Public Contracts Regulations 2015 - Regulation 55

Regulation 55 - Informing candidates and tenderers

Regulation 55 defines the timings and kind of information tenderers are entitled to receive at the end of their participation in a procurement procedure, particularly in case they were unsuccessful. The obligations for the contracting authority cover both the decision to conclude or not a procedure and the grounds on which the decision was taken. This Regulation is a perfect example of the underlying tensions between the principles of transparency and competition in public procurement.

This Regulation is quite similar to Article 55 of Directive 2014/24/EU as well as part of Regulation 32 of the Public Contracts Regulations 2006, although it is much cleaner and prescriptive than the latter. Regulation 55 includes three exceptions to the disclosure rule. First, in case it would impede law enforcement or would be against public interest. Second, that it would prejudice legitimate commercial interests of a particular economic operator (ie, the contract winner). Finally, in case it might prejudice the fair competition between economic operators. Personally, I think these will be over-used as in the past to avoid disclosure of information about contracts.

Explaining why a procedure was not taken to the end does not appear problematic. However, the main rule under Regulation 55  that tenderers are to be informed of the outcome of the procedure and a certain degree of information about the winning tender, raises some questions. Last week Albert criticised the amount of information provided on competition law grounds and provided excellent reasons why that is so. I disagree with him as we come from completely different perspectives. He believes that too much transparency about contract awards distorts the market and facilitates collusion (it does, at least in markets/sectors where collusion is already present or likely). Myself, on the other hand I believe that disclosing a lot more information will actually make the market less imperfect by providing the same level of information to *all* interested players in the market. It would significantly change the market dynamics. Furthermore, less information creates opportunity for arbitrage which, in my view, economic operators have been benefiting from over the years. Unless, perhaps economic operators have been always fair and charging different contracting authorities the same price for the same products/services, right? I believe that more information leaves markets *better overall*, even accepting that in some cases it will indeed help out colluders.

The test subject on this should be Portugal where since 2009 all (read: most) contracts awarded below thresholds are published online and have to follow e-procurement from cradle to grave. Technically contracts above thresholds should have been published as well but a clear obligation is more recent than 2009 and was part of the bailout programme Portugal benefited from. So far, no evidence coming from the country supports the claim collusion is rampant. Now, absence of evidence is different from evidence of absence, but there are two data points that are important to take into account: SME participation rates are going up and prices have come down in some sectors, indicating at least a modest increase in competition. I will try to get some more information about the country tomorrow as I will be at a conference in Porto.

I would heartily support a proper piece of research on this in Portugal. Any takers?