UK: BIM And The New EU Public Procurement Directives: An Update

Last Updated: 28 May 2014
Article by Dr. Stacy Sinclair

Despite innovations and improvements over the past 10 years in the EU Public Procurement Directives, the regime has been criticised for taking too long to implement and for being resource heavy and inflexible. As a result, at the end of 2011 after extensive public consultation, the European Commission published proposals for simplifying and modernising the public procurement regime.

Finally, on 15 January 2014, the European Parliament approved two new EU Procurement Directives which will replace the Utilities and Public Sector Directives, and a third Directive regarding the award of concession contracts. The EU Council approved these Directives on 11 February 2014 and they were published in the Official Journal of the European Union on 28 March 2014. They came into force on 17 April 2014 and EU member states then have two years to implement them into national legislation.

The aim of these Directives, officially called the European Union Public Procurement Directive (EUPPD), is to modernise the existing EU public procurement rules by simplifying the procedures and making them more flexible.

Building Information Modelling (BIM)

BIM connoisseurs may be interested to hear that the new EUPPD aims to encourage the use of BIM in public works. BIM is the process of creating and managing information concerning a building, typically in a three-dimensional computer model which embeds data relating to its construction. If employed to its full extent, it is a tool used as part of the design process, throughout construction and for maintenance and alteration of the completed project.

In the UK, the government's construction strategy requires all government projects to utilise BIM in the form of a fully collaborative 3D computer model (Level 2) by 2016, with all project and asset information, documentation and data being electronic. Similarly, the other EU member states of the Netherlands, Denmark and Finland also require the use of BIM for publically funded building projects.

Now, with the reference to BIM in the EUPPD, all 28 member states have the opportunity to recommend or require the use of BIM on public projects. Furthermore, the use of electronic communications with regard to procurement procedures is now mandatory (unless an exemption applies). The EUPPD states: "For public works contracts and design contests, Member States may require the use of specific electronic tools, such as of building information electronic modelling tools or similar." Clearly the use of BIM will not be mandatory, but the EUPPD does go some way in encouraging or pushing member states to recommend or specify the use of BIM. . When implementing the EUPPD, member states and contracting authorities must take care not to fall foul of the nondiscriminatory requirement. The EUPPD is clear that the tools and devices to be used either in electronic communication or BIM must be non-discriminatory, generally available and interoperable with the ICT products in general use. The tools and devices must not restrict access to public procurement. If the tools and devices proposed are not generally available, the contracting authorities must offer an alternative means of access. Furthermore, public contracts must comply with the principles of the Treaty on the Functioning of the European Union: equal treatment, non-discrimination, proportionality and transparency.

Therefore, contracting authorities in each member state must consider the technical platforms/standards which they intend to use and ensure that they do not restrict access or competition between potential tenderers. Using an open and neutral data format (IFC) of course assists with interoperability and should therefore limit issues of discrimination.

Mandatory use of electronic Communications

In addition to referencing BIM, the EUPPD also requires member states to ensure that all communication and information exchange in relation to procurement procedures are carried out electronically (unless an exemption applies). This includes the submission of tender documents. Member states are expected to move to this full electronic communication within 54 months of the formal adoption of the Directive.

Other reforms in the EU Public Procurement Directive

Other key reforms in the EUPPD include:

Less red tape and easier access for small and medium-sized enterprises (SMEs)

The introduction of the "European Single Procurement Document" (ESPD) aims to reduce the administrative burdens on companies, particularly SMEs, by introducing self-declarations – rather than the substantial number of certificates/ documents that is currently required for the exclusion and selection criteria. Now, only the winning bidder will have to produce original documentation.

In addition, purchasers are encouraged to divide contracts into "lots", thereby making it possible for smaller firms to bid. Also, the new rules introduce a requirement that the yearly turnover that suppliers/ economic operators are required to have shall not exceed two times the estimated contract value. This aims to improve access for SMEs and young businesses.

The "Most Economically Advantageous Tender" (MEAT)

Whilst the concept of MEAT is not new, under the current rules, contracting authorities can stipulate that the contract award will be made on the basis of the lowest cost or on the basis of MEAT. The new procedure requires that contracts are awarded by reference to MEAT. The EUPPD's new award procedure has adopted criteria that allow contracting authorities to put more emphasis on quality, environmental considerations and social aspects while still taking into account price and life-cycle costs.

Abolition of the distinction between Part A and Part B services

Currently, Part A services are fully regulated by the procurement rules and Part B services (education, health, cultural and some transport services, for example) are regulated to a more limited extent. The new rules abolish this distinction and introduce a new "simplified regime" for particular social and other services, including social, health, cultural, legal, hotel, restaurant and catering services. These services only fall within the EUPPD if the contract meets a higher threshold of 750,000 euros. The EUPPD allows member states to determine the detailed requirements for the procurement of these services.

Subcontracting

The EUPPD includes tighter procedures regarding subcontracting. For tenders that appear "abnormally low" owing to technically, economically or legally unsound practices, if the tenderer cannot provide a sufficient explanation, the contracting authority should be entitled to reject the tender. Furthermore, the new rules require that contracting authorities must reject any bids which are deemed to be "abnormally low" and the evidence points to a violation of social, labour or environmental laws.

Conclusion

The aim of the new EUPPD is to modernise the existing EU public procurement rules by promoting the use of BIM and electronic communication, minimising red tape and enabling easier access for SMEs. The UK government has stated that it is aiming to implement the Directives quickly so that the UK can benefit as soon as possible from the improved flexibilities they offer. Clearly the new Directives will not resolve all of the complexities and ambiguities which have developed in UK public procurement; however, the new regime is certainly a step in the right direction.

International Quarterly is produced quartely by Fenwick Elliott LLP, the leading specialist construction law firm in the UK, working with clients in the building, engineering and energy sectors throughout the world.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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