EU Public Procurement Act: Public Procurement Law before a Systemic Shift?

Regulation instead of Directives – less scope for national implementation

Classical public procurement, utilities procurement and concessions are to be regulated in a single legal act in future. For the above-threshold sector harmonised under EU law, national implementation would therefore largely cease to apply. At the same time, this means less scope for national special provisions (“Gold Plating”). The Austrian Federal Procurement Act 2018 (Bundesvergabegesetz 2018) would not, however, become entirely redundant. National legislative discretion would continue to exist for procurements falling outside the scope of EU law. This applies in particular to legal protection in public procurement procedures: the EU Remedies Directives currently in force would initially remain unaffected by the draft Regulation. National administrative and civil law provisions relevant in the context of public procurement will, of course, also remain applicable.

A significantly streamlined procedural architecture

The multitude of procurement procedures would essentially be replaced by four instruments:

• the open procedure, which in future would also allow for negotiations;
• the dynamic procedure for recurring procurements,
• a new innovation procedure for the development and procurement of innovative solutions, and
• a special procedure that may only be used where particular circumstances exist (e.g. technical exclusivity) or in certain crisis and emergency situations.

At the same time, preliminary market consultations are to be used more extensively as a regular instrument for preparing procurement procedures.

Best bidder principle becomes the rule

The draft places a clear emphasis on quality. Contracts are generally to be awarded on the basis of the best price-quality ratio. Quality criteria must generally account for at least 30% of the award evaluation; for labour-intensive contracts, at least 50% is envisaged. A deviation should remain possible where quality is already sufficiently ensured by the technical specifications or the contractual conditions.

Simplified access for SMEs

Suitability requirements are to be limited to what is necessary and proportionate. In particular, excessive requirements regarding turnover and public-sector references are to be restricted. The draft provides, for example, that the required minimum annual turnover should generally not exceed 50% of the “estimated annual contract value”.

“Buy European” as a new principle

For the first time, the draft establishes a general EU legal framework for a “European preference”. Under certain conditions, contracting authorities should be able to restrict participation to economic operators from the EU or to so-called “covered economic operators” (economic operators from GPA contracting states or from states with trade agreements). They should also be able to impose requirements regarding the origin of goods, services or works and to favour European or otherwise protected value creation. In future, contracting authorities should be able to exclude a tender if the share of goods, services or works from the EU or from covered third countries is below 50%.

Security, resilience and supply chains become procurement issues

Security and resilience requirements are to be integrated more extensively into the entire procurement process in future. The draft refers in particular to critical infrastructure, cybersecurity, security of supply, strategic dependencies, supply chains and the influence of third countries. In certain areas, corresponding requirements may even be made mandatory.

Digitalisation and the “Once-Only” principle

National eProcurement systems are to become technically interoperable; the aim is to establish an EU-wide interoperable digital procurement ecosystem. An electronic qualification service and digital company evidence are intended to implement the “Once-Only” principle and reduce the administrative burden associated with the repeated submission of evidence of suitability. In addition, national procurement data spaces and an EU-wide procurement data space (“Public Procurement Data Space”) are to be established.

Governance is also becoming more Europeanised

Each Member State is to designate a national coordination body. Regular reports on the functioning of the national procurement system are envisaged. The Commission is to continuously monitor the development of European procurement markets on the basis of the procurement data collected.

Tightening of the self-cleaning regime

The possibility of self-cleaning is to be restricted: in cases of mandatory exclusion grounds (e.g. a final conviction for certain serious offences), subsequent self-cleaning would generally no longer be available. In addition, the complete subcontracting of a contract is now to be expressly prohibited under EU law as well.

Significant need for adjustment in Austria

If the proposal is adopted in its current basic structure, public procurement practice in the above-threshold sector would undergo substantial changes. This would affect in particular the choice and design of the procurement procedure, award criteria, suitability requirements, the treatment of tenderers from third countries, supply chains and security requirements, as well as the digitalisation and documentation of procurement procedures.