Some preliminary impressions on the Industrial Accelerator Act proposal

The Commission published last week the draft Industrial Accelerator Act (IAA) proposal, after delaying it a couple of times. The draft is complex and puzzling at stages and frankly it lacks internal coherence since it includes four distinct approaches to achieve its stated objectives: speeding up permit-granting procedures for industrial manufacturing; creating lead markets in strategic sectors; setting conditions for foreign direct investment in strategic sectors; and designating industrial manufacturing acceleration areas. A grab bag of disparage ideas, most of them not connected with public procurement at all. Nonetheless, what it does cover about procurement is important and warrants a few reflections.

The IAA name drops procurement specifically and includes some provisions relevant for the area, adding up to the pile of sectorial or external EU legislation which impacts procurement officers on a day to day basis. Procurement is mostly covered on Chapter III (Strenghtening the Union's strategic industrial value chains). Here, we can find procurement mentioned specifically in articles 8 and 11, with cross-references to Annexes II and III.

In article 8, the IAA equates the origin of content in bids as being equivalent to the Union if it comes from countries parties to the GPA or with whom the EU has concluded a free trade agreement with a chapter in public procurement. This is self-evident but it is a clarification of some of the practical issues raised by the Kolin and Qingdao cases and possibly an indication of what the Commission is thinking in regards to solving third country operator access.

This article 8 also includes provisions for the Commission to adopt regulated acts to exclude countries covered by the general clause in case of non-compliance with providing national treatment for certain products, dependencies affecting security of supply or as allowed per the rules of the GPA/FTA.

Article 11 establishes that for specific products contracting authorities are under the obligation to exclude economic operators from participating in public procurement if they come from third countries not party to the GPA or with whom a FTA covering public procurement has been signed. The sectors included are energy intensive industries and electric vehicles, as determined by Part I of Annexes II and III to the proposal. Whereas the electric vehicles is reasonably self-explanatory, the energy intensive industries in this case are steel, concrete/mortar and aluminium and "any product the performance of which" depends on each particular input for buildings, infrastructure and motor vehicles. The requirements from Annex II are applicable from 2029 whereas those for Annex III (electric vehicles) will apply six months or three years after entry into force of the IAA, depending on the actual requirement.

Furthermore, for the procurement of products covered by such annexes the contracting authorities are obliged to adhere to the minimum level of Union origin and low-carbon as established by articles 8 and 10. This will have an impact in the complexity of setting up tender specifications that comply with this requirement as well as assessing any bids containing these products. In particular the rules of origin details for the electric vehicles look particularly demanding for contracting authorities. While there are easier rules of origin to apply to the M1E category of vehicles, such category only covers small electric cars such as the Renaults 4 and 5 or the Volkswagen ID Polo.

If this looks complex enough, then rest assured that in accordance with article 11(4) compliance with all these requirements can be subsumed by the contracting authority to a self-declaration delivered by the economic operator assuring its compliance with the requirements. I will go out on a limb and predict that in general contracting authorities have zero interest or incentive in applying these rules and will simply adopt the self-declaration strategy and take it at face value without too much bother.

If that was not enough of an obvious gap in the framework, then we also have the exceptions too look at. As far as exceptions go, article 11(3) is quite generous for contracting authorities. Contracting authorities have the discretion to disregard the requirements set above where the following conditions are met:

• the product/services can only be procured from one supplier without reasonable alternative or substitute
• no response to a tender launched for the same product/service in the previous two years
• the rules imply a disproportionate increase in cost (at least 25%) or would result in technical incompatibility in operations or maintenance
  

While the first two conditions are similar to existing exemptions to the adoption of an open procedure, the third one seems quite generous and possibly where we will see the contracting authorities pushing for non-compliance with the requirements of article 11(1). The text of article 11(3)(c) does make reference to the cost increase having to be based on 'objective and transparent data' but beyond that it seems that it is pretty much at the discretion of the contracting authority on how to justify using this particular exception.