Public Contracts Regulation 2015 - Regulation 39

Regulation 39 - Procurement involving contracting authorities from other member States

Regulation 39 brings a real innovation to the public procurement table: the possibility of undertaking joint procurement with contracting authorities based in other Member States. Regulation 39 transposes Article 39 of Directive 2014/24/EU into England, Wales and Northern Ireland. Regulation 39 provides three different types of cross-border procurement: using a centralised body, carrying out joint procurement (a la Regulation 38) or via the creation of cross-border joint entities. Albert's entry for today is here.

Public law shenanigans

Paragraph 2 of Regulation 39 states that contracting authorities shall not use cross-border joint procurement features for the purpose of avoiding the application of EU compliant mandatory public law rules from their jurisdiction. This can be interpreted in different ways. One is that if the public law rules are incompatible with EU law then the "jurisdiction shopping" is legal, which strikes me as an odd solution as it effectively sidesteps the usual judicial review mechanisms to assess legislation's compatibility with EU law.

The second interpretative issue arising from paragraph 2 is that avoiding the application of a national public law rule cannot be one objective of the deal. As the paragraph makes no reference to that being the sole objective, even if other legal, reasonable, logical reasoning exist for the decision, it is still illegal under this paragraph.

Centralised purchasing

Paragraphs 3 to 5 regulate how cross-border procurement via a centralised purchasing body is to be carried out. The rules thereby established are quite reasonable, effectively dictating the application of the national rules from the centralised body's Member State. This covers the procurement activities, but I suspect does not extend to contractual obligations which begets the question about a possible scenario where contractual terms and conditions are established in advance in a framework agreement or a dynamic purchasing system.

Joint procurement

Whereas Regulation 38 was short and light on detail on the regulation of occasional procurement within a single Member State, Regulation 39 is a lot more detailed. Paragraphs 6 to 9 of Regulation 39 forces the different contracting authorities to have a clear agreement in place determining which parts are subject to national rules and the internal organisation of the procurement procedure (although reversing paragraphs 6 and 7 order would provide a more logical structure). It is interesting to note that this agreement can either be done at authority level or even at national level, so two different Member States can agree to a cross-border joint procurement structure if they so see fit.

Joint entities

A final alternative for joint cross-border procurement provided by Regulation 39 is the creation of joint entities. These entities will carry out procurement on behalf of contracting authorities based in two or more Member States. The appropriate law applicable will either be the law from the jurisdiction where it is based or the one where the procurement activities will take part.

One final note for paragraph 15: yet again the Regulations include at the bottom of a substantive regulation another definition. As before, my comments hold: why not putting all definitions on Regulation 2 instead?

Cross-border joint procurement is a good idea in theory but one that will have limited use in practice, effectively I only saw it being used in practice once in a joint Italy - France procurement project. As we so of the changes introduced in this new round of Regulations, these changes are targeted at the top 1% of contracting authorities in terms of budget and capacity, not the run of the mill procurement authority dealing with day-to-day purchasing requirements.

Public Contracts Regulations 2015 - Regulation 38

Regulation 38 - Occasional joint procurement

Regulation 38 provides contracting authorities with a simple set of rules to determine responsibility in case they decide to do some joint procurement. This Regulation transposes Article 38 of Directive 2014/24/EU into England and Wales.

What Regulation 38 tries to achieve is the creation of joint responsibility (liability might have been a more appropriate choice here?) for joint procurement. As all the talks about joint responsibility or liability tend to end, the crucial element is to define exactly where the border for that joint responsibility lies. I suspect this is an area where there is no interest in harmonising at EU level, thus leaving for the national legal systems the work of solving the issues associated.

Paragraph 2 states that where the procurement is done "in the name and on behalf of" another contracting authority or authorities, then there is joint responsibility by all authorities for resulting obligations. This main rule warrants two comments. First, all elements need to be present for the responsibility to be joint (unless general national laws would establish otherwise I suppose), leading thus to potential scenarios such as what happens when the procurement is done in the name and behalf of someone else but the supplier is not aware? Is it a requirement for the joint liability for the name of the other participating authorities to be disclosed or is it simply an internal requirement (that is all participating authorities are aware of the procurement) irrespective of the supplier being informed? I can definitely see a "pass the buck" game going on between the various contracting authorities if something goes wrong, leaving aggrieved bidders or suppliers without knowing exactly who to sue or complain to (Albert has similar misgivings).

Second, for a civil lawyer as myself, It is interesting to note that the word used in the Regulations is obligations, which in other jurisdictions implies that they can have an extra-contractual nature in addition to a contractual one, ie they can also originate in tort.

Paragraph 4 tries to solve the "in the name and on behalf of" conundrum by establishing that when a procurement is not fully jointly undertaken, then the joint part generates joint responsibility and the rest does not, leading to what Albert calls a mixed responsibility scenario. Probably this could be inferred from the previous rules but at least it is quite clear.

My final observation is that this appears to be a simple framework to help Member States, but cannot think that it would have been preferable either not to have it at all, leaving the issues associated squarely with national law or else to actually establish a proper liability regime for joint procurement. As things stand, it's neither here nor there and contracting authorities need to think carefully about the potential pitfalls before embarking into joint procurement.