The CNMC starts the process of updating the guidelines on public procurement and competition: Part 1 – Planning

The 2020 Action Plan of the National Commission for Markets and Competition (CNMC) set the target of updating the Guidelines on Public Procurement and Competition of the extinct National Competition Commission (CNC) (the “2011 Guidelines”), in which the competition authority offered recommendations to public sector entities on designing public tenders and detecting collusion between bidders. The update actually started in 2019, focusing on the analysis of the phases that should make up any public sector procurement process and with the aim of offering targeted recommendations on the competition issues that arise in each of them. Now, coinciding with the tenth anniversary of the 2011 Guidelines, the CNMC has just published the first part of the review, focused on the planning phase.

Better planning of procurement processes should lead to greater legal certainty for bidding companies, also from an antitrust perspective, since more open and transparent procedures reduce the risks of collusion. From this perspective, better public planning could also avoid conduct that, while responding to the dynamics of the market and the configuration of the bids, may be contrary to competition law in the eyes of the competition authorities.

It is recognized that the lack of adequate planning in public procurement is one of the great shortcomings of the current public procurement system in Spain. However, the 2011 Guidelines did not address this phase, other than mentioning some basic ideas throughout the text, such as the importance of accurately defining the objectives pursued with the project, or obtaining information on past experiences and the market situation before the formal start of the tender process, due to the influence of information asymmetries between the bidding companies and the tendering body in situations of collusion.

In this sense, based on the conclusions drawn from a public consultation and a conference on the importance of planning to promote competition and efficiency in public procurement held in December 2019, the CNMC has taken this first publication as an opportunity to develop on that deficiency.

The document just published is structured in four sections.

The first presents the wide room for improvement in the competition aspect of the public procurement process in Spain in general and its planning in particular.

It then discusses the usefulness of planning as a tool to promote competition and efficiency in public procurement. Among others, it underlines that effective planning facilitates the participation of competitors in tenders through greater transparency and anticipation of public actions. Furthermore, it points out the creation of incentives to reward efficiency and the use of more competitive tender procedures.

Third, the document sets out the phases of effective and efficient planning: identifying and prioritizing needs, programing and publishing a purchasing plan, and assessing and monitoring the plan.

Finally, based on these premises, the CNMC recommends focusing on a “true culture of planning in public procurement” that is transparent, and strategic and integrates all the levels of the procurement process. Seeking greater transparency, legitimacy and confidence in managing the public procurement process, the CNMC recommends that the needs analysis and purchasing plan of the contracting entities be published. However, to avoid that the predictability derived from such added transparency could lead to an increase in anticompetitive conduct (such as collusion between bidding companies), the CNMC suggests complementing that publication with ex ante control measures, such as aggregation of data, and ex post measures of oversight and reporting to the competition authorities. It is striking that another of the suggestions of the CNMC to avoid —or minimize— the information asymmetry between companies and the administration is to promote collaboration between contracting entities by encouraging the exchange of experiences and good practices.

In view of the content of this first delivery, the update of the 2011 Guidelines promises to be detailed, including both a greater development on phases already included in the 2011 Guidelines (the preparation, tender, award and execution of the contract) and an ex novo development of recommendations for the phases following the conclusion of the contract (the ex post assessment of the procurement processes). In this sense, it could be expected that the new guidelines would refer to novelties that have been incorporated into the public procurement legislation in recent years and that have a direct impact on competition, such as, for example, the expeditious procedure established in article 150.1 of the Law on Public Sector Contracts (Ley de Contratos del Sector Público) whereby, prior to the award of the contract, the CNMC may be notified of well-founded indicia of collusive conduct in the procurement procedure, or the possibility of requiring the companies forming a consortium to expressly justify the reasons for bidding together, in case there are indicia suggesting collusion (section 69 of the Law on Public Sector Contracts).

Finally, it should be recalled that the renewal of the 2011 Guidelines takes place in a context in which public procurement is one of the main areas of interest for competition authorities and, in particular, the CNMC. In fact, a significant number of the main sanctioning proceedings of the CNMC in recent years have dealt precisely with this area (approximately 30% of the decisions in the last three years, in addition to the proceedings initiated at the time of writing).

In this sense, both the 2021-2026 Strategic Plan and the 2021-2022 Action Plan of the CNMC recognize that anticompetitive practices in public procurement will remain a priority and, therefore, the mechanisms for detecting conduct related to bid-rigging will be strengthened. Specifically, it aims to fortify the Economic Intelligence Unit, which will continue to enhance the use of data analysis techniques and the development of automatic algorithms and indicators for detecting indicia of collusion based on databases. Furthermore, some screening processes will be automated and processing data using artificial intelligence techniques will be promoted. It is therefore to be expected that new investigations will take place in the coming years, and all sectors where public procurement is important will continue to be the main focus of the sanctioning activity of the competition authority.