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.