The different types of public procurement procedures

Last Updated on Thursday, 10 March, 2022 at 12:53 pm by Andre Camilleri

This article is part of a series of articles on public procurement in Malta. Luca Amato is a senior associate within the Corporate and Commercial Law department of Fenech & Fenech Advocates

In my last article, published in The Malta Business Weekly edition on 17 February, I discussed several public procurement procedures, namely the open procedure, restricted procedure and competitive procedure with negotiation. These procedures are to some extent similar, in that the contracting authority (CA) will have a clear picture of its requirements when it issues the call for competition. On the other hand, there are situations where a CA will have a general idea of its needs, but not to a sufficient degree that would allow it to issue a detailed tender. Moreover, there are situations where the CA would have a clear sense of its requirements, but these cannot be addressed without some innovative product, service or work that does not already exists on the market. EU and Maltese law cater for such scenarios by providing special types of public procurement procedures.

The “competitive dialogue” is a procurement procedure that must be approved by the Director of Contracts and is allowed where: (i) the needs of the contracting authority cannot be met without adaptation of readily available solutions; (ii) the required works, supplies or services include design/innovative solutions; (iii) the contract cannot be awarded without prior negotiations because of specific circumstances related to the nature, the complexity or the legal and financial make-up or because of the risks attaching to them; (iv) the technical specifications cannot be established with sufficient precision by the contracting authority with reference to a standard, European Technical Assessment, common technical specification or technical reference or (v) in response to an open or a restricted procedure, only irregular or unacceptable tenders were submitted.

In most respects, it is a similar procedure to the competitive procedure with negotiation (CPN) discussed in the previous article. The distinguishing feature, however, is the dialogue element. Thus, while in the CPN the CA will issue detailed contract specifications and then proceed to negotiate with prospective bidders on the terms of those specifications, in the competitive dialogue the CA will issue a contract notice or descriptive document outlining the CA’s needs and requirements at a high-level, following which the CA and prospective bidders will engage in dialogue to identify and define the best means for satisfying the CA’s needs. Once a solution is identified, the dialogue is declared concluded and all remaining participants will be asked to submit final tenders based on the identified solution. Thereafter, the tenders will be assessed against the award criteria laid down in the contract notice or descriptive document. As with the CPN, a degree of negotiation with the CA will be allowed, provided this does not prove discriminatory on other prospective bidders.

The “innovation partnership” procedure is usually adopted when products, services or works already available on the market do not meet the needs of the CA, thus requiring the development of an innovative product, service or works. It is a special procedure that must be approved by the Director of Contracts and any economic operator (supplier) may request to participate provided they provide the necessary information requested by the CA.

As the name suggests, a key feature of the innovation partnership is the partnership element. Indeed, the CA will set up a partnership with one or more partners conducting separate research and development activities with a view to developing the required product, service or work. Assuming the performance levels are met within the agreed budget, the CA may (but isn’t obliged to) proceed to purchase the resulting product, service or supply from the partner itself. The partnership is structured in phases reflecting the R&D process, with intermediate targets and corresponding payment instalments being set. The CA may terminate the partnership or reduce the number of partners, at the end of each phase. As with the CPN and competitive dialogue, there is a negotiation stage where the different partners will negotiate the tender with the CA. Crucially, when considering candidates, the CA is expected to consider the candidates’ capacity in the field of research and development and of developing and implementing innovative solutions. The procurement documents shall also define the arrangements applicable to intellectual property rights. Where there are several partners, the CA shall be prohibited from revealing confidential information of one partner to another partner.

The “negotiated procedure without prior publication” is another special procedure that must be authorised by the Director of Contracts and is generally adopted when a contracting authority has received no suitable tenders or requests for participation in response to an open or restricted procedure. The procedure thus allows the contracting authority to engage in direct negotiations with a specific operator, provided the terms of the contract remain substantially the same as published in the original tender.

The procedure is also allowed where works, services or supplies can only be offered by a particular operator because it involves some unique artistic work, where competition is absent for technical reasons and where the project involves the protection of exclusive rights, including intellectual property rights. It is also allowed where there are reasons of extreme urgency brought about by events unforeseeable and unattributable to the contracting authority, and for new works, services or supplies consisting in the repetition of similar works, services or supplies entrusted to the economic operator to which the same contracting authorities awarded an original contract.

With regard to supplies, in addition to the above instances, the procedure may also be used: (i) for products manufactured purely for the purpose of research, experimentation, study or development; (ii) for supplies quoted and purchased on a commodity market; and (iii) for the purchase of supplies on particularly advantageous terms due to a supplier undergoing insolvency proceedings.

As for contracts for services, in addition to the above instances, the procedure may be adopted with an economic operator who was the winner of a design contest organised by the contracting authority.

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