The cat is out of the bag – it’s going to be a Regulation! Although I can’t claim thinking and writing about the benefits of a regulation over a directive as long as my friend Pedro (read his post on the matter here, but also this one here), I’ll try and make a sinilar argument. Maybe this is a result of an echo chamber of two, but I think we need a public procurement Regulation.

My approach will be different though. I’ll try and list all the pros of a Regulation I can think of, from two different perspectives – of the EU, but also of the Member State. After, I’ll try to engage with all the cons I can think of, also from both perspectives.

 

Pros from the EU perspective

 

1) Uniformity and simplification

By choosing a single Regulation in place of three separate Directives (with a large overlap of same instruments) a certain level of simplification is immediately achieved, which gels well with the Council demand for regulatory simplification. This will of course lead to a higher level of uniformity across the Member States, making it harder to implement divergent national regimes that further dilute the attempts to finally achieve some semblance of progress in creating a single public procurement market. This also eliminates transposition delays and infringement litigation. Furthermore, we may again see something we saw when the GDPR Regulation was introduced – the elevation of public procurement to a real paneuropean legal and practical discipline, where all stakeholders from all Member States will operate under a much more similar legal framework, where everyone will have the same problems, and it will be much easier to apply a great solution from Latvia to the same problem in Croatia.

 

2) No more trying to solve the same problems with the same tools and the same approach

This is after all the famous definition of insanity misattributed to Einstein. After 50 years of Directives, there is still no single public procurement market, direct cross-border procurement is at a negligible low, indirect cross-border procurement is somewhat better. The ECA report, the Draghi report and the Letta report (like them or not) point in the same direction – we’re not where we thought we would be, and it would be irresponsible to try again using the same tools.

 

3) External dimension of EU procurement law and third-country access after Kolin and Qingdao

 We all know this story, my thoughts on this here amd here.

 If this is an exclusive competence of the EU (and it is, under the TFEU and the CJEU judgments), it would be nearly impossible to achieve an effective and uniform approach with a Directive – only a Regulation can do this. Of course, this will fail if the Commission uses a lot of words like ‘could’ and ‘can’ in the final proposal.

 

Pros from a Member State perspective

 

1) Level playing field between Member States

A Regulation (at least theoretically) makes it more difficult to implement intra-EU protectionism, favouring e.g. Italian economic operators and goods at the expense of German ones. Also, exporters will face much more uniform rules across Member State borders, possibly facilitating cross-border procurement.

 

3) The same solutions are applicabl across the continent

 Under a Regulation, an interpretation, a piece of guidance, or a practical solution developed in one Member State is immediately relevant in all the others. For national review bodies and courts, this means access to a much larger pool of precedent and practice. For practitioners, it means that the answer to their problem may already exist – just not, as is the case now, locked inside somebody else’s national regime.

 

4) A uniform answer to the third-country question

The aftermath of Kolin and Qingdao has demonstrated exactly what happens when Member States are left to react individually to a development in an area of exclusive EU competence: strikingly divergent national approaches, improvised general acts and amendments, and serious open questions on remedies and the rule of law. A Regulation would give every Member State the same answer to the third-country question. But of course, this is under the assumption that the Commission indeed does do away with contracting authority discretion in the text.

 

Cons from the EU perspective

 

1) The Council may kill it

At least 17 Member States (plus, curiously, Norway) are on record asking the Commission to retain the Directives, so the proposal faces a difficult road through the Council – it may be delayed, diluted, or gutted entirely. The intensity of the opposition is, in a way, the best available evidence that a Regulation would have teeth.

 

2) A Regulation cannot fully harmonise everything

Below-threshold procurement, remedies, administrative and civil procedures will remain with the Member States, so national rules will continue to exist alongside the Regulation. The choice here is between less divergence and more divergence. A Regulation with remaining national layers is still considerably more uniform than three Directives transposed through 27 national regimes (plus Norway, again – wierd), each with its own residual layers on top.

 

Cons from a Member State perspective

 

1) Loss of flexibility and subsidiarity

 Public procurement is intertwined with national administrative and civil law, and a Directive allows Member States to adapt EU rules to national systems. In principle, this is a legitimate concern. In practice, the procedural rules of the 2014 Directives are already so detailed that the room for national adaptation is modest. And subsidiarity is not an end in itself; it is justified only if the objectives can be achieved at least as well at national level. Fifty years of Directives and a direct cross-border procurement rate that never escaped the low single digits suggest they cannot.

 

2) Legal uncertainty for a period

 Contracting authorities operate under constant risk of legal challenge, and a wholesale change of the legal basis will generate litigation until the new questions are settled. Also true. But contracting authorities operate under that risk today, under the Directives, and the uncertainty generated by a single directly applicable text is at least shared – and therefore resolved  collectively.

 

3) Loss of the ability to ‘fine-tune’

 A Regulation strips Member States of the ability to tailor transposition to suit national interests – to introduce the small frictions that make life just slightly harder for a foreign economic operator. This is a real loss for the Member States, but it is not a legitimate one.

 

Conclusion

 The cons from the EU perspective are risks of execution. They are arguments for doing this well, not for not doing it. The cons from the Member State perspective, however, are of a different nature. Once the genuine but temporary transition costs are set aside, what remains is, to put it politely, self-serving.

This narrow view of national interests and particularism may look attractive in the short run. But it is a view that hurts precisely those it claims to protect. Successful national economic operators – the ones capable of winning contracts in other Member States – are the first victims of 27 different regimes, and they would be the first beneficiaries of a single one. And the common market, the entire point of this exercise since the 1970s, is the permanent casualty of treating public procurement as 27 national islnds with pretence of Europeisation.

Therefore, the choice of a Regulation is the correct one. It will not solve every problem of EU public procurement law, and the transition will be difficult and unpopular. But for the first time in fifty years, we would all be reading the same text, facing the same problems, and building the same solutions. The proposal is expected in September; the battle in the Council will be ugly. It is a battle worth having.

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