Positions 30 May 2012

CER views on the revision of the ‘utilities’ Directive

The European Commission launched a recast of the public procurement directives in December 2011 further to a stakeholder consultation organised earlier that year. The recast concerns two texts, the directive on public procurement, also called the ‘classic’ directive and the one on procurement by entities operating in the water, energy, transport and postal services, called the ‘utilities’ directive.

The Community of European Railway and Infrastructure Companies (CER) welcomes the revision of the existing legal framework inasmuch as it aims at simplifying and clarifying the texts with a view to ultimately reduce unnecessary administrative and legal costs. CER wishes however to draw the attention of the European Parliament and the Council to a certain number of provisions which would have serious negative consequences on the rail sector if not appropriately amended.
In that context and as a general overall comment, CER wishes to express its surprise with regard to the mismatch between the proposed new texts and the overall objective of simplification pursued by the European Commission.
No overregulation of utilities procurement law
The European Commission's proposal for a revision of the utilities directive (hereinafter referred to as the "proposal") is intended to provide simplification and enhanced flexibility of the existing public procurement rules as well as substantial relief for contracting entities and bidding companies. CER however, fears that this objective is unlikely to be achieved. The proposed text provides surprisingly for more regulation and over-detailed procedures. The increasing ‘legalistic approach’ and red tape in procurement rules will inevitably increase the costs incurred in carrying out procurement procedures in accordance with the law. Such costs will largely offset or even exceed the competitive effects and cost savings resulting from the application of European procurement law.
Moreover, CER understands that the European Commission's proposed directives aims to further harmonise utilities procurement law with the "classic procurement directive" (e.g. with regard to framework agreements). In CER’s views, however, the special characteristics of utilities procurement are not taken into account sufficiently in this proposal. In this regard, it should be kept in mind that:
Utilities operators generally carry out supply activities in line with entrepreneurial principles; in carrying out supply activities, utilities operators compete in many areas with private enterprises which are not subject to procurement law:

- The high percentage of the utilities procurement volume (more than 75%) exceeds the thresholds and is awarded according to the rules of Directive 2004/17/EC;

- As a result, companies in the utilities sector are bound by strict procurement rules which entail substantive additional costs. This does not contribute to putting them on a competitive level playing field with their competitors on the market.

With this position paper CER wishes to highlight the major issues of concern of the rail sector with regard to the proposed utilities directive.
This position paper was elaborated with the expertise of the UIC Legal Group – sub group on public procurement.