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Go public — the European community public sector market initiative,
Conference
reports
Public procurement and the ES1 Go Public - the European
community
Public Sector Market Initiative,
~~i%~ber~ II ~~~~~~~~c~ Centre, L-on&n,
This conference was organized by the UK National Economic Development Office to alert public agencies and private industry to the implications of the European Community’s (EC) evolving policy on procurement, As the Commission extends and enforces its powers in this area - one of its main targets in the Single Market programme - there has been growing concern but relatively little understanding about how they would affect both the supply and demand of goods and services to the public sector. The policy will have a major impact on the energy industries, and a substantial component of the conference was devoted to the responses of one particular sector, the Electricity Supply industry (ESI). Any doubts about the EC’s determination to tackle the procurement issue were dispelled in a presentation by Robert Coleman from the Commission. He admitted that historically the policy had been a failure, but claimed that the impetus of the Single Market and the accompanying legislation would liberalize public sector purchasing. The Commission was now scrutinizing how the directives were being enforced. The utility directive, which covers the energy industries, was of particular interest. In making sure that the policy was applied, the Commission was prepared to resort to the European Court, he claimed. For their part, the energy industries seemed less than thrilled at the prospect of the new policy. While applauding the intentions of the Commissian, most of the speakers had serious misgivings about how the measures would be put into practice. Michael Reynolds of the UK’s National Power. a company which spends g4600million on purchases, was particularly critical. (Although privatized, the company is covered by the directive under the Commission’s definitions,) He argued that the Commission’s directive did not take account of
94
Q!ueen
prices. Of greater concern to him was the imnact of the directives in hemming in utilities’ freedam to negotiate, at the same time as the supplier industry was undergoing a major rationalization.
18-19 April 1990
the special characteristics of the ESI, where, for example, the distinction between supply of works and of equipment was not a practical one. The tendering procedure itself, even allowing for the special bidding canditions permitted by the directive, could require National Power to evaluate up to 10 000 companies, compared with 3 Ooo at present. Reynolds was pa~ie~arly fearful of the extension of the EC’s powers in the direction of procurement enforcement. There would be the potential for an unsuccessful bidder taking legal action, leading to a suspension of construction work and imposing major cost penalties on utilities. Michel Thibierge of Electricite de France stressed the need for utilities to maintain long-term relationships with suppliers, a factor which he argued had helped keep prices low in the past. He doubted whether the new rules on procurement would cut costs and
More support for the Commission’s policy came from Coleman Morrissey, from the Irish Electricity Supply Board. In contrast to the other utilities, which traditionally were tied to national suppliers the Irish industry had been buying power plant on the world market for many years. Overall, it appeared that the Commission’s plans for procurement were being taken seriously by the electricity industry. However, they doubted that the impact of the changes would be as radical as the Commission hoped. There would be a heavy compliance burden in the new regime, which would possibly raise rather than cut the costs of procurement,
Utilities Policy January Issue Thenew
procurement regime Utilities, suppliers and EC policy ed Francis McGowm This collection of papers will deal with the development of EC procurement policy for the utility industries. It will analyse the EC’s new proposals and their impacts on specific sectors in the context of demand and technology trends and the changing relationship between utilities and their suppliers. Papers will cover the debate on EC policy, national responses and impacts on the eiectricity, telecommunications and defence industries. Planned for publication in the January issue of U&Ses Policy.
UTILITIES POLICY October 1990
reports
Public procurement and the ES1 Go Public - the European
community
Public Sector Market Initiative,
~~i%~ber~ II ~~~~~~~~c~ Centre, L-on&n,
This conference was organized by the UK National Economic Development Office to alert public agencies and private industry to the implications of the European Community’s (EC) evolving policy on procurement, As the Commission extends and enforces its powers in this area - one of its main targets in the Single Market programme - there has been growing concern but relatively little understanding about how they would affect both the supply and demand of goods and services to the public sector. The policy will have a major impact on the energy industries, and a substantial component of the conference was devoted to the responses of one particular sector, the Electricity Supply industry (ESI). Any doubts about the EC’s determination to tackle the procurement issue were dispelled in a presentation by Robert Coleman from the Commission. He admitted that historically the policy had been a failure, but claimed that the impetus of the Single Market and the accompanying legislation would liberalize public sector purchasing. The Commission was now scrutinizing how the directives were being enforced. The utility directive, which covers the energy industries, was of particular interest. In making sure that the policy was applied, the Commission was prepared to resort to the European Court, he claimed. For their part, the energy industries seemed less than thrilled at the prospect of the new policy. While applauding the intentions of the Commissian, most of the speakers had serious misgivings about how the measures would be put into practice. Michael Reynolds of the UK’s National Power. a company which spends g4600million on purchases, was particularly critical. (Although privatized, the company is covered by the directive under the Commission’s definitions,) He argued that the Commission’s directive did not take account of
94
Q!ueen
prices. Of greater concern to him was the imnact of the directives in hemming in utilities’ freedam to negotiate, at the same time as the supplier industry was undergoing a major rationalization.
18-19 April 1990
the special characteristics of the ESI, where, for example, the distinction between supply of works and of equipment was not a practical one. The tendering procedure itself, even allowing for the special bidding canditions permitted by the directive, could require National Power to evaluate up to 10 000 companies, compared with 3 Ooo at present. Reynolds was pa~ie~arly fearful of the extension of the EC’s powers in the direction of procurement enforcement. There would be the potential for an unsuccessful bidder taking legal action, leading to a suspension of construction work and imposing major cost penalties on utilities. Michel Thibierge of Electricite de France stressed the need for utilities to maintain long-term relationships with suppliers, a factor which he argued had helped keep prices low in the past. He doubted whether the new rules on procurement would cut costs and
More support for the Commission’s policy came from Coleman Morrissey, from the Irish Electricity Supply Board. In contrast to the other utilities, which traditionally were tied to national suppliers the Irish industry had been buying power plant on the world market for many years. Overall, it appeared that the Commission’s plans for procurement were being taken seriously by the electricity industry. However, they doubted that the impact of the changes would be as radical as the Commission hoped. There would be a heavy compliance burden in the new regime, which would possibly raise rather than cut the costs of procurement,
Utilities Policy January Issue Thenew
procurement regime Utilities, suppliers and EC policy ed Francis McGowm This collection of papers will deal with the development of EC procurement policy for the utility industries. It will analyse the EC’s new proposals and their impacts on specific sectors in the context of demand and technology trends and the changing relationship between utilities and their suppliers. Papers will cover the debate on EC policy, national responses and impacts on the eiectricity, telecommunications and defence industries. Planned for publication in the January issue of U&Ses Policy.
UTILITIES POLICY October 1990