes 1 INTRODUCTION In the past few years, Portugal has witnessed a strong trend towards centralising public purchases and consequently central purchasing bodies (CPBs) have been fairly well used in the Portuguese procurement system.1 Several reasons that justify this tendency can be pointed out. In the eyes of the Portuguese legislator, centralisation in public procurement could bring more efficiency into the procurement processes of contracting authorities through better use of human resources (professionalisation of the procurement function), and also reduce costs through economies of scale.2 However, some have argued that, in spite of this national predisposition towards centralisation, the lack of comprehensive economic and financial studies capable of measuring its effects in the Portuguese system may undermine any evaluation of this legislative trend.3

1 This movement towards centralisation in public purchases has been felt since the seventies, but more recently there has been an intensification of the phenomenon, namely with the approval of the law-decree n.º 37/2007 of 19 February, which was responsible for both the creation of the National Agency for Public Purchases and the definition of the national system of public purchases and the later law-decree n.º 117-A/2012 of 14 June; M. Caldeira, ‘A Centralização das Compras Públicas: a proposito (mas não só …) das Directivas de 2014’ (2017) 14 Revista dos Contratos Públicos, pp. 20–21. In addition, the European legislator also stresses in recital 69 of the Directive that the centralisation of public purchases is a common trend among Member States. 2 In accordance with the preambles of both law-decree n.º 37/2007 of 19 February and law-decree n.º 117-A/2012 of 14 June. 3 M. Assis Raimundo and A. França Jardim, ‘Dever de Contratar através de acordo quadro – notas ao sistema de compras públicas’, in M. Assis Raimundo, Estudos Sobre Contratos Públicos (AAFDL, 2010), pp. 271–272; M. Assis Raimundo, A Formação dos Contratos Públicos – Uma Concorrência Ajustada ao Interesse Público (AAFDL, 2013), pp. 463–470.

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The recent health and financial crises motivated by the COVID-19 pandemic have not slowed down the pace towards centralisation. Nonetheless, the focus of the legal and public debate was never the use of CPBs and their impacts. During the fight against the pandemic, the centre of the legal debate was much more on the grounds of use of Article 32(2)(c) of the Directive. The Portuguese legal order does not impose any specific limitations on this legislative trend towards centralisation and aggregation of public purchases. Nonetheless, the Portuguese Constitution sets certain frontiers that the ordinary legislator cannot cross. For instance, the principles of administrative decentralisation and the autonomy of local authorities, safeguarded by the Portuguese Constitution,4 are clear limits to the centralisation of procurement activities.5 The current legal framework on the matter does not contravene these constitutional principles, due to the fact that the centralised system for public purchases does not apply to local authorities and only to a certain extent to public institutes.6 In the next section, we shall analyse the legal framework of the Portuguese centralised system for public purchases.

2

STRUCTURE AND USE OF CPBS AND OTHER FORMS OF JOINT PROCUREMENT

The legal framework for CPBs can be found in separated laws. First, the Portuguese Public Procurement Code (PPPC), which allows contracting authorities to establish CPBs for the acquisition of works, supplies and services.7 The same law also provides for the possibility of using other CPBs outside Portugal, if certain conditions are met, namely: (i) the other CPB must be based in another Member State within the European Union and; (ii) the CPB in question must offer more advantageous conditions. Lastly, the PPPC also regulates procurement techniques used by Portuguese CPBs and other forms of joint procurement. However, the legal rules regarding the establishment, structure and function of the CPBs cannot be found in the PPPC.8 These rules are to be found in sep-

Articles 6.º and 237.º of the Portuguese Constitution. T. Serrão, ‘Centrais de compras: algumas questões de organização administrativa’, in M. Assis Raimundo (ed.), Centralização e Agregação de Compras Públicas – reflexões sobre uma tendência atual da contratação pública (Almedina, 2019), pp. 124–129. 6 For a critic perspective, see M. Assis Raimundo, A Formação dos Contratos Públicos (n. 4), pp. 468–469. 7 Article 260.º of the PPPC. 8 In accordance with article 260.º nº 3 of the PPPC. 4 5

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arate laws.9 Therefore, CPBs are regulated through separate complementary laws, which set distinctive types of entities and also different legal frameworks depending on the nature of the entity, and the sector in which they will operate. Establishment and Structure of CPBs The national system for public purchases (NSPP) for the central State was established by law-decree 37/2007 of 19 February and later amended by law-decree 117-A/2012. The creation of the NSPP was part of a larger reform, in order to modernise the Portuguese State and its services. In this regard, the NSPP aimed to integrate entities that would be legally forced to use CPBs within the NSPP and other public entities, which would only be entitled to voluntarily join CPBs on a contractual basis. The structure of the NSPP follows a hybrid model of management with several CPBs operating in a network. Therefore, the NSPP encompasses a central management entity coupled with ministerial purchasing units (UMC) and other purchasing entities. For the role of the central management entity, the Portuguese legislator has created a new legal entity, ESPAP, I.P.,10 which is a public body with legal personality responsible for purchases for the shared services of the public administration (central State). Therefore, ESPAP, I.P. is the major CPB operating under the NSPP. The organic structure and mission of this entity can be found in law-decree nº 117-A/2012 of 14 June 2021. ESPAP, I.P. is a public institute with legal personality that has a special regime regarding its capacity for implementing and developing solutions for improving the quality of the shared services of the Portuguese public administration. ESPAP, I.P. is paid by the contracting authorities that use its services. The calculation of the value to be paid to ESPAP, I.P. is made in accordance with performance levels, namely the volume of purchases and the overall saving to the entity.11 Moreover, ESPAP, I.P. is also responsible for managing all the CPBs that are part of the national system of public purchases. The UMC are also central purchasing entities that are part of the NSPP. These are ministerial departments/units responsible for public purchases, deprived of legal personality.12 Due to the number and nature of their public purchases, the Ministry of Health has created a separate entity with legal personality named SPMS, 9 Law-decree 37/2007 of 19 February, law-decree 117-A/2012 of 14 June and law-decree 200/2008 of 9 October. 10 Article 3º of law-decree 37/2007 of 19 February. 11 Portaria n.º 94/2018 of 4 April 2018. 12 T Serrão, ‘Centrais de compras: algumas questões sobre organização administrativa’, supra note 5, pp. 113–119.

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E.P.E. This entity has a commercial and administrative character13 and is exclusively responsible for the public purchases of the Ministry of Health, in accordance with law-decree 10/2010 of 22 March 2010. Finally, according to the law-decree 200/2008 of 9 October 2008, not only can the central State establish CPBs, but so too can Portuguese municipalities and the Portuguese autonomous regions (Madeira and the Azores). As an example of CPBs created by a community of municipalities, there is LIPOR (Municipality Service for the Management of Waste for the Region of Greater Porto). The legal nature of these CPBs not operating from the central State can vary from public institutes to commercial entities. In Portugal, the nature of CPBs is a plural and complex issue. As I have shown, there are CPBs with legal personality and other CPBs that are deprived of legal personality. Without careful analysis, the lack of legal personality might pose some difficulties. However, the absence of legal personality does not prohibit the classification of a certain entity as a contracting authority according to both EU and national law. Therefore, entities such as the UMC can be considered a CPB in accordance with the definition of CPBs in the Directive (Article 2(1)(16)). Who are the Users of the CPB? Entities operating in the NSPP are bound to use CPBs, mainly ESPAP, I.P. In this regard, article 5º nº 3 law-decree nº 37/2007 provides that State departments and their public institutes must acquire certain types of goods, services or works through CPBs operating in the national system of public purchasing.14 Therefore, if the contracting authority that is required, under law, to acquire goods, services or work through a CPB decides to acquire the same goods outside the CPB, that contract is considered void. In addition to the invalidity of the contract, the public official responsible for that unlawful purchase can also face disciplinary, civil and financial liability.15 The list of categories of goods, services and works which must be acquired through ESPAP, I.P. is

Article 2.º n.º 1 law-decree 19/2010 of 22 March. However, these entities can avoid acquiring through the CPB, if they prove that they can directly acquire that particular good or service on better terms (call-off mechanism). Nevertheless, if they decide to follow this option, they must expressly authorise this with the Ministry of Finance. This procedure is a bureaucratic procedure and it is almost never used. On the issue, see L. Sofia Pinto, Os Acordos Quadro no Direito da Contratação Pública (Almedina, 2011), p. 41; P. Sanchéz, Direito Da Contratação Pública, Vol. II (AAFDL, 2020), p. 816. 15 Article 5.º nº 6 law-decree 37/2007. 13 14

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approved in a government ordinance and it is subject to change over time.16 The legal doctrine has pointed out some scepticism, regarding the mandatory use of ESPAP, I.P. In the words of P. Sánchez, a truly competitive centralised system of public purchases should not need help from the national legislator to impose its advantages. Sánchez argues that contracting authorities should be allowed more freedom, in order to find different and more viable solutions from an economic and financial perspective.17 The NSPP provides that other contracting authorities, namely autonomous administrative entities or those entities that are considered to be State-owned companies, are not bound to use ESPAP, I.P.,18 but can voluntarily do so through contract or administrative mandate.19 Outside the national system of public purchases, law-decree 200/2008 allows for any contracting authority to establish a CPB, provided certain conditions are met. For instance, the constituent act of the CPB must define: (i) the objective scope – which type of contracts and activities are to be developed; (ii) the subjective scope – which entities will be covered by the CPB; and (iii) the nature of the legal relationship between the contracting authorities and the CPB (voluntary or mandatory).20 Having said that, we can conclude that contracting authorities that are not part of the NSPP have a significant degree of discretion to create any CPB for their procurement activities. Nonetheless, the same degree of freedom does not apply when a given contracting authority wants to simply join other pre-existing CPBs. In this case, this possibility must be included in the law of the CPB in question.21 How Are CPBs Financed? The laws or the constituent act of the CPB can define different forms of remuneration for the CPB. In this regard, several examples can be given. For instance, ESPAP, I.P., operating in the NSPP, is remunerated through the purchasing entities. However, the terms of this remuneration can be defined 16 Portaria n.º 772/2008 of 6 August later amended by Portaria n.º 103/2014 of 14 April. In addition, the Portuguese government, through a resolution of the ministerial council, has extended this regime to the acquisition of electricity, fuel and natural gas. 17 P. Sanchéz (n. 14) p. 818. 18 Article 3.º n.º 3 law-decree 37/2007. 19 Article 7.º n.º 2 law-decree 37/2007. 20 Article 4.º law-decree 200/2008. 21 Article 262.º n.º 2 of the PPPC. In addition, according to article 260.º nº 4 of the PPPC, which partly implements Article 39 Directive 2014/24/EU, contracting authorities shall not be forbidden to use centralised purchasing bodies located in another Member State, provided that these CPBs offer more favourable conditions. However, this last possibility has not been used in Portugal.

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through an ordinance of the Minister of Finance, taking into account appropriate performance indicators, namely the volume of purchases or savings generated.22 Likewise, SPMS, E.P.E. is also financed by their activities. However, law-decree 19/2010 provides more detail regarding the sources of financing of SPMS, E.P.E. In summary SPMS, E.P.E. can also be remunerated by contributions, appropriations, subsidies and financial compensation from the State or other public bodies; donations, inheritances or legacies intended for it; any other income or values deriving from its activity or which, by law or contract, should belong to it; or even by a portion of the savings obtained through the centralisation of purchases of goods and services. Cross-Border Procurement After the transposition of the 2014 Directives for public procurement, the Portuguese legal framework allows for forms of joint procurement which can offer the possibility for cross-border procurement. One possible way is through occasional joint procurement, which can be carried out with contracting authorities from other EU Member States provided they have concluded a prior agreement establishing the responsibilities of the parties, the applicable national provisions and the internal organisation of the procurement procedure, namely it its management and the conclusion of future contracts.23 Another possibility for Portuguese contracting authorities is to entrust CPBs in other EU countries with the task of conducting their procurement activities, when these other European CPBs offer more advantageous conditions compared to those offered by the national CPBs.24 National contracting authorities may also associate themselves with one or more contracting authorities from other Member States, through the creation of a new common legal entity, in particular in the form of a European Grouping of territorial cooperation under Regulation (EC) No. 1082/2006 of the European Parliament and of the Council. Following the transposition of Article 39(5) of the Directive, in order to solve the potential conflict of procurement laws, the PPPC demands that the competent body of the joint entity agrees on the applicable law.25 Cross-border procurement poses a great number of legal difficulties, mostly connected with conflict of laws on both the procedural aspects and the execu Article 15.º of law-decree 37/2007. Article 39.º n.º 7 of the PPPC. 24 In this case the contract is governed by the national provisions of the respective State of the CPB, see article 260.º n.º 4 and 5. 25 Article 39.º n.º 8 and 9.º of the PPPC. 22 23

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tion of contracts, due to the intersection with more than one jurisdiction.26 That said, although these provisions have been transposed into the Portuguese legal system, the difficulties in their implementation make these rules a ‘dead letter’ in the Portuguese public procurement system and so far, these possibilities have never been used. Efficiency and Policy Issues The national policy behind the creation of CPBs has already been mentioned in the introduction to this chapter. CPBs should bring more efficiency into the procurement process of contracting authorities through better use of human resources, but also by reducing costs through economies of scale. However, the lack of relevant data on the activities of Portuguese CPBs undermines any analysis of its efficiency. One of the few audits of the NPSS, conducted by the Court of Auditors, has precisely recommended, among other aspects, the need to revise the methodology of data collection under the NPSS and its connection with the public procurement electronic platforms.27 In the same audit, the Court of Auditors concluded that CPBs’ activities were increasing the amount of savings made. Nonetheless, the same audit has concluded that some aspects needed revision, namely the inflexibility of framework agreements once in place and the drafting of the tender documents. More recently CPBs have played a role in promoting strategic procurement. For example, in 39.5% of awards made by SPMS, E.P.E. under the framework agreement covering 2017–2019, environmental criteria were included, namely in technical specifications, selection of economic operators or even in the award criteria.28

26 The difficulties arising from this procedure were recognised by the European legislator in recital 73, Directive 2014/24/EU. For a critical perspective, see A. Sánchez-Graells, ‘Is Joint Cross-Border Public Procurement Legally Feasible or Simply Commercially Tolerated? – A Critical Assessment of the BBG-SKI JCBPP Feasibility Study’ (2017) 12(2) European Procurement & Public Private Partnership Law Review, pp. 97–111. 27 Court of Auditors, n.º 25/2015, 2.ª S, Processo n.º 21/2015. 28 Court of Auditors, Auditoria às Compras Públicas Ecológicas, Relatório, Abril de 2020, pp. 43–44.

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PROCUREMENT TECHNIQUES

Types of Techniques and Agreements The issue of the types of techniques and agreements that CPBs used in Portugal is intrinsically connected to their main activities. The CPBs focus on two major activities: (i) CPBs can act as wholesalers by buying, stocking and reselling goods or services; and (ii) CPBs can also act as an intermediary in some cases by conducting the relevant award procedures autonomously, without detailed instructions from the contracting authorities concerned; or in other cases, by conducting the relevant award procedures under the instructions of the contracting authorities concerned, on their behalf and on their account.29 In summary, CPBs can award contracts for the acquisition of goods, services or works on behalf of the contracting authority; conclude framework agreements mostly for supply of goods, services or works; and establish dynamic purchasing systems and electronic catalogues. In Portugal, the tendency of CPBs is to favour framework agreements as the main procurement technique to procure goods, services or works, so e‑catalogues30 and DPSs are rarely used. This could be explained as being due to the structural difficulties surrounding the use of DPSs and e‑catalogues. Regarding the use of DPSs, it was never a real option until the end of 2017, despite their ability to overcome certain competition issues of framework agreements.31 The ability of DPSs to allow new economic operators to enter into specific agreements (article 241.º-A of the PPPC) makes a DPS a more attractive procurement instrument. By allowing the entrance of new economic operators, it can have a significant positive impact on a given market and therefore safeguard competition. This need to safeguard competition becomes more acute in those cases where public entities are forced by law to acquire goods or services through a specific CPB. However, DPSs can only be used for the acquisition of goods and services in ‘current use’ and for works contracts with reduced technical complexity (article 237 of the PPPC). Having said that, we are going to restrict our analysis to framework agreements.

Article 261.º PPPC. In the same vein as recital 69 Directive 2014/24/EU. M. Assis Raimundo, ‘Catálogos Eletrónicos e sistemas de aquisição dinâmicos no anteprojecto de Revisão do CCP’, in M. Estorninho and A. Gouveia Martins (eds), Atas da Conferência – A Revisão do CCP (ICJP-CDIP, 2016), p. 245. 31 M. Assis Raimundo, ‘Os sistemas dinamicos na “caixa de ferramentas”’, in M. Assis Raimundo (ed.) (n. 5), p. 329. 29 30

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Award of Framework Agreements and Contracts National practice shows that CPBs tend to use the open or the restrictive procedure for the award of framework agreements.32 Two different types of framework agreements are provided for in the PPPC. If the framework agreement covers all aspects that are subject to competition, the procedure for the award of future contracts must be simplified. Thus, in this case contracting authorities are entitled to use the direct award, by taking into account objective criteria previously set in the tender documents.33 Moreover, in accordance with the case law, this objective criterion must have a connection with the contractual conditions.34 Alternatively, if the framework agreement does not cover all aspects that are subject to competition, the contracting authorities must engage in a prior consultation.35 The prior consultation procedure follows the same rules as the direct award. However, in this case the contracting authorities must invite at least three economic operators to present proposals, which increases the level of competition when compared to the direct award procedure. In this case, regarding the award criteria, the most economically advantageous tender should be assessed on the basis of the best price–quality ratio. Changes in Agreements Framework agreements are categorised by their rigidity when it comes to future amendments. The rule is that no previously selected economic operator may be invited to submit a proposal under the framework agreement.36 The same degree of rigidity does not apply to contracting authorities when they want to join framework agreements to which they were not initially a party. This latter possibility must be described in detail in the tender documents, in order to be compatible with EU law requirements.37 Contracts concluded under a given framework agreement may not lead to substantial changes in the conditions set out in the procedure for the award of the framework. There are, however, exceptions in this regard. If the tender documents expressly allow, contracting authorities may update the characteristics of the goods or services to be purchased under the framework agreement 32 Article 253.º of the PPPC. See, Acórdão Supremo Tribunal Administrativo, 26-01-2017, processo 01213/16. 33 Articles 252.º n.º 1(a) and 258.º of the PPPC. 34 Tribunal de Contas n.º1/2013 (Processo. 1481/2012). P. Sanchéz (n. 14), p. 783. 35 Articles 252.º n.º 1(b) and 259.º of the PPPC. 36 Article 257.º n.º 1 of the PPPC. 37 In this vein, recital 60 of Directive 2014/24/UE.

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by amending them or replacing them with others, provided that the type of service and the objectives of the specifications set out in the procedure for forming the framework agreement are maintained and also that this is justified in the event of technological innovations.38 Finally, concerning contracting authorities that are legally bound to use a CPB, since 2017, the PPPC gives them the possibility to acquire goods and services outside the framework agreement (call-off contracts) if certain strict and complex criteria are met.39 Nonetheless, this procedure can be extremely slow, which might indicate that the Portuguese legislator is not very willing to give up mandatory acquisition through CPBs.40

4

COMPETITION AND SME ASPECTS

Concerns Regarding Competition Law and Participation of SMEs The intersections between competition law and public procurement law are frequent in the Portuguese system, covering many aspects, from the existence of cartels or other unjustified restrictions of competition present in the procedures for the formation of contracts or even in the context of contractual amendments. Nonetheless, regarding the centralisation of public purchases and the use of framework agreements, some issues should be mentioned. Framework agreements, as already described, are categorised by a certain degree of inflexibility. As mentioned in section 3 above, contracts concluded under a given framework agreement may not lead to substantial changes in the conditions set in the procedure for the award of the framework. The recent change in the law now provides, however, for certain changes under certain requirements, namely in the event of technological innovations, since the type of goods, services or works remains the same as well as the objectives of the technical specifications.41 This provision aimed to facilitate competition and had a positive impact in the health sector and on the framework agreements made by SPMS, E.P.E.42 For instance, if new types of drugs are available and are cheaper this may justify a change or update under article 257(3) PPPC.

38 Article 257.º n.º 3 of the PPPC. For more developments, see A. Guerra Martins, ‘Os acordos-quadro e os contratos celebrados ao seu Abrigo’, in M. Assis Raimundo (ed.) n. 5, p. 241. 39 M. Real Martins, ‘A centralização das compras públicas no setor da saúde em Portugal’, in M. Assis Raimundo (ed.) n. 5, p. 452. 40 Article 256.º-A of the PPPC. 41 Article 257(3) of the PPPC. 42 A Mimoso, ‘A saúde das compras públicas – centrais de compras no âmbito do CCP’ (2018) 1 Revista de Direito Administrativo, pp. 78–82.

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This measure could be seen as a new path for innovative SMEs to enter these framework agreements. This issue could indeed be overcome with the use of dynamic purchasing systems. However, this instrument is rarely used by CPBs, because it is considered too complex to allow the inclusion of new players in the agreement.43 Second, framework agreements tend to be of long duration. According to the PPPC, they can last a maximum of four years but in exceptional cases they can last longer. During their term, no new economic operators are admitted, allegedly to safeguard competition in the procedure leading to that specific framework. This clearly closes the market for that time period – particularly if they are bound to purchase through that framework agreement, as is the case with the NSPP.44 Finally, CPBs and centralisation of public purchases may also pose some issues of abuse of public buying power, which can reduce the participation of SMEs.45 In practice, the available data do not suggest that there is any discrimination against SMEs. However, some argue that due to their potential impact in a given market, the creation of CPBs must be subject to regulatory control from the Portuguese Competition Authority under the same terms as apply to control of mergers.46 Are CPBs Solely for the Use of Public Sector Entities or Can They Also Sell to Private Users? CPBs are mostly used by public sector entities. There is no specific provision in the law forbidding CPBs to provide services to private users. For instance, according to statutory law, ESPAP, I.P. can conclude contracts with private entities.

5

LIABILITY BETWEEN CPBS AND THEIR USERS

Contract Management As to contract management, CPBs usually make sure that the requirements stipulated in the agreements are complied with. It is mandatory for the con Ibid., p. 80. See articles 252.º n.º 2; 256.º n.º 1 and 257.º of the PPPC. 45 On this topic, see N. Cunha Rodrigues, A contratação pública como um instrumento de política económica (Almeida, 2013), pp. 378–420. 46 B. Zêzere Barradas, ‘Direito da contratação pública e direito da concorrência : da separação à sobreposição de regras aplicáveis : em especial o caso das centrais de compras’ (2016) 6 Revista do Instituto do Conhecimento AB Instantia, pp. 239–241. 43 44

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tracting authority to appoint a contract manager for every contract. The main function of the contract manager is to continuously monitor the contract, in order to assess compliance with legal obligations and whether the contract is being punctually fulfilled and the public interest defended.47 Rules Relating to Enforcement and Remedies CPBs’ activities in Portugal can be monitored by the Portuguese court of auditors. Furthermore, CPBs are subject to the same rules as any public entity with regard to public liability and the lawfulness of contracts, in respect of which there is a specialised jurisdiction to solve possible disputes. However, when compared to other contracting authorities, CPBs show a low level of court disputes. For example, in 2016–2019, only 0.3% of SPMS, E.P.E.’s contracts were challenged in court.48 Consequences in the Event the Agreement Was Unlawfully Entered into by the CPB This has already been mentioned in this chapter. When a contracting authority is bound by law to acquire certain goods, services or work through a CPB, and decides to acquire those goods, services or work outside the CPB, that contract is considered void.49

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COVID-19 AND JOINT PROCUREMENT

It is clear that COVID-19 has change the priorities of every single contracting authority, mostly regarding the acquisitions of products and services needed to fight COVID-19. The urgent need for medical equipment, protective equipment and respirators, among others, was the priority for every contracting authority. In that sense, law-decree 10-A/2020 of 13 March created a special legal framework, which allowed every contracting authority to purchase products and services necessary for the fight against the pandemic through a direct award procedure.50 Accordingly, entities covered by the NSPP were given the possibility to purchase products and services for the fight against COVID-19

Article 290.º-A of the PPPC. Data available in A. Mimoso, ‘Novo Sistema Nacional de Compras Públicas – Uma oportunidade’, unpublished dissertation, Universidade Católica Portuguesa, 2020, pp. 13–17. 49 Article 5 nº 6 law-decree 37/2007. 50 Article 2 law-decree 10-A/2020. 47 48

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outside a given framework agreement.51 However, these acquisitions by direct award must be made only if strictly necessary and for reasons of extreme urgency. Outside this special legal framework, COVID-19 has also speeded up the need for modernisation of the health sector, mostly through the development and acquisition of new hardware and software; this has been carried out mainly through framework agreements set up by SPMS, E.P.E.

Article 2 nº 7 law-decree 10-A/2020.

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18. Central purchasing bodies in Romania Roxana Vornicu and Dacian Dragos 1 INTRODUCTION Aggregated procurement does not have a long-standing tradition in Romania. It was first regulated under the initial Act transposing the EU acquis on public procurement1 and until 2018, there were only three CPBs actively organising procurement procedures; these were sectoral purchasing bodies, namely, the Ministry of Health, the General Inspectorate for Emergency Situations and the National Prisons Administration. These bodies themselves had only been designated as CPBs within the previous three years. The activity of these CPBs is regulated by special secondary legislative instruments, such as the Government Emergency Ordinance 71/2012 on designating the Ministry of Health as a CPB.2 According to article 2 of this Ordinance, the Ministry of Health signs framework agreements on behalf of the public health bodies, both central as well as local. The call-offs are signed and implemented by these users pursuant to a permit issued by the Ministry of Health. The Act’s provisions are further detailed through Orders issued by the Ministry of Health approving the methodological norms for centralised procurement of medicine, sanitary materials and equipment, services, and fuel for vehicles.3 Similar legislative instruments were enacted to regulate the aggregated procurement by the National Prisons Administration, i.e. Government Decision no. 756/2016 for the organisation and functioning and attributions of the National Prisons Administration, which establishes that the CPB is in fact the Department of Procurement, Management and Reparation, a department within the National

1 Government Emergency Ordinance 34/2006 published in the Romanian Official Journal 418/2006. 2 Government Emergency Ordinance 71/2012 published in the Romanian Official Journal 794/2012. 3 Order of the Ministry of Health no. 1282/2012 on the approval of methodological norms for centralised procurement of medicine, sanitary materials and equipment, services, and fuel for vehicles.

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Prisons Administration.4 The third functioning CPB in Romania is the General Inspectorate for Emergency Situations established through Government Decision no. 74/2017 for the purchase of ambulances and ambulance services.5 The designation of this Inspectorate as a CPB is interesting as this was done to address a specific problem which appeared at a specific moment in time. The normative Act designating the National Inspectorate for Emergency Situations (NIES) as a CPB lists the ratio legis in its recitals and mentions that the government had decided to take this action given that lately there is an increased demand for ambulances and the use of used, degraded ambulances has become risky, considering that more than 400 ambulances that are degraded are being used and endanger the life of the users … considering that the lack of ambulances affect the emergency health care dedicated to 2 million people, … considering that centralised procurement can help obtain better value for money.6

The general regulations on CPBs are found under article 3 (definitions) and articles 40–43 of the general procurement regulations (Law 98/2016 on public procurement7). These provisions faithfully implement the provisions of Article 37 of the Directive. The provisions on cross-border procurement are regulated under articles 45–47 of Law 98/2016. In 2018, advances were made in respect of CPBs, and the National Office for Centralised Procurement (NOCP) was established. To regulate the activity of the NOCP, the Government issued Emergency Government Ordinance 46/2018 on the creation, organisation and functioning of the National Office for Centralised Procurement.8 This instrument is completed by methodological norms on its application.9 The creation of the NOCP and the recently enacted regulations related to its functions are part of a wider strategy to reform the national procurement system, which dates back to 2015. This strategy was adopted through 4 The procurement carried out by the central purchasing body is regulated under Order 2725/c/2017 on the approval of the Regulation for the organisation and functioning of the Department of Procurement, Management and Reparation of the National Prisons Administration, published in the Romanian Official Journal 525/2017. 5 Government Decision no. 74/2017 published in the Romanian Official Journal 817/2017. 6 See the recitals of Government Emergency Ordinance no. 74/2017 designating the General Inspectorate for Emergency Situations as a Central Purchasing Body, published in the Romanian Official Journal 817/2017. All the translations are ours. 7 Law 98/2016, published in the Romanian Official Journal. 8 Emergency Government Ordinance 46/2018, published in the Romanian Official Journal, 7 June 2018. 9 Emergency Government Ordinance 46/2018, published in the Romanian Official Journal, 27 February 2019.

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a statutory instrument, i.e. Government Decision no. 901/2015 (hereinafter the Strategy).10 The Strategy is written in a narrative and coherent fashion, describing both the challenges that Romania faces with respect to its public procurement system as well as the solutions that need to be implemented in order to tackle them. The Strategy stresses the importance of centralised procurement and depicts it as a key instrument in Romania’s attempts to improve its EU funds absorption rate. However, between 2015 and 2018, none of the steps mentioned in the Strategy were taken. The legislative Act establishing the creation of the NOCP expresses these political views in its recitals, stating that the creation of CPBs was one of the conditions imposed on Romania by the Partnership Agreement approved by the European Commission through Decision C(2014) 5.515 of 4 August 2014. The recitals say: ‘… having regard that, contrary to the provisions listed in the Partnership Agreement, there are no CPBs that can help central authorities purchase certain services and products, which could affect the structural funds finance for the 2014–2020 budget, this issue needs therefore to be urgently addressed’. Therefore, rather than a political will for the creation of CPBs, what we are experiencing in Romania is a political will to comply with the conditions imposed by the European Commission. This is partially a positive aspect; still, it could be argued that this transparently expressed ratio legis shows a lack of maturity of the Romanian legislator when it comes to identifying solutions for improving our national procurement system because rather than being strategic and adapted to the national market, the measures it has taken so far are meant to address specific problems and respond to external pressure.

2

STRUCTURE AND USE OF CPBS AND OTHER FORMS OF JOINT PROCUREMENT

How Are CPBs Structured? All the CPBs including the most active one, the NOCP, have nationwide geographical coverage. The goods and services that are to be provided by the NOCP are listed in its statutory Act, which governs its functions. Specifically, the NOCP buys fuel, paper, furniture, hardware, cars, stationery, mobile telephone services, lighting devices, cleaning products and services and products that are widely used and standardised; these types of standardised products are identified via

10 Government Decision no. 901/2015, published in the Romanian Official Journal, no. 881, 26 October 2015.

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government decision with little or no discretion of the CPB in deciding which products they can buy via framework agreements. This limitation is established under article 3 of the Methodology for the application of Government’s Decision 46/2018 on the creation of the NOCP. The CPBs functioning in Romania are all public authorities. There are no CPBs with private partners/shareholders; not because the law forbids it but simply because it hasn’t happened. The CPBs do not act as wholesalers and they do not provide ancillary purchasing activities. Who Are the Users of the CPB? As per article 6 of the Methodology for the application of Government Decision 46/2018 on the creation of the NOCP, the main users (central public bodies) have an obligation to register as users, whereas the secondary users (all other public bodies) can choose whether to register as users or not. Once the NOCP informs the users of a certain centralised procurement procedure, those users are no longer allowed to purchase the same goods or services through a different procedure. Government Ordinance 46/2018 on the creation, emergency organisation and functioning of the NOCP establishes that there are two types of users: (i) main users and (ii) secondary users. The main users are CPBs or public bodies working under the supervision of central public bodies. Secondary users are the contracting authorities which are not main users as per the definition above.11 The NOCP has already published the Register of Users on its web page and so far it seems that there are 2933 users registered.12 It is mandatory for the main users to purchase the relevant goods and services through the NOCP, whereas the secondary users merely have a right to access the framework agreements and DPS. These goods and services are fuel, paper, office furniture, hardware, vehicles, interior lighting, cleaning products, mobile phone services, cleaning services, and other standard type products that need to be purchased in high volumes, as approved by a Government memorandum.13

Article 2 of Government Emergency Ordinance 46/2018. See: Officiul National pentru Achizitii Centralizate, ‘Registru Utilizatori’ (Onac), http://​onac​.gov​.ro/​informatii​-de​-interes​-public/​registru​-utilizatori/​, accessed 22 March 2021. 13 Article 3 of the Methodological Norms for the application of Government Emergency Ordinance 46/2018. 11 12

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How Are CPBs Financed? The CPBs are financed from taxpayers’ money, through the normal state budget. All the CPBs functioning in Romania are non-profit-making. As mentioned above, the Ministry of Health itself is a CPB, whilst the National Prisons Administration functions as a department of the Ministry of Justice, and the National Inspectorate for Emergency Situations (NIES) is subordinated to the Ministry of Internal Affairs. Other Roles of CPBs The NOCP’s activity is subject to the principles listed under article 4 of Emergency Government Ordinance 46/2018, namely the optimisation of the procurement process based on added value and improved legal certainty through aggregated procurement, increased transparency in public procurement, increased professionalisation in the procurement system and availability of goods and services for users.14 The main attributions of the NOCP are to sign framework agreements on behalf of its users, whereas the users themselves will sign the call-offs or the DPS contracts. The NOCP also has more systemic functions as it collects information on the needs of users and establishes the annual programme for centralised procurement; it makes available to all its users the framework agreements it has signed; it monitors the performance of the call-offs; and represents the users before the courts of justice.15 Cross-Border Procurement None of the active CPBs in Romania has been involved in any cross-border procurement process. However, during the preparation of the present chapter, we have contacted the NOPC through an official letter with questions regarding their activity.16 As far as cross-border procedures are concerned, the NOPC replied that they have never been involved in one but have instead applied to be included in an Operational Programme called ‘Developing and implementing electronic integrated mechanisms for organising and monitoring centralised procurement’, and that in this programme, collaboration between CPBs from various Member States is envisaged.

Article 4 of Government Emergency Ordinance 46/2018. Article 5 of Government Emergency Ordinance 46/2018. 16 NOPC’s official reply no. 2409/27-08-2019. Email from NOPC to author (27 August 2008). 14 15

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Efficiency and Policy Issues CPBs do not have a particular role in the fight against corruption but strategic procurement is very much on the NOPC’s agenda. Based on their official reply, the Office stated that one of the main objectives is, specifically, green procurement and in general, strategic procurement. Although no specific measures have been taken, NOPC intends to organise a procedure for the purchase of mobile phone services and intends to include the objectives of strategic procurement in the tender documentation. Since the NOPC is still in its infancy, there has as yet been no study showing the economic effectiveness of its purchasing practices.

3

PROCUREMENT TECHNIQUES

The CPBs in Romania have never used dynamic purchasing systems, probably due to the immaturity of the Romanian procurement system in general. The framework agreements they use are custom built and they are adapted depending on the procedure and on the type of goods/services/works that they purchase. The only contract that is mandatory in Romania is the national works contract, adopted through Government Decision no. 1/2018.17 This standard contract is mandatory for all the works purchased under the procurement regulations and it is in fact an International Federation of Consulting Engineers (FIDIC)-inspired contract. Should the NOCP or any other CPB purchase works, then the standard national contract will have to be used. In terms of services and goods, there is no such obligation. When asked about the contractual provisions that they use and the type of framework agreements included in the tender documentation, the NOCP replied that they adopt the framework agreement and the call-off model for all the procedures. Types of Framework Agreements The NOCP replied to our official question regarding the management of wrongful estimates and mentioned that it is the users’ responsibility to correctly make the estimates. The NOCP also explained that in the electronic system software that they use, the users have the possibility of adjusting the estimates initially communicated to the Office. These communications happen in the preparation stage of a procedure.

17 Government Decision no. 1/2018 published in the Romanian Official Journal 26, 18 January 2018.

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The legislation applicable to the NOCP does not bring additional clarifications as to the types of framework agreements that can be signed by the NOCP, so the general provisions under the procurement regulations apply. The NOCP is responsible for sending the necessary documentation to all users so that they can sign the call-offs. The users are bound by the standard call-off contractual model included in the tender documentation for the award of the framework agreement.18 Once they are registered as main users, contracting authorities using the framework agreements do not have the right to purchase the same objects via a new procurement procedure, unless the framework agreement or the dynamic purchasing system in question is not available and the NOCP informs the main users in this regard in writing. Issues in Respect of Contract Management Article 5 of Emergency Government Ordinance no. 47/2018 establishes that the NOCP has a monitoring function in respect of the framework agreements it concludes. As a consequence, more detailed legislation (methodological norms) sets out that the NOCP has the right to request information from all users about the implementation of the contracts. The NOCP centralises the information received from users periodically and drafts reports describing the evolution of the centralised procurement system.19 As far as electronic procurement is concerned, the law establishes that both users as well as the NOCP need to make available to one another all documents via e‑procurement tools. Changes in Framework Agreements Rather rudimentary types of framework agreements are being signed by Romanian contracting authorities/CPBs. The framework agreements are not necessarily encouraged by the Romanian National Procurement Authority. In a guidance note on framework agreements published on the Romanian National Public Procurement Authority’s website, it states the following: ‘whenever a contracting authority uses a framework agreement without it being necessary, the disadvantages are bigger than the advantages and the contracting authorities’ activity becomes ineffective’. The National Public Procurement Authority recommends that contracting authorities do not use framework agreements in the following situations: (i) when they do not know

18 Article 19 of the Methodological norms for the application of the Emergency Government Ordinance no. 47/2018. 19 Article 20 of the Methodological norms for the application of the Emergency Government Ordinance no. 47/2018.

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the quantities they will purchase even if successive purchases of the same product are anticipated; (ii) for new investments, when they are made for projects with a precise purpose; (iii) for purchase of complex products or services or whenever the methods or methodology of production are unpredictable.20 This is not a provision under a statutory Act but rather guidance coming from the National Public Procurement Authority and it is rather unfortunate, as it reveals how little use we make in Romania of framework agreements and how reluctant Romanian authorities are when it comes to using framework agreements for more complex purchases. Requirements Relating to Estimates There is no specific Romanian case law on wrongful estimates of framework agreements and no particular guidance coming from the Romanian National Public Procurement Authority. However, prior to the decision issued by the CJEU in C-216/17, Autorità, the National Authority was asked to interpret and clarify the situation of wrongful estimates of framework agreements. Such interpretations are published on the Authority’s website. They have the effect of a soft instrument/guidance and are not enforceable. Still, practitioners tend to comply with them. The courts, however, would not consider themselves bound by these interpretations. When asked to issue guidance on this topic in 2016, the National Public Procurement Authority mentioned that maximum and minimum quantities of a framework agreement were flexible and could therefore vary. However, more recently, the National Authority published an instruction on the modification of contracts. This is a normative administrative Act and is therefore enforceable.21 It mostly reaffirms the EU and national law and case law on modification of contracts and outlines that the exact same rules apply to framework agreements, and thus any increase in price should be interpreted as per the general provisions on contract modification.

20 See: Agentia Nationala Pentru Achizitii Publice, Notificare cu privire la utilizarea acordului–cadru (ANAP, 10 October 2018), http://​anap​.gov​.ro/​web/​notificare​-cu​ -privire​-la​-utilizarea​-acordului​-cadru/​, accessed 22 March 2021. 21 See Instructiunea 1/2021, available at: Agentia Nationala Pentru Achizitii Publice, ‘ANAP a publicat Instrucțiunea privind derularea și modificarea contractului de achiziţie publică’ (ANAP, 28 December 2020), http://​anap​.gov​.ro/​web/​anap​ -a​-publicat​-instructiunea​-privind​-derularea​-si​-modificarea​-contractului​-de​-achizitie​ -publica/​, accessed 22 March 2021.

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4

COMPETITION AND SME ASPECTS

Concerns Relating to Competition Law As per the sources available when drafting this chapter, competition aspects and centralised procurement are only reflected in one document, namely the Competition Council’s Investigation Report for the analysis of the wholesale medicine market.22 This report mentions that the centralised procurement of drugs does entail the disadvantage of posing competition law risks. These risks include restricting access to the market for new products throughout the duration of the implementation of a framework agreement as well as temporarily blocking access to the market for the suppliers who did not win the bid, with the direct consequence that, in time, the number of suppliers decreases, leading to an increase in prices and a lack of an alternative for consumers. The report also mentions that it is very important for consumers to be able to use new products that only appeared on the market after the date of the framework agreement. However, the report also mentions that, when the drugs are not purchased through a centralised procurement procedure, the fragmentation might lead to increased practice costs and increased tender costs as well as budget limitations that centralised procurement does not have.23 Furthermore, when asked, the NOCP mentioned that they do consider competition law aspects before and throughout all their procedures and that delegates of the competition council will be present prior to the preparation of the documentation of the second procedure (for fuel) that they intend to launch. Participation of SMEs The NOCP, in its response, stresses that the Office is committed to considering SMEs and mentions that in view of so doing, they divided the contract of the first procedure into lots. As a consequence, some of the tenderers were SMEs (four out of the six who submitted an offer).24

22 See the Competition Council’s Investigation Report for the analysis of the wholesale medicine market, available online in Romanian: Daniela Raluca Papacu, Raport privind investigaţia utilă pentru cunoaşterea pieţei distribuţiei angro de medicamente din România’ (Romania Consiliul Concurentei), www​.c​ onsiliulc​oncurentei​.ro/​ uploads/​docs/​items/​bucket6/​id6495/​raport​_total​.pdf, accessed 22 March 2021. 23 Ibid. 24 NOPC’s official reply no. 2409/27-08-2019. Email from NOPC to author (27 August 2008).

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LIABILITY BETWEEN CPBS AND THEIR USERS

Rules Regarding Enforcement and Remedies Article 10 of Emergency Government Ordinance 47/2018 establishes that claims related to the decisions issued by the NOCP during the award procedure of the framework agreement should be brought against the NOCP. The NOCP stands before the CJEU as the representative of its users and the users will be represented by the NOCP in disputes related to: (i)

claims for annulment or ineffectiveness of the framework agreements and call-offs whenever the call-offs are signed by the NOCP, not on behalf of the users, but in its own name; (ii) claims regarding the performance, termination and unilateral termination of the framework agreement.

This provision of article 10 of Emergency Government Ordinance 47/2018 is slightly confusing since the same legislative Act establishes under article 3 that the NOCP performs its functions by acting on behalf of its users, thus suggesting that it would not enter agreements in its own name. Since the NOCP has only organised one tender procedure thus far, it is still too early to have a clear view of how the provisions of article 10 will be applied in practice. The provision does make sense, though, provided that there is indeed the possibility for the NOCP to sign a call-off contract in its own name and not on behalf of its users, and article 10 is therefore not redundant. At the same time, users will have locus standi in disputes regarding the performance of call-off contracts that they have entered into. More specifically, the users have locus standi in the following disputes: (i) performance of call-offs signed by users; (ii) annulment and ineffectiveness of call-offs. There are no specific provisions under Romanian law addressing the issue of liability between a CPB and its users. Article 10(3) of Emergency Government Ordinance 47/2018 establishes that, in relation to disputes where NOCP has locus standi (see above), then NOCP will also be responsible for the enforcement of such judicial decisions, as well as liable for damages. However, this legal provision refers to the NOCP’s obligation to make good the damage caused to tenderers or interested economic operators, and not the liability between the CPB and its users. The other normative Acts regulating the sectoral CPBs do not contain any such legal provisions.

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The Consequences if the CPB Has Entered into the Agreement Unlawfully Romania has seen very little case law on the legality of agreements signed by CPBs. At the time of writing, there have been several decisions on claims brought against the Ministry of Health’s award decisions regarding the framework agreement.25 However, these disputes arose prior to the call-offs, so they do not clarify the relationship between the CPB and the users and are only relevant due to the way in which the contracting authority had applied the evaluation criteria.

6

COVID-19 AND JOINT PROCUREMENT

During the COVID-19 pandemic, the NOCP had an important role in the purchase of medicine and equipment. Initially in Romania, in February 2020, the government adopted regulatory measures exclusively to tackle the health crisis, consisting of rules applicable to the centralised procurement of medicine, equipment and other supplies needed in the hospitals. At that point, the NOCP was designated as the body responsible for purchasing the necessary equipment, but it soon became evident that purchases via the NOCP would not be sufficient. The NOCP used the negotiated procedure without prior notice during the pandemic. However, on 13 March 2020, the President of Romania issued Decree 195/2020, declaring the state of emergency for a month, but later prolonged through another presidential decree. This decree contained provisions relevant to several fields, such as health care, economics and justice. As far as the economic measures are concerned, the decree established a series of derogations applicable to the public procurement field. Specifically, article 10 of the Decree established that the medicine and equipment needed in the fight against the pandemic could be bought via direct award. What this provision entailed was that such public purchases could be made via direct award, irrespective of their value, because the Romanian regulations on public procurement already allowed the direct award of public contracts but only when their value was lower than about €27,000 for supplies and services and €95,000 for works. Many of the public bodies that bought medicine and equipment during the state of emergency awarded their contracts directly and this has engendered quite a number of debates amongst practitioners, particularly given that the

25 See for instance Decision 309/2017, Bucharest Court of Appeal; Decision 2651/2016, Bucharest Court of Appeal; Decision 1102/2017, Bucharest Court of Appeal, all available at Sintact.ro.

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European Commission recommended the use of the negotiated procedure without prior notice, as opposed to the direct award of contracts.

19. Central purchasing bodies in Spain Patricia Valcárcel Fernández 1 INTRODUCTION In Spain, centralised public purchasing of goods and services has a regulatory history stretching back over 50 years. The 1965 State Procurement Law already envisaged that supply contracts referring to “goods that are consumable or easily deteriorated by use” would be verified through a purchasing board in each Ministerial Department. In turn, Law 30/2007 – the legislation which transposed Directive 2004/18/EC – retains the previous possibility and extends the scope of application of these techniques, including not only supplies and services but also works. This regulation was the one in force until the approval of the current Law 9/2017, of 8 November, on Public Sector Contracts (LCSP), which transpose the Directive.1 From a practical perspective, it must be acknowledged that a fundamental fact which in Spain gave rise de facto to an important development of CPBs was the context of the economic crisis experienced in 2007–2008.2 Although there is no political opposition to the development of CPBs or the centralisation of purchasing, and despite the fact that with the crisis this possibility increased, there is still room to boost it. One characteristic of the Spanish centralised purchasing model is that, to date, it has been consolidated more as a system for rationalising contractual management within each organisation (within each territorial contracting authority) (inter-organic organisation formula) than as a collaborative purchasing system; i.e., for acquisitions made for/between different contracting authorities (intersubjective collaboration formula).

1 Currently, CPBs are regulated under articles 227–230 of the Spanish Law on Public Sector Contracts (herein after, LCSP). 2 Worthy of note within the State setting is the fact that the CORA Report, drafted in 2013, recommended extending the use of joint purchasing formulas in light of the significant savings in resources obtained through centralisation.

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There is no official information about the number of CPBs that currently exist in Spain, but it is estimated that there are around 40 in the three territorial levels (State, regional and local).

2

STRUCTURE AND USE OF CPBS AND OTHER FORMS OF JOINT PROCUREMENT

How Are CPBs Structured? Although the Spanish Law on Public Sector Contracts3 states that public sector entities – generally speaking – may centralise the contracting of works, services and supplies, attributing it to specialised services, the law particularly refers to centralisation taking into account the territorial organisation of Spain, that is, mainly considering the different territorial levels. State level: The general regime and structure of the General State Administration for centralised procurement is complex.4 The General Directorate for Rationalisation and Centralisation of Procurement was created in 2013,5 as a governing body dependent on the Ministry of Finance, and the fundamental mission of which will be the promotion, management and monitoring of centralised procurement in the State public sector setting. The Centralised Procurement Board was also created and assigned to the General Directorate for Rationalisation and Centralisation of Procurement; it acts as the contracting body for the State Centralised Procurement System. This CPB has a double role. Firstly, it is a specialised procurement service within the public sector at the State level. Thus, there is a list of supplies and services that will be mandatory for centralised purchasing throughout the entire public sector at the State level. Secondly, it is the contracting body that brokers purchasing by different contracting authorities, which are not obliged to buy through this CPB, but which voluntarily decide to do it. That is, the aforementioned law6 also regulates the voluntary accession to this State CPB of different contracting authorities belonging to the regional level (Autonomous Communities), to the local level, or even to the State level (some public law entities that are not obliged to purchase goods and services through this CPB). Accession, which in this case is always voluntary, Article 227.1 of the Spanish Law on Public Sector Contracts. The general regime and structure of the General State Administration for centralised procurement appears in article 229 of the Spanish Law on Public Sector Contracts. 5 It was created by the Royal Decree 696/2013. 6 Article 229.3 of the Spanish Law on Public Sector Contracts. 3 4

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requires the conclusion of the corresponding agreement with the General State Administration through the General Directorate for Rationalisation and Centralisation of Procurement. That being said, the law merely stipulates that the content and procedure of the accession agreements will be established by Order of the Minister of Finance. The current Order7 develops the procedure of accession to the State CPB, establishing accession in two phases: (a) First, the interested entity will sign a generic accession agreement to the State CPB with the General Directorate for Rationalisation and Centralisation of Procurement. This agreement entails the formal manifestation of its willingness to participate in the State’s CPB’s general operating regime, and the right of accession to the various centralised contracts and framework agreements that are concluded. (b) Second, the entity must formalise its voluntary accession to specific centralised contracts and framework agreements. At the State level, in addition to the General Directorate for Rationalisation and Centralisation of Procurement, there are other CPBs such as the one in the Ministry of Defence, or the one in the Ministry of Health, in relation to the supply of medicines, health products and medical devices, to which we will refer later. CPBs at the Autonomous Community level: The Spanish Law on Public Sector Contracts establishes that the creation of CPBs by the Autonomous Communities will be conducted in accordance with its provisions, as well as those which the Autonomous Communities may approve in the exercise of their powers. At present, Autonomous Communities have developed centralised procurement initiatives, systems which, despite their differences, tend to follow the State model. Thus, a list of supplies and services is established which, within the scope of the Autonomous Administration, must be subject to centralised purchasing. Accession to the CPBs of the Autonomous Communities by entities from outside the autonomous centralised system is governed by their own regulations. In most cases, the accession of local authorities to the autonomous CPB is allowed. The CPBs at regional level can have a general role comparable to the General Directorate for Rationalisation and Centralisation of Procurement or a specialised role comparable to the Instituto Nacional de Gestión Sanitaria (Directorate of the National Institute of Health Management, hereinafter INGESA).



7

Order HAP/2834/2015.

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CPBs at the local level: Originally, it was discussed whether all local authorities had the power to create CPBs. There was a debate about whether this possibility should only be foreseen for provincial councils. But the fact is that the Spanish Law on Public Sector Contracts currently in force expressly admits the general possibility of all “local authorities” creating CPBs, i.e. all manner of local authorities, and not only the provincial councils. In any case, it is acknowledged that provincial CPBs should be a fundamental part of the joint purchasing model at a local level, owing to the assistance they can offer to all local contracting authorities acceding to them. This is due to the technical complexity involved in drafting the contract documents and processing the file for small municipalities lacking qualified personnel, in addition to the significant savings that are obtained with the aggregation of demand. The creation of provincial CPBs has been boosted by legislation in the local setting which, in municipalities with a population of under 20,000 inhabitants, establishes the provision of electronic administration services and centralised procurement as a competence of the provincial councils. Moreover, the Spanish Law on Public Sector Contracts indicates that “in municipalities with a population under 5,000 inhabitants, competences in the matter of procurement may be exercised by those bodies which, as CPBs, are constituted in the … through agreements to that effect”.8 This provision makes it possible to transfer the competencies in the procurement of municipalities with a population of under 5,000 inhabitants to the CPBs. If this possibility were verified, the contractual activity of CPBs would not be limited to their habitual functions of intermediation. On the contrary, the displacement of powers would constitute an intersubjective delegation, and the CPB’s operation would be extended to the functions of executing the contract. However, to date, the possibility of delegating competencies pertaining to procurement to the CPBs has had no practical significance. Nonetheless, in practice, even though a number of provincial councils have created their own CPBs, the majority of provinces have yet to do so. On the other hand, the activity of those created provincial CPBs is not uniform; for example, when determining the entities to accede to the framework agreements that they conclude. While in some framework agreements, the list of entities acceding to each specific framework agreement is mentioned in the procurement documents, in others, the entities that have the intention to award contracts on the basis of each specific framework agreement are not clearly identified in them.

8

2nd Additional Provision of the Spanish Law on Public Sector Contracts.

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Likewise, access to the procurement conducted by CPBs for local authorities can be coordinated through their accession to the CPBs of provincial councils or Autonomous Communities. The Spanish Law expressly authorises the creation of CPBs by associations of local authorities. It is expressly stated that these associations must apply the procurement rules of public administrations. The most prominent example of a CPB created by an association of local authorities is that of the Spanish Federation of Municipalities and Provinces.9 For the accession to take effect, the corresponding agreement must be adopted by the local corporate plenary session, and the relevant agreement or accession convention between the Spanish Federation of Municipalities and Provinces and each local authority must be formalised. Accession is not mandatory for the local authorities, which may conduct procurement outside the CPB of the Spanish Federation of Municipalities and Provinces.10 Other examples of local associations include: the CPB of the Catalan Consortium for Local Development11 or the CPB of the Federation of Municipalities and Provinces of Castilla-La Mancha.12 As explained, the Spanish Law on Public Sector Contracts regulates the possibility of contracting authorities acceding to different CPBs at different territorial levels. In any case, the law also establishes a rule or limit on this possibility, since it provides that in no case may the same contracting authority contract for the provision of the same work, supply or service through several different CPBs.13 In other words, a contracting authority could have acceded to different CPBs, but for the provision of different supplies, services or works. In sum, as some scholars have pointed out, within the same territorial scope, different CPBs can offer the same service, so that, in practice, in Spain,

9 This CPB is governed by regulations approved by the Governing Board of the Spanish Federation of Municipalities and Provinces on 17 July 2014. 10 See: Federacion Española de municipios y provincias. “Datos de intereś sobre la Central de Contratacion de la FEMP”. Boletin no. 38, http://​femp​.femp​.es/​files/​3580​ -2061​-fichero/​Bolet​%C3​%ADn​%20n​%C2​%BA​%2038​%20WEB​.pdf, accessed 17 March 2021. Federacion Española de municipios y provincias, “Contratos en Vigor”, http://​femp​.femp​.es/​Microsites/​Front/​PaginasLayout3/​Layout3​_Personalizables/​MS​ _Maestra​_3/​_MznynrPoTrU6CM​-Yw1K​FsmaTMxyVK​z0cSyNJ31t​gQDj4sL2Hd​ P2iovRxQp1​_iUZ8, accessed 17 March 2021. 11 See: Associació Catalana de Municipis, “Central de compres del mó local”, www​ .acm​.cat/​compres, accessed 17 March 2021. 12 See: Federación Municipios Provicias Castilla-La Mancha, “Central-D​e-Contratacion”, ​w​w​w​.f​e​m​pc​lm​​.es/​es/​351/​CENTRAL​-DE​-CONTRA​TACION​.html, accessed 17 March 2021. 13 Article 228.3 of the Spanish Law on Public Sector Contracts.

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a too-flexible model of CPBs has been imposed, but one which is also unsystematic, with uncertain effects on the market.14 From the point of view of functional jurisdiction, there are CPBs that only provide certain goods or services, for example, at State administration level, the centralisation of the purchasing of medicines and medical devices must be taken into account.15 Thus, the Ministry of Health may declare that supplies of medicines and health products, as well as health services, should be purchased via centralised procurement at State level. In this case the procurement is carried out through INGESA16 and there is also a list of medicines and medical devices for which centralised purchasing will be mandatory throughout the entire public sector at the State level.17 Similarly to the General Directorate for Rationalisation and Centralisation of Procurement, other public administrations and public sector entities that are dependent on them and integrated into the national health system, may accede to this State centralised procurement system for medicines, medical products and health services, for all of the foregoing or only for certain categories thereof. Accession will require the conclusion of the corresponding agreement between the public entity and the Ministry of Health. As will be explained later, the activity of INGESA has increased because of Covid-19. The Autonomous Communities may also have their own centralised purchasing system for medicines or other particular products, and some of them (e.g. Madrid, or Andalucía) have created their own CPBs for this purpose. In this case, they could buy through the State CPB but with the indicated limit: in no case may the same contracting authority contract for the provision of the same work, supplies or services through several CPBs.18 As well at State administration level, the Ministry of Defence encouraged centralised purchasing through different contracting boards.19 As a general reflection, it can be highlighted that regarding the creation and functioning of CPBs the EU law and the Spanish legislator in some ways have different perspectives. While EU law is more concerned with intersubjective relations (i.e. acquisitions for other contracting authorities), the Spanish 14 Gallego Córcoles, Isabel, “La agregación de la demanda local: la creación y adhesión a las centrales de contratación”, Cuadernos de Derecho Local, 39, 50, 2019, p. 113. 15 The Spanish Law on Public Sector Contracts refers to this in its 27th Additional Provision. 16 See: https://​comprassns​.ingesa​.sanidad​.gob​.es/​, accessed 17 March 2021. 17 Order SSI/1075/2014, of 16 June, declaring medicines to be the object of centralised procurement at State level and Order SSI/1076/2014, of 16 June, declaring health products and medical devices to be the object of centralised procurement at State level. 18 Article 228.3 of the Spanish Law on Public Sector Contracts. 19 See Order DEF/1501/2015, of 22 July.

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regulations govern the creation of CPBs, and pay more attention to relations between bodies from the same territorial contracting authority, or to relations between different entities but all of them linked to the same territorial contracting authority. In any case, the current Spanish Law on Public Sector Contracts is more in line with the EU regulation than the previous one, since although it still stipulates that centralisation must be carried out through “specialised departments”20 (bodies), it does incorporate the intersubjective dimension of CPBs by indicating that CPBs will act by acquiring supplies and services for other public sector entities, or awarding contracts or concluding framework agreements and dynamic purchasing systems for the realisation of works, supplies or services assigned to them.21 So, in Spain CPBs are normally “specialised departments” (contracting bodies) within the respective contracting authority; that is, in order to meet the requirements of Article 2(1)(16) of the Directive, the contracting authority is the public sector entity – normally a territorial administration – within which is the CPB.22 In Spain, there are no CPBs with private partners/shareholders. The Spanish Law on Public Sector Contracts only anticipates that the centralisation systems within its scope will be developed by public sector entities. In Spain CPBs can have the two dimensions attributed to them by EU law.23 Experience in Spain is that CPBs are non-profit-making bodies. When CPBs make purchases, they do not, in practice, act as wholesalers. Although, legally, CPBs can supply works, this possibility has seen very little use in practice.24 Who Are the Users of the CPB? The Spanish CPB model is not uniform. As explained, the State and the Autonomous Communities have established that their departments and the entities in their public sectors must necessarily purchase certain goods or services through their respective CPBs. Article 227.1 of the Spanish Law on Public Sector Contracts. Article 227.2 of the Spanish Law on Public Sector Contracts. 22 Fernández Acevedo, Rafael, “Aspectos jurídicos de las técnicas e instrumentos para la contratación pública agregada”, in Patricia Valcárcel Fernández, Compra conjunta y demanda agregada en la contratación del sector público. Un análisis jurídico y económico, Aranzadi-Thomson Reuters, 2016, p. 38. 23 Article 227 of the Spanish Law on Public Sector Contracts. 24 Annual report on the supervision of public procurement in Spain (December 2019), approved on 18 December 2019 by the Independent Procurement Regulation and Supervision Office (Oirescon), attached to the Ministry of Finance, p. 108. Available at: www​.hacienda​.gob​.es/​RSC/​OIReSuC/​INFORME​%20ANUAL​%20SUPERVISION/​ INFORME​_SUPERVISI​%C3​%93N​_OIRESCON​_2019​_​%20DEFINITIVO2​.pdf. 20 21

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As regards the generic State CPB (that governed by the General Directorate for Rationalisation and Centralisation of Procurement), the law25 establishes that the declaration of goods and services for obligatory centralised procurement is performed by Order of the Ministry of Finance.26 However, the current Order provides for the possibility of excluding centralised contracting in certain cases.27 On the other hand, as explained earlier, the regulations state that other contracting authorities may voluntarily accede to the centralised procurement systems set up by the State or the Autonomous Communities, or others that may be established by other contracting authorities. The Spanish Law on Public Sector Contracts regulates neither the competence nor the nature of the act through which the accession of a contracting authority to a CPB is agreed. With regard to the manner and procedure of local authorities’ membership to a provincial CPB, the Administrative Contracting Advisory Board of Aragón in its Report 5/2010 concluded that an agreement, or similar legal instrument, with the content and determinations approved by the provincial deputation, would be sufficient, without it being necessary to issue a management order or to conduct the procedure indicated in the consultation request. How Are CPBs Financed? The financing system of CPBs in Spain is not homogeneous. Some CPBs are financed from the general budgets of the territorial administration in which they are integrated, while others have different systems. For instance, in the CPB of the Consorci de Salut i Social de Catalunya, the acceding entities should pay a minimum fee depending on the object of the contract or framework agreement in which they participate, which is supplemented with another amount corresponding to a percentage of the estimated value of the contract or framework agreement within a fixed maximum.28 Another financing model is that used by the CPB of the Associació Catalana de Municipis,29 which is

Article 229 of the Spanish Law on Public Sector Contracts. At present, this declaration is established by Order EHA/1049/2008, last modified in May 2018. 27 In 2018, a large number of derogations were submitted (2,171). The principal ground justifying the non-centralisation of procurement is that the goods and services awarded do not meet the needs of the requesting body. 28 See: Consorci de Salut i Social de Catalunya, “Tarifes SACAC 2019”, www​ .consorci​.org/​media/​upload/​arxius/​transparencia/​informacio​-economica/​tarifes​-mitjans​ -propis/​Tarifes​_SACAC2019​.pdf , accessed 17 March 2021. 29 See: www​.acm​.cat/​search/​node/​tarifas, accessed 17 March 2021. 25 26

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financed by a percentage set out in the contract specifications on the risk and reward of the contracts based on the framework agreements. The successful tenderers of the contracts based on a framework agreement pay variable amounts; in fact, a provisional initial settlement and a final settlement at the end of the contract are made. It is only the successful tenderers of the contracts based on a framework agreement who pay these amounts, but this is an amount that is likely to have an impact on their bids. Other Roles of CPBs Ancillary functions are, in practice, performed by certain CPBs (mainly at local level). This depends on the regulation of the specific CPB and usually consists, for instance, in providing legal advice on the preparation and management of contracting procedures on behalf of a contracting authority.30 Cross-Border Procurement Within the meaning of Article 39 of the Directive, Spain has scant experience of cross-border procurement. Indeed, the aforementioned Article 39 has not been transposed into the Spanish Law of Public Sector Contracts. Spanish CPBs do not have affiliated entities with other Member States. Efficiency and Policy Issues There is total consensus in considering that the CPBs existing in Spain have been highly efficient and have helped to generate significant savings. Notwithstanding, there are no rigorous studies that analyse the actual efficiency indicators of CPBs. The Annual Report of the Spanish Independent Procurement Regulation and Supervision Office (Oirescon), published in December 2019, points out the lack of such studies.31 CPBs are not assigned a specific role related to preventing corruption. There are, however, certain practices that are common in their routine that do impede corrupt practices. For example, electronic procurement; or in some CPBs, in

30 For example, the CPB Consorci de Salut I Social de Catalunya, www​.consorci​ .org/​sacac/​en​_qui​-som​-que​-fem/​, accessed 17 March 2021. They provide associate centres for the services they require in the administrative processing of their own procurement activities, including providing legal advice. 31 Annual report, pp. 115–119. Available at: https://​ c​ ontratacio​ ndelestado​ .es/​ w ps/​ w cm/​ c onnect/ ​ 2 7901388 ​ - df3a ​ - 434d ​ - 8a47​ - 3356a7c11261/​ I NFORME+​ SUPERVISION+​OIRESCON+​2019​.pdf​?MOD​=​AJPERES, accessed 3 September 2021.

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the first minutes of the award committee to be prepared, all members must expressly declare that they have no conflict of interest with any of the tendering companies.

3

PROCUREMENT TECHNIQUES

Types of Techniques and Agreements The techniques principally employed by Spanish CPBs are framework agreements and centralised contracts.32 The use of a dynamic purchasing system (DPS) is practically non-existent at the State level and very limited at regional and local levels. In the case of the State, in recent reports, the General Directorate for Rationalisation and Centralisation of Procurement has justified its lack of usage of DPSs due to the technical difficulties that they entail. In addition, it stated that there are no proven reasons for economic efficiency to recommend the use of DPS as opposed to other instruments, such as framework agreements. In its report from December 2019, the Spanish Independent Procurement Regulation and Supervision Office has pointed out that, in light of the total absence of DPSs, the development of framework agreements could undermine competition and leave the affected supplies and services out of the procurement market for long periods.33 The implementation of e‑procurement is inconsistent, but there are some CPBs which we could say only operate though e‑procurement. The use of electronic catalogues is also not totally widespread, but there are practical examples of its use. Notwithstanding, the Spanish Law on Public Sector Contracts makes no mention whatsoever of electronic catalogues. New award criteria cannot be introduced in a mini-competition within a framework agreement.34

32 Currently the General Directorate for Rationalisation and Centralisation of Procurement has 18 framework agreements and nine centralised contracts in force; https://​cont​ratacionce​ntralizada​.gob​.es/​catalogo. 33 Annual Report. p.  108. Available at: https://​c​ontratacio​ndelestado​.es/​wps/​wcm/​ connect/​27901388​-df3a​-434d​-8a47​-3356a7c11261/​INFORME+​SUPERVISION+​ OIRESCON+​2019​.pdf​?MOD​=​AJPERES, accessed 3 September 2021. 34 See: article 221.6(e) of the Spanish Law on Public Sector Contracts and decision no. 494/2019, 9 May 2019 of the central administrative tribunal on public contracts.

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Types of Framework Agreements As mentioned above, it is the Ministry of Finance, the Ministry of Health and the equivalents at Autonomous Community level that determine the works, products or services that must be acquired through a CPB. How Do Users Use the Agreements? It is difficult to say which of all the models is the most common (call-offs, direct purchasing, etc.). There are certain supplies that are habitually contracted through sole-awardee framework agreements. But there are CPBs which, when possible, prefer to opt for framework agreements with multiple awardees wherein there is a second tender process. Depending on the case, some of them allow the contracting authority to make the award proposal directly, but in others a second tender must be held.35 Modification of Framework Agreements The framework agreements and the contracts based on them may be modified in accordance with the general rules of contract modification. The Spanish Law on Public Sector Contracts36 provides certain limits to the modification of the framework agreements and contracts based on the same: – The contracts based on a framework agreement cannot introduce substantial modifications to the provisions of the framework agreement. – The unit prices resulting from the modification of the framework agreement may not exceed 20% of the prices prior to the modification nor may they be higher prices than those that the companies that are part of the framework agreement offer in the market for the same products. – The winners of a framework agreement may propose to the contracting authority the replacement of the goods awarded by others that incorporate advances or technological innovations that improve the benefits or characteristics of the awarded ones, provided that their price does not increase by more than 10% above the initial price, unless the administrative specifications have established another limit. – The contracting authority may include new goods of the type awarded or similar to the same when there are reasons of public interest or new tech35 Annual Report. Available at: https://​c​ontratacio​ndelestado​.es/​wps/​wcm/​ connect/​27901388​-df3a​-434d​-8a47​-3356a7c11261/​INFORME+​SUPERVISION+​ OIRESCON+​2019​.pdf​?MOD​=​AJPERES, accessed 3 September 2021. 36 Article 222 of the Spanish Law on Public Sector Contracts.

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nology or configuration with respect to those awarded, commercialisation of which began after the deadline for submission of offers, provided that the price does not exceed the limits indicated in the previous paragraphs. Outside these limits the framework agreements or the contracts based on the same would have to be terminated. In practice, it is possible to find cases of modification of the framework agreements within the limits indicated. Regarding the modification of DPSs, the Spanish Law on Public Sector Contracts does not establish any particular regulation. Requirements Relating to Estimates and the Consequences of Wrongful Estimates In Spain, prior to the CJEU ruling in Case C-216/17, Autorità, various administrative and jurisdictional bodies related to public procurement considered that the estimated value of a framework agreement did not operate as a maximum limiting amount that conditioned the maximum accumulated value of all future contracts based on the said framework agreement.37 Thus, prior to the entry into force of the current Spanish Law on Public Sector Contracts, it was not uncommon for the framework agreement not to respect the proper estimated value. Some practitioners considered this way of acting unsatisfactory, already anticipating the solution established later by the CJEU.38 Even before Autorità, Spanish law introduced a pragmatic resolution: in the framework agreements concluded by CPBs, although it was not necessary to be a signatory to a framework agreement to benefit from it, the recipients of the goods, services and works that could be acquired with the performance of contracts based on them do need to be correctly identified in the framework agreement.39 And currently it can be confirmed that there has been a significant change of course; in general terms, nowadays CPBs calculate the estimated value of framework agreements correctly, and it is common for framework agreements to expire when the estimated value has been reached.

37 Informe Junta Consultiva de Contratación Administrativa 17/2012; la RTACR 914 de 5 de octubre de 2015 y la SAN de 27 de septiembre de 2017 (ECLI: ES:​AN:​ 2017:​3877). 38 Moreo Marroig, Teresa, Manual para la utilización de los acuerdos marco y figuras relacionadas (Aranzadi, 2014) pp. 135–138 and ObCP, “La importancia del valor máximo estimado de un acuerdo marco” (1.9.2014), www​.obcp​.es, accessed 17 March 2021. 39 Article 227.4 of the Spanish Law on Public Sector Contracts.

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COMPETITION AND SME ASPECTS

Concerns Relating to Competition Law On several occasions, the National Competition Authority (CNMC), at the request of the Ministry of Finance, has issued reports on the tender documents that the State CPB wished to use to purchase certain goods and services.40 In these reports, CNMC has made different suggestions to encourage competition; thus, for example: (a) It recommended implementing a DPS in order to channel purchasing through the CPBs. (b) It recommended that the tender documents should include explicit mention of the definition of anti-competitive practices in public procurement. (c) It advised against limiting the number of adherents to the framework agreement. (d) It advised the modification of some of the initially envisaged solvency and award criteria. Additionally, the State’s own CPB website suggests: “If a complaint needs to be made to the National Competition Authority (CNMC) for conduct prohibited by Law 15/2007, of 3 July, on the Defence of Competition, or by Articles 101 and 102 of the TFEU, you can do so at the electronic headquarters of the National Competition Authority.” From a practical perspective, the “administrative tribunals for special appeals on the matter of procurement have long been ensuring that centralised procurement does not affect the principle of competition in an unacceptable manner”.41

40 See: CNMC, “INF/DP/001/14 Informe Sobre los Pliegos del Acuerdo Marco para los Suministros de Combustibles de Automoción” (23 January 2015) www​.cnmc​ .es/​sites/​default/​files/​1171751​_8​.pdf, accessed 17 March 2021. 41 By way of example, decision no. 29/2011 of the administrative tribunal for public contracts of Aragón (TACPA) annulled the tender process of a framework agreement for postal and telegraphic services in the Autonomous Community of Aragón, whose estimated value amounted to €20,517,789.80, excluding VAT. The tribunal understood that since all the administrative units of the government of Aragón located in the territory of the Autonomous Community and the acceding public sector bodies were included in its subjective scope, the holding of that framework agreement would close the postal market in Aragón for four years, since the successful bidder would monopolise the postal service. It understood that this involved abusive use of the framework agreement.

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In addition, the current Spanish Law on Public Sector Contracts encourages the use of framework agreements and DPSs, expressly providing “that the use of these mechanisms must not be abusive, in a manner that would hamper, restrict or distort competition”. The obligation to divide the object of the contract into lots, imposed by the Spanish Law as the general rule, can also help to avoid restricting competition. Are CPBs Solely for the Use of Public Sector Entities or Also for Private Users? In Spain, the Law on Public Sector Contracts foresees the use of CPBs only for public sector entities. As explained earlier, in Spain, there are no CPBs with private partners/shareholders, and the Law on Public Sector Contracts only anticipates that the centralisation systems within its scope will be developed by public sector entities. Participation of SMEs in CPBs There are no specific initiatives from the CPBs to facilitate or encourage the participation of SMEs in their area of procurement. ​​ The participation of SMEs in contracts that are promoted by CPBs is very uneven. It is common for them to participate in the award procurement procedures of CPBs by submitting applications to be included in framework agreements with multiple awardees, and to be finally selected to be part of the framework agreement. But more difficulties have been detected, for example, in their being awarded centralised contracts promoted by CPBs. By way of example, it is worth mentioning that in the setting of the general State CPB (General Directorate for Rationalisation and Centralisation of Procurement) in 2018, the percentage of economic operators with the status of SMEs in their contracts was 34.78%. The criteria used for the calculation of awards to small and medium enterprises were: in framework agreements, at least one small or medium enterprise was included among the successful companies; and in centralised contracts, a small or medium enterprise was awarded at least one of the contract lots.42 Notably, one of the measures in the regulation in Spain that can facilitate the participation of SMEs in public procurement is the division of the object of the

42 Annual Report pp. 120–121. Available at: https://​ co​ntratacio​ ndelestado​ .es/​ w ps/​ w cm/​ c onnect/ ​ 2 7901388 ​ - df3a ​ - 434d ​ - 8a47​ - 3356a7c11261/​ I NFORME+​ SUPERVISION+​OIRESCON+​2019​.pdf​?MOD​=​AJPERES, accessed 3 September 2021.

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contract into lots. This is referred to in Article 46(4) of the Directive that has been incorporated in the Spanish Law and, as a general rule, the division of contracts into lots is mandatory.43

5

LIABILITY BETWEEN CPBS AND THE CONTRACTING AUTHORITIES WHO USE THE CPBS’ AGREEMENTS

Contract Management The Spanish Law on Public Sector Contracts provides no specific monitoring mechanism for contracts concluded by CPBs. In any case, a distinction can be made between the different types of relationships (inter-organisational and inter-administrative) that CPBs can accommodate in Spain. In the case of inter-administrative relationships (a contracting authority that accedes to the CPB of another contracting authority), the CPB has a more important role in monitoring the framework agreement, while the management of the contracts based on the same is usually assumed by each of the acceding entities. When the CPB acts within the framework of the inter-organisational relationship, the CPB has a greater role in the overall control of the contracts based on the framework agreements concluded. The specifications of the framework agreements can determine the monitoring system to be applied to the same. For example, the CPB of the Association of Catalan Municipalities includes a clause to regulate the monitoring of the framework agreement and all the contracts based on it. It establishes a support committee for the framework agreement, which is entrusted with the management thereof and acts as the responsible party for the contract.44 This committee comprises three members, appointed by the contracting authority: two of them are specialists in the services covered by this framework agreement, and a third one represents the monitoring office. It is also indicated that, as a general rule, each local entity that has acceded to the framework agreement, and that concludes contracts based on it, must designate the person responsible for monitoring the execution of the corresponding contract. Rules Relating to Enforcement and Remedies In Spain, there are two types of contracting authorities, depending on whether or not they are considered “public administrations” in accordance with the

Article 99 of the Spanish Law on Public Sector Contracts. Article 62 of the Spanish Law on Public Sector Contracts.

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Spanish Law on Public Sector Contracts. If the contracting authorities belong to the public administration group, their works, supplies and services contracts are “administrative contracts” and the regulation of the effects, compliance and termination thereof is all found in the Spanish Law on Public Sector Contracts. In accordance with the same, the CPB has a series of prerogatives or powers, which allow it to unilaterally impose the manner of executing the contract on the contractor. If the contractor is not satisfied or does not agree with the decisions of the CPB, it may file the applicable administrative and jurisdictional appeals against it. If the CPB is a non-public administration contracting authority, its contracts are private; i.e. the performance thereof is subject to private law, without prejudice to the application of certain rules, which mostly result from the transposition of the procurement Directives into Spanish law, and which are contained in the Spanish Law on Public Sector Contracts. The system of appeals applicable to contracts entered into by the CPBs, that is, centralised contracts, framework agreements, DPSs and contracts based on the foregoing, is the general one. The Spanish Law on Public Sector Contracts contains no specific regulation to address the issue of responsibility between a CPB and its users. Consequences if a CPB Has Entered into an Agreement Unlawfully We are not aware of any resolutions or case law that address this issue. In any case, to answer this question, it must be borne in mind that in Spain, the declaration of nullity of administrative acts, and among them those of a contractual procedure, must be interpreted restrictively. Nullity is considered an extreme measure that should only be assessed in cases of very serious infringements expressly provided for in the rules. Taking this into account: 1. If a framework agreement concluded by a CPB is in the execution phase and is cancelled in its entirety, the general rule would be: (a) Contracts based on the same could no longer be awarded. (b) Contracts which had already been executed and paid for, would not, in principle, be affected by the annulment of the framework agreement. (c) With respect to contracts that had already been formalised and were in the execution phase, the general rule on the effects of the declaration of nullity would be understood to be applicable, and they would also be cancelled. However, if it could be justified that the declaration of nullity – in this case of the contracts that were in the execution phase – resulted in serious disruption to public services, the continuation of its effects under the same clauses could be provided for until urgent measures to avoid damage could be adopted.

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2. On the other hand, the nullity of one act in the procedure does not necessarily determine that of all others which are independent, by virtue of the principle of preservation of formalities. Consequently, the defects of the vitiated act are only passed on when they are of such importance that they may have a bearing on successive ones. Thus, the declaration of nullity of a clause will not result in the nullity of the entire framework agreement or of the contracts based on the same, except where the invalidated clause has content that is essential for compliance with the agreement. In short, if the invalidity or nullity affecting the framework agreement is partial, contracts based on it may not be affected.

6

IMPACT OF COVID-19 ON JOINT PROCUREMENT

The Covid-19 pandemic has had a relevant impact on the use of joint procurement to buy medical products and equipment. As indicated previously, in Spain there is a structure with State, regional and local CPBs. Besides, in relation to the purchase of medicines, health products and medical devices, the State, and also some Autonomous Communities, have their own specialised CPBs. No structural modifications were made to the CPBs involved in the purchases concluded because of Covid-19, and no new CPBs were created, but the measures adopted to face Covid-19 implied an evident trend towards the nationalisation/centralisation of centralised procurement. In March 2020, when the “state of emergency” and the lockdown were declared in Spain because of Covid-19, the General Administration of the State tried to organise, on behalf of all public administrations, the main centralised purchases related to the medical products and health devices needed to fight the new disease. Thus, at the beginning of the pandemic, the central government declared/imposed the power of the central administration to buy all this material. In spite of the imposed centralisation, due to some initial difficulties suffered by the State CPB, some Autonomous Communities’ CPBs tried to conclude their own contracts. Some Autonomous Communities (e.g. Madrid) revoked the power of hospitals to buy protective equipment (personal protective equipment and facemasks) in order to centralise all these purchases in the regional CPB. Likewise, the logistics, storage and distribution process for medical and health material was centralised, to be prioritised on the basis of real and daily needs. In any case, as a result of the pandemic, an evident centralisation at different levels has been noted. Generally speaking, after the initial phase, with regard to

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relevant purchases linked to Covid-19, there has been sufficient coordination between the State CPB (INGESA-Ministry of Health) and the regional ones. The award procedures foreseen in the Law on Public Sector Contracts were not modified due to the pandemic. However, during this period the vast­majority of purchases launched by CPBs in order to acquire medical products or health devices were awarded according to the “emergency solution” regulated by the Law. This solution means that when a public administration needs to act immediately due to catastrophic events or situations that pose serious danger (and the Covid-19 pandemic matched this definition),45 a contracting authority may directly award the contracts needed to face the extraordinary situation, without observing either the ordinary award procedures or the formal requirements established in the Law on Public Sector Contracts. An important example of the coordinated centralisation that is taking place is the framework agreement put out to tender by the Ministry of Health through its CPB (INGESA) to acquire hygiene supplies and personal protective equipment for the National Health System and other institutions of the Spanish State.46 The estimated value of the framework agreement amounted to €2,131,189,674.09. This is the largest framework agreement signed to date in Spain. Sixteen Autonomous Communities acceded to this framework agreement. Only the Valencian Community did not accede to it. The Ministry of Defence and the Ministry of the Interior also participated in the framework agreement. The contract was divided into 11 lots and the number of companies that submitted their bids on time was 155, with a total of 475 bids submitted. The extent of the framework agreement is one year with the possibility of an extension for a second year. The framework agreement procurement documents were published in the Public Sector Procurement Platform.47 In this case, the awarding of the contracts took place in accordance with the “emergency solution” regulated by article 120 of the Spanish Law on Public Sector Contracts, although the regulation of the negotiated procedure with prior publication was declared of

45 Article 16 of Royal Decree Law 7/2020 expressly declared the effectiveness of the emergency procedure provided for in article 120 of the Law on Public Sector Contracts for the purchase of all types of goods and services required by public sector entities to deal with Covid-19. 46 Surgical gowns, nitrile gloves, protective glasses, type II and IIR surgical masks, FPP2 and FPP3 protective masks, PCR tests and extraction kits. 47 See: Administración General Del Estado, “Expediente: AM 2020/070” (Platforma de Contracion del sector publico, 23.2.2021), https://​ co​ntratacio​ ndelestado​ .es/​ wps/​ poc​?uri​=​deeplink​%3Adetalle​_licitacion​&​idEvl​=​SSLe4kSkcl8BPRBxZ4nJ​%2Fg​%3D​ %3D, accessed 17 March 2021.

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application in case of a legal vacuum. It was estimated that this purchase will help to save more than €300 million.

20. Central purchasing bodies in Sweden Åsa Edman 1 INTRODUCTION The political environment surrounding CPBs and coordinated procurement in Sweden has followed the development of public procurement policy in general. It has not been a priority for any Swedish government, regardless of political colour, during the first two decades of the Swedish membership of the EU.1 Quite peculiar, considering that public procurement adds up to more than one-fifth of the Swedish GDP. Coordinated purchasing was in practice for quite a long time before EU membership, but few goals have been set at a national level regarding how central purchasing should contribute to the common good. However, this is now changing and a couple of CPBs have been recognized as important contributors to the national strategies for public procurement, digitalization, sustainability, etc.2 Dating back slightly less than a decade, there has been both negative and positive criticism in respect of CPBs’ coordinated purchasing from academia3 as well as the Competition Authority.4 Contracting authorities and entities using the services of CPBs have also voiced criticism. Fear of national framework agreements creating monopoly markets has been driving the debate. The criticism refers not only to the complexity of framework agreements and call-offs from such agreements, but also the high expectations from contracting authorities on increased value for the end-users, which is keeping CPBs on their toes. Criticism has also been brought against delayed framework agree Sweden became a member of the EU in 1995. Sveriges Kommuner och Landsting, Utveckling i en digital tid en strategi för grundläggande förutsättningar (2019-05-06); Ministry of Finance, National Procurement Strategy (2017), p. 10; skr. Nationell handlingsplan för miljöanpassad upphandling (2007), skr. 2006/07:54. 3 Samordnade Ramavtal, en empirisk undersökning, Bergman m.fl., Konkurrensverket, report (2010:5) (commissioned by the Competition Authority). 4 The Competition Authority’s consultation response to Upphandlingsutredningens 2010 report På jakt efter den goda affären (SOU 2011:73), 2012-01-19, Dnr 763/2011, p. 13ff. 1 2

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ments due to complex procurements and lengthy court review procedures. Nevertheless, the overall opinion on CPBs and joint procurements is increasingly more positive in Sweden. This might partly be the result of CPBs taking into consideration the above-mentioned criticism in strategies and day-to-day operations, but mainly it is due to improved professionalization within the organizations, e.g. category management, a higher degree of market dialogue and contract management. The increased use of the CPBs’ voluntary services is a sign of approval of the benefits CPBs can provide. The legal basis for CPBs and the regulation of framework agreements are found in Chapter 7 of the Procurement Acts, called lagen (2016:1145) om offentlig upphandling and lagen (2016:1146) om upphandling inom försörjningssektorerna, which are implementations of the procurement Directives for the ‘classical’ (public procurement) and utilities sectors.5 The introduction of CPBs in the procurement legislation happened as late as 2010,6 although central purchasing activities and joint framework agreements existed long before that, both at central and local level. There are no national statistics on the use of central or regional joint purchasing or CPBs. However, the four national CPBs’ own data, e.g. sales statistics, shows a turnover on their combined framework agreements and dynamic purchasing systems (DPSs) at approximately €2.6 billion (28.6 billion Swedish kronor) in 2019, which constitute a little less than 3.7 percent of the total value of Swedish public procurement.

2

STRUCTURE AND USE OF CPBS AND OTHER FORMS OF JOINT PROCUREMENT

The use of central CPBs’ services, including framework agreements and DPSs, is increasing. The regional CPBs are briefly described below, though the main focus of this chapter is on the national CPBs in Sweden. The central government sector has its own CPB and the municipal sector has three national CPBs. One of them, Adda,7 procures for local authorities in general, and the remaining two specialize in purchasing for the housing (HBV) and utilities sectors (Sinfra). All three CPBs purchase goods and services, but only Adda procures works, i.e. prefabricated homes and preschool buildings. The majority of the CPBs’ services are framework agreements procured in the CPBs’ own names. Some of the CPBs procure a few framework agree-

Directive 2014/24/EU and Directive 2014/25/EU. Svensk författningssamling 2010:571, prop. 2009/10:180, p. 262. 7 Adda was formerly known as SKL Kommentus. The company group changed its name in April 2021. 5 6

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ments in the name of other contracting authorities, thus acting as agents. At the national level, none regularly act as wholesalers. How Are CPBs Structured? CPBs in Sweden are organized in different ways. At the regional level, they are sometimes part of a local authority and sometimes a separate legal entity (municipal association). At the central level they are either part of a central government agency or a separate legal entity, e.g. an economic association or a limited company. Regional CPBs There are several regional CPBs, procuring mainly framework agreements, but also a few DPSs for municipalities and regions. There is no register or data coverage of exactly how many of these CPBs there are in Sweden. Additionally, there is no data available on wholesale solutions among regional CPBs. Regional CPBs either procure for many users within one single municipality, e.g. the Administration for Purchasing and Procurement in the City of Gothenburg, or for several users, such as the Municipality of Umeå, Upphandlingskontoret in the County of Jämtland and Upphandling Södertörn. The Act on Local Authorities8 is applicable to all regional CPBs. There could be private ownership of limited companies, but to the author’s knowledge, there are no such companies in Sweden. This form of organization is not prohibited, as long as the organization qualifies as a contracting authority or entity. The regional CPBs are all covered by the principle of public access to information found in Chapter 2 of the Freedom of the Press Act, one of Sweden’s constitutional laws.9 All documents received or dispatched, decisions and reports are in principle public documents and must be made available for anyone to read, including tenders. There are, however, limitations in the Public and Privacy Act10 in the case of, for example, business secrets or other regulated interests.



Kommunallag (2017:725). Tryckfrihetsförordningen (1949:105). 10 Offentlighets- och sekretesslagen (2009:400). 8 9

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Kammarkollegiet – CPB for Central Government Authorities The Legal, Financial and Administrative Services Agency (Kammarkollegiet) includes Statens inköpscentral (SIC), a contracting authority and CPB for all central government authorities. Kammarkollegiet was established in 1539 and is an independent agency under the Ministry of Finance, while SIC was established as a CPB in 2011. The history of joint state purchasing goes back to 1988, but was at that time organized between several contracting authorities. The largest buyers of certain goods or services were responsible for procuring framework agreements as agents for all contracting authorities at the central level. The core business of SIC is the procurement and management of framework agreements made in the name of the CPB. Most framework agreements are procured through an open procedure but restricted and negotiated procedures are used occasionally. There is, at the time of writing, no DPS in use at SIC. SIC concludes and administers more than 1900 unique framework agreements and has 765 suppliers in over 47 areas. They include a wide variety of ICT products and services, office furniture, office equipment, hotels and conferences, safety and security, transportation and vehicles, etc. SIC is also obliged to provide regions and municipalities with access to its framework agreements within the area of ICT products.11 SIC is obliged to pay particular attention both to common standards for public administration and to the interest in innovations and technology-neutral solutions. These agreements account for one-third of SIC’s total turnover and use of them is compulsory for the state agencies, but voluntary for regions and municipalities. In this area, there is some competition between SIC and Adda (described below). In addition to this long-term assignment, SIC receives ad hoc tasks from the government in areas concerning, for example, particular procurements and the development of digitalization within certain areas. SIC has developed a work process in order to ensure quality in procurement activities. Feasibility studies are carried out in cooperation with users, i.e., representatives from central government authorities and, in the case of ICT products and services, regional and local authorities. When defining requirements for the tendering process, social and environmental aspects, as well as the opportunities for small and medium-sized enterprises to participate, are taken into account.12

Regulation (2007:824) with Instructions for Kammarkollegiet, §8(a). See: Avropa, ‘Coordinated framework agreement in Sweden’ (26 January 2021) www​.avropa​.se/​topplankar/​In​-English/​, accessed 23 March 2021. 11 12

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STIC does monitor its framework agreements, but does not provide ancillary services nor act as an agent or procure goods or services for individual contracting authorities. STIC is financed by fees charged from each supplier that is a party to a framework agreement. The fee is a percentage of the supplier’s turnover, resulting from call-offs. STIC’s economic goal is full coverage of costs. Every year, the government decides how any financial surplus should be spent. Adda – CPB for Municipalities and Regions Adda inköpscentral AB (Adda) is a limited company, part of a small company group, and the CPB for municipalities, regions and their companies.13 It is a body governed by public law. The Swedish Association of Local Authorities and Regions14 owns Adda, together with 256 municipalities (minority owners). There are no private interests in the company. Public procurement law does not prohibit private ownership, but the interpretation of the law is that CPBs may not work with the aim of distributing profit.15 Any surplus is therefore reinvested in the CPB. Adda started to function as a CPB in 2011, but joint purchasing for the municipal sector has existed at Adda since 1934. Adda has around 1100 users and 650 suppliers selling goods and services through its framework agreements and DPS. Adda is based in Stockholm but has regional offices in both Malmö and Gothenburg. In 2014, a CPB for the municipalities in Stockholm County was founded within the legal entity of Adda. It is called STIC and has 12 municipalities as members. They have all signed a cooperation agreement with Adda on the organization, decision-making and financing of the regional CPB’s activities. Adda has 204 active agreements within 131 framework agreements and two DPSs. The CPB mainly procures framework agreements in its own name, but has also made a few procurements in the name of its users, i.e. as an agent. The CPB has acted as a wholesaler only during the Covid-19 pandemic. Most framework agreements are procured through an open procedure, although Adda has experience in using restricted and negotiated procedures as well as competitive dialogue. The DPSs currently in place cover electricity, fuel

13 Adda was previously called SKL Kommentus. The name changed in April 2021 to Adda. See www​.adda​.se, accessed 31 August 2021. 14 Sweden’s 290 municipalities and 21 regions are all members of the Swedish Association of Local Authorities and Regions. 15 Chapter 1, para. 18, lagen om offentlig upphandling.

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pellets, solar cell solutions, artificial grass and charging stations for electric cars. All framework agreements and DPSs can be found on the Adda website.16 There are internal processes for procurement and contract management within the CPB, e.g. including dialogue with both customers and the market, quality and legality. Adda organizes its work through seven departments: procurement, category management, sustainability, purchase services, customer support and STIC. Additionally, there is a department for strategic relations, which manages relations with academia and provides an ombudsman for suppliers. The Adda company group also includes a parent company that consists of legal, communications, development, HR and financial departments. The company group also includes a separate consultancy company, offering services (on a competitive market) to the public sector within public procurement and strategic purchasing, and a company providing HR services. It is a strategic decision not to include the consultancy business within the CPB, since there is a private market for such services in Sweden. Thus, competition is considered beneficial to the company as well as to its customers, i.e. contracting authorities and entities. It is voluntary for Adda’s clients to use all but one framework agreement. The compulsory agreement covers children’s vaccines, which Adda has administered, together with the regions, since 2019. To be able to use any framework agreement, the contracting authorities must register their interest in the agreement. This is done by accepting the procurement plan for the coming year and paying Adda a fee of €100. After the payment, the contracting authorities are eligible for call-offs from those framework agreements or dynamic purchasing systems that Adda publishes the following year. STIC’s framework agreements are – due to the agreement between Adda and the municipalities – compulsory for the municipalities that have signed up for them. Adda, as well as STIC, is financed by an administrative fee from the suppliers and service providers, based on their sales deriving from the framework agreements and DPSs. Adda has limited experience of cross-border procurements, but takes part in beneficial exchanges of experiences and ideas with CPBs all over Europe, e.g. through the Network for European CPBs (SIC also participates in this network). Adda CPB is aiming to mainstream sustainability, including environmental requirements, corporate social responsibility (CSR) requirements (ILO’s core conventions, UN Declaration of Human Rights, UN Convention on the Rights of the Child, UN Convention against Corruption) and national labour See www​.adda​.se, accessed 31 August 2021.

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conditions, in all of its procurements. These requirements are followed up regularly through suppliers’ self-evaluation, audits in Sweden and at production sites. The CPB also offers contract management services within CSR (‘The Sustainability Check’) and chemical analysis of supplies (‘The Chemical Check’) to all clients. These services consist of a risk-based system for following up contracts that Adda’s clients have procured for themselves. Adda works closely with the Swedish regions’ sustainability office within this area. Adda is not covered by the constitutional principle of public access, mentioned in the text above concerning Kammarkollegiet, although transparency is regarded as being of great importance in maintaining the contracting authorities’ as well as the suppliers’ trust in Adda’s procurements. The CPB has therefore developed an internal regulation and method for sharing tenders among tenderers – in which business secrets are masked by the tenderers participating in the procurement. The CPB has a policy, guidelines and an action plan to prevent corruption and conflict of interests when carrying out its business. HBV – CPB for Public Utility Housing Companies HBV, an economic association and the national CPB for public utility housing companies, was established in 1952 and is a body governed by public law. It has 359 members, mainly municipal-owned housing companies (combined, they own approximately 843,000 apartments in total) as well as non-members, such as municipalities themselves and other types of public housing companies, amounting to a total of approximately 470 potential users17 of its framework agreements and DPS. All members of HBV are automatically included in HBV’s framework agreements, but it is possible for them to withdraw from participation through a specific request sent to HBV before the procurement is advertised. Other organizations must instead make a specific request in order to participate in the procurement. HBV coordinates procurements of goods and services in the areas of facility management, construction, plumbing, energy and safety. It has approximately 200 agreements and four DPSs. The DPSs are in the areas of fuel pellets, solar energy, lock and entrance systems and service vehicles. All framework agreements and DPSs are available on HBV’s website. HBV normally uses open procedures but has experience of using restricted and negotiated procedures, as well as electronic auctions. HBV is a not-for-profit organization. Its business model consists of suppliers that are parties to the framework agreements or participants in the DPSs Some municipalities and public housing companies are users but not members.

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paying an administrative fee to the CPB based on the sales that derive from these agreements and systems. The members of HBV receive a yearly refund of all surplus, based on their purchased volume during the previous year. In addition, volume bonuses – depending on the size of the purchases – are paid to the members. HBV is also working with sustainable procurement. This work includes a code of conduct concerning the ILO’s core conventions being respected in the supply chain, an environmental policy for the reduction of negative environmental impact and the counteracting of corruption.18 HBV is also a partner to an initiative for swift reduction of CO2 emissions within public utility housing. In addition, HBV works with a non-profit company for sustainable community building, which has carried out 100 pilot projects within the mobility, energy systems and construction sectors.19 Sinfra – CPB for the Utilities Sector Sinfra is a national CPB procuring within the utilities sector. It is an economic association owned by its 228 members, which are companies owned by or units within municipalities and regions. Sinfra’s members’ core business is to produce or distribute district heating, electricity or water and sewage. Sinfra is the only CPB with national coverage within the utilities sector. It does not work for profit and membership is free, including for members’ subsidiaries. The CPB receives an administrative fee from the suppliers on their sales deriving from the framework agreements to which they are parties. Sinfra procures framework agreements as an agent and in cooperation with representatives from its members, mainly in three different categories; electricity, heating/cooling and water/sewage. The CPB has 136 framework agreements. Members and other users have the right – but are not obliged – to use Sinfra’s framework agreements. Sinfra’s vision is to provide the most sustainable goods and services from a technical, environmental and CSR perspective.20 Framework agreements are the main business, but Sinfra also owns a company called FVUab, which monitors innovation and new technology and offers testing of new products that might benefit Sinfra’s members. They have had a code of conduct in place for their suppliers since 2014, covering the ten principles of the Global Compact (human rights, labour conditions, environment and corruption). The suppliers 18 See: HBV, ‘Hållbarhetsrapport’ (3 June 2020), https://​ hbv​ .se/​ om​ -oss/​ hallbarhetsrapport, accessed 23 March 2021. 19 See: HBV, ‘Våra samarbetspartners’ (14 August 2019), https://​hbv​.se/​om​-oss/​ vara​-samarbetspartners/​, accessed 23 March 2021. 20 See: https://​sinfra​.se/​english/​.

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to Sinfra and FVUab commit to the code and perform a self-evaluation on a yearly basis. Cross-border procurement was tested between Sinfra and the Finnish IS-Hankinta (since the autumn of 2019, IS-Hankinta has been part of the Finnish CPB Hansel). It resulted in two framework agreements. The goal was to increase business opportunities with the help of a larger market. The project was based on a cooperation agreement, but is currently pending due to the administrative burden and language difficulties.

3

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Type of Techniques and Agreements All CPBs, and presumably all contracting authorities in Sweden, use electronic procurement. Several CPBs have used e‑procurement platforms since at least 2012. Electronic communication is also a requirement for all contracting authorities and entities. CPBs use their electronic platforms for time planning and sending out award decisions. HBV and Adda sign their agreements via the procurement platform and both HBV and Sinfra have experience in evaluating tenders electronically/automatically. There is no single e‑procurement platform in Sweden, but currently all national CPBs are using TendSign, owned by the Mercell Group. None of the national CPBs are using the electronic platforms for the post-award phase (call-offs or mini-competitions). HBV does, however, use TendSign when the CPB is assisting the users with their call-offs. None of the CPBs have experience in regularly using e‑catalogues, but Adda planned to introduce this in 2021. Dynamic Purchasing Systems A DPS must be carried out entirely electronically and be open to every supplier who meets the qualification requirements. The procurement legislation states that a contracting authority must apply the rules for restrictive procedures for procurement in a DPS, with the only difference being that the number of tenderers who are allowed to participate in the system must not be limited. It is presently being discussed with the European Commission and nationally with the procurement support agency21 whether it is in accordance with EU and national legislation to award framework agreements through a DPS. Adda is

21 https://​ f rageportalen​ . upp​ h andlingsm​ y ndigheten​ . se/​ o rg/​ u pph​ a ndlingsmy​ ndigheten/​d/​ramavtal​-kombinerat​-med​-dynamiskt​-inkopssystem​-dis/​ and https://​

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arguing that the DPS two-stage procedure, equal to the restrictive procedure, should be able to result in framework agreements.22 CPBs have found that the DPS is a useful tool. HBV has, as mentioned above, four DPSs running and Adda has five. CPBs can choose to take responsibility for enrolling the tenderers into the system (first stage) and leave the tendering process (second stage) to the users, or they can assist the users all the way, including in the award of contracts. Generally, it is considered that contracting authorities would find limited value in using a DPS if they had to perform the second stage themselves. The experience of DPSs is generally positive, e.g. it is flexible for both users and suppliers. Both types of organizations can enter and leave CPBs’ DPSs whenever they like. It is generally considered easier for small companies to participate in a DPS than in a regular procurement of a framework agreement, due to this flexibility. If a company fails to meet the formal criteria, they can submit a new application the next day. A supplier may also abstain from submitting a tender (sometimes it is a requirement in the framework agreements to submit tenders) if it cannot meet the demands of a given award procedure. Using DPSs in markets with many economic operators might lead to many tenders. In such markets, tenderers could find it too costly to participate in a DPS (when the assumption is that tendering relatively rarely results in awards). Many tenderers also risk making the tendering process burdensome for the CPB or contracting authorities managing the second stage, since they cannot limit the tenderers’ participation in an individual procurement. At least until there is a more sophisticated system for managing the tenders in the available platforms for DPSs, such procurements seem to be rather expensive. Framework agreements with many product lines are usually evaluated by using the so-called ‘cart’ method (a product selection method). The vast majority of the products included in the procurement are evaluated, while discounts are given on the suppliers’ regular prices for the rest of the assortment that is covered by the procurement. There are several Swedish court cases regarding to what extent the products or services that are part of a procurement should be evaluated. In one case, a contracting authority had chosen only to evaluate the prices of services and not the prices of spare parts, despite the fact that the latter items had historically been the predominant part (80 percent) of the cost for the authority. The court found that the cost of spare parts would also

frageportalen​ . upp​ h andlingsm​ y ndigheten​ . se/​ o rg/ ​ u pph ​ a ndlingsmy ​ n digheten/ ​ d /​ dynamiska​-inkopssystem​-ramavtal/​. 22 Larsson, A., www​.adda​.se/​aktuellt/​bloggar/​Addablogg/​ar​-det​-mojligt​-att​-tilldela​ -ett​-ramavtal​-i​-ett​-dynamiskt​-inkopssystem/​, accessed 31 August 2021.

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constitute the dominant part of the new contract, and therefore it should have been included in the evaluation.23 New award criteria may not be included in a renewed competition under a framework agreement. In the event of a renewed competition, the suppliers who are parties to the framework agreement shall be invited to submit tenders in accordance with the terms set out in the framework agreement. These conditions may, if necessary, be specified and supplemented, with other terms specified in any of the procurement documents for the framework agreement.24 The procedural regime for the utilities sector is, however, less strict when it comes to framework agreements. In general, the Swedish courts usually consider that detailed information is required, in order for evaluation models and award criteria not to be considered contrary to the principle of transparency. In a judgment of the Administrative Court of Appeal in Gothenburg,25 a region procured X-ray equipment for public dental care. According to the invitation to tender, the evaluation would be carried out through an overall assessment of the equipment’s function with a score of 1 to 4. The court found that it was not possible to deduce from the procurement documents what would form the basis for the distribution of the various points. It was considered a breach of the principle of transparency. In this context, it should be mentioned that the CJEU gives a less strict view of the requirement for transparency than the Swedish judgments. In the Dimarso ruling, the CJEU found that the contracting authority may change its evaluation method after the publication of the procurement documents, and even after the tenders have been opened, if it is not possible to determine the method before that. However, such a change may not alter the award criteria and their relative weighting.26 Types of Framework Agreements According to Regulation (1998:796) on State Procurement Coordination,27 there must be framework agreements or other joint agreements that streamline the procurement of goods and services that authorities often procure to a large extent, or which are of great value. The regulation makes it more or less compulsory for authorities under the government to use STIC’s frame23 Administrative Court of Appeal in Gothenburg in case no. 1336-13. See also Administrative Court of Appeal in Stockholm in case no. 2344-11. 24 Chapter 7, para. 9, lagen om offentlig upphandling. 25 Judgment from Administrative Court of Appeal in Gothenburg, 2012-12-21, case no. 5823-12. 26 Case C-6/15 TNS Dimarso NV [2016] ECLI:​EU:​C:​2016:​555, pp.  31–32. 27 Förordning (1998:796) om statlig inköpssamordning.

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work agreements.28 When such an authority intends to procure without using the common framework agreements, STIC is to be informed of the reasons for this, although there are no sanctions against contracting authorities that do not adhere to the regulation. Agencies under the national parliament and state-owned companies may use STIC’s framework agreements. How Do Users Use the Agreements? STIC’s framework agreements usually offer mini-competitions (100 percent in IT framework agreements and 32 percent in agreements concerning other goods and services), call-offs according to ranking (12 percent) or a combination of both methods (32 percent). In four of STIC’s framework agreement areas, there is only one supplier. In Adda’s and HBV’s framework agreements the most common awarding methods used are renewed competitions and call-offs according to a ranking order, or a combination of the two. Only a few agreements have one supplier. Adda also has a couple of agreements where the needs of the individuals using the services or goods are the decisive factor (care services and cognitive aids). In Sinfra’s framework agreements call-offs are made from the supplier that best corresponds to the specific and requested need. The Swedish courts have developed case law concerning call-offs and mini-competitions. A strict interpretation of the judgments concludes that all awards under framework agreements must result in contracts that settle all conditions, at least for more than half of the contract value. It is, for example, not allowed to call-off, under a framework agreement with one or many suppliers in ranking order, an IT system including implementation services, if the services cost more than the system itself and are not specified to the full extent (exact volume to be purchased). According to the Swedish courts, such a contract is a framework agreement. Awarding a framework agreement under a framework agreement is not in accordance with the Swedish court practice.29 Modifications to Agreements The most common changes to CPBs’ framework agreements are due to suppliers’ corporate restructuring, including acquisitions, mergers or insolvencies. Another common change for CPBs is the adjustment of prices.

28 Avropa, ‘Coordinated framework agreement in Sweden’ (26 January 2021), www​.avropa​.se/​topplankar/​In​-English/​, accessed 23 March 2021. 29 Administrative Court of Appeal in Stockholm, case no. 3713-17.

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At the time of writing, there is a case concerning the ineffectiveness of a national framework agreement pending in the Supreme Administrative Court. The case involves four framework agreements procured by SIC through a restricted procedure, in accordance with lagen (2007:1091) om offentlig upphandling (Act (2007:1091) on Public Procurement), now repealed. One of the winning suppliers was declared insolvent after the framework agreement had been concluded. The insolvency estate transferred four framework agreements to a new supplier. The national court has requested a preliminary ruling from the CJEU on whether the new supplier may be regarded as having succeeded to the position of the initial supplier, in such circumstances that it is unnecessary to carry out a new procurement procedure.30 Requirement for Estimates and its Consequences The interpretation of the CJEU case C-216/17, Autorità is of great importance for national CPBs. The task of setting maximum values and/or quantities for national framework agreements is challenging when there are hundreds of voluntary users. In applications for court review, tenderers frequently include claims that maximum values or quantities are missing. The national courts – so far only lower courts – have developed a wide variety of interpretations. Clarifications by the CJEU and the Supreme Administrative Court are anticipated in the near future. The Supreme Administrative Court has seemingly opened the door for two particular cases of interest when it decided against two different courts of appeal and admitted two appeals.31 One concerns the interpretation of Autorità and whether the contracting authority must not only include maximum volumes but also maximum quantities in the procurement documents. The second case concerns a similar issue but involves a national CPB. Both cases are still pending in the administrative courts of appeal. In addition, it should be mentioned that the Court of Appeal in Gothenburg has accepted only a maximum value in a procurement of fixed and mobile telephony.32 It has also used Autorità in cases about procurement of services below the

Case C-461/20 Advania Sverige and Kammarkollegiet [2020] OJ C 414. The Supreme Administrative Court’s decision in HFD 2020-05-04, case no. 1303-20, overturning the decision of the Administrative Court of Appeal in Sundsvall, 2020-03-02, case no. 3556-19. The Supreme Administrative Court’s decision, 2020-09-25, case no. 5148-20 overturning the decision of the Administrative Court of Appeal in Stockholm, 2020-08-26, case no. 4845-20. 32 Judgment of the Court of Appeal in Gothenburg, 2020-06-15, case no. 604-20. 30 31

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thresholds33 and for services not covered by the Directives.34 In both cases the court confirmed quantity figures were not needed in order for the contracting authority to comply with the principle of transparency. On the other hand, the Administrative Court of Appeal in Sundsvall has in more than one case ruled against the interest of the contracting authority, stating, for example, that there must be a maximum quantity when school taxi services were procured. The court agreed with the complainant who claimed that the lack of a maximum volume entails unlimited possibilities to use the framework agreement without a new procurement procedure. If there was a new procurement procedure, the complainant could have submitted a tender.35 Many complaints in Swedish courts have otherwise been dismissed, since the complainants have not been able to show that the contracting authorities’ alleged infringements have caused harm or risked causing harm.36 The Competition Authority and the Procurement Support Agency have both issued opinions on the interpretation of Autorità.37 According to both authorities, even though Autorità concerned a framework agreement with only one supplier, it probably also covers agreements with suppliers in ranking order. There is a recommendation, from both authorities, to use maximum values also in framework agreements with renewed competitions. The Procurement Support Agency does not rule out that the case could also apply to social and other services. The Competition Authority is of the opinion that there should be both a maximum quantity and a maximum value. The Procurement Support Agency, however, is slightly more flexible in its approach and states that a maximum value would suffice in most types of procurement. Both authorities have also said that maximum volumes should be specified for each lot that tenderers can bid on (calling each lot a framework agreement). A national CPB has recently lost a case at first instance concerning such a matter.38

33 Judgment of the Administrative Court of Appeal in Gothenburg, 2020-07-17, case nos. 2609-20 and 2610-20. 34 Judgment of the Administrative Court of Appeal in Gothenburg, 2020-10-29, case nos. 3689-20 and 3690-20. 35 Administrative Court of Appeal in Sundsvall, 2020-04-23, case no. 2770-19. 36 E.g. Administrative Court of Appeal in Sundsvall, 2020-10-28, case no. 1142-20. 37 Ramavtalsupphandlingar och öppenhetsprincipen – EU-domstolens avgörande i mål C-216/17 Coopservice, The Competition Authority’s reasoned opinion 2019:1 och Vägledning om takvolym i ramavtal, The Procurement Support Agency guidance 2019:3. 38 The Administrative Court of First Instance in Stockholm, 2020-12-10, case nos. 8332-20 and 8369-20.

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311

COMPETITION AND SME ASPECTS

Around 99.7 percent of Swedish companies have fewer than 250 employees. Conclusively, almost all of them are SMEs. The organizers of coordinated procurement – in particular on the national level – have from time to time received their share of criticism from, in particular, the Competition Authority and business organizations. A major issue was, until a decade ago, the fear of CPBs procuring large framework agreements and destroying business opportunities for SMEs and hence competition in the relevant market.39 Business organizations have also voiced concerns that procurement, in general, is so complicated that economic operators refrain from participating in procurements. Nevertheless, there have not yet been any competition law cases raised against the CPBs or their framework agreements, but the competition principle40 is often raised in procurement review cases, although usually not as the primary ground for the complaint. Swedish law requires contracting authorities to decide whether it is possible to divide a procurement into several subcontracts, but there is no obligation to use lots. Contracting authorities also have the opportunity to decide whether tenders may be submitted for all or certain combinations of subcontracts/framework agreements and limit the number of agreements that can be awarded to one tenderer.41 Occasionally there are red flags raised against suspicious collusion between tenderers in the CPBs’ procurements. It could be, for example, similar prices, seemingly coordinated objections against central purchasing initiatives or the same wording used in tenders from different suppliers. There is so far insufficient guidance on whether such red flags are considered evidence enough to exclude tenderers. CPBs’ framework agreements are solely for the use of the public sector, with two known exceptions. Schools with private leadership may call off children’s vaccines under Adda’s framework agreement. Furthermore, private service providers of elderly care were able to call off from Adda’s temporary framework agreement for personal protective equipment during the first part of the Covid-19 pandemic. According to the Government Procurement Coordination Regulation, STIC must take into account SMEs’ opportunities to participate in all of its pro-

39 The Swedish Agency for Public Management, Statskontoret, Offentliga inköpscentraler i Sverige? (PM), 2008:108 reported facts that more or less ended the critique. 40 Article 18.1 of Directive 2014/24 implemented in Chapter 4, para. 2, lagen om offentlig upphandling. 41 Chapter 4, paras 13–17, lagen om offentlig upphandling.

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curements.42 STIC therefore always considers whether the procurement can be divided into lots, in order to facilitate the submission of tenders from SMEs. The preliminary studies carried out prior to the procurement process also included a market survey in which, among other things, the conditions of SMEs were analysed. At the end of 2019, STIC had 765 framework agreements. Around 63 percent of the suppliers had up to 49 employees and 86 percent up to 199 employees.43 Adda has been dividing its procurements into lots for many years as well, and has analysed the results of that work. In 2018, 86 percent of the suppliers on its framework agreements were SMEs. SMEs could account for 80 percent of the agreements and almost 70 percent of the turnover. Adda has one person working full-time on strategic supplier relations. In order to gain trust from economic operators and the industry as a whole, Adda has a supplier ombudsman. The key objective of the supplier ombudsman is to make Adda more accessible to economic operators wanting to establish a relationship with the CPB. The supplier ombudsman also acts as a neutral representative of both existing and prospective tenderers’ interests, if they feel that they have not been treated in accordance with the core values of the CPB. Furthermore, the supplier ombudsman is responsible for NAGI and NLI (which are key performance indexes for measuring satisfaction among bidders and suppliers to Adda) as well as a self-service platform for the suppliers. The success factor in business relations is dialogue before, during and after the procurement as well as throughout the duration of the agreement.

5

LIABILITY BETWEEN CPBS AND THEIR USERS

Contract Management It is important that CPBs’ framework agreements and contracts are monitored. It is generally considered an indicator of the CPB being a serious business partner. Suppliers often stress that follow-up activities are a necessity for creating a level playing field.44 An important part of the work process at SIC is active and continuous management of the framework agreements. The contract managers help their users conduct call-offs from the framework agreements as well as monitoring 42 CPBs are, as contracting authorities, in accordance with lagen om offentlig upphandling, Chapter 4, section 14, obliged to justify their decisions not to divide a procurement into separate parts, if there are conditions for doing so. 43 Information from Chief Legal Officer at SIC, Anna Ekberg. 44 Goda affärer en strategi för hållbar offentlig upphandling, Statens offentliga utredningar 2013:12.

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the terms of delivery, in close contact with the users and the suppliers. External audits of suppliers are carried out by professional audit firms.45 SIC does not yet use any particular e‑procurement tools for contract management. The framework agreements and DPSs at Adda are monitored and managed by category and contract managers, with support from Adda’s purchasing department as well as the legal team. It is done through an extensive and recurring dialogue with the framework suppliers. The suppliers and their respective framework agreements are also usually audited from an economic, quality and sustainability perspective, at least once during the duration of the agreement. These are planned audits exercised by professional auditors. There are also ad hoc audits when Adda suspects breaches of the terms of the framework agreements. These are often performed by the category or contract managers together with a legal expert. Only audits within the area of sustainable procurement are managed through a digital platform; other management of framework agreements lacks such digital support. Rules Relating to Enforcement and Remedies There is, at the time of writing, no case law that addresses the issues of liability between a CPB at the national level and its users. There are no cases of importance concerning damages in respect of procurements under a national framework agreement. There is one case concerning ineffectiveness from the Court of Appeal in Stockholm against a CPB, Adda. A supplier, party to a framework agreement, argued that a change to a framework agreement, excluding one of three economic operators, constituted an unlawful change to the agreement. The court considered that the framework agreement allowed for such a change and that there were also material grounds for cancelling the agreement. The complaint was therefore unsuccessful.46 Consequences in the Event a Framework Agreement Is Entered into Unlawfully If a court finds that a CPB has entered into a framework agreement unlawfully, the agreement could be considered invalid (ex post and ex ante). Such an outcome is, however, reserved for the situation where agreements are entered

45 See: Avropa, ‘Coordinated framework agreement in Sweden’ (26 January 2021), www​.avropa​.se/​topplankar/​In​-English/​, accessed 23 March 2021. 46 Kammarrätten i Stockholm, 2015-12-18, case no. 1355/15.

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into without respecting the publication rules47 or the regulated standstill.48 If it is justified by overriding reasons in the public interest, the court shall decide that the agreement may remain in force, even though the conditions for invalidity are met.49 In cases where there is an unauthorized negotiated procedure without prior publication of a contract notice, the Competition Authority is required to apply to the administrative court for the CPB to pay a procurement damage fee. If the contract is declared invalid, the Competition Authority may go ahead with such an application. The procurement damage fee must not exceed €1 million and may never be more than 10 percent of the contract value.50 In addition to this fee and an invalid framework agreement, the CPB risks having to pay damages according the procurement law51 to the tenderer harmed by the violation, as well as contractual damages to the supplier that lost the framework agreement. The consequences for a user of a framework agreement that a CPB has entered into unlawfully could – if challenged by an economic operator or the Competition Authority – be ineffectiveness, a procurement damage fee and the same kind of damages as for the CPB.

6

COVID-19 AND JOINT PROCUREMENT

The only ‘regular’ Swedish CPB directly involved in the Covid-19 response is Adda. During the initial phase of the Covid-19 pandemic, the Swedish government appointed the Agency of Health and Welfare (Socialstyrelsen) to be a CPB for purchases. The agency is also the Swedish representative in the joint European efforts to procure personal protective equipment.52 The role as a CPB was new to Socialstyrelsen and for quite some time, in the beginning of the pandemic, there was uncertainty as to what it was buying and for whom. After a while, it was established that the new CPB would only carry out purchases to supplement those made by the regions and municipalities themselves, and distribute supplies to local authorities in most need. All contracting authorities would have to keep on buying for themselves.

47 It is particularly reserved for unauthorized negotiated procedures without prior publication of a contract notice. 48 Chapter 20, para. 13, lagen om offentlig upphandling. 49 Chapter 20, para. 14, lagen om offentlig upphandling. 50 Chapter 21, paras 1–2 and 4, lagen om offentlig upphandling. 51 Chapter 20, para. 20, lagen om offentlig upphandling. 52 Societystyrelesn, ‘Lägesrapporter, samordning och övriga uppdrag med anledning av Covid-19’ (17 March 2020), www​.socialstyrelsen​.se/​coronavirus​-covid​-19/​ socialstyrelsens​-roll​-och​-uppdrag/​, accessed 23 March 2021.

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Adda had framework agreements in respect of both personal protective equipment and disinfectant. The suppliers who were parties to these framework agreements were all wholesalers. Either they could not get hold of the missing products or they could not take the risks connected to sourcing on the world market, which resulted in the users being unable to call off from the framework agreements. Sourcing during the second quarter of 2020 meant paying a lot of money in advance for supplies, with the risk that, upon delivery, they would not meet quality standards. A majority of the municipalities had no or very limited stocks in the beginning of the pandemic and there were no national stocks. It was early on obvious to Adda that most Swedish municipalities would not stand a chance as small buyers on a world market, where the needed products were scarce and the demand overwhelming. Public purchases of personal protective equipment also needed to be coordinated to avoid domestic competition that could result in price inflation. Adda’s owners, the Swedish Association of Local Authorities and Regions, therefore entered into an agreement with the largest municipalities as well as the central government agencies responsible for crisis management at the beginning of April 2020. Through this agreement, Adda was given the role of buying large amounts of supplies that municipalities needed to combat the crisis, both in the mid and long term. Adda received financial support through a loan (€0.5 billion). Additionally, the agreement established the coordination of ‘Covid-19 purchases’ with the regions in order not to compete against one another, as well as sharing information about opportunities (both of supplies and transportation), testing of products, test results, etc. The coordination was facilitated by Adda. Adda entered into a temporary framework agreement (for three months, with an extension for a further three months if necessary), using the negotiated procedure without publication according to Article 32(2)(c) of Directive 2014/24, with a wholesaler that had distribution lines established with all Swedish municipalities. The deal was that both Adda and the wholesaler were sourcing goods, but the wholesaler entered into the contracts with the suppliers and was responsible for quality standards being met. A small executive group at Adda was set up to scrutinize and swiftly decide on the offers. Large quantities of face masks, gloves, aprons, protective visors and disinfectant were bought during April and a special ‘corona’ web shop was opened at the end of May 2020. Adda guaranteed payment to the wholesaler for supplies that weren’t sold during the time frame of the temporary agreement. The CPB took no commission on the sales originating from that agreement. As of November 2020, the regular framework agreement is in use for disinfectant and almost all personal protective equipment.

21. Central purchasing bodies in the United Kingdom Alice Manzini, Luke Butler and Martin Trybus 1 INTRODUCTION According to the United Kingdom (UK) Public Contracts Regulations (PCR) 2015,1 contracting authorities may acquire supplies and services – anything from common goods to locum doctors, management consultancy, facilities management, etc. – from a central purchasing body (CPB) offering a ‘centralised purchasing activity’.2 Thus, contracting authorities may procure by using contracts awarded by a CPB; using dynamic purchasing systems (DPSs) operated by a CPB; or by using a framework agreement concluded by a CPB.3 They may, without applying the prescribed procedures, award a public service contract for the provision of centralised purchasing activities to a CPB.4 Such contracts may also include provision of ancillary purchasing activities.5 Therefore, contracting authorities can award these to CPBs directly without advertising, with or without remuneration.6

UK Statutory Instruments 2015 No. 102. Reg. 37(1). 3 Reg. 37(2). To the extent set out in regulation 33(5). 4 Reg. 37(8). 5 Reg. 37(9). However, contracts for ancillary purchasing services can only fall outside the PCR 2015 when they are performed by a CPB in connection with its CPB activities. Contracts between two contracting authorities, for example, for procurement or contract management services, therefore, remain subject to the PCR 2015, unless they relate to one party’s central purchasing activities. Contracts between contracting authorities for centralised or ancillary purchasing activities which are not for pecuniary interest would also fall outside the PCR 2015. 6 Recital 69 Directive 2014/24/EU. 1 2

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CPBs in the UK can be divided into three basic types: a national CPB currently called ‘Crown Commercial Service’ (CCS),7 central – or rather joint – purchasing bodies formed by two or more local government authorities,8 and sectoral joint purchasing bodies especially in education and the National Health Service (NHS).9 The use of UK CPBs is free and voluntary for contracting authorities. They are financed by a small fee taken from suppliers. This means that their success depends on proven and perceived efficiency, sustainability, and cost savings. Otherwise, contracting authorities will leave the CPB consortium or simply not use the CPB and procure independently. UK CPBs are generally only used by public sector contracting authorities, not by any private companies or charities.

7 On 1 April 1991, what is now the CCS was created as the ‘Buying Agency’. On 1 April 2000, it became part of the ‘Office of Government Commerce (OGC)’ within HM Treasury. On 1 April 2001, the Buying Agency, the Central Computer and Telecommunications Agency, Property Advisors to the Civil Estate and other Treasury units merged to form OGCbuying.solutions. On 1 April 2009, the Agency’s name changed to ‘Buying Solutions’. On 15 June 2010, Buying Solutions moved, along with its parent agency the OGC, to become part of the Efficiency and Reform Group within the Cabinet Office. In July 2011, the name Buying Solutions changed to ‘Government Procurement Service (GPS)’. In January 2014, the GPS merged with procurement management from government departments to form the ‘Crown Commercial Service’ (CCS). The upshot is that there has been extensive institutional relabelling, raising questions beyond this chapter about the extent to which this has really achieved meaningful substantive reform of central purchasing policy in practice. Some of these changes followed changes of government but overall, there are no specific Conservative or Labour policies regarding CPBs. Both governments aimed for efficiency and EU law compliance. CCS operates as a trading fund established under the Government Trading Funds Act 1973. It provides professional procurement services to the public sector to enable organisations to deliver improved value for money in their commercial activities and professional support, advising on technical issues, energy saving and environmental improvements. CCS operations break down into framework agreements. A small commission (averaging less than 1%) is collected from the suppliers for each sale they make under these framework agreements. 8 Prominent examples for local government joint purchasing bodies are the associations of the North East Council Limited (NEPO), Scape, Eastern Shires Purchasing Organisation (ESPO), North West Construction Hub, London Construction Programme, Southern Construction Framework, Yorkshire and Humber Region Construction Frameworks, and Constructing West Midlands. 9 Prominent examples for sector-specific joint purchasing bodies are Crescent Purchasing Consortium (further education), North Eastern Universities Purchasing Consortium (NEUPC) and South Universities Purchasing Consortium (SUPC) (higher education), Education Funding Agency Regional Building Contractors Framework, Education Funding Agency National Builders Contractors Framework, ReFit Energy Performance Contracts, NHS Commercial Solutions, and NHS Shared Business Services Construction Consulting Services Framework (health).

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Besides the structure of the questionnaire, in the conclusions, this chapter will also provide a short look at CPBs in the UK after Brexit. It will be argued that, apart from the voluntary nature of their use, CPB activities in the UK are currently still largely shaped by EU law.

2

STRUCTURE AND USE OF CPBS AND OTHER FORMS OF JOINT PROCUREMENT

The specific structure of UK CPBs varies but tends to follow a very similar general model. They are usually set up and formed by contracting authorities acting as shareholders. CPBs establish framework agreements which potential suppliers are invited to join and then award contracts to these suppliers based on the framework agreements. Apart from the CCS, the structure of CPBs is similar as between local government and sector-specific joint purchasing bodies. The CCS operates as a trading fund and is managed by a board of seven members. It works with more than 17,000 customer organisations and over 5,000 suppliers. Many local government purchasing bodies tend to operate only in the construction sector. However, several prominent local government CPBs also cover education, social care and information technology. For instance, the North East Council Limited (NEPO) operates in a wide variety of areas: construction, energy (electricity and gas), facilities management, fleet vehicles, food, and technology products, together with other partners.10 Moreover, some local government purchasing bodies tend to offer other services besides purchasing goods and services, such as policy and consultancy services (for example the Eastern Shires Purchasing Organisation, ESPO). Some have also developed social value delivery groups aimed at actively encouraging suppliers to achieve improvements to the economic, social, and environmental well-being of the areas they operate in. Usually, more than 50% of the total spend by member authorities of local government purchasing bodies is with SMEs. Prominent sector-specific joint purchasing bodies usually operate in the education and health sectors. Joint purchasing bodies in the field of education are non-profit organisations, the profits of which are invested back into members’ support and delivery of services.11 Most joint purchasing bodies in the field of education have established sustainability groups (e.g.

10 These include: CCS, Eastern Shires Purchasing Organisation (ESPO), YPO and the Ministry of Defence, professional services and social care. 11 Again, some of them offer additional services, such as account management services (e.g. North Eastern Universities Purchasing Consortium, NEUPC).

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North Eastern Universities Purchasing Consortium and South Universities Purchasing Consortium) or endeavour to proactively incorporate sustainable and ethical procurement in their implemented policies and services (e.g. Crescent Purchasing Consortium). The most prominent examples of joint purchasing bodies operating in the health sector are NHS Supply Chain, NHS Commercial Solutions, and NHS Shared Business Services Construction Consulting Services Framework. They offer a wide range of services, also including procurement consultancy. Unlike some other CPBs, some of their frameworks and contracts are free to access. Neither CCS nor the local or sector-specific CPBs in the UK offer services that involve taking over the contract management phase of a public contract, after the award. Cross-Border Procurement The analysis of UK CPBs indicates a very limited experience with cross-border procurement. The only notable exception is in the health-care context. Three cases can be highlighted, driven primarily through EU coordination as opposed to ‘bottom up’ domestic initiative: • HAPPI (Healthy Ageing – Public Procurement of Innovation) project. NHS Supply Chain is involved in a joint cross-border tender with four other Member States: Luxembourg, Italy, Belgium and France. This project is an EU co-financed project within the Competitiveness and Innovation Framework Programme (CIP) which aims to detect and purchase innovative solutions addressing the needs of an ageing society and to disseminate them to hospitals and nursing homes across Europe. The CPBs in the five countries involved are: GIP RESAH (Groupement d’intérêt Public – Réseau des Acheteurs Hospitaliers) in France; Fédération des Hôpitaux Luxembourgeois (FHL) in Luxembourg; NHS Commercial Solutions, United Kingdom; Società di Committenza Regione Piemonte (SCR), Italy; and MercurHosp – Mutualisation Hospitalière, Belgium. The HAPPI tender was the first joint cross-border procurement for all of them.12

12 See D. Mitea, M. Theiner, Z. Finderup, C. Fuchs and T. Polzer, ‘Support of the internal market policy for growth: Feasibility study concerning the actual implementation of a joint cross-border procurement procedure by public buyers from different Member States’ (2017) European Commission, https://​pure​.qub​.ac​.uk/​portal/​files/​ 126189391/​Study​_JCBPP​_final​_version​_BBG​.pdf, accessed 16 April 2021.

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• EHPPA (European Health Public Procurement Alliance) project.13 This is a non-profit organisation and a consortium of CPBs from ten EU Member States and Switzerland operating in the health sector. It aims to (1) establish a framework for joint procurement policies and strategies shared by the members; (2) facilitate the cooperation and exchange of information between its members to improve their own procurement performance; (3) enhance and professionalise the health-care public procurement sector in Europe; (4) have a better overview of the European public health-care sector; and (5) support and encourage the use of public procurement as a tool for innovation in the health-care sector. • SAEPP (Smart Ambulance: European Procurers Platform) project.14 This project comprises a group of several CPBs, providing ambulance services, together with academic health-care research bodies, hospitals, and other health-care organisations. This consortium’s aim is ‘designing and building a 21st century prototype emergency ambulance vehicle which will allow frontline clinicians to provide more high-level patient care on-scene and thus help reduce the number of unnecessary hospital transports currently made by ambulance services across the Euro-Zone’. There are also other EU-funded projects limited to the health sector which involve UK CPBs. These projects aim to implement pre-commercial procurements (PCPs) or public procurement of innovative solutions (PPIs) and many of them are still ongoing.15 It is beyond the scope of this chapter to assess the extent to which these ‘pilot projects’ have been or are likely to be successful in terms of outcomes and as a confidence-building measure for further cross-border CPB activities in the future.

13 See: European Health Public Procurement Alliance, www​.ehppa​.com/​accueil​ .aspx, accessed 16 April 2021 and NHS Commercial Services, www​.commercialsolutions​ -sec​.nhs​.uk/​page​.php​?pid​=​1331, accessed 16 April 2021. 14 See NHS Commercial Services, www​.commercialsolutions​-sec​.nhs​.uk/​page​.php​ ?pid​=​1478 and Cordis, ‘Smart Ambulance: European Procurers Platform (SAEPP)’, https://​cordis​.europa​.eu/​project/​rcn/​194189/​factsheet/​de, accessed 16 April 2021. 15 See Cordis, ‘International Network Supporting Procurement of Innovation via Resources and Education’, https://​cordis​.europa​.eu/​project/​rcn/​110904/​factsheet/​ en, accessed 16 April 2021 and European Commission, ‘EU funded projects implementing Pre-Commercial Procurements (PCP) or Public Procurement of Innovative Solutions (PPIs)’, 29 October 2020, https://​ec​.europa​.eu/​digital​-single​-market/​en/​eu​ -funded​-projects, accessed 16 April 2021.

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Efficiency and Policy Issues There is currently no detailed analysis available on the efficiency of CPBs, especially in relation to value for money, the fight against corruption, and achievement of strategic procurement aims and objectives. However, many CPBs publish relevant information and a summary of their framework agreements on their websites. CCS has recently been the subject of a report by the National Audit Office (NAO) examining its governance, efficiency and transparency.16 Overall, the report shows how the establishment of CCS has contributed to the achievement of large savings. Nevertheless, it also points out several deficiencies in relation to value for money and the delivery of its services to customers. Despite important financial savings, CCS has not achieved value for money. This is mainly attributable to the difficulty in implementing joint central buying and to the lack of evidence on net costs and benefits. This has substantially undermined CCS’s capacity to show that it has achieved more savings compared to other departments buying common goods and services by themselves.17 Therefore, CCS could not demonstrate that its deals are always the best available.18 Furthermore, the report has also shown the delivery of poor-quality services, due to poor management of procurement frameworks, unsatisfactory communication and unreliable services.19 By and large, CCS’s failures mainly stem from the lack of clarity on what and how to centralise public spending.20 Importantly, the report does not refer to the potential role of CCS and central buying in achieving wider non-service related objectives, for example, preventing or limiting corruption risks. A Public Accounts Committee report was even more critical. It concluded that CCS had not achieved projected savings, managing £2.5 billion on behalf of seven departments, not £13 billion on behalf of 17, as forecast.21 It also reported weak management of frameworks, for example, failure to: benchmark the prices it achieves; measure the impact of services on end users; renew or replace frameworks before expiry; and use all extension options. The report noted that use of expired frameworks contravenes public procurement law and

16 See National Audit Office, Crown Commercial Service (HC 786, Session 2016–17, 10 January 2017), www​.nao​.org​.uk/​wp​-content/​uploads/​2016/​12/​Crown​ -Commercial​-Service​.pdf, accessed 16 April 2021. 17 Ibid., p. 13. 18 Ibid., p. 38. 19 Ibid., p. 41. 20 Ibid., p. 29. 21 Public Accounts Committee, Action needed to improve performance of Crown Commercial Service (24 March 2017).

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exposes the risk of legal challenge, with CCS responding that it takes legal advice when it extends frameworks beyond their final expiry date.

3

PROCUREMENT TECHNIQUES

The PCR 2015 do not prescribe specific procurement techniques for centralised purchasing. However, some non-legally binding and now dated guidance has been published.22 The three main techniques are to award a call-off contract under a framework agreement; to conclude a separate contract directly with the other contracting authority’s provider; or to conclude a contract with the other contracting authority, who will subcontract the provision of the services. Framework Agreements A contracting authority can conclude a framework agreement with one or more suppliers. However, other contracting authorities may be able to award call-off contracts with any of the suppliers provided they are identified as potential purchasers in the Official Journal of the European Union (OJEU) notice, in accordance with the terms of the framework. At the outset, it should be stated that there is no specific regulation in relation to framework agreements in this context. This accords with the UK’s minimal approach to copy out of the Directives. However, there remain several issues which arise in respect of application of the rules deriving from the EU Directives. For example, there is an issue as to which contracting authorities are permitted to use the framework. Regulation 33(5) PCR 2015 provides that the framework can only apply between those contracting authorities ‘clearly identified’ for that purpose in the call or invitation.23 In turn, an issue arises as to what form identification may take. To be certain, the contracting authority should be individually named. However, it may be possible to identify a class of authority. The same will apply where a CPB procures a framework. However, direct purchases from the CPB will not require identification. It is not possible for an authority which is not identified at the time to join the framework later. Further, regulation 33 PCR 2015 is silent on identification of the value and volume of purchasing under a framework. However, the OJEU contract notice

22 Office of Government Commerce, Central Purchasing Bodies, OGC Guidance on Central Purchasing Bodies in the Procurement Regulations, March 2008. 23 Case C-216/7, Autorità Garante della Concorrenza e del Mercato, ECLI:​EU:​C:​ 2018:​1034, has provided some clarification in this regard.

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does not expressly exempt frameworks from the requirement to clearly state the value of the procurement. In practice, it has been observed that these requirements can be difficult to manage for several reasons. First, in the case of CPBs, the actual requirements of individual authorities may be difficult to clearly identify. For example, it has been noted that some of the CCS frameworks are available to much of the public sector with ‘eye wateringly large numbers’ in terms of volumes quoted which are commonly inserted into the value section of the OJEU.24 It has been argued that Autorità implies that more than guesswork may be required in identifying value and volume in confirming not only that the overall value of the framework needed to be stated, but also that ‘best endeavours with regard to the value and frequency of each of the subsequent contracts to be awarded’ is used.25 The implication is that whilst the procurer of the framework must state the overall values to be procured under the framework, the requirements of individual authorities cannot be ignored. In this regard it has been observed that, for CPBs, ‘this could be a bit of a headache’ because it is unlikely that CCS, for example, will contact and determine the procurement requirements of every individual public body before setting up a framework.26 There is also a question to be asked about whether this could undermine the purported efficiency gains and reduced administrative bureaucracy which are said to favour the use of frameworks. However, where a framework is more local and perhaps more bespoke, it has been suggested that authorities would have no excuse for not addressing this when setting up the framework. It would fail a test of best endeavours if it simply ignored the requirements of those it purports to allow to use the framework.27 Again, this raises questions as to the basis for determining what would qualify a framework as more or less local or bespoke in identifying the extent to which it is necessary to have due regard to individual requirements. Second, relatedly, it has been asked who will bear the risk of any failure of identification. The obligations appear to be addressed to the initial design of the framework. However, in practice, the problem will arise at the call-off stage. The framework itself will have benefitted from an issued standstill notice and is likely to be beyond the normal time limits for challenge. However, the call-off, which does not clearly identify who is entitled to use the framework, is not subject to this protection and risks being subject to the ineffectiveness 24 M. Mousedale, ‘Who is in the frame?’, Local Government Lawyer, 5 April 2019. Available at: www​.l​ocalgovern​mentlawyer​.co​.uk/​projects​-and​-regeneration/​317​ -projects​-features/​40234​-who​-is​-in​-the​-frame, accessed 16 April 2021. 25 Case C-216/7, Autorità Garante della Concorrenza e del Mercato, para. [60]. 26 M. Mousedale, ‘Who is in the frame?’, supra note 24. 27 Ibid.

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remedy. Therefore, the contracting authority seeking to use another’s framework must be clear at the outset both that it is entitled to use the framework and that best endeavours have been used in addressing its requirements.28 Contract Sharing Clause: Direct Contract with Supplier A public body may conclude a contract for the purchase of goods, services or works with a supplier directly, but also enable a partner organisation to procure on (substantially) the same terms and conditions. This structure is most likely to be used where the goods and services are standard and are delivered by using the supplier’s premises, assets and staff. Unlike under a framework agreement, which is essentially an agreement to contract with the possibility of a call-off, the contract will set out the precise scope of the arrangement and any new purchaser is bound by the terms agreed with the original contracting authority. In the UK, practitioners have developed a standard contract-sharing clause to this effect.29 The clause provides as follows. First, the parties agree that the public authority enters into the agreement for itself and for the benefit of partner organisations.30 Second, the partner organisation must obtain prior written consent from the authority.31 Third, three specific obligations are prescribed: (1) each and every partner organisation must enter into a specific contract with the supplier incorporating the same terms and conditions; (2) any non-substantial amendments to the terms and conditions agreed between the supplier and the partner organisation must be clearly set out in the specific contracts; and (3) in order to enter into a specific contract with the supplier the partner organisation may, in accordance with relevant public procurement regulations, consult the supplier in writing requesting the supplier to supplement its tender or solution as may be necessary.32 Fourth, the authority does not guarantee that any partner organisation will require the supplier to provide any additional goods, services or works nor does it guarantee the supplier a right to receive such requirement for them.33 Fifth, the authority is not liable

M. Mousedale, ‘Who is in the frame?’, supra note 24. See: Edward Vera-Cruz, ‘West Sussex County Council and Practical Law Public Sector, Collaborative procurement: contract sharing clause (direct contract with supplier)’, https://​uk​.practicallaw​.thomsonreuters​.com/​3​-502​-3293​?transitionType​=​ Default​&​contextData​=​(sc​.Default)​&​firstPage​=​true​&​bhcp​=​1, accessed 20 November 2019. 30 Clause 1.1. 31 Clause 1.2. The public body can refuse consent at its absolute discretion. 32 Clause 1.3. 33 Clause 1.4. 28 29

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to the supplier or partner organisation for payment in respect of them.34 Sixth, the partner organisation is responsible for satisfying itself that entering into the specific contract with the supplier does not breach any relevant public procurement regulations or the general EU procurement principles.35 Seventh, if any partner organisation enters into a contract with the supplier for the provision of additional goods, services or works, the supplier must, at the end of each month or quarter during each such contract, pay to the authority a rebate equal to a percentage (1%, 1.5% or 2%) of the supplier’s gross total invoices (excluding VAT) in relation to the additional goods, services or works.36 All such payments must be made within 30 days of the end of each month or quarter.37 Where the full details of such an arrangement are not established at the outset, the contract may provide for variations enabling such arrangements to be introduced in accordance with its terms. Such variations should comply with the procurement rules. This approach allows the CPB to market its procurement to include the potential spend of its partner authorities. However, under this model, the CPB does not undertake a contract management function for the partner authorities and is not responsible for the service that is delivered to them. The disadvantages of this approach are that the CPB does not manage the performance of the supplier in respect of its contracts with the partner authorities and, therefore, may have less influence with it. Moreover, it has little control over any variations to the contract that may be agreed directly between the supplier and the partner authority. Substantial changes to the original specification or contract value as advertised could expose the CPB to the risk of a procurement challenge. Contracting with the CPB as Prime Contractor A CPB can also let a contract under which a supplier provides services. That CPB may also require that operator to provide any of the services to any partner organisation on the same terms. In this model, the partner organisation contracts with the CPB as prime contractor with the service provider as subcontractor. The CPB either includes the partner organisation’s requirements in its contract with the supplier at the outset or varies its contract to allow for the partner organisation’s requirements. This model can be used when the CPB

36 37 34 35

Clause 1.5. Clause 1.6. Clause 1.7. Clause 1.8.

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wants to offer its services to the wider public sector market. This structure is most likely to be used where the supplier will provide the service using the original authority’s premises or assets; or where the CPB’s requirements are substantially greater and more complex than those of any partner authority. Again, UK practitioners have developed a standard clause to this effect.38 First, the parties agree that the authority enters into the agreement for itself and for the benefit of partner organisations.39 Second, the partner organisation may, with the authority’s prior written consent,40 consult the supplier in writing requesting it to supplement its tender or solution as may be necessary regarding the specific requirements of that particular partner organisation.41 Third, if the parties and partner organisation agree to proceed with the request, the provider must provide an analysis of the impact that the agreed change will have on the existing provision of services to the authority within ten working days, or another period as the parties may agree.42 If, following receipt, the authority confirms in writing that it wants to proceed with its requirement for the provision of services to the partner organisation, the parties must implement any requested services in accordance with the Change Control Procedure.43 The supplier must not be required to enter into a separate contract with the partner organisation.44 As part of and consequent on successful implementation of the requested services, any additional charges for those services must be incorporated in the charges as specified in the payment mechanism schedule; any service levels concerning the requested services must be incorporated in the service levels schedule; all details of the requested services as agreed and implemented, together with any non-substantial amendments to the terms and conditions in the agreement as agreed for the requested services, must be clearly set out in a specific additional schedule; and the relevant requested services must become part of the services for the purpose of all other obligations within the agreement.45 The authority does not guarantee that any services will be required to be provided by the economic operator to any partner organisation under the agreement nor does the provider have a right to receive this requirement for

40 41 42 43 44 45 38 39

Edward Vera-Cruz, supra note 29. Clause 1.1. The authority can refuse consent at its absolute discretion. Clause 1.2. Clause 1.3. Clause 1.4. Clause 1.4. Clause 1.5.

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providing services.46 It is the responsibility of the partner organisation in requiring the provision of any services to satisfy itself that it would not be in breach of any relevant public procurement regulations or violate general EU procurement principles.47 The basis of the arrangement between the CPB and the partner authorities will be set out in a separate agreement and is, therefore, not covered by these clauses. In addition, if the contracting authorities work together during the procurement exercise, they may also require a memorandum of understanding setting out the two parties’ respective responsibilities during that process. This approach allows the CPB to monitor the other authorities’ level of spend; to operate a single employer and contractor governance arrangement with the supplier, including managing performance issues centrally; to agree any variations centrally; and if appropriate, to recover a management fee from the other authorities for its management costs. The disadvantages of this approach are that the CPB will manage the contract on behalf of itself and its partner authorities. It will, therefore, be responsible for addressing any performance issues that arise concerning the service received by the partner authorities. Moreover, the indemnities that the CPB has agreed with the supplier continue to apply, unless varied for the partner authority.48 Finally, the CPB must ensure that it does not arrange to provide anything to a partner authority that cannot be fully subcontracted to its supplier under the contract, or which can otherwise be delivered by the CPB. Beyond these standard forms, there do not appear to be any government prescribed models for other types of purchasing, such as dynamic purchasing systems (DPSs), specifically in the UK. However, the Local Government Association has published a Guide to DPSs49 and there are examples of

Clause 1.6. Clause 1.7. 48 For example, if there were a TUPE (Transfer of Undertakings (Protection of Employment)) transfer from the CPB and an indemnity in favour of the supplier for pre-transfer liabilities, the same would be required for any transfers from the partner organisations. The CPB should ensure that it benefits from back-to-back indemnities from the partner organisation. 49 Local Government Association, ‘A guide to Dynamic Purchasing Systems within the public sector Is it right for you and your suppliers?’ (13 June 2017), www​.local​.gov​ .uk/​guide​-dynamic​-purchasing​-systems​-within​-public​-sector​-it​-right​-you​-and​-your​ -suppliers, accessed 19 November 2019. 46 47

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their use in practice, for example by CCS,50 in health care,51 and in regional transport.52 There appear to have been no specific issues identified in relation to the evaluation for CPBs. There are no domestic requirements in relation to estimates of the purchase requirement and what are the consequences of wrongful estimates. As there are no domestic requirements in respect of estimates, there are no consequences except any resulting from a contravention of EU law, which have not been identified as a major issue in practice.

4

COMPETITION AND SME ASPECTS

Following a 2014 Cabinet Office Discussion Paper, which suggested a need for legislation to make the use of CPBs mandatory, concerns were raised regarding the effect on competition. It was a criticism that mandatory framework agreements or a limitation on the number of CPBs closed the public procurement market to these few CPBs and thereby eliminated suppliers who would not survive the long waiting time until the next framework agreement. Making the use of CPBs mandatory would also affect competition by removing incentives for the CPBs to do good work. The benefits of economies of scale could also be compromised where mandatory framework agreements were used by a small number of CPBs, reducing competition by eliminating suppliers and reducing CPB efficiency.53 CPBs are taking SMEs into account. According to the CCS: Work has continued in support of the government’s growth and industrial strategies through public procurement and increasing spend with SMEs. More than 80% of the suppliers that have been successful in securing a place on the new commercial agreements that we have launched this year are SMEs. We have also continued to simplify our commercial documents and bidding processes, making it easier to do business with us. The bidding packs have been simplified and we have rolled out

50 See for example, GovUK, ‘Dynamic Purchasing System Marketplace’, https://​ supplierregistration​.cabinetoffice​.gov​.uk/​dps, accessed 4 February 2021. 51 See, for example, in the NHS London Procurement Partnership, ‘Dynamic Purchasing Systems – all you need to know’, www​.lpp​.nhs​.uk/​for​-suppliers/​dynamic​ -purchasing​-systems​-all​-you​-need​-to​-know/​, accessed 4 February 2021. 52 See, for example, the case studies (primarily individual contracting authorities) in the Local Government Association Guide. However, note the Strathclyde Partnership for Transport (SPT) which was formed on 1 April 2006. It is a shared service and the largest of Scotland’s seven regional transport partnerships. It has relied on a DPS to provide home to school transport involving 11 participating councils. 53 See: Peter Smith, ‘Central Purchasing and potential market distortion’, Spendmatters, 3 February 2014, http://​spendmatters​.com/​uk/​central​-purchasing​-bodies​ -potential​-market​-distortion/​, accessed 16 April 2021.

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a clearer standard Public Sector Contract which works with dynamic purchasing systems – helping to continue to level the playing field for suppliers.54

Further, the Crescent Purchasing Consortium (CPC) has identified a range of measures to reduce barriers for SMEs.55 According to one CPB, ‘spend directly with SMEs reached £912m (12%) which is +£173m on 2017/18 and flat as a percentage of total direct spend’.56 According to another, ‘NEPO member authorities spend over £2.68bn per year with suppliers. In 2017, 60% of total spend by our member authorities was with North East suppliers. Of the 60% of spend with North East Suppliers, 65% was with Small to Medium Enterprises.’57 Crescent reported that, ‘we currently have 558 unique suppliers across 55 EU tendered framework agreements, including a broad range of structures and sizes’.58 The UK transposed all four measures to facilitate SME participation introduced in the 2014 Directive;59 however, the division into lots is not compulsory – the UK opted for a ‘divide or explain’ approach – and there is no requirement for direct payments to subcontractors but rather a rule to pay within 30 days.

5

LIABILITY BETWEEN CPBS AND THEIR USERS

The contracting authority is deemed to have complied with the PCR 2015 to the extent that the CPB has complied with the PCR. However, the contracting authority is responsible for ensuring that those parts of the procedure it conducts itself are compliant with the PCR 2015, such as awarding a contract under a DPS which is operated by a CPB; conducting a reopening of competition (i.e. a mini-competition) under a framework agreement that has been concluded by a CPB; or placing a call-off contract for the performance of a given task without reopening competition with a supplier under a framework agreement that has been concluded by a CPB.60 As indicated, the UK adopted a copy-out approach. There are no express domestic legal requirements in respect of how a CPB conducts its procurement activities. Of course, every government department, local council, etc. has Crown Commercial Services, Annual Report and Accounts (2018/2019), p. 19. Crescent Purchasing Consortium, SME Statement (2017). 56 Crown Commercial Services, Annual Report and Accounts (2018/2019), p. 23. 57 See: Nepo, www​.nepo​.org/​about, accessed 16 April 2021. 58 Crescent Purchasing Consortium, SME Statement (2017). 59 See Martin Trybus, ‘The Promotion of Small and Medium-Sized Enterprises in Public Procurement: A Strategic Objective of the New Public Sector Directive’ in François Lichère, Roberto Caranta and Steen Treumer (eds), Modernising Public Procurement: The New Directive (Djøf Publishing: Copenhagen, 2014) 255–280. 60 Pursuant to regulation 33(8)(a) or (b): Reg. 37(6). 54 55

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financial reporting obligations for audit purposes. However, there have been specific ‘audits’ of the operation of the CCS. For example, in 2017, the NAO published a report examining the CCS’s operation since its launch in 2014.61 There is no specific regulation or case law addressing liability between a CPB and its users. As indicated in the discussion of techniques used, there remains some uncertainty with regard to who may be liable in respect of parties identified in a framework agreement, e.g. the risk of ineffectiveness. Whilst there has been no case law addressing CPB-user liability, a recent Supreme Court case incidentally explored the type of procurement techniques discussed in Section 3 above (e.g. contracting with a CPB as a prime contractor) and brings into focus some of the potential issues that may arise in respect of contract variations and the general compatibility of such arrangements with EU law in this context. In 2015, in Edenred, the Supreme Court dealt with an appeal by a provider of childcare vouchers against a judgment upholding HM Treasury’s decision to deliver a tax-free childcare scheme internally, in conjunction with National Savings and Investments (NSI) rather than inviting competitive tenders from external providers.62 NSI was a non-ministerial government department which provided operational services to other public bodies. These operational services were, in turn, outsourced to a private company under a public service contract. The NSI wished to provide these services on behalf of HM Revenue and Customs (HMRC). This required a memorandum of understanding between NSI and HMRC and a variation of the contract between NSI and a private company. The proposed modification to the public service contract was challenged as contrary to EU procurement law and Reg. 72(1)(e) PCR 2015 on the basis that the modification was substantial. Further, it was argued that there was, in substance, a public service contract between HMRC and the private company. This was on the basis that: most of the provisions of the proposed memorandum of understanding between the NSI and HMRC were repeated in the proposed variation; the private company would provide operational services through its staff using equipment that it would purchase or develop; HMRC would be the service recipient; HMRC had discussed the services directly with

61 National Audit Office, Crown Commercial Service (HC 786 Session 2016–17, 10 January 2017). 62 Edenred (UK Group) Limited and another (Appellants) v Her Majesty’s Treasury and others (Respondents) [2015] UKSC 45. For commentary, see R. Ashmore, ‘The Supreme Court’s ruling in Edenred on the issue of material variation of a concluded contract under EU law’ (2015) 6 Public Procurement Law Review NA202–NA207.

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the private company; and an Act of Parliament63 imposed a legal obligation on the NSI to comply with its memorandum of understanding with HMRC. Concerning the variation, it was held that the proposed amendment would not considerably extend the scope of the contract and did not involve a substantial modification. Concerning the argument that the variation to the contract between NSI and the private company amounted to a new public service contract between HMRC and the private company, it was held that there was no new public service contract. In substance and reality, the government had decided to deliver a particular scheme internally, rather than through an external provider. The arrangements between NSI and HMRC did not constitute a public contract and there was no opportunity that was required to be offered to the market. The fact that the implementation of that decision was not confined to HMRC, but involved HMRC making use of another government department, NSI, which was part of HM Treasury, to set up and administer the childcare accounts, did not change the character or the substance of what was planned from an essentially in-house implementation of policy into the sort of external arrangement that would attract the requirements of the PCR. Nor did NSI’s outsourcing arrangement with the private company alter the essential character of the arrangement with HMRC from an in-house arrangement to one requiring a procurement process. Article 56 TFEU did not apply. Among other things, the TFEU was not aimed at, and did not apply to, what were essentially resource-sharing arrangements made internally between two government departments.64 The only consequences of using a CPB agreement in cases where the CPB has entered into the agreement unlawfully would have been any consequences under EU law. There is no UK case law on this issue.

63 The Childcare Payments Act 2014, s. 16 (the proposed services related to the administration of the Taxfree Childcare Scheme). 64 Paras 99–101 of judgment. Further, NSI was an existing public body with an established remit separate from the tax-free childcare scheme, and it was seeking to use its outsourced resources to provide business-to-business services to other public bodies. That context was part of the substance of the proposed agreement, and there was no legal basis for suggesting that NSI was not involved. The memorandum of understanding and the contract with the outsourced provider were legally distinct. Further, under any business-to-business scheme, a public body would be the service recipient, but it would receive the services from NSI: the fact that the service recipient discussed those services with the private company as the outsourced provider of operational services to NSI did not alter the substance of the transaction: para. 48.

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6 COVID-19 The UK addressed COVID-19 using a combination of the centralisation of the procurement function rather than centralised purchasing per se, a degree of centralised purchasing, e.g. through the CCS, and assistance provided by the CCS to individual contracting authorities when procuring as an individual contracting authority. Firstly, concerning the temporary centralisation of the procurement function, at the onset of the pandemic, there was a need to develop a centralised response to the many thousands of offers of PPE that were received by government. Early on the UK used a central email address initially followed by a portal (Coronavirus Support from Business Scheme). In addition, an inbox was also created for referrals available for use by politicians across all parties of government. In total, the UK government received 24,000 PPE offers from 16,000 suppliers. To deal with these expeditiously, a cross-government PPE team (largely led by the Ministry of Defence) established a ‘high-priority lane’ to assess and process potential PPE leads from politicians and larger companies with established contacts on the basis that these sources were more credible or needed to be treated with more urgency.65 This was in addition to a ‘normal lane’ established to assess and process PPE offers. However, this high-priority lane proved to be controversial. A Public Accounts Committee Report criticised the fact that the process for allocation and the criteria used for selecting suppliers was neither clear nor transparent.66 Secondly, within the NHS specifically, NHS trusts were advised to cease individually procuring PPE, ventilators and other products in high demand due to COVID-19. These were to be procured on a national level in order to reduce competition between individual NHS organisations for the same supplies. The only exception was in cases where an NHS Trust was working with ‘new, local or small suppliers’ in such a way as to not conflict with national procurement.67 This was purportedly to prevent local stockpiling of in-demand equipment

65 Cabinet Office, ‘Response to article published by the New York Times on UK government procurement’ (23 December 2020), www​.gov​.uk/​government/​news/​ response​-to​-article​-published​-by​-the​-new​-york​-times​-on​-uk​-government​-procurement, accessed 16 April 2021. 66 See generally, Public Accounts Committee, ‘COVID-19: Government procurement and supply of Personal Protective Equipment’, https://​committees​.parliament​.uk/​ publications/​4607/​documents/​46709/​default/​, accessed 30 August 2021. 67 Letter from Jonathan Marron, Director General, PPE and Public Health, Department of Health and Social Care and Emily Lawson, Chief Commercial Officer (1 May 2020).

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by trusts with the strongest purchasing departments and largest budgets.68 However, this required a delicate balance between relying on national procurement and local purchasing because of potential risks of inadequate or unpredictable central deliveries. Thirdly, there was a degree of centralised purchasing on behalf of all contracting authorities generally during the pandemic. To the authors’ knowledge, to date, there have not been any detailed reports or inquiry findings in respect of the extent of centralised purchasing arrangements that were used. However, a National Audit Office Report has identified that ‘many’ CCS agreements were used to procure goods and services during the pandemic.69 In addition, the CCS provided centralised support for procurement undertaken by individual contracting authorities. This was the case not just in England but also in the devolved regions. For example, at the start of the pandemic, a website in Wales identified various ways in which procuring entities and suppliers could identify PPE (and other types of urgently needed equipment or services). It identified the possibility of contract opportunities available through the Welsh national procurement portal. Further, procuring entities were directed to the UK’s Crown Commercial Services catalogue of suppliers (for use by contracting authorities) which permits a search of goods and services offered by region. To clarify, this supplier catalogue was not a framework agreement established through a competition with the potential for follow-on call-off contracts. This was simply designed to identify potential suppliers and matches supplier offers with procuring entity needs. CCS expressly asked that the procuring entity call on existing commercial frameworks first, with the supplier catalogue simply filling a gap where the former were unable to meet the need. It would be up to the procuring entity in terms of how to procure. There were essentially two options, either contact CCS for assistance or contact the supplier directly, although the clear emphasis was on the latter. This was accompanied by a disclaimer, namely that any procurement would need to comply with the EU procurement rules.70 Therefore, it is difficult to determine to what extent individual contracting authorities complied with EU law in their

68 Katherine Hignett, ‘Government bans trusts from major PPE deals to stop them competing for scarce equipment’(2020) Health Service Journal, 2 May, www​ .hsj​.co​.uk/​coronavirus/​government​-bans​-trusts​-from​-major​-ppe​-deals​-to​-stop​-them​ -competing​-for​-scarce​-equipment/​7027554​.article, accessed 16 April 2021. 69 National Audit Office, Investigation into government procurement during the COVID-19 pandemic (HC 959 Session 2019–2021, 26 November 2020) p. 17. 70 For an example, see Welsh Government, ‘Provide critical equipment and personal protective equipment (PPE)’ (30 March 2020), https://​gov​.wales/​provision​-of​ -personal​-protection​-equipment, accessed 16 April 2021.

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selection and award criteria and this does not appear to be a matter that was closely supervised or overseen by CCS.

7 CONCLUSIONS The use of UK CPBs, CCS, central/joint, or sectoral, is voluntary rather than mandatory for contracting authorities. This means that the success of CPBs depends on proven and perceived efficiency, achieved sustainability objectives, and cost savings. Otherwise, contracting authorities will leave the consortium or simply not use the CPB and procure independently. Apart from the voluntary nature of their use, CPB activities in the UK are currently still shaped by EU law. In 2021 it is still too early to tell how this might change with the country having left the EU. There are some immediate consequences of Brexit. The Public Procurement (Amendment etc.) (EU Exit) Regulations 202071 omit provisions on joint cross-border procurement with EU Member States. This could possibly be due, inter alia, to the fact that such a provision was never generally considered to be necessary (at least in the UK) and a recognition that in reality very little joint cross-border public procurement is done in the UK. In any event, it would not preclude such cooperation in future. There are also potential longer-term implications of Brexit. A recently issued Cabinet Office Green Paper on post-Brexit reform of the UK public procurement systems sees an opportunity to make certain changes in respect of CPBs and their associated tools. For example, there are proposals to enable use of DPSs for all types of procurement, not just commonly used goods and services, and to legislate for new options in framework agreements, including an ‘open framework’ with multiple joining points and a maximum term of eight years.72 Further, it is proposed that it should be a requirement for contracting authorities to record framework agreements and DPSs that are available to other contracting authorities on a central register. This would enable commercial teams to identify collaborative commercial arrangements that can deliver best value for money.73 Put simply, the emphasis is on enabling more flexible use of the best commercial purchasing tools. It remains to be seen whether such reforms will be enacted in the form recommended.

Statutory Instrument 2020 No. 1319. Cabinet Office, Transforming Public Procurement (CP 353 December 2020) p.  42. See: https://​assets​.publishing​.service​.gov​.uk/​government/​uploads/​system/​ uploads/​attachment​_data/​file/​943946/​Transforming​_public​_procurement​.pdf, accessed 16 April 2021. 73 Cabinet Office, Transforming Public Procurement, p. 57. 71 72

Central purchasing bodies in the United Kingdom

335

Whatever the continuing influence of EU law on CPB design and operation, the immediate importance of CPBs in UK practice persists, as evidenced most recently by COVID-19.

Index furniture 123 insurance 123 role of FOR in launching and monitoring 123 impact and benefits of 129 under influence of European law 137 joint procurement by COVID-19 and 136 penetration rate of 122 joint public contracts for road works 121 liability between CPBs and their users contract management 135 rules relating to enforcement and remedies 135–6 Ministry of the Environment of the Brussels–Capital Region 124 participation of SMEs in 134 federal procurement 122 pillars of procurement model and procurement policy centralisation and professionalisation of purchasing within the vertical entities 124 horizontal entity 124 purchasing consultation 124 procurement techniques implementation of 132 types of 130–32 for public sectors 134 roles of 128 structure of 123–8 use of 121 below-the-threshold contracts 112, 230 best price–quality ratio 261 bid rigging, risk of 72, 76 big buyers’ initiatives 64 Brexit 318, 334 bus ride model

Adda inköpscentral AB (Adda) 301–3, 305, 312, 315 administrative tribunals 78, 290 advance purchase agreements (APAs) 117, 237 agency contract 30 aggregated procurement, legal scheme for 23 anticompetitive risks, in CPB activities 76–80 anti-SME risks, in CPB activities 76 awareness of 76–80 Antitrust and Coopservice case 213 antitrust law, for collaborative procurement 78 ASMEL case 19 Autorità case 45–7, 87, 95–8, 148, 151–2, 163, 181, 213, 273, 289, 309, 323 Beentjes case 208 Belgian Council of State 133 Belgian Ghent–Terneuzen project 33 Belgium, CPBs in concern about competition law 133 cross-border procurement 129 efficiency and policy issues 129–30 expansion of 122 Facilitair Bedrijf (Facility Services Agency) 122, 124, 129 Federal Central Purchasing Office (FOR) 123 Federal Framework Agreements Unit 121 financing of 128 Flemish Agency for Social Housing 125 framework agreements for 127 changes of 132–3 estimates of purchases and their consequences 133 336

Index

of collaborative procurement 32–3 of joint procurement 62–3, 70 buying power 1, 66, 71, 73, 75, 78, 106, 240, 246, 248, 263 Cabinet Office Green Paper on post-Brexit reform 334 cab rank 40 call-off contracts 38, 91, 93, 148, 195, 242, 246, 266, 270, 271, 323, 329 award of ‘cascade’ model for 40 direct 39, 40–41 framework agreement for 39, 46 objective criteria for 39 procedure for 39 random selection method for 41 terms and conditions for 39 based on a ‘mini-competition’ 39, 41–2 cab rank 40 remedies relating to 94 right to enter into 38–9 risk of ineffectiveness of 99 subject-matter of 41 users’ responsibility to follow up on 89 value of 39 CAMIF judgment 170 Cap’Oise Hauts-de-France 172 carpooling 32–3, 63, 205 centralisation of purchases 21 centralised procurement, regionalisation of 8 centralised purchasing activity 24 central purchasing bodies (CPBs) 1 advantages and disadvantages of 17 anti-competitive effects of 10 breaches related to 87 constitution of 10–13 creation of 71 definition of 12 economic insights to 3 EU regulation on 10, 75 financing of 5, 257–8 function of 123 influence of EU law on 335 liability between CPBs and their users 7, 10

337

participation of SMEs in 134 procurement techniques 5–6 for public sectors 134 structure and use of 2, 4–5, 12 subject-matter of public contracts awarded by 242 users of 4, 87 challenges for CPBs, in Scandinavia 47 city-based CPBs 125 Civil Protection Mechanism 102, 104–5, 115–16 code of conduct 304 collaborative procurement antitrust law for 78 command-and-control approach to 79 competition impacts of 79 juridification for 79 self-regulatory approach to 79 SME participation in 79, 80 Commission v. France 22–3 common framework agreement 143, 308 community of municipalities 256 competition among CPBs 27, 80 CPB oversight and regulation from 80–84 between CPBs and economic operators 17 between CPBs and (private) undertakings 84 for framework agreements 149 impact of CPB activity on 83 impact of procurement centralisation on 77 mandating lot division as an output 82–3 mini-competition 131 principle of 85 for public contracts 82 SME impacts of CPB activities on 80 competition law application to CPBs 17–19, 73, 84 in Belgium 133 in Denmark 149 in Finland 164–6 in France 181–2 in Germany 196 in Italy 232

338

Centralising public procurement

in The Netherlands 214–15 in Poland 248–9 in Portugal 262–3 in Romania 274 rules in Articles 101 and/or 102 TFEU 76 in Spain 290 in Sweden 311–12 on unilateral conduct by a dominant undertaking 81 in United Kingdom 328–9 Competitiveness and Innovation Framework Programme (CIP) 319 complaints, regarding CPBs’ agreements 92 conflict of laws 258 “conflict of procurement laws” rules 193 contract management framework agreement maximum estimated value 98 requirements in 88 issues in respect of 272 liability between CPBs and their users 135, 150, 183, 233 procurement rules for 88–90 in relation to CPBs’ agreements 89 social and environmental requirements 89 convoy 63–4 coordination by hierarchy 32 by market 32 corporate policy, in the CPB 83 corporate social responsibility (CSR) 144, 241 corruption, in Denmark 144 Council, The 258 Court of Auditors 174 Court of Justice of the European Union (CJEU) 18, 46, 207, 213, 234 Autorità case 45–6 case law 156 creation of case law 29 Public Procurement Directive 96 COVID-19 pandemic 7–8, 20, 113, 311 anti-COVID vaccines 34, 101 AstraZeneca vaccine 118 cross-border procurement 119

joint procurement and centralisation of vaccines in the EU 117–18 assistance and cooperation among Member States 114–16 economic impact of 113 European Vaccine Strategy 117 EU support to the Member States in terms of guidance 110–14 health-care procurement system 74 prior to COVID-19 101–3 joint EU approach to 107 joint procurement by CPBs in 7–8 Belgium 136 Denmark 153 Finland 169 France 184 Germany 199–200 Italy 235 The Netherlands 218–19 Poland 251–2 Portugal 264–5 Romania 276–7 Spain 294–6 Sweden 314–15 United Kingdom 332–4 lessons learnt from 118–20 outbreak of 100, 104, 111 personal protection equipment (PPE) against 26 purchasing healthcare equipment at EU level 104–7 national level 107–10 severe acute respiratory syndrome coronavirus 2 (COVID-19) 100 CPB market 166 criteria for classifying CPBs Formula 1 Team / carpooling / bus ride models 32–3 funding of CPBs and efficiency 31–2 joint cross-border procurements / only national joint procurements 33–4 wholesaler vs agent model 30 cross-border procurement 14–15, 129 in Belgium 129 in Denmark 143

Index

in France 178 in Germany 193 in Italy 225–8 in The Netherlands 210 in Portugal 258–9 in Spain 286 in Sweden 305 in United Kingdom 319–20 cross-border undertakings 56 Crown Commercial Service (CCS) 31, 109 Danish Competition Authority 143, 148 Danish Enforcement Act 139 Danish Procurement Act 39, 140, 146, 150, 152 Dansk Cater A/S v. SKI 152 data communication 125 Decree-Law 18/2020 112 Denmark, CPBs in call-offs (contract awards) 143 common framework agreement 143 Complaints Board for public procurement 143 concerns relating to competition law 149 COVID-19 and joint procurement 153 for cross-border procurement 143 dynamic purchasing system (DPS) 142 efficiency and policy issues corruption 144 strategic procurement 144 transaction costs and value for money 143 establishment of 138 financing of 142 framework agreements 141 evaluation of 146 with large product range 146 modification of 148 requirement relating to estimates 148–9 types of 147 using of 147–8 liability between CPBs and their users

339

consequences when using a framework entered into in breach of the procurement rules 151–3 contract management 150 on procurement process 151 rules relating to enforcement and remedies 150–51 participation of small and medium enterprises in 150 procurement techniques dynamic purchasing systems (DPSs) 145 e-catalogues 146 types of 145 Public Procurement Directive 139 road marking case 149 roles of 142–3 solely for the use of public sector entities 149 Staten og Kommunernes Indkøbsservice A/S (SKI) 138 structure of 139–40 use of 140–42 detriment of CPBs 26 Dijon Métropole 172 Dimarso ruling 307 Directives on CPBs (2014) Article 36 of 52 Recital 55 of 52 Recital 61 of 147, 165 Recital 63 of 50 Dutch Competition Act 214 dynamic purchasing systems (DPS) 2, 6, 10, 49–51, 76, 168, 316, 327 amendments in 50 comparison with framework agreements 49 in Denmark 142, 145 establishment of 6 EU procurement system 49 in France 180 in Germany 195 in Italy 229–31 knowledge and know-how concerning 247 in The Netherlands 211 in Poland 246–7 in Portugal 260

340

Centralising public procurement

in Spain 284 in Sweden 298, 305–7 in United Kingdom (UK) 316 Eastern Shires Purchasing Organisation (ESPO) 318 e-catalogues 37, 146, 195, 229, 260 under 2014 Directive 52–3 definition of 52 establishment of 6 governments work with 130 multi-supplier frameworks 52 use of 52 eco-labelling 144 e-commerce services 229 economic and managerial perspectives, on CPBs 32 economies of knowledge or information 57 economies of process 3, 54, 57–8, 67 economies of scale 10, 56, 57, 74, 81, 171, 244 achievement of 179 advantages of 103 exploitation of 37 tool to achieve 37 efficiency and policy issues, in CPBs 5, 25, 31–2 in Belgium 129–30 in Denmark 143–4 in Finland 160–61 in France 178–9 in Germany 194 in Italy 231 in The Netherlands 210 in Poland 246 in Portugal 259 in Romania 271 in Spain 286–7 in United Kingdom (UK) 321–2 eForms, rules on 85 EG A/S v. Egedal Kommune 94, 148, 151 e-learning systems 49, 145 electronic administration services 281 Employee Capital Plans 113 energy procurement 60 enforcement and remedies in respect of CPBs, rules on 150–51 e-procurement 6–7, 37, 51, 124

development of 52 in Spain 51–2 equality of opportunity 77 equal treatment, principle of 96–7 e-supplier systems 51, 145 e-tendering system 51, 161 EU4Health 117 EU citizens, public spending for 227 EU Commission 9, 34, 131, 138, 179, 189, 277, 305 Emergency Support Instrument (ESI) 106 guidance on meeting asylum seekers’ needs 110 public procurement professionalisation initiative 89, 155 strategy 55, 71 EU law 29, 157, 234, 239, 283 influence on CPB design and operation 335 EU Member States 1, 7, 34, 43, 90, 193, 258 assistance and cooperation against COVID-19 114–16 implementation of CPBs 10, 15 joint procurement 11 legal institutions 22 national legislation of 35 procurement techniques 36 EU procurement rules Decree-Law 18/2020 112 Directive 2004/18/EC 9, 34, 38, 278 Directive 2014/23/EU 239 Directive 2014/24/EU 27, 34, 145, 150, 173 Directive 2014/25/EU 173 European case law, on public procurement 23 European Centre of Disease Prevention and Control (ECDC) 101 European Charter of Local Self-Government 202 European Civil Protection Mechanism 102 European cooperation, on emergency health care 235 European CPBs, professionalisation of 32

Index

European Groupings for Territorial Cooperation (EGTC) 178, 225, 258 European group of local authorities 174 European health procurement market 228 European Health Public Procurement Alliance (EHPPA) project 227–8, 320 European legal order 21 European legal space, Bogdandy’s theory of 21 European Parliament 14, 258 European Tenders Electronic Daily database 56 European Union (EU) acquis on public procurement 266 Civil Protection Mechanism 105 competition rules 20 Digital Single Market strategy 51 Directives on CPBs 22 Emergency Response and Coordination Centre 105 Health Threats Decision 101 joint procurement and centralisation of vaccines in 117–18 mechanism for joint procurement of vaccines 101 membership of 297 procurement rules, remedies for breaches of 98 public procurement law 114, 122 role in relation to health care 101, 117 Swedish membership of 297 European Vaccine Strategy 117 Facilitair Bedrijf 124, 129 Fastweb case 94 Federal Central Purchasing Office (FOR) 123 centralised public contracts 123–4 framework agreements for furniture 123 insurance 123 pillars of procurement policy 124 Federal Framework Agreements Unit 121 federal public services 121, 123 financing of CPBs 128 in Belgium 128

341

in Denmark 142 in Finland 159 in France 177 in Germany 192 in Italy 224–5 in The Netherlands 209 in Poland 245 in Portugal 257–8 in Romania 270 in Spain 285–6 Finland, CPBs in Act on Public Procurement and Concession Contracts 155 body governed by public law 156 Budget Decree 158 case law on CPB agreements 168 competition and SME aspects 164–6 consequences in the event the agreement was unlawfully entered 168–9 COVID-19 and joint procurement 169 CPB market 166 cross-border procurement projects 160 efficiency and policy issues 160–61 financing of 159 liability between CPBs and their users contract management 167 rules relating to enforcement and remedies 167–8 National Emergency Supply Agency 169 other roles of 159–60 ownership of 155 participation of the SMEs in 166–7 procurement techniques for changes in agreements 163 requirements for estimates 163–4 types of 161–2 use of agreements 162–3 on public procurement 155 State Procurement Centre 154 structure of 156–8 users of 158–9 Finnish Company Act 156 Finnish Freedom of Information Act 160

342

Centralising public procurement

Finnish Public Contracts Act 156–7, 160, 164 Flemish Agency for Social Housing 125 Flemish Energy Company 125 force majeure 112–13 Formula 1 model 205 for collaborative procurement 32–3 for joint procurement 64 for-profit organisations 66 framework agreement 16, 37–8, 89, 152 award criteria for 42 in Belgium 132 call-off contracts 39, 46 change of member 48–9 changes of 132–3 consequences if the estimated value has been reached 94–8 consequences of unlawfully entry by the CPB 168–9, 199 contracting authority’s freedom to buy outside 42 in Denmark 147 determination of maximum value of 97 establishment of 46 evaluation of ‘cart’ method for 48 evaluation of, with large product range 146 Federal Central Purchasing Office (FOR) 123 in Finland 162–3 in France 180–81 in Germany 195 for health care and hospital supplies 78, 165 identification of parties and closed character of 44–6 ineffectiveness of 97 life-cycle costing 42 market and competition for 149 modifications of 48, 148 with multiple economic operators 130 in The Netherlands 212–13 non-signatories, issue of 45–6 in Poland 247–8 in Portugal 261–2 procurement documents for 42 product ranges 48

in Romania 271–3 in Spain 293–4 in Sweden 307–8 types of single and multi-supplier 38–42 voluntary vs mandatory 42–4 use of 132 value of 46–8 framework contract 130 France, CPBs in ancillary purchasing activities 175 Approlys CPB 172 Armed Forces Commissioners (Economat des armées) 170, 172 benefits of using 178 Cap’Oise Hauts-de-France 172 centralisation of public procurement 170 competition caused among suppliers by 178 concern about Competition Law 181–2 consequences if the agreements were entered into unlawfully by 184 COVID-19 and joint procurement 184 cross-border procurement by 178 Dijon Métropole 172 dynamic purchasing systems (DPSs) 180 efficiency and policy issues of 178–9 establishment of 172 financing of 177 formalisation at European level 170 framework agreements application of 180–81 changes to 181 requirements relating to estimates and its consequences 181 Groupement de commandes legal model 227 incompatibility between UGAP and EU law 170 initiatives at regional scale 172 Legal Affairs Department 174

Index

liability between CPBs and their users contract management 183 participation of SMEs in 182–3 Picard initiative 172 procurement techniques framework agreements 180–81 types of 180 Public Procurement Code 171, 173–4, 176, 180, 183 regional 178 role of 175, 178 rules regarding enforcement and remedies 183 in socio-medical sector 176 structure of 171–5 users of 176–7 free adherence, model of 27 freedom of choice 27 freedom of information rules 161 free-rider problem 64 French Union des Groupements d’Achats Publics (UGAP) 30 funding of CPBs 31–2 FVUab company 304–5 gangbare aankopen (common procurements) 211 German Länder 190–91 Germany, CPBs in administrative tasks and competences 185 Beschaffungsstelle des Bundesgrenzschutzes 186 call-off contract 195 concern about competition law 196–7 “conflict of procurement laws” rules 193 consequences if the agreements were entered into unlawfully by 199 cross-border procurement 193 Demand Assessment Tool 194 dynamic purchasing systems (DPSs) 195 e‑catalogues 195 efficiency and policy issues 194 establishment of 190–92 federal and municipal structures 185

343

Federal Department Store (FDS) 194 Federal E‑Procurement Platform 194 at federal level 189 financing of 192 framework agreements 194 changes in 196 implementation of 195 requirements for estimates and their consequences 196 types of 195 Gemeinden 185, 190 Gesetz gegen Wettbewerbsbeschränkungen (GWB) 186 involvement of 190 IT-related services 191 joint procurement 185–9 COVID-19 and 199–200 occasional 190 Kreise 185 legal and political risks 188 liability between CPBs and their users contract management 198 rules relating to enforcement and remedies 198–9 Marktmissbrauchsverbot 197 at municipal level 189 participation of SMEs in 197–8 privatisation of public procurement 188 Procurement Office of the Federal Ministry of the Interior 189, 191 procurement service providers 187 procurement techniques types of 194–5 professionalisation of public procurement 187 Public Procurement Professionalisation Act 190 Public Procurement Regulation (PPReg) 186, 193, 197 and right of municipalities to local self-government 189 roles of 192 rules and principles of intermunicipal cooperation 186

344

Centralising public procurement

structure of 190–92 for use of the public and private sector 197 users of 192 Gesellschaft mit beschränkter Haftung – GmbH 191 Ghent–Terneuzen New Lock 129 Global Compact 304 good purchasing practices and tools, dissemination of 241 Grondwet (Dutch Constitution) 201 Groupement de commandes legal model 227 group purchasing organisations (GPOs) effects for hospitals and their patients 56 in US health care 55 H1N1 pandemic 102 Haagse Inkoop Organisatie 203 Hansel Act 161 HAPPI (Healthy Ageing – Public Procurement of Innovation) project 319 health care and hospital supplies framework agreement for 78, 165 purchasing health-care equipment during COVID-19 at EU level 104–7 national level 107–10 health-care procurement system 74 management of 100 for purchasing healthcare equipment during COVID-19 at EU level 104–7 national level 107–10 role of EU prior to COVID-19 101–3 health-care public procurement 320 health-care sector 106 Health Security Committee 114 Health Threat Decision framework 101 Healthy Ageing – Public Procurement of Innovation Project (HAPPI Project) 227 hitchhiking 62 Horizon 2020 research programme 107 horizontal entity, procurement service in 124 hybrid forms, of joint procurement 65

infectious disease management 101 information management 123 inhuur van externen (hiring of third-party personnel) 211 International Federation of Consulting Engineers (FIDIC) 271 Italian Civil Protection Department 236 Italian National Anti-Corruption Authority (A.N.A.C.) 31, 222, 225, 229, 234–5 Italy, CPBs in ancillary purchasing activities 225 anti-corruption plans 231 balance of competence among central and local CPBs 235–6 Centrale Unica di Committenza (CUC) 223 concerns relating to competition law 232 creation of 223 cross-border procurement experience with 225–8 efficiency and policy issues 231 electronic procurement and DPSs 229–31 establishment of joint entities 225 under EU Procurement Directive (2014) 220 under Finance Law (2018) 234 under Finance Law (2020) 224 financing of 224–5 health-care CPBs 227 Healthy Ageing – Public Procurement of Innovation Project (HAPPI Project) 227 impact of the health emergency on regional purchasing 223 impact on joint procurement of the COVID-19 emergency 235 Joint Procurement Agreement (JPA) initiatives 220, 223, 236 joint procurement entities responding to the COVID-19 emergency 236–7 liability between CPBs and their users on issues of contract management 233 on rules relating to enforcement and remedies 233–4

Index

345

National Database of Public Contracts (BDNCP) 231 organisational models of 221 participation of SMEs in 232 procedures applied during the emergency 237–8 qualified 222, 235 role of 232 Soggetti aggregatori (SUA) 221, 223 “Spending Review” provisions 222 structure of 221–3 transaction fees 225 types of techniques and agreements used by 228–9 users of 224 IT goods and services, purchase of 112

carpooling 63 convoy 63–4 Formula 1 teams 64 hitchhiking 62 temporary open-house procedure for 199–200 threats related to 2 of vaccines in the EU 117–18 Joint Procurement Agreement (JPA) 102 common rules of 103 governance and operation of 103 Specific Procurement Steering Committee (SPSC) 103 Steering Committee (JPASC) 103 joint tenders 57, 64, 76 jurisdictions, among different CPBs 27

joint cross-border procurements 2, 33–4 joint procurement advantages and disadvantages in terms of economies of knowledge or information 57 economies of scale 56 based on aggregate demand 67 classification of 61 competition between different initiatives for 65–9 concept of 54, 59 COVID-19 and 7–8, 136, 153, 199–200, 264–5 cross-border (see joint cross-border procurements) environment-related initiatives 55 by EU Member States 11 goal of 58 highway matrix 61 hybrid forms, application of 65 impediments to 58–9 in Member States 54 occasional 11 for PPE equipment 106 procedures in the EU 55 regional forms of 70 in situation with competition between bus rides 68 situation without 67 structure of different forms of 60–64 bus rides 62–3

Kammarkollegiet 300–301 kickbacks 55 Konica Minolta case 39 legal nature and organisational models, of CPBs in Europe 25–30 ‘listed price’ savings 74 local public company (SPL) 174 l’Union des groupements d’achats publics (UGAP) 170 mandate-to-buy contract 30 market engagement and consultation, requirements of 76 market incentives, preservation of 77 medical countermeasures 102 memorandum of understanding 327 MePA (e‑marketplace) 229, 232 advantages of 229 micro-enterprises 229 mini-competition 131–2 model of “free adherence” compulsory model 28 conditioned compulsory model 28 optional model 27–8, 29 multi-supplier framework agreements 39–40, 52 National Audit Office (NAO), UK 31 national system for public purchases (NSPP) 255

346

Centralising public procurement

NATO’s Euro-Atlantic Disaster Response Coordination Centre (EADRCC) 115–16 The Netherlands, CPBs in Code Interbestuurlijke Verhoudingen 202 Committee of Public Procurement Experts 207 concerns about competition law 214–15 consequences if entered into the agreement unlawfully 217 cross-border procurement 210 dynamic purchasing systems (DPSs) 211 efficiency and policy issues 210 Explanatory Memorandum of the Awet 2012 210 financing of 209 framework agreements changes in 213 consequences of wrongful estimates 213 implementation of 213 requirement relating to estimates 213 types of 212–13 free adherence model 207 geographical jurisdiction of 207 health-care services 201 impact of COVID-19 on joint procurement by 218–19 liability between CPBs and their users contract management 217 rules relating to enforcement and remedies 217 Manifest Maatschappelijk Verantwoord Inkopen 210 Ministry of Health, Welfare and Sport 203 Naamloze Vennootschap (public company) 203 organisation of 203 public tasks 201 participation of SMEs in 215–16 procurement techniques types of 211 Proportionality Guide 212 for public/private sector 215

roles of 209 social security payments 202 structure of 205–7 users of 207–9 non-contractual public law relationship 29 non-obligatory procurement 30 non-profit associations 126 non-profit organisations 318, 320 non-signatories, issue of 45–6 North East Council Limited (NEPO), UK 318 not-for-profit organizations 126, 303 occasional joint procurement 11 Official Journal of the European Union (OJEU) 322–3 only national joint procurements 33–4 Open Data Directive 85 organisational structure, of CPBs 25 personal protective equipment (PPE) 100 Civil Protection Agency for supplies of 109 demand management of 75 procurement of 109, 235 Picard initiative 172 Poland, CPBs in anti-corruption factor 241 appointed on the national (central) level 239 Baza Techniczna Urzędu Rady Ministrów 239 call-off contracts 242, 246 Centrum Obsługi Administracji Rządowej (COAR) 239, 244–5 concerns about competition law 248–9 contract award procedure 247 dynamic purchasing systems (DPSs) 246–7 economic efficiency of 241 efficiency and policy issues 246 financing of 245 framework agreements changes in 247–8 consequences of wrongful entry 250–51

Index

consequences of wrongful estimates 248 implementation of 246–7 requirements relating to estimates 248 impact of COVID-19 on joint procurement 251–2 liability between CPBs and their users contract management 250 rules relating to enforcement and remedies 250 limitations of powers of executive bodies 245 participation of SMEs in 249 problems in the labour market 241 procurement techniques types of 246 Public Procurement Law (2019) 239 principle of “divide or explain” 249 public procurement system 239 development of 240 formal and legal problems of 240 roles of 245 savings from economies of scale 244 structure of 242–5 use of 240, 248 for the use of public/private sector entities 249 users of 245 Polish State Treasury 243 Portugal, CPBs in concerns regarding competition law 262–3 consequences in the event of unlawful entry of agreement 264 cross-border procurement 258–9 dynamic purchasing systems 260 e‑catalogues 260 efficiency and policy issues 259 establishment and structure of 255–6 financing of 257–8 framework agreements and contracts award of 261 changes in 261–2 impact of COVID-19 on joint procurement 264–5

347

legal framework for 254 legal rules regarding 254 liability between CPBs and their users contract management 263–4 rules relating to enforcement and remedies 264 methodology of data collection 259 national policy behind the creation of 259 national system for public purchases (NSPP) 255, 257 nature of 256 participation of SMEs in 262–3 procurement techniques used by 253–4 types of 260 public procurement electronic platforms 259 trend towards centralising public purchases 253 for the use of public/private sector entities 263 users of 256–7 Portuguese Public Procurement Code (PPPC) 254 pre-commercial procurements (PCPs) 320 prejudice to CPBs 132 Presidential Decree 113 price index 39 private consultants, services of 26 private procurement services 26 procedural requirement, for contracting authorities conditional obligation to create 82–3 procurement procedures, management of 13 procurement techniques 36 types of 130–32 public contracts competition for 82 number of SMEs for 83–4 implementation of rules on 132–3 Public Contract Code 113 public demand, aggregation of 229 public finance rules, infringement of 114 public funds 49 public interest group 174

348

Centralising public procurement

public law 25 public nature of CPBs 34 public needs, values of 37 public power, transfer of 22 public–private partnerships 239 public procurement cycle of 231 digitalisation of 241 European Commission on recommendation on 89 professionalisation of 187 Public Procurement Act 113, 114, 148 Public Procurement Directive 96 role in fighting COVID-19 pandemic 100 Public Procurement Bulletin 242 public procurement of innovative solutions (PPIs) 320 Public Procurement (Amendment etc.) (EU Exit) Regulations 2020 334 public prosecution service 242 public purchases, centralisation of 171 public sectors, CPBs for 134 public tender market 50 purchases, requirements relating to estimates of 133 purchasing activities, legal qualification of 23 purchasing consultation 124 purchasing within the vertical entities, centralisation and professionalisation of 124 qualification of CPBs, as contracting authorities 26 remedies, against CPBs 92–4 for breaches of the EU procurement rules 98 relating to call-off contract 94 CPB’s agreement 92–3 rules on 92 Remedies Directive 91, 93, 152 RescEU 105, 107, 115, 117, 119 road transportation 32 Romania, CPBs in for aggregated procurement 266

call-offs contract 266, 270–72, 275 centralised procurement procedure 274 Competition Council’s Investigation Report 274 concerns relating to competition law 274 creation of 268 cross-border procurement 270 efficiency and policy issues 271 Emergency Government Ordinance 46/2018 270 Emergency Government Ordinance 47/2018 275 financing of 270 framework agreements changes in 272–3 requirements relating to estimates 273 types of 271–2 functioning of 267, 269 General Inspectorate for Emergency Situations 267 general regulations on 267 Government Decision no. 74/2017 267 Government Decision no. 901/2015 268 Government Emergency Ordinance 71/2012 266 Government Ordinance 46/2018 269 impact of COVID-19 on joint procurement 276–7 issues in respect of contract management 272 liability between CPBs and their users 275–6 consequences if CPB entered into the agreement unlawfully 276 rules regarding enforcement and remedies 275 National Inspectorate for Emergency Situations (NIES) 267, 270 National Office for Centralised Procurement (NOCP) 267, 272, 275 National Prisons Administration 266 National Public Procurement Authority 273

Index

participation of SMEs in 274 Partnership Agreement 268 procurement techniques 271 Register of Users 269 roles of 270 structure of 268–9 users of 269 Romanian National Public Procurement Authority 273 rules on CPBs 15 Sanchez-Graells, Albert 17 Sánchez, P. 257 sanctions, risk of 87 SARS, outbreak of 101 service of general interest (SGI) 73 services contracts 126 Simonsen & Wehl case 47, 87, 96–7, 152 Sinfra 304–5 single-supplier framework agreements 77 Sistema dinamico d’acquisto della Pubblica Amministrazione (SdaPA) 230 small and medium enterprises (SMEs) participation in contracts launched by CPBs 134, 150, 166, 182, 197, 215, 274, 291–2, 311–12 Smart Ambulance: European Procurers Platform (SAEPP) project 320 sociale werkplaatsen (sheltered workshops) 215 social housing companies 125 social public procurement 64 social security payments 202 Socialstyrelsen 108, 314 soil remediation projects 37 Spain, CPBs in anti-competitive practices in public procurement 290 of Associació Catalana de Municipis 285 Autonomous Communities 279 Catalan Consortium for Local Development of 282 characteristic of 278 concerns relating to competition law 290–91 of Consorci de Salut i Social de Catalunya 285 creation of 281–2, 284

349

cross-border procurement 286 development of 278 under Directive 2004/18/EC 278 dynamic purchasing systems 284 efficiency and policy issues 286–7 financing of 285–6 framework agreements 284 consequences of wrongful entry 293–4 consequences of wrongful estimates 289 implementation of 288 modification of 288–9 requirements relating to estimates 289 types of 288 functioning of 283 General Directorate for Rationalisation and Centralisation of Procurement 279–80 General State Administration 280, 294 impact of COVID-19 on joint procurement 294–6 liability between CPBs and their users contract management 292 rules relating to enforcement and remedies 292–3 Ministry of Finance 290 National Competition Authority (CNMC) and 290 participation of SMEs in 291–2 procurement techniques, types of 287 roles of 286 State Centralised Procurement System 279 State Procurement Law (1965) and 278 structure of at autonomous community level 280 at local level 281–4 at state level 279–80 territorial contracting authority 278 for the use of public and private sector entities 291 users of 284–5

350

Centralising public procurement

Spanish Law on Public Sector Contracts 279–81, 284–5, 288–9, 291 speciality, principle of 173 splitsingsgebod (splitting obligation) 216 State-level CPB 78 Statens inköpscentral (SIC) 300 Strategic Federal Purchasing Consultative Body (SFA) 124 structural collaborative local procurement 205 supply chains 74 sustainable development goals (SDGs) 144 sustainable development, principle of 241 sustainable procurements 10 sustainable public procurement 64 Sweden, CPBs in Act on Local Authorities 299 Adda inköpscentral AB (Adda) 301–3, 305, 312, 315 administrative fee 304 benefits of 298 for Central Government Authorities 300–301 code of conduct for suppliers 304 Competition Authority 297 concern about competition law 311–12 COVID-19 and joint procurement 314–15 cross-border procurement 305 Dimarso ruling 307 dynamic purchasing systems (DPSs) 298 framework agreements procured in 298 ‘cart’ method for evaluation of 306 consequences when entered into unlawfully 313–14 implementation of 308 modifications to 308–9 requirement for estimates and its consequences 309–10 types of 307–8 Freedom of the Press Act 299 HBV 303–4 Kammarkollegiet 300–301 legal basis for 298

liability between CPBs and their users 312–14 contract management 312–13 rules relating to enforcement and remedies 313 for municipalities and regions 301–3 participation of SMEs in 311–12 procurement techniques dynamic purchasing systems (DPS) 305–7 types of 305 public procurement policy 297 for public utility housing companies 303–4 quality standards 315 regional CPBs 299 Regulation on State Procurement Coordination 307 Sinfra 304–5 structure and use of 298–9 suppliers’ self-evaluation 303 for utilities sector 304–5 Swedish Association of Local Authorities and Regions 315 Tactical and Operational Federal Procurement Consultative Body (TOFA) 124 tax revenues vs fees on users (or on suppliers) 31–2 Teckal case 208 TenderNed 216 territorial and functional organisation, of CPBs 26 transactional costs 37 transparency, principle of 96–7, 307, 310 Treaty on the Functioning of the European Union (TFEU) 18 Article 101 of 76, 84 Article 101(3) 214 Article 102 of 76, 84 United Kingdom, CPBs in Act of Parliament and 331 call-off contracts 323, 329 centralised purchasing activity 316 concern about competition law 328–9

Index

COVID-19 and joint procurement 332–4 Crescent Purchasing Consortium (CPC) 329 cross-border procurement 319–20 Crown Commercial Service (CCS) 317, 333 ‘audits’ of the operation of 330 establishment of 321 direct contract with supplier 324–5 dynamic purchasing systems (DPSs) 316 efficiency and policy issues 321–2 European Health Public Procurement Alliance (EHPPA) project 320 HAPPI (Healthy Ageing – Public Procurement of Innovation) project 319 liability between CPBs and their users 329–31 memorandum of understanding 327 National Audit Office (NAO) 321, 333 National Health Service (NHS) 317 National Savings and Investments (NSI) 330 NHS Supply Chain 319

351

participation of SMEs in 328–9 pre-commercial procurements (PCPs) 320 procurement techniques for contracting with the CPB as prime contractor 325–8 contract sharing clause 324–5 framework agreement 322–4 Public Accounts Committee report 321 Public Contracts Regulations (PCR) 316 Smart Ambulance: European Procurers Platform (SAEPP) project 320 structure of 318–19 use of 317, 318–19 vendor fees 55 voluntary ex-ante transparency (VEAT) notice 94 von Bogdandy, Armin theory of the European legal space 21 wholesaler vs agent model 30 World Health Organization 115