4.1.1 It is important when considering the appointment of advisers that the impact of the EC public procurement rules is considered thoroughly from the outset (with advice being sought from procurement specialists and internal legal advisers as appropriate). In all cases, Treaty principles such as non-discrimination and freedom to provide services within the EU will apply. In certain cases the EC Services Directive (and implementing UK Regulations) may also apply.
4.1.2 The Services Directive applies to contracts where the value exceeds certain thresholds*. The Directive divides services into two categories, those to which the full rules apply (eg financial and technical advice and management consultancy) and those to which only limited provisions apply (eg legal services).
4.1.3 In cases where the full rules apply, they require that selection (of those to be invited to tender or negotiate) and award (evaluation of bids) are conducted as distinct stages. They place limitations on the information which may be considered at each stage. They also lay down, inter alia, strict requirements in respect of timescales for the award process, advertisement of the contract in the EC Official Journal and the number of persons to be invited to tender or negotiate (generally, at least three).
4.1.4 A common problem which arises when appointing advisers is that the full extent of the likely requirement is underestimated. As a result it is often assumed that the requirement is below threshold and the Directive is not applied when the adviser is first appointed, only for the authority to realise later that the rules do apply and that subsequent contracts with the adviser must be advertised. By that time the adviser is often considered to be the only person realistically capable of performing the assignment, but in order to comply with the law a competition must nonetheless be held before the appointment can be extended. Failure to have advertised the full requirement at the outset could be construed as a breach of the rules in these circumstances and lead to challenge in domestic or European courts. It is very important, in order to avoid such complications arising, that the full potential scope of the requirement is addressed from the outset and advertised in the OJEC if necessary (see Treasury Taskforce Technical Note No.2 "How to follow EC Procurement Procedure and Advertise in the OJEC" (June 1998)).
*The current thresholds can be obtained from the Treasury's Website: http://www.hm-treasury.gov.uk