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COM (84) 717 
 
 
 
Vol. 1984/0 259 
  
 
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Conformém ent au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983 
concernant l'ouverture au public des archives historiques de la Communauté économique 
européenne et de la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983, 
p. 1), tel que modifié par le règlement (CE, Euratom) n° 1700/2003 du 22 septembre 2003 
(JO L 243 du 27.9.2003, p. 1), ce dossier est ouvert au public. Le cas échéant, les documents 
classifiés présents dans ce dossier ont été déclassifiés conformément à l'article 5 dudit 
règlem ent. 
In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983 
concerning the opening to the public of the historical archives of the European Econom ic 
Communit y and the European Atom ic Energy Communit y (OJ L 43, 15.2.1983, p. 1), as 
amended by Regulation (EC, Euratom) No 1700/2003 of 22 September 2003 (OJ L 243, 
27.9.2003, p. 1), this file is open to the public. Where necessary, classified documents in this 
file have been declassified in conformity with Article 5 of the aforementioned regulation. 
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom  1. 
Februar 1983 über die Freigabe der historischen Archive der Europäischen 
Wirtschaftsgemeinschaft und der Europäischen Atomgem einschaft (ABI. L 43 vom  15.2.1983, 
S. 1), geändert durch die Verordnung (EG, Euratom) Nr. 1700/2003 vom 22. Septem ber 2003 
(ABI. L 243 vom 27.9.2003, S. 1), ist diese Datei der Öffentlichkeit zugänglich. Soweit 
erforderlich, wurden die Verschlusssachen in dieser Datei in Übereinstimmung mit Artikel 5 
der genannten Verordnung freigegeben. 
COMMISSION OF THE EUROPEAN COMMUNITIES
COM(84) 717 final  
Brussels, 14 December 1984
COMMUNICATION BY THE COMMISSION TO THE COUNCIL
PUBLIC SUPPLY CONTRACTS  
Conclusions and Perspectives  
ooo
COM(84) 717 final

Cb * ? // * ? /  7^7^
-  2 -
TABLE OF CONTENTS
INDRODUCTION p-  3
I. COMMUNITY LEGISLATION p-  6
II. INCORPORATION OF SECONDARY LEGISLATION INTO THE LAW
OF THE MEMBER STATES p-  7
III. APPLICATION OF THE COMMUNITY DIRECTIVES p.  10
IV. PUBLIC CONTRACTS AND COMMERCIAL POLICY p-  16
V. THE FURTHER DEVELOPMENT OF COMMUNITY POLICY P. 17
V.1. Improved Application of Existing Directives P. 17
V.1.1. Transposition into National Legislation P. 18
V.1.2. Volume and Quality of Information P. 18
V.1.3. Interpretations of the Directives P. 19
V.1.4. Respect of Directives by the Community
Institutions p-  20
V.1.5. Respect of the Directives by Regional
and Local Authorities p- 20
V.1.6. Exploitation of Statistics p- 21
V.1.7. Small and Medium-sized Enterprises P- 22
V.2. Improvement through Modification of Directives P. 22
V.2.1. Transparency p·  23
V.2.2. Definition of the exemptions p-  24
V.2.3. Procedures p-  25
V.2.4. Formal System of Redress p- 25
V.3. The exclusions to the current directives P. 26
STATISTICAL ANNEXES

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INTRODUCTION
With the presentation of this report the Commission meets the requirement Laid  
down by the Council at the moment of the adoption of the directive on public  
procurement (1) that a report on the effectiveness of and experience with the  
directive should be prepared. The preparation of the report which is now pre­
sented after consultation with the Advisory Committee on Government Procurement  
has been delayed because of the unavailability until recently of the necessary  
basic information and in particular of valid statistical data.
The content of the report highlights the unsatisfactory situation in a sector  
of the internal market of which the liberalisation is hundered by specific cir­
cumstances and which is charged by numerous political pledges from the past.
It is this continued partitioning of the individual national public markets  
which is one of the one most evident factors that block the dynamic of the Com­
munity economy.
The identification of the deficiencies is but a first step. Further steps must  
follow in order to remedy them. The Commission sees this report as the starting  
point fora series of energetic steps towards the removal of the remaining bar­
riers in the sector public procurement.
The public sector share (investments and current purchases) of GDP is  
generally around 20 %, or even more in some countries. This estimate  
includes public undertakings and military purchases. The share of public  
contracts proper, i.e. purchases by public authorities alone, is between  
7 and 10 % of GDP.
A number of experts have attempted to estimate the financial implications  
of the continued closure of the markets for public contracts in the Community.
A report, recently presented to the European Parliament estimated the addi­
tional cost of non realisation of the Common Market in this area to be some  
40 billion ECU.
(1) Council Directive 77/62/EEC of 21 December 1976 on the coordination of  
procedures on the award of public supply contracts - O.J. n° L 13 of  
15.01.1977, page 1 ; Council Resolution of 21 December 1976 concerning  
the revision of the directives 77/62/CEE - OJ n° C 11 of 15.01.1977,  
page. 3.

- 4 -
Such figures indicate just how much is at stake in the effort to  
integrate the Community's internal market. They are not surprising  
given the importance of the public sector in the highly industrialized  
economies of the Member States.
These stakes are much more than mere statistics. Indeed, a substantial  
proportion of public purchases concerns sectors whose very future directly  
depends on the size of the market open to them. This applies in particular,  
for example, to the telecommunications industry. The recent communications  
of the Commission and the recommendations adopted by the Council Ministers  
mark a progress by proposing a Community policy in this area.
The "cost of non-Europe" represents a direct, serious threat to essential  
components of the Community's industrial potential.
The action taken by the Commission and the other Community institutions, which  
is intended to extend the internal market to the public sector,  
has many facets. This report describes one of them, namely a coordination of  
the procedures for awarding public supply contracts.
The Commission is fully aware of the strategic importance to the Community  
economy of opening up public contracts and since the early 1960s has cons­
tantly pursuing this objective.
The basis for ensuring the free movement of goods provided by the EEC  
Treaty is contained in Articles 30 et seq. thereof. These provisions seek the  
elimination of all quantitative restrictions between Member States and of all  
measures having equivalent effect. But the obligation "not to take certain  
action" contained therein is, as experience has shown, not sufficient to bring  
about the desired interpenetration of the public procurement market. For that,  
an obligation "to take certain action" is required. While a regime that gua­
rantees effective competition between private or public firms is sufficient to  
assure the process of interpenetration of markets, a complementary approach is  
needed to open up the ,  ublic procurement market.

- 5 -
Unlike the private businessman, who acts out of his own self-interest, the  
public purchaser operates in quite special circumstances. Efforts were  
therefore concentrated on the manner in which public purchases are made.
A common body of rules applicable to public purchasers was introduced.
They endeavour to establish purchasing
procedures whereby all the necessary information is notified both before  
and after a contract is awarded and all potential suppliers are placed  
on the same footing. The checks necessary for their successful operation  
and remedies for any default complete the machinery. An attempt was thus  
made to create a system of "transparency”of contracts i.e. a set of Community  
rules with which national procedures and practices had to be brought into line.
In the 1970s, specific provisions governing freedom to provide services  
in respect of works contracts were adopted » The work carried out then  
resulted in the adoption by the Community of a series of rules which now consti  
tute the arrangements to ensure that the purchasing decisions made are  
rational and are based on effective competition between those Supplying the  
public authorities.
Before the Community had been given an opportunity to evaluate the impact  
of its arrangements on the behaviour of contracting authorities and the  
progress achieved in the mutual integration of markets, it was obliged  
as a result of multilateral negotiations to extend them partially  
to its principal partners within GATT. The GATT agreement on Governement  
Procurement which was concluded called for certain partial amendments to the  
Community arrangements.
This memorandum outlines, for the first time, the Community's progress in  
this area and tries to take stock of them. It is confined to public supply  
contracts.
Not only suppliers, industry and commerce but also purchasers,  
and hence the public purse, must benefit from the desired liberalisation of  
public contracts. Obviously, effective competition between potential  
suppliers is bound to have favourable effects on the quality of tenders and  
the prices demanded. Even in the short time, extending the public purchaser's  
r gnr -  ;T choice could well bring considerable savings when supply requirements  
T.-· ,  but the long-term benefits will be far greater on account of the de-  
i  - ,  of industrial and commercial structure, “ whose efficiency will im-  
n> ·  · .  'siderably as markets are opened up and an internal market comes  
into being.

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I
I. COMMUNITY LEGISLATION
As far as supplies to public authorities are concerned, the provisions  
of Articles 30 et seq. of the EEC Treaty, which remain the basis of policy in  
this field, were put into effect by Commission Directive 70/32/EEC of 17  
December 1969 on the supply of goods to the State, regional and local autho­
rities and other legal persons governed by public law. This instrument defines  
the discriminatory practices which the Member States must terminate  
in order to eliminate measures having an effect equivalent to quantitative  
restrictions.
The Council Directive 77/62/EEC of 21 December 1976 coordinating procedures  
for the award of public supply contracts carried forward this process of opening  
up the Community market in respect of a large number of purchasing bodies  
by imposing a series of positive obligations on the agencies in addition  
to the interdictions of Art. 30 and the preceding directive.
When the Community concluded the Multilateral Agreements resulting from the  
1973-79 trade negotiations within GATT (Council Decision 80/272/EEC of 10  
December 1979) and, among them, the Agreement on Governmeent Procurement  
the Community rules had to be amended to bring them into line with those  
of the GATT to the extent that conditions introduced by the latter were  
more liberal. This change was brought about by Council Directive 80/767/EEC  
of 22 July 1980 adapting and supplementing in respect of certain contracting  
authorities its first Directive.

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II. INCORPORATION OF SECONDARY LEGISLATION INTO THE LAW OF THE MEMBER STATES
These various legal instruments, which were adopted one after another  
between 1976 and 1980, have resulted in a somewhat complex body of Community  
rules. This complexity made the incorporation of all of these provisions into  
national law a far from easy matter.
A major source of difficulty was the existence of two sets of arrangements  
for opening up access to contracts, based on separate legal instruments, one  
governing relations within the Community and the other relations between the  
Community and certain non-member countries. The first set of arrangements  
is based on Council Directives, which impose obligations on the Member States  
as to the results to be attained, while leaving the national authorities  
free to choose the manner and means of attaining them. The second is based  
on a Council Decision, which is binding in its entirety on the Member States.
A given situation is subject, however, to both sets of arrangements. There  
cannot therefore be two different procedures for the award of a given contract.  
The latter must be governed simultaneously by Community rules and GATT rules.  
Since the GATT rules affect only some of the public contracts awarded, the  
Community rules were altered and aligned on those of the GATT Agreement  
only as far as those contracts were concerned. As a result, the rules differ  
significantly according to the categories of contracting authorities, the  
nature of the contracts and the procedures by which they are awarded. Moreover,  
the rules as a whole are highly elaborate and frequently define rights and  
obligations in minute detail. A further complication was that the Community  
rules had to deal with situations which differed considerably from one Member  
State to another. Some countries already had well-developed rules based on  
highly detailed legislative instruments. Others relied solely on administra­
tive action which was not always comprehensive, and there were those which had  
no systematic body of rules at all in this area.
These different situations account to some extent for the difficulties and  
shortcomings observed in the incorporation of the Community rules into  
national law.

-  -  -  '8 -
The incorporation of a Directive into national law must as a rule attain  
the following two main objectives:
a) the obligations laid down must be transposed clearly at national level as  
far as those who are to apply them are concerned, that is to say, in this  
particular case, all central or local public authorities who must award  
their contracts in accordance with those provisions^
b) the third party interests of potentiel suppliers must be protected and they  
must be afforded a genuine opportunity to seek redress in national courts.
Countries which already had specific legislation on public contracts were  
able, when Directive 77/62/EEC was incorporated into national law, to attain  
these two objectives without too much difficulty. In countries where public  
contracts were governed by administrative rules, on the other hand, the  
incorporation of the Directive into national law gave, and still can give  
rise to certain difficulties. Lastly, in countries where there was no syste­
matic body of rules governing public contracts, the legal position djd not  
on the whole change significantly in spite of the obligation to incorporate  
the Directive into national law. The governments of those countries simply  
forwarded the Directive for information purposes to the central and local  
authorities which are supposed to comply with its provisions. The drawbacks  
of this approach, having regard to the two objectives described above  
are obvious.
Without examining in detail here all the problems of a more specific nature  
associated with the incorporation of Community rules into the law of each  
Member State, it can be stated, therefore, that, generally speaking, the in­
corporation of these rules into national law by various means and from radi­
cally different points of departure has not succeeded in establishing within  
the Community an internal market governed by uniform rules of law. The differences  
in the situations - in terms of nights and obligations - in which firms and  
contracting authorities operate in the various Member States brings into question  
the foundations and the very principle of the internal market. These' conclusions  
therefore give rise to serious cause for concern and call for the continuation  
of the energetic action already begun by the Commission.

- 9 -
The principles and guidelines which should underlie the implementation  
of the Community Arrangements may be summarized as follows:
Within the limits of the freedom left to them by Article 189 of the EEC  
Treaty, the Member States are obliged to choose the most appropriate form  
and methods to transpose the Directives into arrangements at national level  
to ensure their effectiveness. The internal provisions ensuring this trans­
position must nevertheless be binding, so that the public authorities concerned  
are obliged to comply with them. In short, such transposition must satisfy  
the requirements of clarity and certainty of the legal situations at which the  
Directives aim. The administrative or judicial remedies against decisions of  
the central, regional or local contracting authority are - apart from the  
Community complaints or ex officio procedures, which are the same for all -  
governed by the law of the country in question according to the procedures  
and rules in force there.

1 0  -
III. APPLICATION OF THE COMMUNITY DIRECTIVES
It is not easy to formulate valid judgements on the application of the  
Community directives since we are dealing with a system which has been in  
evolution since its inception in 1977 and where some Member States have been  
less rapid than others to fully implement the directives. Further the dispo­
sitions of the directive have furnished an imperfect statistical basis on which  
to found such conclusions. Indeed one of the reasons for the delay of this  
report has been the difficulties experienced by Member States mastering even  
this apparently rudimentary statistical requirement.
Nevertheless despite the inherent instability of the system and deficiencies  
in the available statistics certain consistent trends emerge from a detailed  
examination of the application of the directives over the last 5 years. The detailed  
statistical data are incorporated in the Annex to this report.
Despite the unfavourable economic climate the number of invitations to  
tender using the open/restricted procedures published by Central Regional and  
Local Government in the Supplement of the Official Journal of the European  
Communities has increased steadily from year to year rising from 1038 in 1979
to 2683 notices for the year 1983. Even in 1983 the number of  
notices published has increased by 12 % in comparison with 1982. Since  
in real terms government consumption has only grown by 5% in the period 1979-83  
and by less than 1% in the last two years it is clear that significant progress  
has been made in the application of the directives. In the case of the two  
Member States (Belgium and F.R. Germany) despite a decline in real government  
consumption in 1982 the number of invitations to tender actually published In­
creased (See Table I of Annex).
Jhe range of products covered by the published invitations to tender is  
extremely wide and diversified.
In al l,
— the two groups, footwear/clothingand foodstuffs, each account for more than
10% of notices published;

-  11
the six groups, electrical engineering products, manufacturing of  
metal articles, mechanical engineering products, office machinery and  
data processing equipment, petroleum products, paper and paperboard  
each account for between 5 and 10% of notices published;  
the five groups, chemical products, motor vehicles, textiles, precision  
instruments and plastic goods each account for between 1% and 5% of  
notices published.
Even when account is taken of the fact that 1982 and 1983 figures have been  
distorted by a surge resulting from the belated implementation by one Member  
State of the directives the overall picture remains relatively favourable.
However within this global situation there are significant and unexpected diver­
gences between the performances of the individual Member States. While it is true  
that these divergences can in part be explained by the differing structure of their  
economies, the varying structure of the purchasing activity and different speeds  
of implementation of the directives , the underlying reason for such divergence  
is to be found in the failure to implement fully and correctly the directives.
The impact of the public supply directives is in reality marginal. The  
figure of 12 billion ECU representing the purchases of goods by central government  
in the nine Member States Community i.e. excluding regional and local government,  
is in isolation an impressive figure but measured against the GDP of the Community  
it represents only 0,5% (See Table V of Annex).

-  1 2  -
Even a more refined comparison with a measure of total government  
activity in the Community economy, i.e. current consumption + fixed  
investment by Government less the compensation of Government employees,  
shows that the purchases of central Government falling within the domain  
of the directives account for approximately 7 % of total Government  
activity (See Table V of Annex).
This figure must then be modified by the volume of tenders of which,  
although they fall within the domain of the directives, the estimated value  
of the contract is below the threshold specified in the directives and the  
volume of the contracts above the threshold awarded by single tendering. In  
1982 over 44 % of the contracts awarded by central Government fell into the  
first category and a further 29 % of the awards fell into the second category.
Thus only 27 % of all contracts awarded by central Government are the  
subject of Community-wide competition (See Table IV of Annex) In other words  
the purchases of central government actually subject to the discimplines of  
the supplies directives in reality account for scarcely 2 % of government  
requirements. Even within this small percentage circa 10 % of the contracts  
are awarded using accelerated procedures which reduce significantly the  
possibilities of foreign participation by curtailing the time available for  
the submission of offers (See Table III of Annex). This confirms the virtually  
non-existent or "Uncommon" Common Market in respect of public procurement as  
outlined in recent report prepared for the European Parliament by Albert and  
Ball.
It is true that, if the areas for which we do not possess adequate  
statistics - the purchases by local and regional government covered by  
the supplies directives and the Public Works Directive - were added the  
figure of 7 % cited above would probably increase to 20-25 % of total  
government procurement activity.
Of course a major explanation of the relatively modest coverage  
of the public procurement activity by the directives is to be found in the

- 13 -
excLusiorîswhich have been prescribed in the directive namely the sectors  
telecommunication, energy, transport and water and those considered to be  
completely outside the scope of the directive such as military equipment.
Even though the absence of these sectors may explain to a large extent  
the poor performance under the directives there are other factors within  
the scope of the directives which certainly contribute to it.
Many central government departments and agencies make no  
purchases under the directives. Many Member States insist that the threshold  
is already too low ,-and yet over two thirds of the entities covered by the  
Directive 80/767/EEC do not make any purchases over the threshold.
.  Local and regional authorities in many Member States purchase little  
under the directives. In some Member States no invitations to tender are  
published by local and regional government (See Table II of Annex).
The volume of contracts below the threshold value is high in the Community  
- in four Member States the level exceeds 70 % of all contracts awarded (See Teble  
IV of Annex)With the diversity that exists in the Community one would expect  
that in an international comparison the Member States would be well dispersed  
over the total spectrum. However, if we rank the signatories of the GATT  
Agreement on Government Procurement according to the volume of below  
threshold contracts declared by each one of those states, descending from the  
lowest volume to the highest, we find that the Member States of the Community  
dominate the bottom end of the ranking list. While there may be factors such  
as decentralized purchasing which in part explain this fact in some Member  
States its generalized nature can only lead to the conelusion that its real cause  
lies in the under estimation of contract values and an over zealous division  
of projects nto lots in order to avoid coverage by the directives.

- 14 -
The same remarks can be made on the subject of the use of single  
tendering and, although the statistics for 1982 show an  
improvement over 1981, the Community still remains at the bottom of the  
international ranking list.
It is not rare to find a complete absence of invitations to tender  
for particular products. Indeed it is not unusual to find this phenomenon  
related to an apparent lack of.awareness, sometimes innocent sometimes  
premeditated, by the purchasing agency of the existence of the directives.
A further example of the non-existence of the internal market in public  
procurement is the extremely low rate of interpenetration achieved in both  
1981 and 1982. It may well be true that the Community statistics based on  
the address of the winner of the contract do tend to minimize the actual  
volume of intra-Community trade. For example a purchase from an agent  
representing a manufacturer either in another Member State or in a third  
country would be shown as sourced in the country of residence of the agent  
even although the merchandise is supplied from outside that state by his  
principals. This subject of origin of material has already been much  
discussed in the Advisory Committee and indeed in the GATT Committee on  
Government Procurement but neither of these bodies have as yet arrived  
at satisfactory solutions. Thus this is a problem which the Commission  
must seek to resolve.
Even if the agencies were able to define  
the origin of the end products which they have purchased it is quite  
possible in view of the growing interdependence of individual economies  
and the consequent growth in trade in intermediate products and in sub­
contracting over frontiers that such a measure would scarcely better  
reflect interpenetration in the public procurement market.
Nevertheless it can be stated on the other hand that the objective of  
the directives is to allow enterprises based in one Member State to parti­
cipate in public procurement in another Member State and as such the Commu­
nity statistic is a relatively good measure of the degree of success in this  
area. In 1981 only a meagre 4,5% by value of all contracts awarded went  
over Community frontiers with the majority of such movements being accounted  
for by two Member States. This figure scarcely reached 1% in the year 1982  
(See Table VI of Annex)..

- 15 -
In summary, although the dispositions of the directives in respect  
of publication are being increasingly observed, it is manifest that the  
desire for competition is not universally shared by all the participants  
in the market and that, even the events subsequent to publication are  
all too frequently characterized by a desire to avoid competition. In  
terms of the awards old prejudices and preferences die hard. It seems  
that even a period of 5-6 years is too short to breakdown old and long  
established practices in public procurement. Local and national interests  
often of a short-term character seem to take preference in the decision  
making process over the significant benefits which are manifestly to be  
obtained from a opening of the markets to Community-wide competition.
On the supplier side the majority are either not informed of the  
existence of the market offered by public procurement or have already  
decided often on the basis of very limited information that nothing has  
really changed in this area, i.e. foreign companies have no chance to  
win contracts. Even among the minority who recognize the market possi­
bilities there is often a strange reluctance to employ the effort necessary  
to win contracts over frontiers. This is manifested by the relatively 
low circulation of ca 3 500 copies of the S Supplement of the Official 
Journal. It is evident that the credibility of the Community directives  
is low among potential participants in the market. The directives are  
often criticised as lacking teeth, i.e. the rights of redress offered  
to injured parties consist of Long drawn out and often expensive legal  
procedures which usually do not result in the reversal of decision on  
the award of the contract.
It is often claimed that the directives discriminate against the  
Si'iE. However such limited evidence as is available indicates that the SME  
play an important role in the market both as sub-contractor and a prime  
contractor although this latter activity is heavily concentrated in the  
large volume of small contracts under the threshold specified in the  
directive.

16 -
IV. PUBLIC CONTRACTS AND COMMERCIAL POLICY
Since 1 January 1981 a considerable proportion of the Community's public  
contracts, a large number of central and federal government purchases,  
has also been open to competitive bidding and hence to direct competition  
from suppliers established in certain non-member countries (USA, Canada,
Japan, EFTA countries, Singapore, Hong Kong and more recently Israel) which are  
parties to the GATT Agreement on Government Procurement.
It is important to bear in mind that even before the entry into force of  
that Agreement, suppliers and products from non-member countries already  
qualified directly or indirectly for the advantages resulting from the  
Community arrangements, by virtue of the principles of free circulation  
and freedom of establishment. The liberal nature of the Community arrange­
ments has always permitted firms in non-member countries to have access  
to public contracts in the Community. This access is identical to that  
enjoyed by European suppliers and is available on the same terms and in  
accordance with the same guarantees, provided tenders are submitted through  
a supplier established in the Community.
European firms, on the other hand, did not enjoy the same advantages on  
the markets of non-member countries where rules exist or existed specifying  
that national goods only be purchased (for example, in the United States)  
and where there were no arrangements requiring market transparency (for  
example, in Japan).
The Agreement on Government Procurement was an important achievement in the  
TokyoRound, therefore, since it established to a certain extent reciprocal arran­
gements that did not exist previously. At the same time, however, it is a serious
impediment as far as the freedom of the EEC to organise its internal market  
is concerned, since any amendment to Community rules may create problems  
pgg 3PcHpg the provisions of the GATT Agreement and thus necessitate rene  
gotiation of the latter.

- 17 -
V. THE FURTHER DEVELOPMENT OF COMMUNITY POLICY
is necessary to move from this state of formal respect of  
the directives towards a genuine and wider opening of the public procurement  
market in the Community to competition with all the benefits which will accrue  
to the participants in this market.
The Commission can act in three directions, none of which are mutually  
exclusive, to ensure progress towards a Common market in Government procure­
ment :
1. the further improvement of the application of existing directives
2. the modification of the directives in order to restrain evident abuses  
of and to improve the existing directives in the light of the experience
of the past 5 years
3. the extension of the coverage to those sectors and areas of public  
procurement which are presently excluded from the directives.
-  Improved Application of E.xigting_Directivgs
The Commission has during the period of implementation of the directives  
taken account of the difficulties encountered by the Member States in this  
phase and has adopted a low profile approach to the management of the direc­
tives. Since we have now passed through this period of transition it is  
now necessary to adopt a more rigorous approach towards the implementation  
and application of the directives.
The following aspects are of particular importance in this area :
1) transposition into national legislation
2) increased volume and quality of information on public procurement market
3) interpretations of the directives
4) respect of directives by the Community institutions
5) respect of the supply directives by regional and local authorities
6) exploitation of statistics
7) treatment of small and medium sized enterprises.

-  18  -
V.1.1., Transposition into National Legislation
Up to the present time the Commission has judged the various forms and methods  
used by the Member States to transpose the directive into the national context  
in the light of the results obtained, e.g. the number of invitations to  
tender published and contracts awarded. Such an approach was clearly appro­
priate during the first phase of the adoption of directives. However now it is  
necessary to examine more closely the transpositions from a legal viewpoint  
and in particular their binding character in order to ensure that all and not  
just some of purchasing agencies covered by the directives feel obliged to  
submit their purchasing activities to their dispositions and to guarantee  
the rights in law of the suppliers.
V.1 2 V°lume and Quality of Information
It is necessary to continue and reinforce the efforts which have already  
been undertaken in the field of increasing the knowledge of the public  
procurement market. The Commission has already published a simple elementary  
brochure to explain to all interested parties the market possibilities opened  
up by the two supplies directives.
This first brochure has had a circulation both within and without  
the Community of almost 100 000 copies. Having stimulated the interest  
of many in the public procurement market it would seem appropriate to  
facilitate their entry into the market through the publication of further  
brochures on the legalenvironment and mechanics of public procurement in  
each Member State.
The year 1983 has seen the arrival of electronic publishing in the field  
of public procurement. The data-bank TED (Tenders Electronic Daily) covering  
the invitations to tender currently published in the S Supplement of the  
Official Journal is now fully operational and thus eliminates the increasing  
postal delays suffered by the Supplement since the data if available within  
a matter of hours of its entry into the data-bank. In addition to this  
benefit the system allows its user a selectivity which is not of course  
open to readers of the Supplement. Further expansion of the data-bank are
planned.

- 19 -
Now that the directives have entered a period of relative stability  
it is imperative that an examination of the quality of the published invitations  
to tender should be carried out both from the aspect of their conformity  
with the dispositions of the directives and the useability of the information  
provided therein to potential participants in order to ensure the maximum  
transparency of the market.
The directives have recognized the important role that the use of norms  
and standards can play in the opening up of the Community public procurement  
market. Purchasing agencies are obliged to define norms and standards  
as far as possible in terms of performance and a hierarchy of such n o rm s  
is laid down in the directive. In practice the entities would appear to  
have considerable difficulty in fulfilling this apparently simple obligation.
It is clear that the new initiative taken by the Commission in the field of  
normalisation (Directive 83/189/CEE ) will contribute significantly to
eliminate discrimination in the field of public procurement through the use  
of norms and standards.
V.1.3. IOi£I££etations_of_the_Directives
The Advisory Committee on Government Procurement has pronounced after  
prolonged deliberations on a number of aspects of the directives such as inter­
pretation of the meaning of the sectoral exclusions, leasing etc. It would  
appear that ensuing exhaustion following such deliberations has led to a  
situation in which the recommendations although adopted unanimously by the  
Committee have, with few exceptions, rarely been implemented by the Member  
States. Thus it is necessary to re-open the discussion in the Committee of these  
important interpretations to ascertain the reasons for their apparent non-  
implementation by the Member States. The Commission may as a consequence of  
such an examination decide to introduce'modificat ions to the directives or in­
deed may institute proceedings against the Member State in default. A number of  
other aspects of the directives require, in the light of the experience to date,
further clarification and will be drawn to the attention of the Committee  
in its coming meetings.

-  20  -
V.1.4. 5S2ES£Ì_2Ì_2Ì£S£ÌÌy®§_fe^_ÌÌ!S_i2!!!!!!yDÌÌZ_lD2ÌÌÌyÌÌ2D§
It would seem appropriate that the Commission should in its own procure­
ment activities set the example tor the Member States by voluntarily  
applying as tar as possible the dispositions ot the directives.
In the past the Commission and other Community institutions have not  
always insisted on the observance of the dispositions of the directive as a  
condition of finance of particular projects within the scope of the direc­
tives. While such decisions have particularly during the initial period of  
the implementation of the directives been justified it must be recognized  
that they have not at alt facilitated the implementation in general of the  
directives in certain Member States.
It should now be evident that the transition phase is over since the dispo­
sitions of the directives have not changed since 1980. Thus the Commission  
should in future refuse to finance any project covered by the directive if  
the dispositions of those directives have not been observed by the demander  
in respect of the particular project.Moreover since this can give rise to  
serious anomalies it would be preferable to obtain the observation of the  
directives for projects concerned which are funded totally or partially by  
Community instruments regardless of the exclusions from the directive or  
the legal status of the demander.
The European Investment Bank has recently decided to reinforce its efforts  
to secure the respect of the existing public procurement directives by its  
clients and to encourage both public and private promoters in the areas not  
covered by the directives to open their markets to international competition.
V.1.5. Respect_of_the 2’ ’rË£îiyS2~-ï_2S2i2Dâi_2D^_t2£2i_4yîj32r2Î222
Although more than 40% of all government expenditure in the Community is  
incurred at regional and local levels the degree of implementation in Member  
States of the supplies directives at this level of government as indicated  
for example by the number of invitations to tender published in the supple­
ment to the Official Journal remains modest, it is doubtful if

-  21
this modest performance can be totally explained by the high level of the  
threshold in the directives or that a higher proportion of the funds at this  
level of government are expended on public works rather than supplies.
Thus the Commission will undertake in cooperation with the Advisory  
Committee and individual Member States an examination of the application  
of the procurement directive m  this area to seek ways and means of improving  
it.
V.1.6. Exploitation of Statistics
Statistics of contract awards are available for 1981 and 1982 and will  
shortly be available for 1983.
On the basis of this data the Commission services have commenced an in  
depth analysis of the implementation of the directives by' each Member State.
The first stage of this analysis has yielded a number of anomalies in  
each Member State. These with requests for further information on aspects  
such as the apparent excessive use of non-competitive/negotiated tendering  
have been transmitted to Member States for examination. It is essential that  
we examine in further detail the phenomenon of non-competitive/negotiated  
tendering in the Community in order to further understand why such procedures  
are so extensively used in public procurement.
It is the intention of the Commission to exploit to the maximum the  
available statistical information in order to ensure and improve the respect  
of the directives.
In addition it is clearly necessary to improve the quality of the existin  
statistical information in order to better understand the government procure­
ment market. This subject will on the demand of the Commission and a number  
of Member States again be discussed during futyre meetings of the Advisory  
Committee on Government Procurement.

-  22  -
V.1.7. Small and Medium-sized Enterprises
The directives deal with large public procurement contracts which are  
susceptible to be traded over frontiers. The average size of contract let  
under the directive 80/767/EEC in 1981 and 1982 was approximately ECU 500 000.  
The role of the SME in this market is primarily that of a subcontractor. The  
Commi ssion has followed a policy of encouraging the purchasing authorities  
to breakdown the larger contracts into lots in order to facilitate the direct  
participation of the SME in this area.
As has been indicated earlier slightly more than half of the contracts  
awarded by government in fact lie below the thresholds specified in the supply  
directive - indeed in some Member States this figure exceeds 70% of all public  
contracts awarded. It is in this sector of the market that the SME win most  
public contracts and thus attain in certain Member State a share as a prime  
contractor of approaching 30% of all contracts awarded by government.
The Commission will ensure with the aid of the Advisory Committee on  
Public Procurement that the access of small and medium-sized enterprises  
to the public procurement market will not be affected by this process of  
improvement of the directives.
V. 2. Improvement through Modification of Directives
We can distinguish four areas of possible improvement :
^ the increase in the transparency of the whole procedure to ensure  
a better respect of the directives
2. clearer definition of the exemptions from the directives
3. changes and improvements in the procedures
4. the creation of a system of redress which would permit the Commission  
in cooperation with the Member States to ensure the respect during a  
procurement procedure of the dispositions of the directives.

- 23 -
V 2 1  Transparency
On the transparency front the directive currently only specifies the  
obligation to publish the invitation to tender and while it imposes many obli  
gations on the purchasing agency, most of these can be executed or ignored  
without the knowledge of the Commission or indeed the Member States. While  
it would not be possible for administrative reasons to bring the full light  
of day into every aspect of the procedure there are at least three areas  
which deserve particular attention, namely pre-information on projects, non­
competitive tendering, and the notification of the award.
Pre-information on projects already exists for a limited few potential  
participants and thus discriminates against the vast majority of potential  
suppliers. In order to avoid such discrimination an obligation should be  
introduced in the directive which would oblige covered agencies to publish  
in the Official Journal on an annual or quarterly basis details of proposed  
purchases by the agency.

- 24 -
Non-competitive or negotiated tendering is still extensively used in the  
Community and it is certainly not clear that its use is always fully justified.  
The Commission does not usually become aware of these practices until the  
availability of the annual statistics which.can be up to 18 months after the  
event. Thus since it is necessary to further understand and control this  
procedure an obligation should be introduced in the directives to publish  
in the Official Journal the intention to use such procedures just as those  
agencies who use competitive procedures are obliged to publish invitations to  
tender. The agency would of course have to indicate in this notice the justi­
fication for the use of this procedure.
All purchasing agencies should also be obliged to publish details of the  
award of contracts over the threshold value within a given time limit after  
the award date. Such a development in addition to its value as an addi­
tional control of the respect of the directives could enable the Commission  
eventually to lift with the aid of for example TED^he burden of preparation  
of annual statistics from the purchasing agencies, an activity which they do not  
appreciate and fulfill with considerable reluctance, and would considerably  
accelerate the availability of statistical information in comparison with the  
present situation.
The latter two pieces of information would also be of value to the SME in the  
field of sub-contracting.
Further in view of the electronic publishing in the field of  
public procurement it would seem appropriate to review the type of information  
which is published to ensure that it is of a nature and quality to permit  
the maximum transparence and thus participation in the market.
V.2.2. Definition of the exemptions
The present exemptions to the coverage of the directive could be inter­
preted as applying only to the equipment specific to the activities of those  
organisations who offer a public service in one of those exempted sectors.  
Certain Member States have already adopted at least in pa^t such an interpre­
tation of the directives. All of these organisations make considerable pur­
chase of non-activity specific materials e.g. office equipment, stationery,  
textiles, foodstuffs etc. It
(*) electronic publication o

- 25 -
would seem appropriate that such non specific purchases should not be  
exempted from the coverage of the directives. Certain experts go even  
further and suggest that only high techonology capital intensive specific  
equipment should be excluded from the discipline of the directives.
V.2.3. Procedures
In terms of procedures a number of areas require examination such as the  
calculation of the threshold for certain contracts, the length of bid times,  
abnormal length of the award procedure in many cases, the qualification  
procedures used in practice and the appropriateness of the procedures them­
selves. In the latter case the directives only recognize three basic  
procedures namely open ,restricted or selective and non-competitive tendering.  
There are in fact a number of other types of procedure for the award of public  
contracts in use in the Member States. Each of these procedures
has certain merits and demand a further examination to determine whether  
the directives should be modified to recognize these variants. Indeed it  
would seem appropriate at this time, particularly as the Community is
as result of the obligatory renegotiation of the GATT Agreement Govern­
ment Procurement Code obliged to examine the Directive 80/767/EEC, to carry  
out a detailed review of all the procedures.
V.2.4. Formal System of Redress
It is evident that suppliers have at the present time, little confidence  
in their rights of redress such as are available under the directives if they  
consider that, in their case,the terms of the directives have been breached  
either during the procedures or at the moment of the award of the contract.

- 26 -
There is Little jurisprudence either at national or European level in  
the domain and such as exists has done little to reassure potential partici­
pants in the oublie procurement activity.
This deficiency in effect deters and discourages potential suppliers from  
participating in the market.
Up to the present time the Commission has intervened on an informal and  
ad hoc basis in particular purchasing activities when one or other participant  
has drawn its attention to an apparent breach of the directives during the  
course of the procedure. Such interventions aLthough limited in number have  
always without exception been
successful. However few suppliers have availed themselves of this informal  
service simply because it is not generally known that it exists. In order  
to increase the credibility of the directives it is thus necessary to reflect  
on how such a possibility of intervention during the procurement procedure  
could be formalized. Mechanisms of this nature already exist in certain  
Member States and will be examined in respect of their relevance to this  
problem. Of course this mechanism would not replace the use of Article 169  
procedure nor the possibility for a participant who judges that he has been  
wronged to take his case before national courts.
V.  3. Ii]£_£X£iys 2ons_ t o_ t he_cur r ent_dj rec t_ives
The current directives cover but a very limited area of the whole public  
procurement area. A number of major and important sectors were excluded  
from the coverage of the directives namely the organisation who offer public  
services in the telecommunications, transport, energy and water sectors and more  
generally services except those concerned with public works.
Since it is clearly necessary to move towards an opening of those markets  
the search for solutions appropriate to these sectors has been re-opened.
The Commission has already proposed a Community policy in the field of tele­
communication's which could lead among other objectives to the opening up of  
this major market.
This present report is a purely factual examination of the current state  
of application of the supply directives ; the extension of the coverage of  
the directives will be the subject of separate communications.

STATISTICAL ANNEXES

TABLE I
NUMBER OF CONTRACT NOTICES PUBLISHED IN THE OFFICIAL JOURNAL
Count ry 1979 1980 1981 1982 1983
B 68 77 84 86 81
DK 23 41 51 60 59
D 121 254 324 412 415
F 344 515 593 596 689
IRL 4 6 15 33 22
I - - 84 274 409
LUX 5 8 8 3 5
NL 5 73 133 156 182
UK 468 319 631 678 710
EEC 1038 1293 1923 2301 2583
Annual 
Progression-+ 24,6 % + 48,7 % + 19,7 % + 12,3 %
Footnote :  In the first 6 months of 1984, 1.414 notices were published,  
an increase of 269 notices or 23,5 % over the same period of  
1983.

TABLE II
NUMBER OF CONTRACT NOTICES PUBLISHED IN THE SUPPLEMENT TO THE OJEC IN 1983
Breakdown by Member State and by category of contracting authority
Member State State-Army State Total StateRegiona l 
& Local 
Autbori tiesTOTAL
B 10 44 54 27 81
DK 12 31 43 16 59
D 218 97 315 100 415
F 275 191 466 223 689
EL 0 10 10 1 11
IRL 0 19 19 3 22
I 186 49 235 174 409
LUX 0 5 5 0 5
NL 33 148 181 1 182
UK 186 324 510 200 710
TOTAL 1983 920 918 1838 745 2583
TOTAL 1982 719 914 1633 668 2301
TOTAL 1981 547 831 1378 545 1923

TABLEAU III - TABLE III
MARCHES PUBLICS DE FOURNITURES - PUBLIC SUPPLY CONTRACTS
•  Avis publiés au JOCE du 01.01.1983 au 31.12.1983  
Notices Published in the OJEC from 01.01.1983 to 31.12.1983
Etat Membre 
Member StateProcédure ouverte 
Open procedureProcédure restreinte 
Restricted procedure
Z du total CEE 
Z of EEC totalNormale
NormalAccélérée
Accelerated TOTAL
Nombre ^ 
NumberNombre < g  
NunberNombre g 
Number
Belgique - België
Danmark
Deutschland
France
Hellas
Ireland
Italia
Luxembourg
Nederland
United Kingdom68 84 ,0  
2 3 ,4 
120 28,9  
298 43 ,3  
11 100,0  
19 86 ,4  
2 0 ,5 
4 80 ,0  
1  0 ,5 
77 10,813 16,0  
52 88,1  
260 62,7  
349 50,7  
0 0 ,0 
3 13,6  
358 87,5  
1  20,0  
163 89,6  
549 77,30 0 ,0 
5 8 ,5 
35 8 ,4 
42 6 ,0 
0 0 ,0 
0 0,0 
49 12,0  
0 0 ,0 
18 9,9 
84 11,981
59
415
689
II
22
409
5
182
7103,1
2,3
16,1
2 6.7 
0,4 
0,9
15.8 
0,2 
7,0
27,5
TOTAL  CEE -  EEC 1983 602 23,3 1 7 4 8  67,7 233 9,0 2583 100,0
TOTAL CEE - EEC 1982 612 26,6 1469 63,8 220 9,6 2301 100,0 !
I  ■  !:  ._i

TABLE IV
ANALYSIS OF CONTRACTS AWARDED BY CENTRAL GOVERNMENT IN 1982
I. BY VALUE (000 ECU)
I----
Co
untryTotal value  
of contractsContracts whose  
value is below  
the thresholdJ  Contracts whose value is above  
|  the threshold, awarded by
II  private  
negotiationopen/rest ricted  
procedure
B 305.856 131.563 77.185 97.108
DK 680.291 624.578 32.915 22.798
D2.015.729 1 .298.743 287.263 429.723
F5.061.664 1 .305.128 2.440.407 1.316.129
IRL 93.374 74.515 1 .229 17.630
I n.a. n.a. 252.176 92.702
LUX 34.905 23.188 2.247 9.470
NL1.345.404 1.039.699 88.173 217.532
UK2.646.759 912.552 587.163 1.147.044
Total 1982 12.183.982 5.409.966 3.768.758 3.350.136
Total 1981 11.786.508 6.049.886 2.896.656 2.839.966
II. BY PERCENTAGE
B 100,0 43,0 25,2 31,8
DK 100,0 91,8 4,8 3,4
D 100,0 64,4 14,3 21,3
F 100,0 25,8 48,2 26,0
IRL 100,0 79,8 1,3 18,9
T1 n.a. n.a. n.a. n.a.
LUX 100,0 66,4 6,4 27,2
NL 100,0 77,3 6,6 16,1
UK 100,0 34,5 22,2 43,3
Total 1982 100,0 44,4 28,9 26,7
Total 1981 100,0 51,3 24,6 24,1

TABLE V
COMPARISON OF VALUE OF CONTRACTS AWARDED BY CENTRAL GOVERNMENT UNDER  
DIRECTIVES WITH GROSS DOMESTIC PRODUCT AND ITS COMPONENTS
- 1982 -
(Billion ECU)
CountryGross domestic  
product at  
current pricesGovernment  
activity (*)Contracts
awardedC/A (%) C/B (%)
(A) (B) (C)
B 86,140 6,506 0,306 0,36 4,70
DK 57,610 6,238 0,680 1,18 10,90
D 673,020 38,509 2,016 0,30 5,24
F 551,950 39,682 5,062 0,92 12,76
IRL 18,010 2,480 0,093 0,52 3,75
I 354,890 31,676 0,345 (1) 0,09 1,09
LUX 3,420 0,415 0,035 1,02 8,43
NL 140,550 11,152 1,345 0,96 12,06
UK 487.590 48,376 2,647 0,54 5,47 ...
Total 1982 2373,180 185,035 12,529 0,53 6,77
Total 1981 2180,260 170,480 11,786 0,54 6,91
(*) ^Current consumption + fixed investment by government less remuneration  
of personnel.
(1) excludes contracts awarded below the threshold.

TABLE VI
ANALYSIS OF CONTRACTS AWARDED BY CENTRAL GOVERNMENT IN 1982 BY ADDRESS
OF AWARDEE
(000 ECU)
Contracts awardedContracts awardedto :
Country 
awa rdi ngNational firms j  Firms in other  
Member StatesFirms in non­
member countries
contractValue %Value0 /
/ oValue %Va lue %
B 97108 100,0 93945 96,7 2848 3,0 3150,3
DK 22798 100,0 22154 97,2 1640,7 4802,1
D 429723 100,0 428472 99,7 1251 0,3 00,0
F 1316129 100,01314984(1) (99,91) 222(2)(0,02) 923(3)(0,07)
IRL 17630 100,0 16245 92,1 1122 6,3 2631,6
I 92702 100,0 92702 100,0 00,0 00,0
LUX 9470 100,0 9295 98,2 1751,8 00,0
NL 217532 100,0 209574 96,3 7958 3,7 00,0
UK 1147044 100,01127181(4) (98,3) 16679(5) (1,4) 3184 0,3
EEC 1982 3350136 100,03314552(6) (98,9) 30419(7) (0,9) 5165(3)(0,2)
EEC 1981 2260077 100,02108085 93,3101548 4,550109 2,2
(1) plus 5 contracts )
(2) pLus 4 contracts )
(3) plus 1 contract )  The value of which was not communicated for reasons
(4) plus 3 contracts )  of confidentiality.
(5) plus 3 contracts
(6) plus 8 contracts )
(7) plus 7 contracts )