Beyond the rules applicable to centralised and occasional joint procurement, and still focusing on issues concerning the allocation of responsibility/liability between contracting authorities, reg.39 of the Public Contracts Regulations 2015 (PCR2015) is dedicated to procurement involving contracting authorities from other Member States and sets 'conflict-of-law-like' rules to determine the procurement regime applicable to cross-border cooperation, in the same terms of Article 39 of Directive 2014/24. Pedro has encapsulated its content very clearly here.
Reg.39(1) PCR2015 opens with a reference to public-public and in-house cooperation (for critical remarks, see here, here, here and here) by determining that "[w]ithout prejudice to regulation 12, contracting authorities may act jointly with contracting authorities from other member States in the award of public contracts by using one of the means provided for in this regulation". One option is to interpret this as allowing for contracting authorities to set up cross-border in-house/public house schemes, in which case it is to be deferred to the general legal requirements of the chosen vehicle to determine which procurement system controls its activities (which is, by no means, necessarily obvious). However, in view of regs. 30(10) to (14) PCR2015, the relationship between cross-border in-house and other types of cross-border joint entities is not easy to fathom.
In any case, reg.39 PCR2015 goes on to establish a significant number of cross-border cooperation possibilities, subject to the general requirement that contracting authorities shall not use them for the purpose of avoiding the application of mandatory public law provisions in the law of the jurisdiction to which they are subject, where those provisions are in conformity with EU law [reg.39(2) PCR2015], which of course may impose significant restrictions once budgetary and other sets of public sector laws are considered.
The three main options foreseen in reg.39 PCR2015 are cross-border centralised purchasing, cross-border joint procurement and cross-border procurement through joint entities (other than in-house ?, see above). Each of them prompt significant questions.
Regs.39(3) to (5) PCR2015 deal with cross-border access to centralised procurement bodies and determine that contracting authorities are free to use centralised purchasing activities offered by central purchasing bodies located in a Member State other than the UK. The PCR2015 has not restricted the sort of activities carried out by the non-UK CPB, which can then take either of the following forms: (a) the acquisition of supplies and/or services intended for contracting authorities, or (b) the award of public contracts or the conclusion of framework agreements for works, supplies or services intended for contracting authorities. In either case, the provision of centralised purchasing activities shall be conducted in accordance with the national provisions of the Member State where the central purchasing body is located; which rules will also apply to direct call-offs or awards of contracts under framework agreements and dynamic purchasing systems organised by the central purchasing body. So far, so good.
This is quite interesting because it creates a situation where, for example, an English contracting authority that conducts a mini-competition within a framework set up by an Italian central purchasing body is acting with subjection to Italian public procurement law. The likelihood that this actually happens in practice seems small, as the English contracting authority will most likely prefer the Italian CPB to conduct the mini-competition and choose the specific provider of the given goods or services in order to avoid such extraterritorial application of Italian public procurement rules. In that case, though, the initial act whereby the English contracting authority approaches the Italian CPB is not covered by the 'conflict-of-law-like' rules in regs.39(4) & (5) PCR2015, which creates a legal vacuum concerning that specific act.
It would be tempting to assume that it would be English law, but that is by no means the only possible option or the strongest in law. If the "entrustment"/"collaboration" act was considered a commercial contract (the public-public cooperation element indeed seems rather limited as far as that transaction is concerned), the rules of the Rome I Regulation would most likely be engaged, in which case the several criteria in Art 4 would point towards Italian law, unless there were some serious overriding mandatory provisions that could trigger the application of English law instead under Art 9. In any case, it seems clear that there is either a requirement or a risk that the English contracting authority would have to comply with Italian law, which seems a serious limitation of the system.
It would be tempting to assume that it would be English law, but that is by no means the only possible option or the strongest in law. If the "entrustment"/"collaboration" act was considered a commercial contract (the public-public cooperation element indeed seems rather limited as far as that transaction is concerned), the rules of the Rome I Regulation would most likely be engaged, in which case the several criteria in Art 4 would point towards Italian law, unless there were some serious overriding mandatory provisions that could trigger the application of English law instead under Art 9. In any case, it seems clear that there is either a requirement or a risk that the English contracting authority would have to comply with Italian law, which seems a serious limitation of the system.
Moreover, the law applicable to the (public) contract with the ultimate supplier/contractor would also be Italian law in almost all cases, except if the Italian CPB (with amazing foresight) had introduced compliance with the law of the 'client' contracting authority as a contractual condition in the relevant tender documentation. All in all, it looks like this sort of cross-border activity would create a significant need for the English contracting authority to obtain advice on foreign (EU) domestic procurement and contract law, which make well erode any economic advantages derived from the recourse to the CPB of a different Member State.
Regs.39(6) to (9) PCR2015 establish the conditions under which an English or Welsh contracting authority may, together with contracting authorities from different Member States, jointly award a public contract, conclude a framework agreement or operate a dynamic purchasing system, or award contracts based on a framework agreement or on a dynamic purchasing system. For this to be possible, and unless the necessary elements have been regulated by an international agreement concluded between the Member States concerned, the contracting authorities involved need to conclude an agreement that determines: (a) the responsibilities of the parties and the relevant applicable national provisions; and (b) the internal organisation of the procurement procedure, including the management of the procedure, the distribution of the works, supplies or services to be procured, and the conclusion of contracts. In any case, it is clear that a participating contracting authority fulfils its obligations when it purchases works, supplies or services from a
contracting authority which is responsible for the procurement procedure.
This is a group of rules and requirements that fundamentally superfluous. I would have expected this scenario to be covered by reg.9 PCR2015 (art 9 dir 2014/24) on public contracts awarded and design contests organised pursuant to international rules, particularly given the need for an (international) agreement to be reached prior to the cross-border cooperation--either in general terms, or for the specific case. Moreover, the rules in reg.39(6) to (9) leave all decisions to the agreement between the Member States and simply impose a transparency obligation whereby the allocation of responsibilities and the applicable national law must be referred to in the procurement documents [reg.39(7)(b) PCR2015]. However, this does not sort out any of the practical problems derived from joint procurement (see comment to reg.38 PCR2015), which are potentially magnified by the cross-border nature of the rules under reg.39 PCR2015. Hence, this is another area where uptake in practice seems likely to be limited, unless contracting authorities invest significant resources in legal advice.
Cross-border procurement through joint entities
Regs.39(10) to (14) PCR2015 establish rules for contracting authorities of different Member States to set up a joint (in-house?) entity, including European Groupings of territorial cooperation under Regulation 1082/2006 or other entities established under Union law. This raises the already mentioned question whether other sorts of joint entities (ie other than those established under EU law) can be created under the general clause of reg.39(1) PCR2015 or not.
In any case, for the purposes of the joint entities established under EU law, by a decision of the competent body of the joint entity, the participating contracting authorities shall agree on the applicable national procurement rules of one of the following Member States: (a) the national provisions of the Member State where the joint entity has its registered office; or (b) the national provisions of the Member State where the joint entity is carrying out its activities. Such agreement may either apply for an undetermined period, when fixed in the constitutive act of the joint entity, or may be limited to a certain period of time, certain types of contracts or to one or more individual contract awards.
In this case, there is no specific transparency requirement to the effect of imposing disclosure of such agreement in the relevant procurement documents, but the joint entity would be well advised to do so. In this scenario, the same issues concerning the conflict-of-law-like issues discussed above also apply.
Overall impression
In my view, all of the above creates the impression that these rules will be applicable in a marginal set of cases where contracting authorities of different Member States engage in long-term cooperation for public procurement purposes, which seems most likely in frontier areas. In any case, the rules in reg.39 PCR2015 (art 39 dir 2014/24) are mostly limited or completely open to agreement between the Member States/contracting authorities involved, so they can hardly be seen as much more than enabling provisions and, in that case, their relationship (or distinction) with reg. 9 PCR2015 (art 9 dir 2014/24) is unclear.
I would personally not expect a very significant practical implementation of these rules in the short term, with the only possible exception of cross-border centralisation. That is an issue briefly explored in A Sanchez-Graells and I Herrera Anchustegui, Impact of
Public Procurement Aggregation on Competition: Risks, Rationale and
Justification for the Rules in Directive 2014/24 (December 5, 2014).
University of Leicester School of Law Research Paper No. 14-35, and one which we aim to explore further in a forthcoming paper.