Public Contracts Regulations 2015 - Regulation 22 (Part 1)

Regulation 22 - Rules applicable to communication (part 1)

Regulation 22 transposes Article 22 of Directive 2014/24/EU on the rules that contracting authorities are to follow related to communication with economic operators. As mentioned in day 1 of this slow motion procurement tennis match with Albert, some of these rules did not come into force in February 26th with the rest of the Public Contracts Regulations. Today I will be covering part 1 of this Regulation due to its extension. I have plenty to say so brace yourselves.

The extensive rules on communication contained in Regulation 22/Article 22 constitute the first major change from the previous legal system we have encountered so far. E-procurement has been a pie in the sky for a long time, but finally we have a comprehensive set of rules which wants to drag public procurement into the 21st least in what concerns communications. I add that this article covers more than strictly communications, as it touches areas such as file formats, tenders and even what are contracting authorities to do before the deadline to submit tenders expires (nothing).

In general, these new rules for contracting authorities to use e-procurement from end to end in public procurement. Yes, e-procurement contains a lot more than just using e-mail to field questions from economic operators. It covers both communications and file standards as well. It has the potential of reducing transaction costs particularly for participants. Personally, I do not buy the line that in 2015 suppliers are not ready yet to take full advantage of e-procurement. We should not be hold to ransom by uncompetitive suppliers that have no interest in giving up the advantages obtained under the old system (ie, access to procurers, local connections and relationships, etc). The purpose of Regulation 22/Article is to flatten the landscape by reducing the disadvantage suffered by smaller operators and enhancing the attractiveness of cross-border procurement.* In fact Article 22(1)/Regulation 22(2) clearly state that any communications methods need be non-discriminatory, thus rendering requests by some contracting authorities to make contracts visible only to economic operators based on a certain post code even more illegal than it already was.

Ok, what about the rules themselves?

The tools adopted by Member States need to be interoperable and generally available for the market to use. On a first reading, I had the impression this interoperability requirement was only applicable to the communication in itself (ie, email, electronic platform, browsers supported, etc), but looking into the exceptions of paragraph 3 it is clear it covers file formats as well, that is the files that economic operators send to the contracting authority. Therefore this Regulation is more than just about communication rules: it covers the underlying information being transmitted too.

I have no qualms about the interoperability for communications as it forecloses contracting authorities to require a standard that only certain suppliers can comply with. For example, let's imagine that Google invents a type of e-mail that is not really e-email as it only works with is products, locking out everyone else. Or that the contracting authority will conduct Q&A session with economic operators only via Skype. In both cases, particularly the first, the lock in effect is big even if the usage is free (and without even taking into account the security issues it entails).

On the other hand, the interoperability requirement for file formats may lead to problems both for public and the private sector. The way I read the interoperability requirement leads me to the conclusion that any proprietary file format (such as doc/docx or xls/xlsx used by Microsoft Word or Excel) are, prima facie, illegal as they are proprietary AND only work reliably with Microsoft products. For text files contracting authorities can set the old RTF format (which is proprietary, but widely supported outside Microsoft's garden) or the newer ODF format (which is open, but not well supported by Microsoft Word or Excel as it can also be used for spreadsheets). Bear in mind this is a different discussion from the programmes that are used to write the file formats (Microsoft Office vs LibreOffice), although intimately connected.

There are significant exceptions to the e-procurement/interoperability by default principle. Those are contained in Regulation 22(3)-(7) and depend on the specific characteristics of the procurement at hand, particularly if the file formats needed for the documents so require. As an example, in niche areas there may be only one software supplier serving that market with its own proprietary file format. In addition, for certain procurements it simply is impossible to use electronic communication at all. We are yet to be able to beam a scale model of a building or a prototype for example. No Beam me up, Scotty in public procurement yet.

An oral presentation you said?

Regulation 22(8) allows the contracting authority to use oral means of communication as long as it is not for a fundamental aspect of the procurement and the communication is well documented. I am yet to see if this will have an impact on some contracting authorities infatuation with "oral presentations" which constitute part of the award criteria (consultancies anyone?). A strict view of this Regulation 22(8) would foreclose the use of oral presentations to be used as award criteria due to the fact that: i) as an award criteria, they are essential for the procurement; ii) they constitute a communication as information is being communicated from the economic operator to the contracting authority orally; iii) they constitute part of the tender and in consequence deemed essential due to paragraph 9. Paragraph 10 doubles down on the care with oral discussions with tenders.

Paragraph 11 establishes the need for contracting authorities to ensure the integrity of data transmitted by electronic communications, which in my view means two things. First, do not use email (nor try to run your own email server as Hillary Clinton did as Secretary of State). Second, backup everything.

No peeking!

Finally, paragraph 12 by establishing the obligation of contracting authorities not peeking into tenders that have been received before the submission deadline expires. I think this is stating the obvious but maybe some contracting authorities in the past could not resist the temptation. This is not strictly a communications issue and in my view should have been put elsewhere, but once more the lawmaker decided to simply follow the lead of Directive 2014/24/EU.

I will cover the rest of Regulation 22 tomorrow.

* Although bigger issues remain to be solved in what concerns cross-border procurement, ie language, legal regimes (particularly for performance and related aspects) and financial issues such as currency, payments and bank accounts.