Public procurement

hospital ward

The EU public procurement rules govern the way in which public bodies purchase goods, services and works, and seek to guarantee equal access to and fair competition for public contracts within the EU market.

The European Commission published proposals to revise the then EU public procurement Directive at the end of 2011. The proposals went through a lengthy EU decision-making process which lasted one year and half and which culminated with an informal agreement on the new EU Directive in June 2013.

The NHS European Office engaged extensively with the revision process, briefing EU decision-makers on NHS views and putting forward proposals on how to improve the proposed text (see our background page on the proposals).

Following a lengthy negotiation process, the European Parliament voted to approve the new Directive on public procurement on 15 January 2014. Read our press release and download a copy of the full text of the Directive.

The NHS European Office produced a briefing on the new Directive on procurement and its implications for NHS commissioners and providers. Download the briefing.

The new Directive

Key provisions in the new Directive include:

New regime for health service contracts
This replaces the distinction between Part A and Part B services in the previous Directive. Taking into account the limited cross-border interest for contracts for clinical services (as well as for social, education and other few categories of services) a light touch regime is maintained for the procurement of services in these sectors. This regime is based on a higher threshold, set at EUR750,000; health service contracts below this value are considered to have no cross-border interest and as such will not be covered by the Directive.

For health service contracts of a value equal or above EUR750,000 the following will be required:

  • Ex-ante advertisement in OJEU (using contract notices or prior information notices) as well as publication of ex-post award notices
  • Compliance with national rules ensuring that the key EU principles of anti-discrimination and equality are respected
  • Award criteria can be based on principles other than price. In particular, quality, continuity, accessibility, comprehensiveness of services and innovation can be taken into account.

Derogation from the rules for forms of cooperation between public bodies
The new Directive will allow for some forms of agreements and contracts between public bodies to be excluded from its scope.  These new provisions codify a number of decisions of the European Court of Justice (such as the “Teckal” and the “Hamburg” judgements) and will allow for some contractual relationships between NHS bodies to be exempted from compliance with the Directive.

Preventing conflicts of interest
The notion of conflicts of interest is being clarified and Member States have to take measures to effectively prevent, identify and remedy them. Exclusion grounds are strengthened and extended e.g. to cases of undue influence on the decision process.

Market consultation and more access to negotiation
The new Directive broadens the possibilities for negotiation with bidders, while putting in place the safeguards needed to protect against abuse; thus, the competitive procedure with negotiation may be used when justified by the specific circumstances relating e. g. to the nature, the complexity or the legal and financial make-up, or by the fact that the needs of the contracting authority cannot be met without adaptation of readily available solutions.

The rules also clarify the conduct of market consultation prior to the launch of a procurement process to assess the structure, capability and capacity of the market.

Procurement of innovation
The new Directive introduces a new procurement procedure which can be used for the development and subsequent purchase of new, innovative products, works and services. This procedure will be structured in successive phases following the sequence of steps in the research and innovation process.  Contracts will be awarded following publication of a contract notice and in accordance with the rules for the competitive procedure with negotiation.

Strategic use of public procurement
The new Directive includes specific measures allowing for a better integration of the environmental and social needs in public procurement. In particular, the introduction of the "life cycle cost" concept will encourage public authorities to consider the full life cycle (including the CO2 footprint) of the products they intend to purchase. Contracting authorities may also take into account the production process of the specific works, services or supplies purchased, such as the inclusion of vulnerable and disadvantaged people or the use of non-toxic substances, in their award decisions.

Implementing the Directive in the UK - the Public Contracts Regulations 2015

The Public Contracts Regulations 2015, which implement domestically the EU Public Procurement Directive, came into force on 26 February 2015. The Regulations are of great importance for all NHS organisations which will have to comply with them when purchasing goods and services. 

The Regulations bring important changes which will help NHS bodies to buy more smartly and efficiently. In particular, they will broaden the possibilities for NHS bodies to conduct negotiations with bidders during the procurement process, in addition to clarifying how to conduct market consultation prior to the launch of the tender. These changes will help NHS bodies to buy products and services better adapted to their needs and to achieve better commercial outcomes.

The Regulations also bring changes for the procurement of clinical services, replacing the existing `Part B` rules with a new `light touch` regime. These changes apply to NHS commissioners from 18 April 2016. The guidance produced by the Crown Commercial Service on the new light touch regime for health, social, education and certain other service contracts is available here.

A range of resources, including training material, handbooks and guides have been produced by the Cabinet Office to help public bodies become familiar with and understand the new rules.

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