New EU procurement rules set to help SMES and ban poor performing suppliers

The European Parliament has agreed a revised set of procurement directives for the European Union, which aim to help member states cut red tape for SMEs and give governments power to ban poor performing suppliers.

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The European Parliament has agreed a revised set of procurement directives for the European Union, which aim to help member states cut red tape for SMEs and give governments power to ban poor performing suppliers.

The government has been lobbying for the reforms in Brussels and will point to this as a success for the Conservatives’ ambition to reform, rather than exit, the EU.

According to the Cabinet Office, procurement reforms already introduced in the UK have saved the taxpayer £3.8 billion last year.

Under the new directives, the bidding process for companies is said to be simpler, with a standard "European Single Procurement Document" based on self-declarations. This means that only the winning bidder will have to provide original documentation.

According to the European Parliament, this should reduce the administrative burden on companies by over 80 percent, the Commission estimates and make it easier for SMEs to bid for public sector contracts.

The current government has been working hard to ensure that SMEs form a key part of public sector procurement, with a number of reforms and targets that aim for 25 percent of government spend with smaller businesses by 2015.

Under the new EU directives, public sector organisations will also be encourages to break large contracts into smaller lots and capping turnover requirements for businesses. It is hoped that this could also save SMEs up to 60 percent of current bidding costs.

Another key win for the UK government will be that departments will be now be able to exclude suppliers from a procurement procedure not only because of “grave professional misconduct”, but also because of “significant or persistent poor performance”.

It was recently revealed that Serco may be excluded from all current and future government contracts after it emerged that the Ministry of Justice asked the police to investigate alleged fraudulent activity by members of Serco staff on a prisoner escorting and custodial services contract.

However, at the time of the announcement there was concern that this would not be possible under EU procurement laws – it will now be a real possibility for underperforming suppliers.

“Last year our commercial and procurement reforms saved taxpayers £3.8 billion. As part of our long-term plan to help the country live within its means we need to save even more. EU rules used to make it hard for Government to exclude suppliers with a poor performance record and so it’s good news that the changes will make it easier for us to manage contracts effectively,” said Minister for the Cabinet Office, Francis Maude.

“We will seek to transpose these rules into UK law quickly as the regulations will help British companies win business in other European countries”.

Another rule that is likely to be favoured by the UK is that contracts for services provided by mutuals will now have up to three year reserve on them, meaning that they won’t have to be opened up to EU-wide competition. 

The UK is pushing for public sector staff to form mutual and there are already more than 80 live, delivering more than £1 billion of public sector services.

Maude said: “My officials and I have been lobbying on this directive in Brussels and with other member states. The changes will help encourage more public sector mutuals to spin out by protecting the newest from full EU competition rules.

“There are already ten times more public sector mutuals than there were at the time of the 2010 General Election but, because we know they can help drive up productivity, we want to see even more.”

Member States are required to transpose the directives by making national implementing regulations within 2 years from the date of EU adoption. The Cabinet Office has said that it is preparing ambitious plans for early transposition, so that the UK can take advantage of the new directives as soon as possible.

 
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