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The Benefits of Joint Cross-Border Public Procurement

21/11/2017

Directive 2014/24/EU ("The Directive") provides the possibility for contracting authorities to organize a Joint Cross-Border Public Procurement ("JCBPP"). To date not much use has been made of this possibility, but the momentum seems to be shifting since the European Commission, in March 2017, published a study with regard to the internal policy market for growth. The main task of this project was to carry out a feasibility study on the possible implementation of JCBPP by examining four different JCBPP projects and the results were positive.

What is a JCBPP?

JCBPP means that several contracting authorities ("CA's") from different Member States purchase works, supplies or services together. A JCBPP can take the form of a coordinated procurement through the preparation of common technical specifications for works, supplies or services that will be procured by a number of CA's from different Member States, each conducting a procurement procedure for a specific part of the works, supplies or services, also on behalf of the other participating CA's. Another form of a JCBPP is when CA's from different Member States jointly conduct one procurement procedure.

Regulation of JCBPP

The Directive differentiates joint procurement within one Member State from JCBPP among two or more Member States.

Article 38 of the Directive regulates joint procurement. Article 38, however, does not provide any specific rules for JCBPP. Article 39 of the Directive does regulate procurement involving CA's from different Member States. Article 39 subsection 3 applies to a collaboration between unequal partners in a superior-subordinate relationship. In practice, this means that a CA from one Member State joins another Member States' central purchasing body ("CPB"). Article 39 subsection 4 also gives CA's the opportunity to set up a "joint entity".

If CA's choose to set up such a joint entity, the question is which national law applies to the procurement procedure(s) organized by that joint entity. Subsection 4 of Article 39 of the Directive provides that these CA's can choose, by decision of the competent body of the joint entity, which national procurement rules shall be applicable. This means that the competent body of the joint entity can choose to apply the procurement rules that are most advantageous for the specific procurement procedure. CA's however, cannot use Article 39 to avoid the application of public law provisions in conformity with EU law to which they are subject in their own Member State.

Benefits of JCBPP

Numerous benefits arise from committing to a JCBPP. Firstly, JCBPP allow CA's to reduce administrative burdens on themselves and tenderers, and to reduce prices (economies of scale). In addition to lowering procurement costs, the procedures of JCBPP can also be more effective than separate tenders; for instance, CA's can share costs, work, deployment of staff, knowledge, and expertise. While these benefits apply to all CA's, they are particularly important for smaller CA's wishing to organise large-scale procurement procedures.

Although JCBPP remains uncommon, there are a few examples that demonstrate their advantages. One of the projects analysed by the European Commission, was the Healthy Ageing Public Procurement of Innovation ("HAPPI"). The HAPPI project focused on the procurement of innovation, with an aim to detect and purchase innovative solutions that address an ageing society's needs, and to provide these solutions to hospitals and nursing homes across Europe. The HAPPI project, which ran between 2012 and 2016, brought together five central purchasing bodies from different Member States, and allowed CA's from across the EU to purchase three distinct innovative products in the field of elderly care. One of the most important benefits experienced by the CA's of the HAPPI project was the opportunity to exchange good practice and learn about the procurement practices occurring within other Member States. CA's also found that administrative burdens were reduced compared to procedures at national level. These experiences demonstrate that the use of JCBPP are effective and advantageous for purchasing innovative solutions required in different Member States.

Further, JCBPP can play an important role by creating greater opportunities for cross border energy trade, which in turn can reduce the price of energy for consumers within the European Union.

(Legal) challenges

Joint procurement of public contracts by CA's from different Member States encounters specific (legal) challenges, for example regarding the different procurement practices among Member States, the question of applicable law, the question of jurisdiction, civil law versus administrative law and the relation between national law and EU law. CMS is excellently suited to guide CA's and tenderers in a JCBPP, due to the fact that CMS possesses legal and practical knowledge of procurement in (almost) all different jurisdictions within the European Union.

Authors

Maartje-Speksnijder-CMS-NL
Maartje Speksnijder
Advocaat
Amsterdam
Picture of Navid Kiani deh Kiani
Navid Kiani deh Kiani