New procurement rules – Noted novelties

The European Parliament and the Council adopted three new directives relating to public procurement on 26 February 2014, and the transposition period for the member states will expire on 18 April 2016. In the following, we summarise some of the more interesting novelties which are proposed to be introduced in the Swedish legislation on public procurement in connection with the transposition of the EU directives.

The transposition of the directives into the Swedish legislative framework will include new legislation on public procurement in the “classic sector” and in the utilities sector (water, energy, transport and postal services), as well as on the award of concession contracts. The new legislative proposals are quite extensive, and the proposal submitted to the Swedish Legislative Council has 1495 pages. From a general perspective, the proposal largely consists of modifications of a more administrative nature, such as mandatory use of electronic communication, reduced minimum period to submit a tender, and the possibility for tenderers to use a unified European procurement document to attest that no grounds for exclusion are at hand. Many of the proposed changes are clarifying in nature, and will entail only insignificant changes
to the procurement procedures.

However, the proposals include some modifications of interest. Amongst these, we note that the proposal intends to allow for more extensive use of negotiated procedures within the classic sector, which will create more similar conditions for application of negotiated procurement between the classic sector and the utilities sector. The new proposal allows procuring bodies to use negotiated procedures if the contract requires customisation of available solutions on the market. As follows from the considerations in the directive, this would include larger construction projects, consultancy services and larger IT projects. The proposal also introduces a new procurement procedure – the innovation partnership, which allows a procuring entity to enter into a partnership with one or more companies with the goal of developing a new product or service. Such an innovation partnership may also include subsequent purchases of the developed product or service.

Already under the 2004 public procurement directive, central purchasing bodies were allowed to act as wholesalers. However, the Swedish transposition did not provide for this opportunity. Under the new proposal, the central purchasing bodies will now be introduced with the competence to purchase goods and services intended for sale to other procuring entities. The practical consequences of the proposal remain to be seen, but the proposal has identified that centralised purchases of large volumes of generic products may be suitable for wholesale operations.

The proposal includes clarifications regarding voluntary grounds for exclusion of tenderers. For instance, the proposal now explicitly allows for the exclusion of tenderers that have entered into agreements aimed at distorting competition. Furthermore, the proposal allows for exclusion of bidders who have shown deficiencies in the performance of prior contracts with public entities. Although such circumstances could entail exclusion on these grounds already under the applicable legislation, the proposal does provide some clarification. Of more importance are the proposed mechanisms that allow tenderers to avoid exclusion by self-cleaning, which may be applicable under certain conditions.

One of the more litigious issues under the applicable legislation is the question of the extent to which procuring bodies may request tenderers to supplement or clarify tenders.. The proposal suggests that the current limitations, which state that tenderers may only be requested to remedy obvious misprints or miscalculations and other obvious faults in the tender, shall be re-moved and replaced by the more flexible provision provided by the directives, which states that tenderers may be requested to supplement, clarify and complete their tendersas long as the request is in compliance with the principles of equal treatment and transparency. Due to the more flexible wording, the practical consequences of the adjusted provisions will ultimately be decided by the courts. The new wording is still welcome and may entail a less formalistic approach in the review of contested procurements.

The new provisions on modification of contracts during their term are another clarification of importance. Under the proposed legislation, the contract sum may be increased by up to 50% of the original contract sum if made necessary by circumstances that could not have been foreseen by a diligent procuring body. Furthermore, even if no unforeseeable circumstances are at hand and provided that the modification does not alter the overall nature of the contract, the contract price may be increased by up to 10% (or up to 15% for works contracts).

The proposal also provides clarification regarding replacement of contractors during the contract term. The suggestion provides important clarification in relation to corporate restructuring (brought on by takeovers, mergers, acquisitions or insolvency). The proposals are suggested to enter into force in April 2016. However, the proposals are still under review by the Swedish Legislative Council, after which a formal proposition will be drafted by the government and submitted to the national parliament for final adoption. It should therefore be noted that the proposals as described above may be subject to further modifications.

We would also like to point out that legislative initiatives regarding both the appeal procedure and specific provisions relating to labor law requirements are under processing. It is therefore likely that even with transposition of the new EU directives, further changes to the legal framework for public procurement in Sweden should be expected over the next few years.