What is Light Touch Procurement?
Light touch procurement is a simplified and less formalised procurement process that is used for certain specific types of contracts in the European Union. This concept was introduced in the Public Procurement Directive 2014/24/EU, which sets out the rules and procedures for public procurement in the EU. Light Touch procurement is frequently a source of confusion for practitioners however as the term can seem misleading. One of the side effects of having a political union with so many languages, is that phrases do not always work well universally. It is quite common for people that are not specialised in procurement to think this means they can run something high level akin to a quotes process. This is precisely the opposite of what is intended for light touch procurement.
We will outline in this article what Light Touch procurement is, what defines it and some of the benefits associated with it along with scenarios where it can be employed.
Some of its key features are:
- Light touch procurement typically applies to contracts for services or supplies that are below certain financial thresholds (up to €750,000). These thresholds can vary depending on the type of contracting authority (e.g., central government, local authority) and are subject to periodic updates. They can also have a longer contract timeframe than the normal four year limit. This means, for categories that fall within the scope for light touch, a ten year contract could be used for something with an average annual expenditure of €70k.
- The light touch process is less defined and so is referred to as having fewer formalities and less regulatory burden. This is where some confusion can creep in. It provides flexibility and an opportunity to run a lighter process but it should not lack rigour or structure and must still be compliant with core procurement principles.
- A tender can be run over shorter time periods but obviously this should not be the purpose of the tender. The aim for the contract should always determine how long a tender is run for. If more time is needed to obtain effective tenders, an appropriate amount of time should be provided.
- Finally, while contracting authorities are still required to advertise light touch procurement contracts, the advertising and documentation requirements are less stringent compared to full EU procurement procedures.
It’s important to note that public procurement rules and regulations in the EU can change over time. Annex XIV of the procurement directives detail the categories (referenced in Article 74 of the directives) that are eligible for Light Touch Procurement. The most common ones include:
- Health and social services
- Administrative, social, educational, healthcare and cultural services
- Hotel and restaurant services
- Social security and benefit related services
- Prisons and security services
- Postal services
How does light touch procurement work?
Once a contract is below €750k in value, it is possible to use a light touch process for eligible categories like those above. The general principle captured in the directives is that above that level, there can be market interest in contracts internationally. A Light Touch approach can also be used above 750k for eligible categories also but potential competition should be considered and accommodated when this occurs (e.g. via negotiated procedures).
Step 1 – Publish the notice
The contracting authority must publish a note and advertise the light touch process. The requirements (in terms of details) for the notice are greatly simplified and reduced in detail compared to a normal, open EU level contract notice. It allows potential suppliers to be notified of the opportunity but there is much less regulatory detail required.
Step 2 – Select the procedure to be used
Contracting authorities have a choice in the procurement procedure they use. It should suit the specific contract. Options include simplified procedures, using a negotiated procedure without prior publication (i.e. a direct award), a competitive procedure with negotiation, or even an accelerated open procedure (i.e. running the tender over 15 days instead of 30 or 35 days).
Step 3 – Developing the tender documents
The ultimate obligation is for the contracting authority to comply with core procurement principles in sourcing what they need. As a result, the documents (the tender, contract and any standard response templates that may be used) should be constructed to ensure a successful outcome. The documents must include essential information on the contract, what is being procured (the substance of the tender), the criteria for award the contract and deadlines for response and asking queries. If a multi-stage process is being used, the documents and detail should reflect this.
Step 4 – The timelines
Contracting authorities can expedite the end to end tender process for a light touch process if they wish. Typically, the minimum used is 15 days (accelerated open process). It is always best to focus on the outcome required rather than the specific amount of time taken to run a tender process.
Step 5 – Evaluations
Evaluations of tenders have to meet the core principles. Normally these tenders follow the best price/quality ration in evaluations and are awarded on that basis. All bidders are notified of the outcome from the process and the reasons supporting the decision. Unsuccessful bidders have access to the remedies directive should they choose to challenge or appeal the decision.
Why should Light touch procurement not be used?
So far we have outlined what light touch procurement is and how it operates.
Now we will answer a final common question, what are the downsides to choosing this approach over one of the classic approaches?
- Light touch procurement can attract fewer suppliers compared to full EU procurement procedures. Smaller suppliers or suppliers from other EU member states are less inclined to participate due to the less formalised nature of the process.
- The simplified procedures can sometimes lead to contracting authorities inadvertently failing to comply with EU procurement principles, such as transparency and equal treatment. This can result in legal challenges and delays.
- While light touch procurement maintains transparency as a fundamental principle, the reduced documentation and advertising requirements can lead to a perception of reduced transparency, potentially raising concerns among stakeholders.
- The reduced formalities can lead to less efficient procurement processes, as contracting authorities may not invest the same level of effort in market research and contract design as they would in a full EU procurement process.
- With fewer formal procedures and documentation requirements, there may be an increased risk of corruption or favouritism in the procurement process.
- Light touch procurement procedures can vary between EU member states and even within different regions of a single member state. This lack of uniformity can make it challenging for suppliers to navigate the process and understand the requirements.
- The absence of standardised procedures and documentation in light touch procurement can create challenges for both contracting authorities and suppliers. This lack of standardisation can result in confusion and increased negotiation efforts.
- Suppliers who believe they were treated unfairly may challenge light touch procurement decisions in court. Legal challenges can result in delays and added costs for contracting authorities.
- Light touch procurement may not be suitable for contracts that require innovative solutions, as the simplified procedures may discourage suppliers from proposing creative and innovative solutions.
- Light touch procurement is only applicable to contracts that fall within certain financial thresholds. For larger contracts, contracting authorities must follow the more formalised EU procurement procedures, which can be time-consuming and complex.
Summary conclusions on Light Touch Procurement
Light touch procurement is a very useful, streamlined process to be used in those areas covered by Article 74 and Annex XIV of the directives. It allows discretion, longer term contracts and an easier route to market for those categories for contracting authorities. It is a part of the toolkit for contracting authorities that can avail of this and they should not be afraid to use it. The relative lack of definition is not a trap, it is an opportunity. Used correctly, it is an effective way to support the delivery of operational requirements. Additional blogs like this one on running a goods process may be of use to buyers.