COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 27.11.1996 
COM(96)583 final 
GREEN PAPER 
PUBLIC PROCUREMENT 
IN THE EUROPEAN UNION: 
EXPLORING THE WAY FORWARD 
(presented by the Commission) 

CONTENTS 
1. INTRODUCTION 
2. THE BACKGROUND TO THE DEBATE 
I. The objectives of the Union's public procurement policy 
H. The impact so far 
HI. Questions 
3. APPLICATION OF PUBLIC PROCUREMENT LAW 
CURRENT STATE OF PLAY AND TRENDS 
I. Introduction 
H. Directives must be implemented into national law 
HI. The law on public procurement must be correctly applied 
A Issues linked to incorrect application of the Directives 
(a) Basic definitions in the Directives 
(b) Excessive use.of negotiated procedures 
(c) Unsatisfactory quality of notifications 
(d) Excessive use of accelerated procedures and imposition 
of deadlines that are too short 
(e) Selection and award criteria 
B Issues linked to situations which do not fall within the scope of 
the Directives 
(a) Concessions or similar contracts 
(b) Public procurement contracts below the thresholds laid 
down in the Directives 
(c) Changes to rules in the course of individual award 
procedures 
C Preliminary conclusions 
IV 
IV. Monitoring application of the law on public procurement 
A The Remedies Directives 
B Appropriate sanctions 
C Complaints 
(a) At Community level 
(b) At national level 
D Other means for settlement of disputes 
(a) Attestation 
(b) Conciliation 
V. Questions 
4. IMPROVING ACCESS TO PUBLIC PROCUREMENT 
MONITORING, INFORMATION, TRAINING, ELECTRONIC 
TENDERING 
I. Monitoring public procurement 
H. Information 
(a) Improved readability of the legal framework 
(b) Dissemination of notifications 
III. Training 
IV. Electronic tendering 
(a) Current state of play 
(b) Electronic notification 
(c) Electronic dissemination 
(d) A fully electronic tendering system 
(e) Experience outside the European Union 
(f) Conclusion 
V. Questions 
lb 
5. PUBLIC PROCUREMENT AND OTHER COMMUNITY POLICIES 
I. SMEs 
II. Standardisation 
HI. Trans-European Networks (TENs) and transport in particular 
(a) The pre-tendering phase 
(b) The award of concessions to consortia 
(c) The use of the negotiated procedure 
IV. Procurement involving Union funds 
(a) Structural and Cohesion Funds 
(b) Public procurement by the European institutions or 
financed by non member countries benefiting from 
Community resources 
V. Procurement and social aspects 
VI. Procurement and the environment 
VII. Defence procurement 
VHI Procurement and consumer policy 
IX. Questions 
6. PROCUREMENT OUTSIDE THE UNION 
I. Access to world procurement markets - Getting a fair deal for Europe 
II. Laying the foundations for opening up procurement in Central and 
Eastern European Countries and in the Mediterranean countries 
III. Questions 
/, 
VI 
1. INTRODUCTION 
1.1 An effective public procurement policy is fondamental to the success of the single 
market as a whole. Every year, the European Union's public authorities spend about 720 
billion ECU buying goods and services: this represents 11% of EU Gross Domestic 
Product. With the completion of the Community's legal framework for public procurement, 
it is essential to launch thinking and discussions on how best to achieve its full potential: 
discussions in which the Member States, the European Parliament, and, crucially, the 
contracting authorities and suppliers themselves are invited to take part. 
1.2 The European Union has already made considerable progress in its public 
procurement policy. The legislative framework for open and competitive public 
procurement is in place and is now being implemented by Member States. The parties 
involved in public procurement are gradually adapting to the new situation. This policy 
framework will continue to be an incentive for major change in traditional purchasing 
practices in the Member States, thus contributing to an environment favourable to 
economic development in Europe as a whole. Public procurement is already more open to 
competition than ever before. Wider access to public procurement in other countries, 
including those outside the Union, is already generating significant new market 
opportunities. 
1.3 If our public procurement policy represents new opportunities, it also presents a 
formidable challenge. New rules necessarily involve major efforts to adapt traditional 
ways of working. For a contracting entity this means having to deal with new companies, 
often from another Member State right from the outset. For a supplier, it means: increased 
exposure to competition; the need to test new markets and the crucial requirement to 
remain internationally competitive. For the Governments of the Member States too, the 
challenge is real. As the major purchasers, they must follow the rules; they are also 
responsible for the transparency of the system; and they have to implement the Directives 
into their national legislation in accordance with their political commitments. 
1.4 Now is the time to look at what we have achieved and what is still to be done. The 
process of transformation is already under way. It is the adoption of the Community 
Directives and their implementation, even if only partial, and the action of the Commission 
to protect the rights to which they give rise, which have put into place the essential 
elements of efficient purchasing. However, it is a difficult and sometimes painful process, 
particularly where relationships based on habit, special links and national preferences once 
reigned. Long-standing purchasing traditions that bred inefficiency are being progressively 
abandoned. Some contracting entities have alread been able to demonstrate that, by 
applying the Community rules, they are getting the oest value for money. Procurement 
markets of other Member States are beginning to open up; competition is intensifying and 
our industry is becoming better and better prepared to face challenges at international level. 
Yet more remains to be done if our public procurement policy is to achieve its full 
potential. 
1.5 Of course, the primary responsibility for the success of this process lies with the 
contracting entities and suppliers, whatever their size. But the Commission and the 
Member States themselves have a major role to play;. They must work together to create 
1 GA-^ 
the conditions in which competitive procurement can take place and our enterprises can 
flourish. The potential in economic growth and, ultimately, employment will go largely 
unexploited if barriers to cross-border transactions in goods and services are not removed. 
The smooth functioning of the internal market in procurement is, therefore, of relevance in 
the context of the evolving debate on a European Confidence Pact for Employment. 
1.6 This Green Paper is intended to provide a framework for a wide-ranging debate. 
The chapters that follow set out the background against which the Commission is 
developing its initial thinking on a number of issues central to the Community's present and 
future public procurement policy. These issues include the effective implementation into 
national law and application of legislation; how market access can be facilitated by 
information and training and by the development of electronic procurement; how the 
correct application of public procurement law can be pursued while implementing other 
Community policies, in particular with regard to policy on small and medium-sized 
enterprises (SMEs), Trans-European Networks (TENs), standardisation, the Cohesion 
Fund and the Structural Funds and contracts awarded by the European institutions or using 
Community resources, on social policy, consumer policy and environment policy; and, 
finally, on access to other countries' procurement markets. To assist the reader, a brief 
summary is provided at the beginning of each chapter and a short list of key issues for 
debate at the end. 
1.7 The Commission invites all interested parties (Council, the European Parliament, 
Economic and Social Committee, Committee of the Regions, trade associations, 
contracting entities, suppliers and consumers) to present their views. Responses to all or 
part of the Green Paper should be made in writing no later than 31st. March 1997. 
For the attention of: 
The Director-General - DG XV 
Internal Market and Financial Services 
Rue de la Loi 200 
B-1049 Brussels 
Fax: (+32 2) 295.65.00 
E-mail: John.MOGG@DG15.cec.be 
At the end of this written consultation phase, the Commission will decide whether or not to 
hold a hearing in Brussels with interested parties. 
1.8 The Commission will draw up a special communication on public procurement on 
the basis of the contributions to the Green paper and the analysis and reflection stimulated 
by the communication on the impact and effectiveness of the Internal market . That 
communication, which will include a plan of action, should set out what needs to be done 
to bolster the effectiveness of the legal framework and more fully achieve the objectives of 
the Community's public procurement policy. 
Document COM(96) 520. 
2. THE BACKGROUND TO THE DEBATE 
The objective of the Union's public procurement policy is to achieve fair and open 
competition for public contracts, thereby allowing suppliers to gain the full benefits of the 
single market and contracting authorities to choose from a more competitive and wider range 
of bids. The basic Community legal framework needed to meet these objectives has now 
been established: it strikes a fair balance between legal certainty and operational flexibility. 
The results already achieved on the transparency front are highly encouraging. As far as the 
economic impact of the rules is concerned, however, the data available are less favourable 
and show that problems still remain in terms of the practical effectiveness of the legislation, 
even if certain positive signs are beginning to emerge. 
I. The objectives of the Union's public procurement policy 
2.1 The foundations of the Community's open procurement rules are to be found in the 
EC Treaty, particularly in those provisions which guarantee the free movement of goods, 
services and capital, establish fundamental principles (equality of treatment, transparency 
and mutual recognition) and prohibit discrimination on grounds of nationality. To render 
these basic Treaty provisions more effective, detailed secondary legislation (in the form of 
directives) was required. These cover the award of public works, supplies and service 
contracts (the traditional sectors) by public authorities and by entities operating in the 
water, energy, transport and telecommunications sectors (utilities) and also provide means 
of redress for suppliers (for details, see Annex 1). 
2.2 Before the present Community legal framework was in place, procurement tended 
to be focused on the market of each Member State. There was at times a high degree of 
protection for domestic suppliers and a large proportion of public sector contracts were 
usually awarded to domestic suppliers with little regard to value-for-money criteria. Under 
these conditions, there was little incentive for a domestic supplier to the public sector to 
improve its competitiveness. As a result, past purchasing policies all too frequently failed 
to take sufficient account of commercial considerations, with the result that the taxpayer 
and consumer were, probably unknowingly, left to bear the consequences in inefficiency 
and extra costs. 
2.3 The primary objectives of the Union's public procurement policy, set within this 
context, have remained unchanged: to create the necessary competitive conditions in which 
public contracts are awarded without discrimination and value for taxpayers' money is 
achieved through the choice of the best bid submitted; to give suppliers access to a single 
market with major sales opportunities; and to ensure that the competitiveness of the 
European supplier base is strengthened. Developing an effective European public 
procurement policy is essential if the single market is to deliver long-term sustainable 
growth and job creation; a European supplier base that can exploit the opportunities of the 
largest integrated domestic market in the world and continue to compete successfully in 
global markets; and better public services at lower costs to the taxpayer and the utility 
customer. Public authorities and public utilities in the EU spend some ECU 720 billion per 
year on goods and services, which in 1994 was 11,5% GNP of the 15 Member States or, in 
other words, the totality of the Belgian, Danish and Spanish economies, i.e. nearly ECU 
2 000 per EU citizen. The extent of European public procurement means that buying 
goods and services by effective purchasing systems can make significant savings for 
governments and thus for taxpayers. Such considerations are all the more relevant in view 
of the strong pressure to cut budget deficits in line with the Maastricht convergence 
criteria. 
2.4 There are, of course, many other, perhaps less obvious, benefits of a more open 
procurement policy. Fair, non-discriminatory and transparent procurement procedures 
render perpetration of fraud and corruption in public administration more difficult. Whilst 
transparent procedures are not sufficient in themselves to eradicate fraud and corruption, 
an effective and dissuasive system of monitoring, procedural checks and proportional 
penalties helps to protect against breaches of public trust. In addition, it should be noted 
that, where Community funds are involved, instruments establishing standards of 
protection are already in existence2 to deal with the problem of fraud and corruption,. 
These could provide a useful source of reflection for an in-depth discussion. 
II. The impact so far 
2.5 The Cecchini report on the cost of non-Europe3 estimated that savings of around 
ECU 22 billion could result from greater transparency and an increased openness of public 
contracts. There is as yet no hard evidence that savings on this scale have been made. The 
same is true about price convergence or greater intra-community trade flows in public 
contracts for sensitive sectors. In co-operation with EUROSTAT, methods of 
investigation have been drawn up to assess in a comparable and harmonised way the 
importance and structures of public contracts in the various Member States. Two Member 
States (Portugal4 and Greece5) have already volunteered to test these methods which 
quantify the significance of public contracts in these two countries by collecting different 
types of information (amount and number of contracts awarded by public entities, type of 
award procedure, products bought, features of firms who have won contracts, etc.,...). A 
similar exercise is planned for Germany before the end of the year. 
2.6 The Commission presented a communication on the impact and efficiency of the 
legislation on the Internal Market ("1996 Review")6. One theme is the liberalisation of 
public procurement contracts. It discusses whether certain of the expected benefits have 
been obtained in this sector by analysing in particular the effects of legislation on demand 
and supply, import penetration, price evolution and estimates of economies realised. The 
results show that public procurement markets in Europe are developing significantly even if 
public procurement policy has not yielded all the benefits, particularly because Member 
States have failed to incorporate the Directives into national law. 
See, for Community administrative penalties, Regulation concerning the protection of 
financial interests n° 2988/95, OJ n° L312, 8.12.1995, p. 1; regarding criminal 
penalties see the Convention on the protection of the European Communities financial 
interests (against fraud), 2607.95, OJ N° C316, 27.11.1995, p. 48 and the first 
additional protocol (regarding corruption), 27.9.1996, OJ n° C313, 23.10.1996, p. 1. 
"The cost of non-Europe in Public Sector Procurement" WS Atkins Management 
Consultants, 1987. 
Instituto Nacional de Estatistica, Portugal, March 1995. 
National Statistical Service of Greece, February 1995. 
See footnote 1. above. 
2.7 The most visible effect of the Directives has thus undoubtedly been* a major 
increase in the transparency of contract award procedures. The number of tenders 
advertised in the Supplement to the Official Journal (and in its electronic version, Tenders 
Electronic Daily) has steadily increased. The total number of procurement notices rose 
from 12.000 in 1987 to nearly 95.000 in 1995. Projections for the next two years suggest 
further increases to nearly 200.000. These figures are themselves a useful indicator of the 
effects of the public procurement Directives on the transparency of public contracts award 
procedures. Moreover, an enquiry of 1.600 suppliers has shown increased response rates 
to new business opportunities (90% for local markets and 70% for markets beyond the 
frontier). Nevertheless, it must be added that of the some 110.000 entities and contracting 
authorities to which the Directives apply, about 85%, especially local authorities, do not 
comply with their advertising and transparency requirements. 
2.8 Firms supplying equipment to the public transport, telecommunications, electrical 
and health service sectors - all with important public sector clients - have undergone 
considerable structural change due to different factors, among which the rules on public 
contract award procedures can be assumed to have played a part. Joint ventures and 
mergers have taken place, allowing research and development efforts to be pooled. The 
overall result is, without doubt, a more efficient European industry, better placed to take 
advantage of the economies of scale offered by the single market and better prepared to 
compete at the global level. 
2.9 Despite these few encouraging signs, there is still a major problem of non­
compliance. Some Member States have not incorporated the Directives into national law. 
Only three Member States have fully incorporated all texts. Need one emphasise that the 
Commission has initiated 39 infringement procedures against the Member States concerned 
for failure to incorporate the Directives into national law ? This is a problem connected 
with ensuring greater compliance with the legislation which is discussed in the next 
chapter. 
2.10 Moreover, it seems that in a number of sectors, contracting entities are not seeing 
the benefits which justify the efforts necessary to fulfil the obligations imposed by the 
Directives and are also detecting reluctance on the part of would-be suppliers (particularly 
those from other Member States) to bid for their contracts. This may be an indication of 
the existence of a time-lag for economic operators to adapt behaviour to take account of 
new rules and respond to new market opportunities. No doubt, certain economic operators 
have responded to observed or perceived competitive threats in a defensive manner rather 
than by expansionist strategies to build up presence and market share in other Member 
States. 
2.11 Finally, the share of imports for public contracts in Europe remains modest : for 
direct cross-frontier business, they have risen from 1.4% in 1987 to 3% in 1995; and for 
purchases made through importers or local subsidiaries, they have increased from 4% in 
1987 to 7% in 1995. 
III. Questions 
1. Do you have any other economic statistics which would be useful for assessing the 
impact of the Directives and their effects on employment? 
2. Why are economic operators reluctant to tender for contracts in other Member 
States? 
3. APPLICATION OF PUBLIC PROCUREMENT LAW 
CURRENT STATE OF PLAY AND TRENDS 
A legislative framework has been set in place for public procurement. The Commission 
recognises the need for a period of stability and does not therefore intend to make any 
fundamental changes to the framework. Neither does it renounce its right of initiative, of 
course and it is prepared to take or to propose the most appropriate measures wherever 
this should prove necessary. 
The Commission stresses that efforts have to be stepped up with regard to both 
implementation and application of the legal framework, in order to achieve a level-playing -
field for operators seeking public contracts throughout the Union. 
In carrying out its task of monitoring the application of Community law, the Commission 
has found a number of problems to do with both implementation of the Directives into 
national law and actual application of the rules by contracting authorities and contracting 
entities. These are initial observations that the Commission will incorporate into the 
detailed examination of the application of the existing rules which it is required to carry out 
in accordance with the Directives. 
For enforcement of the law on public procurement to be successful, speedy and effective 
means of redress must function satisfactorily at both Community and national level. The 
ways in which remedies operate do not always fulfil these conditions. With the Remedies 
Directives in place, most of the problems should now be tackled at national level. 
Encouraging the practice of attestation and making the conciliation procedure more 
accessible are also fundamental issues to be tackled. 
I. Introduction 
3.1 A Union-wide legislative framework for public procurement is now in place (see 
Annex 1). At this stage, the Commission recognises the need for a period of stability, as 
the framework has not yet produced its full effects. This stability should give all interested 
parties time to adapt to the new procurement rules and practices. Therefore, without 
prejudice to its right to initiate legislation, the Commission does not envisage any 
fundamental modification of the existing regime and confirms its determination to pursue 
its action in this area in accordance with the principles already established as far as the 
method chosen and the substance of the rules are concerned. Clearly, should new 
developments raise problems in specific areas or reveal shortcomings in the legislation, the 
Commission would not hesitate to take the most appropriate measures to ensure that 
European purchasers continue to benefit from an open and competitive supply and that 
suppliers continue to have genuine access to public procurement contracts while 
strengthening their competitiveness. Liberalisation is now taking place in the 
telecommunications and other utilities sectors. With regard to the application of the public 
procurement Directives, the Commission will check whether this liberalisation leads to the 
establishment of conditions of effective competition in the sector. If this should be the case, 
it will consider how best to respond to the situation. It should also be noted that most of 
the Directives require the Commission to review the application of the rules. It will have 
to carry out a detailed examination of their application in the near future. The debate 
prompted by this Green Paper should provide useful input for that exercise. 
3.2 Community Directives must be implemented into national law. Their application -
whether by national, regional or local administrations or by contracting entities in the 
utilities sectors - must not jeopardise the overall objective of establishing a level-playing-
field in public procurement throughout, the Union. The perception that not everybody is 
playing according to the same set of rules can be a major disincentive to opening up public 
procurement. 
II. Directives must be implemented into national law 
3.3 The Directives are an essential instrument for our public procurement system. They 
make it possible to boost economic efficiency and enable the internal market to function 
properly. The state of Member States' implementation of internal market legislation is 
regularly published by the Commission and discussed with Member States, including at 
ministerial level. The Commission has frequently expressed its continuing concern that the 
current level of implementation of public procurement Directives is inadequate (Table 1). 
Public procurement is one of the internal market areas where there are the most problems 
both in terms of communication of the implementing measures and in terms of the quality 
of implementation. The Services Directive, the consolidated Supplies Directive and the 
consolidated Utilities Directive are particular problem areas. 
3.4 Even though most of the provisions of the Directives have "direct effect" in legal 
terms, failure to implement and/or faulty implementation prevent European citizens and 
businesses from taking full advantage of the internal market in public procurement. Thus, 
for example, major disparities can be observed between, on the one hand, the share of 
Community Gross National Product accounted for by some of the Member States which 
have not correctly implemented the Directives and, on the other, the number of notices 
published in these countries as a proportion of the total number of notices published in the 
Community. In other words, the number of notices published in these Member States 
appears low in comparison with their economic importance. The Commission therefore 
again calls on Member States to ensure that public procurement legislation is, first of all, 
implemented into national law. The lack of any implementing measures can provide 
contracting authorities and contracting entities with a ready-made excuse for not applying 
the rules. 
3.5 As a next step, it is essential that Member States draft their national implementing 
provisions with the utmost care if the quality of implementation is to be sufficiently high to 
ensure that the objectives of the Community legislation are fully achieved. Faulty 
implementation can, in certain cases, weaken the rights which the Directives create for the 
benefit of operators and place the bodies which have to apply the rules in a situation where 
Community and national legislation are in conflict and consequently cause them to apply 
the Community rules in force incorrectly. Such a situation is just as serious as non-
implementation, because it has the same effect in practice. Therefore, whatever the 
method used for incorporating the provisions of the Directives into national law, Member 
States must be sure to eliminate any contradiction between pre-existing national rules and 
the principles and provisions of Community law, so that operators will interpret and apply 
them properly. The Commission also calls on Member States to ensure that, wherever 
possible, the national legislative frameworks into which the Directives are incorporated are 
made clearer, for example by limiting references to other instruments and endeavouring to 
group together all the relevant provisions in a single text. This would facilitate application 
of the rules by purchasing entities and access to contracts for interested firms. 
3.6 The Commission is aware of the fact that Community instruments are complex. 
Their complexity can perhaps explain some of the difficulties in implementation and, above 
all, in their application. But, this is a direct consequence of the fact that the questions to be 
solved in order to achieve the objectives pursued, are themselves complex. In 
implementing the Directives, the Commission is willing to afford the Member States, on 
request, all the necessary assistance to facilitate the understanding and simplification of the 
existing texts. 
3.7 In any event, according to the information at the Commission's disposal, in some 
cases, the adoption cf implementing measures, for which drafts were prepared in good 
time, has been delayed for no apparent reason. In other cases, Member States have refused 
to implement certain provisions of Community law. The Commission doubts whether such 
situations are justified and would, at the very least, be interested to ascertain any other 
reasons which might account for the difficulties encountered. 
3.8 The Court of Justice of the European Communities has given judgement in several 
cases concerning the protection of individuals' rights under Community law when Member 
States are in breach of their obligations, particularly where the implementation of directives 
into national law is concerned. In Francovich , the Court established the principle of the 
liability of the State for damage caused to individuals by the non-implementation of a 
directive, the provisions of which grant rights to the individual, even though such rights 
may not have direct effect. In Brasserie du Pêcheur-Factortame , the Court went even 
further, recognising that under certain conditions, State liability may be incurred in respect 
of damage caused by any breach of Community law, regardless of the State body whose 
action or omission is responsible for the breach. It is thus probable that individuals will 
avail themselves of this case law before national judges in order to obtain compensation for 
damage suffered, including loss of profit, and thereby enjoy effective protection of their 
rights. 
Judgement of 19.11.1991 in Joined Cases C-<5/90 and C-9/90 [19911 ECR 1-5403. 
Judgement of 5.03.1996 in Joined Cases C-46/93 and C-48/93 [1996] ECR 1-1029. See also the 
Judgement of 26.03.1996 in Case C-392/93 British Telecom [1996] ECR I - 1631 
EOT. The law on public procurement must be correctly applied 
3.9 While it is essential that the proper legislative framework should be in place 
through faithful implementation of the Directives into national law, it is equally important 
that the rules should be correctly applied by contracting authorities and contracting 
entities. 
3.10 In carrying out the task conferred on it by Article 155 of the EC Treaty of ensuring 
that Community law is complied with, the Commission has identified a number of cases 
where application of the rules by purchasing entities has caused problems. Without 
claiming to be exhaustive, the following points group together some exemplary cases of 
incorrect application of Community law. 
A Issues linked to incorrect application of the Directives 
(a) Basic definitions in the Directives 
3.11 The first type of problem encountered has to do with the correct interpretation of 
the scope of the different concepts used in the Directives. For example, in Beentjes9 the 
Court of Justice defined more precisely what is meant by the term "contracting authority" 
used in the Directives, stressing the need to interpret the concept in functional terms. 
Experience has also shown how difficult it is to circumscribe the notion of "contracting 
entity" as used in the Utilities Directive, since it refers both to the subjective character of 
entities and to the activity carried on in one of the utilities sectors. The Directive specifies 
a large number of special cases where purchasing bodies, although covered by the notion 
of contracting entity are not subject to the rules of this Directive. 
3.12 It has also proven difficult in several cases to establish precisely what constitutes a 
"public procurement contract". The Directives define public procurement contracts in 
fairly broad terms in order to bring within the scope of the Community rules all kinds of 
contracts for consideration concluded in writing between a contracting authority and a 
contracting firm. Despite this broad definition, certain contracting authorities have 
endeavoured to evade application of the Directives. 
3.13 Similar points can also be made with regard to other concepts used in the 
Directives, and in particular that of a "work", for which some guidance is given in the text 
itself, but which can be given different interpretations in certain cases. For other concepts, 
such as that of "supplies" or "services", the Commission notes that some purchasers try to 
take advantage of the flexibility of the definitions in order to evade application of the 
Directives by artificially splitting up different contracts that do in fact form a whole. 
3.14 The fairly general nature of these concepts i a necessary consequence of the fact 
that they have to be applied in a wide variety of national situations and legal systems; the 
Community legislator had to strive to take account of this variety. Care must therefore be 
taken to ensure that the concepts concerned are interpreted in a way which is consistent 
with the intentions of the legislator and enables his objectives to be achieved. 
Judgement of 20.09.1988 in Case 31/87 [1988] ECR 4635. 
(b) Excessive use of negotiated procedures 
3.15 A second type of problem has to do with the choice of contract award procedures, 
and more specifically the use of negotiated procedures. Under the "traditional" Supplies, 
Works and Services Directives, the negotiated procedure - particularly where there is no 
prior publication of a notice - is an exceptional means of awarding contracts that may be 
used only in exhaustive list of cases. The Court of Justice has stated (in Commission v 
Italy1 ) that the provisions governing the negotiated procedure must be interpreted strictly 
and that the burden of proving the actual existence of exceptional circumstances justifying 
the derogation lies on the person seeking to rely on those circumstances. But a number of 
infringement proceedings brought by the Commission and judgements handed down by the 
Court bear witness to the fact that contracting authorities use the procedure much more 
than they should under the existing strict rules, in particular by claiming extreme urgency 
where there is none or where the urgency has arisen owing to factors for which they are 
responsible, or by wrongly claiming that there is only one supplier or contractor capable of 
performing the contract. 
3.16 In cases where it is allowed, the negotiated procedure appears to enable an 
economically more efficient outcome to be arrived at than a traditional call for competition, 
thus proving to be a rational method of reducing public purchasers' costs while achieving 
the objectives pursued. The fact remains, however, that the procedure is less favourable to 
the goal of market transparency. 
(c) Unsatisfactory quality of notifications 
3.17 A third type of problem concerns the advertising of contracts. Some of t 
particulars specified in the model notices annexed to the Directives are missing froi 
large number of contract notices published in the Official Journal. Cross-checks OK 
published notices have also revealed that the obligation to publish prior information notices 
and contract award notices is still widely ignored. 
3.18 However, transparency, which is a necessary precondition for opening up public 
procurement, requires contract notices to be complete. Failure to advertise contracts rules 
out effective competition and the resulting benefits. Each type of notice laid down by the 
Directives follows a specific line of reasoning. The prior information notices (or periodic 
information notices in the Utilities Directive) are intended to enable firms, and particularly 
SMEs, to ascertain purchasers' procurement requirements sufficiently early and to organise 
themselves accordingly so that they can submit better tenders. The purpose of tender 
notices proper is to give economic operators all the information they need in order to 
decide whether and how to bid for a particular contract. Contract award notices enable 
firms which have taken part in the tendering procedure to check that their rights have not 
been infringed and provide useful information for analysing market trends in different 
sectors. 
10 Judgement of 10.03.1987 in Case 199/85 11987| ECR 1039. 
10 
(d) Excessive use of accelerated procedures and imposition of deadlines that 
are too short 
3.19 A fourth type of difficulty relates to the shortening of deadlines through the use of 
accelerated procedures. Scrutiny of notices published in the "S" Supplement to the Official 
Journal in pursuance of Directive 92/50/EEC has revealed that a large proportion of the 
contracts concerned are awarded by accelerated procedure and that, in consequence, the 
periods allowed for submitting requests to participate and tenders are shortened 
substantially. Since these periods are thus reduced to minima of 15 days and 10 days 
respectively, it becomes extremely difficult for firms from other Member States to bid for 
such contracts. Unlike the Utilities Directive, the "traditional" Directives allow the 
accelerated form of restricted and negotiated procedures to be used only in cases where 
urgency renders the normal deadlines impracticable. This means that accelerated 
procedures should be exceptional. In the light of the above findings, it would appear that 
they are not regarded as such by contracting authorities. 
3.20 A similar but more serious problem arises in the fairly frequent case where 
purchasing entities set deadlines for participation in contract award procedures that are 
shorter than the minimum periods laid down by the Directives. Clearly, such behaviour, 
which is in breach of the applicable rules, considerably restricts or even completely 
prevents genuine competition between all interested suppliers. 
(e) Selection and award criteria 
3.21 A fifth type of problem has to do with the criteria applied by contracting authorities 
in contract award procedures when checking the suitability of candidates (selection 
criteria) and awarding contracts (award criteria). 
3.22 In a number of cases the Commission has challenged, and the Court of Justice has 
found incompatible with Community law (Transporoufe ), the practice adopted by some 
contracting authorities of laying down criteria for the technical capacity of candidates other 
than those listed exhaustively in the Directives. It has also been found that the suitability of 
candidates has in some award procedures been tested on the basis of clauses that cannot be 
regarded as selection criteria. 
3.23 Furthermore, although the Court has made it perfectly clear that selection and 
contract award are quite separate phases and therefore that the rules and criteria used in 
the two phases should not be confused (Beenfjes1 ), experience shows that many 
contracting authorities continue to take account, when awarding the contract, of factors 
that are covered by the selection criteria. This can lead, in certain cases, to the contract not 
being awarded on the basis of the best tender for that particular contract but to the 
candidate with the most experience or financial strength. Similar problems arise where 
purchasers, sometimes relying on national rules which are not compatible with Community 
law, use award criteria based on factors which are not provided for in the Directives and 
are therefore unacceptable. Cases where the award criteria are based fairly loosely on 
regional, social or environmental considerations provide ample illustration of this 
problem. 
11 Judgement of 10.02.1982 in Case 76/81 [1982J ECR 471. 
12 
See footnote 9. 
The issues are further discussed in Chapter 5. 
11 
B Issues linked to situations which do not fall within the scope of the Directives 
3.24 Community law on public procurement is based on a set of rules and principles, in 
particular the principles of non-discrimination, equality of treatment, transparency and 
mutual recognition. As the Court has emphasised {Commission v Italy1 ), the Directives 
are designed only to ensure the effective attainment of these principles, but it is clear that, 
given their nature, the principles must apply in all situations where public procurement and 
similar contracts are involved, and in particular contracts which are not covered by the 
Directives. Some situations which are particularly significant are mentioned below by way 
of example. 
(a) Concessions or similar contracts 
3.25 For the completion and/or management of large infrastructures as well as for the 
supply of certain services, contracting authorities have recourse more and more frequently 
to legal mechanisms such as concessions or similar contracts or other awards of special or 
exclusive rights. This is, in many cases, the result of budgetary constraints to which the 
contracting authorities are subject and it also meets their concerns to ensure better 
management of the services. Many projects relating to trans-European networks are an 
illustration of this. At all events, many complaints received by the Commission concern 
concessions, similar contracts or other awards of special or exclusive rights. 
3.26 Contracting authorities appear to consider that Community law is not applicable to 
the award of these contracts or rights and, in many cases, they do not implement the 
measures necessary to ensure transparency and open competition. On the contrary, in this 
type of situation, contracting authorities must respect the provisions of the EC Treaty, in 
particular the rules governing free movement of goods and services as well as fundamental 
principles such as non-discrimination, equality of treatment, transparency and mutual 
recognition. Moreover, by virtue of the Works Directive, Member States are also bound by 
the rules relating to publicity when awarding works concessions. The Commission 
considers that this lack of respect for these fundamental principles of the Treaty is far from 
satisfactory as it obstructs the proper functioning of the internal market. It does not allow 
contracts (or rights) in which important economic interests are at stake to be opened up to 
competition. 
3.27 At a later stage and with a view to reinforcing the opening up the award of these 
contracts to even more competition, consideration could be given to the adoption of rules 
governing procedures for the competitive award of exclusive rights to provide public 
services through a system of concessions. The aim of introducing such rules would be to 
afford new public or private operators easier access to contracts for public services and to 
instil in existing operators an enterprise culture which is closer to the concerns of users, 
while still allowing exclusive rights to be granted where these are necessary for maintaining 
a service in the general economic interest. Such an approach would enable Member States 
to choose for their citizens operators of public services who are the most efficient in terms 
of both cost-effectiveness and quality of service. In the case of inland transport services, 
the Commission has already presented this approach in its Green Paper entitled "Citizens' 
network." 
14 
15 See footnote 10. 
See also Chapter 5, point III. 
COM(95)601 fin-29.11.95 
12 
(b) Public procurement contracts below the thresholds laid down in the 
Directives 
3.28 The procedures provided for by the Community Directives apply exclusively to 
public procurement contracts whose estimated value exceeds the specified thresholds. 
Some contracting authorities consider that, for procurement contracts below these 
thresholds, no Community provision applies, with the consequence that these procurement 
contracts are sometimes awarded without being put out to tender. Such contracts are 
often of considerable importance, particularly for small and medium-sized enterprises. As 
in the case of the granting of concessions and similar rights, these contracts must be 
awarded in accordance with the provisions of the EC Treaty concerning the free movement 
of goods and services as well as its underlying fundamental principles of non­
discrimination, equality of treatment and transparency. 
(c) Changes to rules in the course of individual procedures 
3.29 In several cases brought to the Commission's attention, contracting authorities or 
contracting entities have, when awarding public contracts whose value exceeds the 
thresholds laid down in the Directives, engaged in behaviour or taken decisions 
incompatible with Community law, even if the rule or prohibition to be complied with is 
not expressly laid down in the Directives. This is the case, for example, where substantial 
amendments are made to the tender specifications in the course of the procedure. One 
contracting authority thus changed the site of the work to be performed while continuing 
with the award procedure. In another case, the authority cancelled a large proportion of 
the works initially planned. Another case revealed changes to the financing terms. The 
Commission maintained that these changes were substantial and should entail the 
cancellation of the procedure under way and launching of a new procedure through 
publication of a new contract notice. Certain cases have revealed a different problem, 
namely negotiation with one or more candidates in open or restricted procedures. The 
Commission held that such negotiation was not allowed as it was contrary to the principle 
of equal treatment and its interpretations have been confirmed, by the Court of Justice. 
The same considerations as those developed above in connection with concessions and 
contracts below the thresholds apply here since, even if these situations are not regulated 
by the Directives, they are nevertheless subject to the general principles of Community law. 
C Preliminary conclusions 
3.30 The examples cited above demonstrate that the application of the Community legal 
framework in the Member States still lacks consistency. It therefore appears that there is a 
clear need for further explanation and elucidation of the applicable rules. To this end, the 
Commission considers it timely to intervene to clarify some of the points mentioned earlier 
either by means of interpretative communications and/or through guidelines or even 
through other appropriate means or new rules. 
17 See judgements of 22.06.1993 in Case C-243/89 Commission v Denmark [1993] ECR 1-3385 
and 25.04.1996 in Case C-87/94 Commission v Belgium (not yet published). 
13 
3.31 This situation is clearly unsatisfactory, since the efforts to ensure that the Directives 
are completely and correctly implemented into national law would come to nothing if they 
were not properly applied in practice. The Commission is determined to tackle these 
problems actively. The remainder of this Green Paper (and particularly this and the 
following chapters) sets out a number of options envisaged for achieving more effective 
application of the public procurement rules. It is important for the Commission to ascertain 
whether the sectors concerned think that these options are likely to provide satisfactory 
solutions to the problems mentioned or whether other solutions can be envisaged. 
IV. Monitoring application of the law on public procurement 
3.32 If we are to remedy the problems that have arisen in connection with the 
implementation and application of Community law and therefore achieve the objectives we 
are pursuing, all the authorities concerned must play their part and take the most 
appropriate initiatives, starting with systems for monitoring the behaviour of contracting 
authorities and entities, to act swiftly in order to restore compliance with the law. Such 
systems and powers already exist at Community and national level, but they need to be 
strengthened. 
3.33 Member States and the European Commission must shoulder their responsibilities. 
Member States must ensure that obligations deriving from Community legislation are 
fulfilled, inter alia, through appropriate systems of control and sanctions (penalties), which 
are both effective in practice and have a deterrent value (Article 5 of the EC Treaty). The 
Commission, for its part, is required by Article 155 of the EC Treaty to ensure that 
Member States respect and fulfil these obligations, taking into account not only the letter 
of the law, but also the objectives the legislation is intended to achieve. Enforcement 
measures must improve compliance and build confidence among suppliers in the 
satisfactory operation of the system. 
A The Remedies Directives 
3.34 It is clear that the reactions of suppliers provide the best and most immediate way 
of ensuring that contracting entities practise open and competitive tendering. They are 
best placed to see whether the procurement rules are being followed and they can, where 
necessary, quickly draw purchasing entities' attention to breaches they have committed. 
Sometimes, breaches are immediately corrected when the contracting entity is made aware 
of them. When they are not corrected, however, formal remedies can be used, including 
action through the courts. 
3.35 With the Remedies Directives in place, economic operators in every Member State 
have the possibility of lodging before a national court or tribunal (or body whose decisions 
are subject to judicial review) a complaint for violation by purchasing entities of the rules 
laid down in the Directives. The Remedies Directives require the bodies in question to be 
empowered to grant interim relief (by suspension of the contract procedure, for example), 
to deliver judgements on the compatibility of procurement procedures with the rules and, 
where appropriate, to set aside or ensure the setting-aside of decisions taken unlawfully, to 
require the offending terms to be removed from calls for tender and to award damages. 
The extent of the remedies available to suppliers should make them the most effective 
means of protecting the rights of firms bidding for contracts. 
14 
3.36 Suppliers need to be given full information about their rights under the Remedies 
Directives with regard to other Member States' procedures. The Commission will publish 
guides to make economic operators aware of what can be done when potential 
infringements in other Member States are identified, including the procedures that are 
available; how they can be used and the possible rights to compensation they may enjoy. 
Mention should also be made here of the possibilities offered by the recent case-law of the 
Court of Justice on the damage suffered by individuals as a result of breaches of 
Community law committed by Member States (see point 3.8 above). 
B Appropriate sanctions 
3.37 In the establishment of the legal framework on public procurement by national 
authorities, an essential element is the introduction of appropriate sanctions. In its 
communication to the Council and Parliament on the role of sanctions , the Commission 
has already highlighted public procurement as a sector where the possibility of introducing 
a common system of penalties might be considered with a view to upholding the integrity 
of the law, and where discrepancies between the sanctions applied by different Member 
States in cases of infringements of Community law could hamper the effectiveness of this 
policy. The Council, for its part, in its resolution of 29th June 1995 on the issue of 
penalties in Community law , has also recognised the importance of this issue. It has 
encouraged the Commission to ensure efficient implementation of Community legislation, 
including sanctions. If necessary, this could involve provisions relating to sanctions in 
future Commission proposals. Moreover, it has asked Member States to give positive 
support to Community action in this field. 
3.38 The Commission is concerned that, in practice, the application of the Remedies 
Directives may vary considerably between Member States, and sometimes even within a 
Member State. It has also been made aware of the considerable differences which exist 
between Member States, particularly as regards the requirement for complainants to 
provide proof of an infringement in order to receive damages, as well as the amount of 
damages awarded. In some cases, courts and tribunals have awarded successful 
complainants only a purely symbolic amount; in others complainants have been awarded 
only the costs of putting together their bid (these costs can be substantial but in no way 
provide full compensation for losing a contract). The Commission invites Member States 
and other interested parties to comment on the effectiveness of existing remedies in 
Member States and on any discrepancies that may exist between the sanctions applied. In 
addition to the obligation to provide for full compensation for damages suffered, the 
Commission would also welcome reactions to the desirability of the award consisting of 
liquidated damages of a sufficiently dissuasive sum, exceeding the damage suffered. 
18 COM(95) 162 final, 3.5.1995. 
19 OJNoC 188, 22.7.1995, p. 1. 
15 
C Complaints 
(a) At Community level 
3.39 The Commission, as guardian of the Treaty, investigates complaints it receives 
from firms which consider that they have been harmed and seeks to resolve the problems 
raised. Many such cases have been settled as a result of the Commission's intervention and 
without referral to the Court of Justice. However, when the Commission finds itself in the 
situation where it must pursue a case, experience has demonstrated that the infringement 
procedure provided for under Article 169 of the EC Treaty is not capable of ensuring rapid 
and effective redress. Whilst the Commission is committed to speeding up its internal 
procedures, the different stages in the procedure leading to a Court judgement (involving, 
in the first instance, a letter of formal notice to the Member State authorities concerned 
and, in the second, a reasoned opinion) can last up to three years and, in some cases, even 
longer. This particularly arises when the requisite information cannot be obtained in time. 
In public procurement such lengthy procedures may often be ineffective. 
3.40 As indicated in its opinion on the Intergovernmental Conference "Reinforcing 
political union and preparing for enlargement", the Commission considers that the means 
used to ensure the application of Community law should be made more effective, in 
particular as far as the internal market is concerned. The Commission has also taken the 
view that the role of the Court of Justice should be reinforced, especially in relation to 
compliance with its judgements. 
3.41 Some commentators have pointed to a number of avenues that could be explored 
with a view to achieving these objectives. One possibility would be to confer on the 
Commission more effective investigative powers than it has at present, since they 
considerably limit the effectiveness and promptness of its action in the public procurement 
field. The system based on Regulation (EEC) No 17/62 in the competition field could 
provide a useful example of this approach. In the same way, some observers have 
considered extending the supervision procedures and measures provided by the Regulation 
(Euratom, EC) 2185/9620 for the protection of the financial interests of the European 
Communities to public procurement in general. These provisions are, in fact, applied to the 
award of public contracts involving Community financing, for example, in the case of 
trans-European networks (TENs), the Structural and Cohesion Funds or contracts with 
third countries (see Chapter 5). 
(b) At national level 
3.42 The Commission has neither the resources, nor the information, to identify and 
resolve each and every breach of Community rules throughout the EU. From a practical 
point of view, the vast majority of individual problems encountered by economic operators 
should be tackled at national level. It goes without saying, however, that the Commission 
will not hesitate to intervene where appropriate to maintain the integrity of Community 
public procurement law. The Commission also confirms its determination to play its full 
role in enforcement,. in particular in the pursuit of cases where there are important 
economic interests and/or legal issues at stake. 
20 OJ of 15.11.1996 
16 
3.43 The emphasis the Commission wishes to place on the full and effective application 
of public procurement rules at national level has already been recognised by some Member 
States. Sweden, for example, has entrusted the supervision of its contracting entities to an 
independent authority. Experience suggests that not only does this authority handle 
particular complaints, its very existence may even prevent behaviour giving rise to 
complaints, thereby reducing the potential burden on national courts and tribunals as well 
as on the Community institutions. With a view to monitoring application of the rules more 
effectively at national level, it could be worthwhile for other Member States to set up a 
similar body. 
3.44 In order to be effective (and recognised as such) an authority such as this would 
need to be genuinely independent and have the power to require contracting entities to 
correct procedural errors. However, the standard by which its potential contribution 
should be evaluated should not, in the first place, be the detection of errors but the 
achievement of better procurement. Such authorities could play a key role in improving 
procurement systems: they could provide useful advice to contracting entities, check 
procurement practices to promote efficiency and ensure that mandatory reporting 
requirements were in place to enable Member States to supply any necessary statistical 
data to the Commission. Moreover, it might be useful to exchange information regularly 
among similar bodies. In this way, a permanent administrative network could evolve 
between Member States. The creation of authorities of this kind cannot undermine the 
current distribution of powers between the Commission, as guardian of the Treaty, and the 
national courts, responsible inter alia under the Remedies Directives for protecting the 
rights of businesses. Any dispute that might arise between the Commission and these 
authorities would have to be settled by the Court of Justice, which ensures, in accordance 
with Article 164 of the EC Treaty, that Community law is interpreted uniformly and 
applied correctly. 
3.45 The Commission invites Member. States to consider the establishment or 
appointment of such an independent authority. The Commission believes that, in some 
cases, existing bodies could be used for that purpose. Indeed the tasks of such an authority 
could form part of the functions of a Member State's national court of auditors or of an 
equivalent authority with genuine and unquestionable independence. The Commission will 
pay particular attention to the reactions of all interested parties to the concept of national 
independent authorities for public procurement. It invites any Member State(s) to run a 
pilot project to test how feasible the application of the concept might be. 
D Other means for settlement of disputes 
(a) Attestation 
3.46 Among the measures under consideration with a view to ensuring that the existing 
rules are applied more effectively, the Commission considers that greater advantage should 
be taken of the attestation and conciliation procedures, which have already been 
established under the Remedies for Utilities Directive but have so far not been used. 
17 
3.47 Those contracting entities which apply best procurement practice and set up sound 
procedures internally are most likely to reap maximum benefits from the Community 
procurement regime now in force. It is for this reason that the Remedies for Utilities 
Directive provides for the creation of an attestation procedure under which contracting 
entities can undergo independent attestation of procurement procedures to check that they 
are in compliance with the Directive and geared to a rational use of public money. Such 
attestation, rather like a financial audit, is undertaken by an objectively independent body 
qualified and authorised to carry out this function. There is no comparable provision in the 
Remedies Directive applicable to the "traditional" sectors. 
3.48 In order to be awarded a certificate of good procurement practice, contracting 
entities must demonstrate they have procedures in place which, on the basis of past 
experience, appear to work and to be in conformity with the rules. While an examination 
of the past procurement record does not, in itself, offer an absolute guarantee as to future 
procurement, it does afford the contracting entity a degree of confidence that its 
procedures are sound. The publication of the attestation in the Official Journal could help 
to give would-be suppliers confidence that it is worth the trouble of tendering because the 
attested entity has a proven record of competitive and open public procurement. Utilities 
that accept and meet the prescribed standards could enjoy the advantages of greater choice 
of suppliers and more competitive bids and so obtain best value for money. 
3.49 In conformity with the mandate given by the Commission to the European 
standardisation bodies CEN and CENELEC, a European standard for attestation was 
approved in June 199521. Member States must now make appropriate arrangements to 
ensure that attestators are appointed and can begin work. The Commission is keen to se^ 
utilities seek attestation. Moreover, in view of the benefits of attestation procedures t' 
Commission also believes that similar arrangements could usefully be extended 
contracting entities outside the utilities sectors and it would welcome a debate on this 
issue. Similarly, the Commission intends, as a priority, to apply the attestation 
arrangements to contracting entities awarding contracts involving the Community Funds 
(see Chapter 5 below). 
(b) Conciliation 
3.50 Settling disputes amicably is always to be preferred. In this regard the Remedies for 
Utilities Directive makes provision for a "conciliation" procedure, whereby suppliers and 
contracting entities may agree to discuss and settle any disputes that arise between them 
about the correct application of Community law by using independent conciliators. 
However, in their three years of operation, these procedures have not so far been used. 
This may in part be due to a lack of information among suppliers and contracting entities 
on how the procedure works. The Commission would welcome a debate involving 
Member States, experienced conciliators, contracting entities and industry on how to 
improve the conciliation procedure and ensure that it is more accessible and operational. 
Standard EN 45503 : 1996, published by CEN/CENELEC on 24.1.1996 
V. Questions 
1. Do you have views on the effectiveness of Member States' implementation of the 
Directives? What, in your opinion, are the reasons for the difficulties encountered 
by Member States in this area ? 
2. Do you agree with the list of problems to do with application of Community 
legislation as presented? Should attention be given to other types of erroneous 
application of Directives? Do you think that there are other reasons for the 
problems than those mentioned in the text? 
3. What, in your view, are the points on which interpretative communications or 
guidelines would be useful in order to explain and elucidate the applicable rules? 
4. How effective are existing remedies in the Member States? Have you found 
discrepancies between the remedies and sanctions applied within and between 
Member States that are liable to affect the smooth operation of the internal market 
in this area? If so, should action be taken? 
5. Would liquidated damages exceeding the actual loss suffered be useful? 
6. Do you think that, in order to be able more effectively and more swiftly to carry 
out its task of monitoring compliance with Community law, the Commission should 
be given more effective investigative powers than it has at present, along the lines 
of those conferred on it by Regulation No 17/62 in the competition field? 
7. Could the establishment of an independent supervisory authority in each Member 
State improve procurement systems and aid effective enforcement of the rules? 
Should the Commission establish systems of co-operation at Community level 
between such independent authorities, calculated to promote a uniform application 
of the rules for awarding public contracts and fairer access for all to public 
procurement? 
8. Do you agree that attestation should be promoted as an effective means of 
achieving sound public procurement procedures ? Should attestation be extended 
to contracting entities outside the utilities sectors? If so, how could this best be 
achieved (for example, could it be on a voluntary basis)? 
9. What is your opinion on the reasons why the conciliation procedure provided for in 
the Remedies for the Utilities Directive has not yet been used? 
19 
4. IMPROVING ACCESS TO PUBLIC PROCUREMENT 
MONITORING, INFORMATION, TRAINING, ELECTRONIC 
TENDERING 
Now that the regulatory framework is in place, entities and suppliers must exploit the 
opportunities it offers and maximise benefits. Through monitoring, information has to be 
collected for evaluation of the economic impact of the regime and to allow suppliers to 
analyse the specific public procurement demand in the whole of the Union. Monitoring is 
also necessary in order to enable the Commission to check application of the rules 
consistently. Information and training can contribute decisively to optimally ensuring 
effective, value- for- money public procurement. Yet many contracting entities appear to 
lack detailed knowledge of their legal obligations; suppliers, particularly SMEs, frequently 
seem unaware of the market opportunities that exist. This is where the opportunities 
offered by training and information must be fully exploited. Training stimulates the 
adjustment of old ways of thinking and acting towards a culture that promotes 
transparency and openness in the choice of suppliers and procurement to the highest 
commercial standards. Information is the driving-force for efficient public procurement 
and by improving its quality, it will be made easier for both contracting entities and 
suppliers to exploit the opportunities offered. Looking into the future, electronic 
tendering will play a key role in further enhancing transparency and access to public 
procurement. 
I. Monitoring public procurement 
4.1 The supervision of correct application of the existing legal framework has to be 
complemented by permanent monitoring of public procurement practice. A full 
understanding of the economic realities underlying the award of public contracts is 
necessary. The relatively homogeneous - EU regulatory regime covers increasingly 
heterogeneous contracts. Services procurement in particular needs to be monitored 
because it has only recently become subject to the Community rules. Such monitoring 
could involve, for example, obtaining regular information on the classification of contracts 
in accordance with Annexes IA and IB to Directive 92/50/EEC and on the behaviour of 
contracting authorities in this area. To allow monitoring of the economic impact of the 
Union's public procurement regime, analysis of competition and prices paid by the entities 
is needed, together with a sound understanding of the size and the structure of the demand 
side and the information needs of the supply side. On this basis it will be possible to 
consider to what extent the current regime is meeting the needs of contracting entities and 
economic operators. 
4.2 The Commission intends to design a framework for the monitoring of the economic 
impact of public procurement and is currently studying ways of optimising the use of data 
collected from various sources (Tenders Electronic Daily - TED, EUROSTAT). The 
monitoring exercise should eventually permit the development of price indicators for a 
representative basket of goods purchased by entities subject to the Community rules. As 
previously stated, it is only by securing the best and most competitive supplier that 
contracting entities will be able to provide the best service to the public. 
20 
4.3 The Commission reaffirms its commitment to ensuring day-to-day compliance with 
the Community's Directives in accordance with the principles enshrined in the Treaty. The 
economic monitoring should also allow the market analysis of particular procurement 
sectors in all Member States. On this basis the Commission will be able systematically to 
identify problem areas and to carry out its role of supervision in a more coherent manner, 
rather than simply reacting to individual complaints. Databases (including Tenders 
Electronic Daily) are valuable instruments for the collection, analysis and dissemination of 
information and can perform a useful function in monitoring compliance with the law. A 
system of periodic controls to identify consistent cases of non-publication of tenders has 
also been set up. However, the sheer volume of public procurement transactions (and the 
number and range of public entities) makes detailed monitoring by the Commission alone 
an impossible task. This is especially true in determining whether public entities publish 
information about all relevant tenders. Against this background, the Commission would be 
interested in receiving suggestions on improving the monitoring of public contract award 
procedures, both at Community and at national level. It would also like to receive 
reactions to the question of whether the Commission should look again at the operation of 
a European Observatory. This observatory was created within the framework of the 
Advisory Committee on Public Procurement to monitor the application of the public 
procurement rules by Member States' contracting authorities, but has not, so far, been fully 
operational, despite the fact that it is in no way intended to develop into a technical 
assistance department or an agency. The idea of introducing cross-checking procedures 
could also be usefully exploited in this context. 
II. Information 
4.4 Information related not only to the legal framework and the data available on 
public procurement contracts, but also to observed irregularities and malfunctioning, is the 
key to ensuring optimally effective and honest value-for-money procurement. 
(a) Improved readability of the legal framework 
4.5 Improvements in transparency and the dissemination of information are crucial to 
support efforts to improve procurement practice. The Commission has already taken a 
number of steps to improve both the quality and quantity of information about the rights of 
suppliers and the obligations of procurement entities under EU rules. Although all EU 
public procurement directives have been brought together and published in a single 
volume, the rules themselves would be easier to understand if each Directive were 
consolidated in such a way as to group together all the provisions applicable to public 
procurement in a particular sector. For public supply contracts, public works contracts 
and contracts in the utilities sectors (water, energy, transport and telecommunications), the 
adoption by the Council of Directives 93/36/EEC, 93/37/EEC and 93/38/EEC has brought 
about a formal consolidation. But such a formal consolidation may not be possible each 
time a procurement Directive is amended. Where it is not, other means could be 
envisaged. 
21 
4.6 To facilitate understanding of the public procurement rules, the Commission is 
committed to publishing a number of Vademecums (interpretative communications) which 
will explain and clarify questions on the application of the Directives. These Vademecums 
will update those first published in 1987 (on the Works and Supplies Directives) and 
provide equivalent texts in respect of the Services and Utilities Directives. The 
Commission reaffirms that it will also make available written guides on national remedies 
procedures and the means by which suppliers can pursue their rights. 
(b) Dissemination of notifications 
4.7 Providing information to clarify the legal framework is important. Equally 
important is ensuring the availability of information and data for suppliers to be able to bid 
for contracts. Good and easily available data is vital in exploiting procurement 
opportunities. Now, over 130 000 procurement notices are published each year in the EC 
Official Journal and it is no easy task for suppliers to identify out of this mass, the specific 
calls for tender in which they have an interest. The Commission is aware that there are 
problems disseminating this amount of information in a transparent way by means of the 
paper copy of the Supplement of the Official Journal. The possibility of ultimately shifting 
the publication system away from the paper version is under consideration. 
4.8 The Commission has already carried out a market survey of subscribers to the 
Supplement to the Official Journal and TED in order to find opt what improvements can be 
made to the information and to its presentation. This survey has shown that only a small 
number of subscribers prefer the current publication to any other possible alternatives. The 
majority would prefer to find the information on the World Wide Web or on a CD-ROM 
with search facilities. Selective subscriptions to the Supplement may also be possible so 
that users would receive information only on contracts which are of particular interest to 
them. Whilst it is expected that such improvements will make public contracts more 
accessible to businesses, we must go further and improve access to information in step 
with each and every advance in technology. 
4.9 Today, problems with the quality of tender notices are also frequent. Although 
several Directives require the nature of the procurement to be described using a code from 
the CPA (Classification of Products by Activity) or the CPC (Central Product 
Classification), only a few entities use these nomenclatures. This is costly for the European 
taxpayer. The Commission has developed the Common Procurement Vocabulary (CPV) as 
a list of codes based on the CPA but geared to the specific needs of the procurement 
process. The CPV has recently been published in a revised version22 together with a 
recommendation23 to encourage its use by entities, in order to allow definition of the nature 
of the procurement in CPV terms by those responsible for procurement. Extending the use 
of the CPV to all entities and contracting authorities could improve the transparency of 
public procurement in the Union and allow significant savings for the taxpayer because the 
publication process, including translation into all 11 languages, could by made easier. The 
Commission seeks comments from the interested parties on whether, in this context, use of 
22 
23 OJS 169 of 3.9.96 
OJL 222 of 3.9.96 
22 
the CPV should be made obligatory. An alternative solution would be to levy a charge on 
those entities which have not used the CPV and the standardised electronic forms to 
identify the nature of their procurement, proportional to the extra costs of processing these 
notices. 
EOT. Training 
4.10 Changing traditional procurement practices will only succeed if there is a change in 
management ethos away from closed relationships with national suppliers to a transparent 
and truly commercial environment where doors are open to other bidders and value for 
money is the primary motivation. Training on procurement rules and best practice may 
well be the best and least costly way to achieve such a change. Yet for some governments, 
this is sometimes depicted as a costly luxury, the first to suffer cuts in times of budgetary 
stringency. New procurement techniques, such as electronic notification and electronic 
tendering, will not deliver greater efficiency and lower costs unless procurement officers 
know how to use them. 
4.11 Welcome changes are visible. Current discussions on improving Europe's 
competitiveness increasingly focus on the importance of continuing education and the 
application of knowledge. For procurement, this must result in still greater efforts to 
provide systematic and rigorous training for officials in order to give them the tools that 
effective procurement demands. 
4.12 However pressing the need, we cannot expect those, whose practices are 
traditional, to change overnight. To nurture an optimal procurement policy demands a real 
awareness of what procurement of the highest commercial standard actually entails. The 
Commission believes that steps must now be taken to stimulate the training of procurement 
officers in the new and evolving skills they need and to help them to better understand the 
new role they are called upon to play. If we are to bring about real change, however, a 
programme needs to be developed which spreads training throughout the Community; a 
programme that focuses on best procurement practice and which is not simply a one-off 
event. The application of information technology in procurement and the exchange of 
information on best practice could be covered. The elaboration of such a programme 
would involve many players: the Commission, Member States, national sectoral 
associations, businesses, universities and other interested parties. 
IV. Electronic tendering 
4.13 Our current procurement regime is based on the use of traditional administrative 
practices and means of communication: it is mainly a paper-based system of notification, 
dissemination and tendering. Now, thanks to progress in data processing and 
telecommunications, we do not need to proceed as we have in the past. It is time to take 
our procurement policy into the future; to benefit from the opportunities offered by today's 
advances in information technology. In the short term, new information technologies are 
helping us to introduce electronic notification of tender notices and the dissemination of 
information to suppliers. In the longer term, the use of computer systems and 
23 
telecommunications will revolutionise the way in which contracts are awarded. An 
"electronic marketplace" could be developed in which suppliers could list products and 
prices in electronic catalogues, and contracting entities could compare prices and 
conditions and order electronically the best value item that meets their needs. We all stand 
to benefit; electronic procurement will be more transparent, more open to dialogue with 
suppliers, and far more efficient than any present paper-based system. 
4.14 The European Union cannot afford to fall behind in this area. The 
recommendations of the Bangemann Group report24 to the European Council identified 
public procurement as one of the ten top-priority applications for the use of information 
technology in the public sector. The report suggested that at least 10% of all contracting 
entities should have electronic tendering procedures in place within the next two to three 
years. Clearly, two years later, major efforts are needed at all levels to meet that target. 
At the G7 Summit Conference on the Information Society held in 1995, the participants 
called on the private sector to seize the initiative and committed themselves to encourage 
the private-sector development of information networks and the provision of new 
information-related services. 
(a) Current state of play 
4.15 The notification and dissemination of tender notices is the most appropriate point at 
which to apply information technology to public procurement. Under our Directives, 
contracting entities are under the obligation to publish notices about their calls for tender in 
the Supplement of the EU Official Journal. This supplement already runs to more than 300 
pages per daily issue and the expectation is of continued expansion in the year ahead. Not 
surprisingly, suppliers find it difficult to identify the tender opportunities which interest 
them. The system must, quite simply, be made more efficient and more simple to use. 
4.16 Considerable progress has already been made. The TED database was introduced a 
decade ago and has been updated recently by the development of more user-friendly 
software, the application of the Common Procurement Vocabulary (CPV) and the 
provision of access to the INTERNET. Further improvements are now under way.25 
(b) Electronic notification 
4.17 With today's technology, opportunities abound for increasing transparency, cutting 
operating costs and reducing delays. To this end, the Commission has embarked upon an 
ambitious programme known under the acronym SIMAP ( "Système d'information pour 
les marchés publics") which builds on the experience of TED. SIMAP covers a range of 
different projects. Its most immediate aim is to increase the capacity of the current 
publication system so as to cope adequately with the growing number of notices which 
need to be published. SIMAP will eventually make it possible to provide better tender 
information more quickly - a change which is both urgently needed (given the rapid growth 
in published tenders), and vital if we are to improve the transparency of contract award 
24 
Europe and the Global Information Society: Recommendations presented to the European 
Council at Corfu, Brussels, 26.5.1994. 
25 
See also points 4.7 to 4.9. 
24 
procedures in Europe. SIMAP offers the prospect of improved monitoring, market 
analysis and the exchange of a variety of other useful information so as to make it easier 
for suppliers to identify sales opportunities. 
4.18 Under SEMAP a number of pilot projects have already been launched involving a 
limited number of contracting entities and information providers. They focus on the 
electronic communication of procurement notices between contracting entities and the 
Official Journal and TED, and on facilitating on-line access to information for suppliers. If 
these pilots are successful - and the first signs are encouraging - they could eventually be 
developed into an operational system of electronic notification and dissemination of 
information to which all interested parties in the Union would have access (using a 
Community-wide electronic bulletin board system on procurement). 
4.19 Using such a system, contracting entities would have the means for transmitting 
their notices electronically rather than in paper form. A key question will be how the shift 
from paper to electronic transmission can be achieved. The latest modifications to the 
legislative texts already propose changes to permit the electronic transmission of notices. 
Initially, and for a period of several years, the paper-based and electronic systems will co­
exist. We shall need to decide whether such a change could be achieved on a voluntary 
basis or whether it would be advisable to legally oblige contracting entities to transmit 
notices in electronic form and, whether such an obligation should be introduced first in a 
limited way at central government and utilities level, before extending it to other 
contracting authorities. Such electronic transmission of notices could also make it possible 
to shorten the time needed for disseminating the information and perhaps, ultimately, the 
deadlines for bidding. The Commission invites comments on this issue. 
(c) Electronic dissemination 
4.20 It is clear that, with the steady rise- in the number of notices published and the 
improvements in technology for electronic publishing, the paper version of the OJ/S will in 
time be superseded by electronic versions. The market survey of subscribers has confirmed 
that the majority would prefer to find the information over the World Wide Web and many 
would be interested in a CD-ROM. A CD-ROM is already being developed and further 
improvements to the TED database such as the development of INTERNET access will 
doubtless attract more interest. 
4.21 There are currently around 13,000 subscribers to the Official Journal Supplement. 
This can only be a small part of the number of suppliers potentially interested. The 
electronic or on-line versions must be designed to attract new subscribers, as well as to 
replace the paper version for existing subscribers, for whom it is becoming increasingly 
difficult to use. 
4.22 Once these replacement systems are in place and accepted by subscribers, the 
obligation to publish the OJ supplement on paper could be modified to refer to electronic 
means, so that the paper version could be phased out as demand falls. 
25 
4.23 As a result of the findings of the market survey, the Commission is considering the 
possibility of printing short summaries of notices in a much slimmer OJ supplement and 
giving full information only in a database, also available as a CD-ROM or via the 
INTERNET. It is also considering the possibility of producing only the database version 
or of providing the information only through third parties under licence. 
4.24 The Commission would be interested in reactions to or comments upon these 
various options from all the interested parties, Member States, contracting entities and 
suppliers. 
(d) Fully electronic tendering system 
4.25 The opportunities offered by technology are wider than the relatively 
straightforward electronic transmission and dissemination of notices. In the longer term, 
the way forward for electronic procurement will undoubtedly be a fully electronic 
tendering system. This could include the extension of electronic procurement to meet 
existing mandatory requirements under the Directives (such as the obligation to publish) 
but, far more dramatically, to cover every other part of the procurement process. A full 
electronic tendering system could cover the exchange of tender documents and tenders as 
well as information exchange during the life of the contract (including invoices and 
payments). However, unlike the publication of notices, such applications would fall 
outside the Commission's direct area of responsibility; it would be a matter for the 
commercial judgement of contracting entities and economic operators. The Commission 
will, of course, be closely associated with these developments: they will certainly 
significantly affect the EU regulatory framework for public procurement; and there are real 
dangers that incompatible national systems could create major new internal (and external) 
trade barriers. 
4.26 Our regime must be responsive and ready to meet the challenge posed by a 
constantly changing public procurement environment. No specific provisions in the public 
procurement directives deal with the use of information technology. Our existing rules 
will, whenever possible, be interpreted in such a way as to allow and to accommodate the 
new developments. Although the Commission starts from a presumption that no 
amendments to the legal framework on public procurement will be proposed, it is not 
excluded that those stemming from changes of a technical nature which do not overturn 
the essential principles of the regime may call for specific legal proposals. Electronic 
procurement could be one such area. 
(e) Experience outside the European Union 
4.27 How developments in information technology will be integrated in procurement in 
the coming years is uncertain, but important pointers are available. The US Administration 
has licensed information on tender notices to a dozen private companies which have 
developed so-called value-added networks (or VANs). These networks offer high-quality 
information about procurement possibilities in the US and abroad. Similar private sector 
involvement can be found in Canada. Because of the commercial value of procurement 
See also Chapter 6. 
26 
data, the private sector may be interested, for example, in their dissemination in Europe, 
even if multilingualism in the EU might retard the process. The Commission would 
welcome expressions of interest from private sector operators. Consideration must be 
given as to how the availability of information about potential suppliers of goods and 
services can be improved and how industry can be stimulated to provide the infrastructure 
for electronic trading with contracting entities. This requires much thought from all 
interested parties, in particular to find ways of co-operating to develop the necessary tools 
and services. 
4.28 Electronic procurement is a global phenomenon. Our major trading partners have 
all embarked on ambitious programmes to develop integrated electronic access to their 
procurement information and to expand electronic tendering for their acquisitions. As with 
many new and exciting developments, there are opportunities as well as threats. The 
opportunities include the greater availability of information on public contracts: 
sophisticated software programmes can now give suppliers the information they need at 
the push of a button - irrespective of their geographic location. The threat is that national 
policies and interests could prove to be too great for governments. This could result in 
technically incompatible systems - making it more difficult to communicate; and 
consequently we may not be able to reap the expected benefits of electronic tendering. 
With the Commission's support, the Government Procurement Committee of the World 
Trade Organisation (WTO) - which deals with matters relating to the Government 
Procurement Agreement (GPA) - has already begun to discuss the application of 
information technologies in public procurement. Industry is also inviting us to examine the 
possibility of establishing a system of public purchasing using electronic means of 
communication, compatible between the European Union and the United States. These 
discussions within the GPA Committee also aim to reach a consensus on compatible 
systems in all GPA signatory countries. The key issues of internationally acceptable 
standards and technical procedures will therefore be tackled. 
(0 Conclusion 
4.29 Having considered reactions to this Green Paper, the Commission will publish-a 
strategy paper on electronic procurement which will take account of reflections on 
electronic commerce and the information society. Its aim will be to prepare, with the help 
of Member States, an action plan setting out the way electronic procurement could 
develop over the next five years. 
V. Questions 
1. Is sufficient attention given to monitoring the application of the procurement rules 
as a way of preventing problems or detecting possible breaches? Are there 
suggestions to improve Community and Member State monitoring systems? Do 
you see merit in cross-border monitoring, for example by developing the concept of 
the European Observatory to look at rates of compliance in the public procurement 
market? 
27 
2. Positive incentives to stimulate efficient follow-up procedures in this sector are 
vital. Are there incentives (cross-checking, publication of results achieved, awards 
etc.) that could be applied at national level? 
3. Are you satisfied with the information provided by the Commission or Member 
States on public procurement issues? Would a regular information bulletin 
reporting on public procurement developments and stimulating the exchange of 
views and experience at the European level be useful? 
4. What other sources of information are available? What sort of statistical 
information would meet information and transparency requirements? 
5. Regulations are now in place to protect the Community's financial interests. These 
contain provisions obliging Member States to communicate cases involving fraud 
or other irregularity to the Commission on a regular basis. These obligations 
already apply to public procurement dossiers, where there is Community financing. 
Could this information system be extended to public procurement in general? 
6. Are there any training initiatives in your Member State? (Please give details.) Is 
sufficient attention being paid to training in relation to the application of 
information technology in public procurement? 
7. Is a Community-wide programme needed to stimulate training and spread best 
procurement practice? What form should it take and what should be its duration? 
How can Member States, the procurement profession, academics and business play 
their full part in such a programme? 
8. What improvements to the Official Journal Supplement or to the Tenders 
Electronic Daily database are needed? 
9. Does electronic notification and tendering offer opportunities to make procurement 
more efficient and more accessible to suppliers? Can they contribute to the 
opening-up of public procurement? 
10. How can increased electronic transmission of notices by contracting entities best be 
encouraged (voluntarily or as a legal obligation)? What incentives can be provided 
to encourage such transmission? 
11. What elements would you regard as essential to exploit the wider potential of 
electronic tendering in public procurement? What role should be played by the 
Commission, the Member States, contracting entities, suppliers and software 
writers ? 
12. Is the private sector interested in providing procurement information services in the 
Union? 
13. Should discussions aimed at reaching consensus with our major trading partners on 
the technical compatibility of electronic tendering systems be given high priority? 
28 
5. PUBLIC PROCUREMENT AND OTHER COMMUNITY POLICIES 
Public procurement policy has positive spin-off effects on other Community policies. 
Although SMEs firms still face a number of difficulties in effectively winning contracts, 
more transparent market access, for example, allows these firms to unlock new potential 
markets. In this chapter, the Commission presents measures that could improve the 
situation. 
In the field of standards, the Commission intends to step up efforts, in agreement with 
business, to ensure that the standards institutions draw up European standards for use in 
contract documents, thereby contributing to "the effective opening-up of public 
procurement. 
The massive capital commitment required for Trans-European Networks is encouraged 
with contract award procedures laid down by the Directives that guarantee an acceptable 
return for investors. The Commission is prepared to clarify the legislative framework 
should this prove necessary in order to build partnerships between the public and private 
sectors for these projects. 
Correct application of the Community rules also helps to allocate Community resources 
from the Structural and Regional Funds in the most efficient way. With this objective, the 
Commission is proposing a number of measures to improve compliance with these rules in 
procedures for the award of contracts part-financed by these Funds. The Green Paper 
deals with contracts awarded by the Community institutions or by non-Member countries 
who benefit from Community resources. 
Public procurement rules can contribute to the achievement of social and environment 
policy objectives. A description of the possibilities offered by the Directives in these areas 
is given in this chapter. In the light of the outcome of the debate initiated by the Green 
Paper, the Commission will consider how better account can be taken of social and 
environmental aspects in the application of the rules. 
Lastly, the Commission would welcome any initiative aimed at stimulating competition in 
defence procurement, with a view to conferring a European identity on security and 
defence policy and at the same time strengthening the competitiveness of our industry. 
I. SMEs 
5.1 Most of our larger companies now have considerable experience in bidding for public 
contracts in other countries. They are usually well placed to obtain information about 
particular calls for tender and sufficiently experienced in order to participate in them. They 
often continue to submit tenders through their local subsidiaries or via consortia in which 
the lead company is from the same Member State as the purchasing entity. The number of 
contracts won directly by firms based in other Member States remains small. This also 
holds true for small and medium-sized enterprises (SMEs), which face greater difficulties 
on account of their size. Although a survey of SMEs undertaken in 1994 by the Euro Info 
29 
27 • * 
Centres identified firms which had won contracts in other Member States, these are only 
isolated cases that cannot be used to establish a general trend. 
5.2 And yet SMEs should win a larger share of public contracts given their importance in 
the European economy: they account for over 65% of turnover generated by the private 
sector in the European Union. Wider SME participation in public procurement would lead 
to the creation of a core of SMEs capable of seizing opportunities offered by open public 
procurement not only within the European Union but also in countries covered by the 
GATT Agreement on Government Procurement (see Chapter 6) and would also in the long 
run enable SMEs to make a greater contribution to growth, competitiveness and 
employment. The basic objectives of an internal market in procurement (widening the 
choice of value-for-money suppliers for procurement entities and increasing the 
competitiveness of EU industry) will not be met unless SMEs can also secure genuine 
access to Europe's markets. 
5.3 Work carried out on the basis of various communications or resolutions on the 
subject of SMEs and the internal market" has identified a long list of obstacles 
encountered by SMEs during contract awards, both upstream and downstream of the 
award procedure. 
5.4 When planning their business activities, SMEs thus already encounter difficulties in 
organising themselves in order to bid effectively for the contracts of interest to them. This 
is because they find it difficult to adjust their activities to market demand; they lack 
practical information on contracts put out to tender in their sector; they lack the trained 
staff and technical assistance necessary to cope with prequalification procedures, 
particularly in the utilities sectors, and where appropriate, to prepare bids; they have 
problems in meeting quality certification requirements; and they are often too small in 
comparison with the contracts covered by the Directives and put up for competition at 
Community level. The problem of size is compounded by the difficulty in setting up 
effective and advantageous forms of partnership between SMEs. 
27 
28 Survey on the impact of the internal market on business, involving more than 140 small and 
medium-sized companies in 12 Member Slates. See Commission press release IP (95) 364, 
10.4.1995. 
See, for example, the Commission communications; of 7.5.1990 on promoting SME 
participation in public procurement in the Community (COM (90) 166); of 1.6.1992 on SME 
participation in public procurement in the Community (SEC (92) 722); of 3.6.1992 on measures 
relating to the industries supplying utilities sectors in the structurally disadvantaged regions of 
the Community (SEC (92) 1052); of 18.11.1992 on the problem of the time taken to make . 
payments in commercial transactions (SEC (92) 2214); of 22.12.1993 on making the most of the 
internal market: Strategic programme (COM (93) 632); and of 3.6.1994 on the implementation 
of an integrated programme in support of SMEs (COM (94) 207); the Council resolutions of 
22.11.1993 on strengthening the competitiveness of enterprises, in particular small and 
medium-sized enterprises and craft enterprises, and developing employment in the Community 
(OJ No C 326/1) and of 22.4.1996 on the coordination of Community activities in favour of 
small and medium-sized enterprises and the craft sector (OJ No C 130/1); and Parliament's 
resolution of 21.4.1993 on the Commission communications "Towards a European market in 
subcontracting" and "SME participation in public procurement in the Community" (OJ No C 
150/71). 
30 
5.5 SMEs also have to contend with a number of problems in the contract award phase. 
For example, it is difficult for them to gain rapid access to the information necessary for 
preparing bids, especially for identifying and interpreting tender notices potentially of 
interest to them, the subject-matter of the contract, the regulations applicable (including 
national rules) and the standards and technical specifications to be complied with. In 
particular, a recent study has shown that late transmission of contract documents by 
contracting authorities is a real barrier to participation by SMEs, since in many instances 
(over 50% of the cases studied) it prevents them from submitting a valid bid before the 
deadline expires. The costs of submitting tenders and the securing of financial guarantees 
at competitive rates are also substantial obstacles for these firms. 
5.6 Even when performing contracts they have won, SMEs face special difficulties: in 
meeting the requirements of performance bonds they have accepted when contracts were 
concluded; in securing payment for their works or supplies on time; in settling any disputes 
quickly and cheaply; and in obtaining adequate protection as subcontractors. 
5.7 Action has already been taken to tackle these problems at Community level. As far 
as the availability of information is concerned, some Community sponsored networks 
(including a core group of Euro Info Centres specialised in public procurement) have 
already developed information and market support services, in co-operation with private 
consultants. These networks, together with a number of local, sectoral or national 
services, provide information ori contract opportunities even below the thresholds of the 
Directives - as well as additional information about the procurement plans of specific 
contracting authorities. Moreover, the new design of tender notices published daily in the 
Official Journal certainly facilitates the task of SMEs, which have access to it, in obtaining 
sufficient information on procurement opportunities, particularly in other Member States. 
5.8 The Commission has also adopted a number of measures aimed at providing 
information and technical assistance to SMEs in disadvantaged regions in breaking into 
30 
European procurement markets. These include PRISMA (Preparation of Regional 
Industry for the Internal Market), which ran unfil 1994, and the newly launched SMEs 
39 • 
and INTERREG II initiatives, which also cover the promotion of partnerships between 
SMEs in different Member States and specialised training. 
5.9 The Commission believes that other initiatives should be taken. It would welcome 
comments on the options for action envisaged in this area and described below. 
5.10 As far as general information is concerned, it could prove useful to draft a practical 
guide for SMEs, explaining how they can prepare for participation in public procurement, 
and to draw up interpretative documents on some aspects of the Directives that concern 
29 
30 
31 
32 Euro Info Centre Aarhus County, Analysis of irregularities occurring in tender notices 
published in the Official Journal of the European Communities 1990-1993. Study presented to 
the Commission in 1996. 
PRISMA (91/C 33/05), OJ No C 33/9 of 8.2.1991. 
SMEs Initiative (94/C 180/03), OJ No C 180/10 of 1.7.1994. 
INTERREG II (94/C 180/13), OJ No C 180/60 of 1.7.1994.. 
31 
these types of business more particularly, such as the splitting of contracts into lots, the 
publication of prior information notices, and the problem of the time limits for distributing 
documentation on contracts. 
5.11 As regards information on specific contracts, consideration could be given to 
adapting TED to the specific requirements of SMEs. Another possibility would be to take 
advantage of the increasing popularity of the INTERNET and World Wide Web to provide 
access to such information for a much wider audience. There are few technical obstacles 
to such developments, but there may be a need for co-ordination at a European level if 
such initiatives are to succeed. It could also be useful to press for greater transparency on 
the part of contracting authorities by encouraging them to use wherever possible the 
Common Procurement Vocabulary (CPV) and standard forms for procedural documents, 
• 33 
which would facilitate electronic data interchange. 
5.12 As far as preparing for contract award procedures is concerned, the opening-up and 
simplification of contracting authorities' practices through the training of procurement 
officers, the exchange of officials and the exchange of information on good procurement 
practice could only make it easier for SMEs to bid for contracts. 
5.13 Given their size, it would be easier for SMEs to take part effectively in an ever 
more global market if frameworks were established for co-operation between them. It 
could therefore be worth looking into the question of whether the European Economic 
Interest Grouping (EEIG) is suitable for promoting co-operation between SMEs, 
particularly for cross-border public procurement. 
5.14 An aspect which is extremely important for SMEs, but is not dealt with directly by 
the Directives, is subcontracting. The Commission has been called upon to "pursue, in 
concert with the Member States, its general role of instigating, initiating and co-ordinating 
measures aimed at creating a propitious environment for subcontracting" . To that end, 
action could be taken in this area, for example to improve the existing network of 
databases on subcontracting and to encourage the establishment of approved codes of 
practice and standard contractual clauses. In order to gauge the economic importance of 
sub-contracting, pilot studies have been carried out in 10 Member States using "as à basis 
the common methodology developed by EUROSTAT. These studies were carried out on 
sub-contracting enterprises or those ordering in three economic sectors (cars, electronics, 
textiles/clothing) and the results will be published before the end of 1996. 
5.15 Another aspect which closely concerns SMEs is payment periods. On this topic the 
... . 35 
Commission, after carrying out wide-ranging consultations, adopted a recommendation * 
in which it calls on Member States to ensure that their contracting authorities are 
disciplined in the matter of payment. The recommendation thus provides, for example, for 
a time limit by which payments should be made and for the payment of interest in the event 
33 
34 
35 See in this connection the arguments developed in Chapter 4. 
See Council resolution of 26th September 1989 on the development of subcontracting in the 
Community (OJ No C 254/1 of 7.10.1989). 
Commission recommendation on payment periods in commercial transactions (OJ No L 127/19 
of 10.6.1995 and OJ No C 144/3 of 10.6.1995). 
32 
of late payment. Member States are to submit reports by the end of 1997 on the action 
they have taken to implement the recommendation; the Commission would be interested in 
having at this stage the reactions of the parties concerned on this matter. 
5.16 On a more general note, the Commission takes the view that the effective access of 
SMEs to public procurement could be achieved through a set of concrete measures based 
on a thorough analysis of these firms' practical needs and opportunities, and in particular 
through the development of networks of support services which would provide them with 
the necessary information, technical assistance and suitable training. Following the 
consultations launched by this Green Paper, the Commission intends to present a 
communication on the measures it proposes in this area. 
II. Standardisation 
5.17 Standards and technical specifications describing the characteristics of the works, 
supplies or services covered by contracts play a crucial role in our efforts to open up public 
procurement. The use of national standards can significantly restrict access to contracts 
for non-national suppliers. With this in mind, the Directives provide that contracting 
authorities define technical specifications with reference to European standards or technical 
approvals, without prejudice to mandatory national technical rules, in so far as these are 
compatible with Community law. This was a problem the Directives sought to resolve by 
requiring contracting entities to refer to European standards where they exist. Under 
Commission mandates issued within the framework of the 1985 Council resolution on a 
new approach to standards and technical harmonisation, the European standardisation 
bodies (CEN, CENELEC, ETSI) have developed many European standards which are then 
implemented into national standards. In addition mandates in support of public 
procurement have been issued on a number of occasions. This effort must be stepped up 
since certain markets are to this day still in practice closed off, chiefly owing to insufficient 
standardisation work. Together with industry, the Commission is currently determining 
where further mandates -are needed. The Commission would welcome comments from 
interested parties on the general issue of standardisation and technical specifications in 
public procurement and on the identification of areas where the absence of European 
standards poses problems for the opening-up of public procurement. 
III. Trans-European Networks (TENs) and transport in particular 
5.18 The Maastricht Treaty committed the European Union to promoting the creation of 
a web of Trans-European Networks (TENs) in the transport, energy ; and 
telecommunications sectors. Successfully developing TENs will contribute to the optimal 
use of the opportunities offered by the single market; investing in TENs is an investment in 
our future. This policy is crucial to the overall competitiveness of the EU economy and, 
both directly and indirectly, to the creation of employment. Several key projects are 
already under way, including the 0resund road and rail link between Denmark and 
36 Resolution of 7.4.85, OJ C 136/1 of 4.6.1985. 
33 
Sweden, upgrading Malpensa airport for Milan and the rail link between Cork and 
Stranraer. However, progress on other priority TENs has been slow. 
5.19 Against a background of ever tighter government budgets, thé European Council 
has emphasised the importance of private finance in the Union's efforts to increase 
investment in TENs infrastructures. Investment projects are increasingly unlikely to be 
funded only by grants from local or national governments. They demand a massive 
financial commitment. There is therefore a need to find fresh ways of raising capital. 
Many private sector organisations have made it clear that they are increasingly ready to 
invest substantially in TENs projects and are willing to do so on a risk-financing basis. But 
a number of obstacles still have to be overcome. 
5.20 The Commission's report to the Madrid European Council (December 1995) 
outlined ways of overcoming obstacles to the private financing of Trans-European 
Network projects. Apart from the problem of how to ensure an acceptable rate of return 
for projects, the report also referred to the problem of non-commercial risks arising due to 
changes in public policy. The Commission is presently looking into this issue. The private 
sector has also expressed concern about the application of EU public procurement rules; in 
some circles, it has been claimed that the Directives may inhibit private sector involvement. 
5.21 The ultimate objective of the Community's public procurement directives is to 
achieve fair and open competition for procurement contracts in the internal market. Their 
aim is to facilitate and not to obstruct private sector involvement in projects. The 
Commission believes that the Community public procurement rules can facilitate private 
sector participation in Trans-European Networks, without any need, at this stage, to 
amend the existing legal framework. Should clarification of the framework prove 
necessary, the Commission is prepared to tackle the different questions arising with the 
parties concerned to ensure that partnership between the public and private sectors is in no 
way inhibited. As announced in its report to the Madrid European Council, the 
Commission has also set up a TENs Help Desk to provide a one-stop shop to answer 
enquiries from private sector TENs participants. 
5.22 To date, industry has identified three principal concerns which, while not being 
exclusively concerned with TENs projects, are certainly of considerable importance in that 
particular area. These concern the pre-tendering phase, concessions to consortia and use 
37 
of the negotiated procedure. 
(a) The pre-tendering phase 
5.23 The private sector has indicated its reluctance to engage in pre-tender discussions 
or studies without an assurance that it will not be excluded from the subsequent tendering 
procedures, fearing a potential infringement of the principle of equal treatment. The 
Commission recognises that, in view of the complexity of most of the projects - some of 
which may require solutions never attempted before - a technical dialogue before the calls 
for tender between the awarding authority and private parties involved may be necessary. 
If, through the introduction of specific safeguards - affecting matters of substance as well 
37 
See discussion in Chapter 3. 
34 
as procedure - contracting authorities refrain from requesting or accepting information that 
would have the effect of restricting competition, the principle of equal treatment will not be 
violated. 
(b) The award of concessions to consortia 
5.24 As previously stated (see Chapter 3), the award of a public works concession is 
the usual way of enabling the private sector to participate on a risk basis in the building and 
operation of infrastructure projects in partnership with the public sector. The Commission 
notes that, in line with the applicable Community -rules, it is essential that consortia, 
participating on a risk basis, can bid for concessions knowing they will be able to award 
contracts to their associates within the consortium in respect of the necessary supplies, 
works or services. The provisions of the public works Directive applying to the award of 
works concessions for the construction of public transport infrastructures permit the 
winning consortium to do so. 
(c) The use of the negotiated procedure 
5.25 Complex works and services contracts may in some cases justify the use of the 
negotiated procedure. Under the Utilities Directive, contracting entities already have a free 
choice between three procedures (i.e. open, restricted or negotiated procedures) involving 
a prior call for competition. In the traditional sectors, however, as has already been 
mentioned (see Chapter 3), the negotiated procedure may be used only in certain well-
defined circumstances that are listed exhaustively in the Directives. For example, the 
public services Directive allows an award by negotiated procedure where a service is 
complex and cannot be specified with sufficient precision, particularly in the field of 
intellectual services. The public works Directive allows the use of the competitive 
negotiated procedure in exceptional cases where, for instance, the nature of the works or 
the attendant risks do not permit prior, overall pricing. 
IV. Procurement involving Union funds. 
(a) Structural and Cohesion Funds 
5.26 The Structural and Cohesion Funds have contributed over ECU 50 billion to public 
authority investments in the Member States during the past two years. Through other 
financial instruments (including European Investment Bank loans and grants from other 
Community sources) the Union has provided a further contribution of over ECU 34 billion. 
Moreover, by means of financing from the Funds, the Union expects to spend ECU 57 
billion over the next two years. It is undeniable that Member States must have confidence 
amongst themselves that each and every one of them respects the rules; that the best value 
for money is being achieved in the expenditure of European taxpayers' money and that the 
risk of fraud is minimised. Our rules on public procurement and on the protection of the 
financial interests of the Community have a central role to play in this, it being understood 
that there can be no discrimination in their application, whether it is a question of contracts 
financed from national resources or contracts qualifying for support from the Structural 
and Cohesion Funds. 
35 
5.27 The present system of control is based on the 1989 Commission communication to 
38 
the Council. It clarifies the obligation on Member States to ensure, systematically, that 
the public procurement rules have been respected and to confirm that for each and every 
request to the Commission for payment of funds the rules have been honoured. However, 
very few Member States have put into place a systematic and thorough mechanism for 
monitoring compliance with the public procurement rules. The Commission, for its part, 
can release the funds only upon explicit confirmation of that compliance. If the rules have 
not been followed (for example, if tenders have not been correctly advertised) funding can 
be suspended, and then, if necessary, withdrawn and infringement procedures started. In 
the case of the Cohesion Fund, and large ERDF projects an ex ante verification is 
systematically made as part of the examination of applications for part-financing. 
5.28 The Commission must increasingly rely on Member States to fulfil their obligations, 
especially since the volume of individual projects is steadily growing. The problem has 
become more acute and needs resolution. Indeed, following the reform of the Structural 
Funds, the management of funds (particularly the choice of and follow-up to funded 
projects), has been devolved to each Member State. Greater authority over fund 
management goes hand in hand with greater responsibility to control compliance with 
procurement rules. Improving the current system of control at the Member. State level is 
therefore vital. It is appropriate to recall that an important discussion is taking place as 
part of SEM 2000 on the need for greater transparency and rigour in the use of the 
Structural Funds. In this context, concrete proposals will be submitted to the Dublin 
European Council, directed at clarifying certain criteria and also at promoting co-operation 
and dialogue between Member States and the Commission in the framework of 
partnership, and in the interest of the beneficiaries. The conditions for the application of 
financial adjustments in cases of fraud and irregularity are also tackled, including net 
correction in the extreme case where a Member State persists in failing to meet its audit 
obligations. Work will continue in 1997. At the same time, one should recall and underline 
the rules of transparency, under which there is an obligation to communicate established 
cases of irregularity or fraud to the Commission. 
5.29 Although ultimately, responsibility for improvingprocedures rests with the Member 
States, the Commission will use its best offices to ensure that improved systems of control 
are introduced as soon as possible. Any solution must go beyond identifying particular 
problems in specific projects. Our goal must be to create a regime that adds value. 
Accountability, performance and results must become bywords in Structural Fund 
management. The likely benefits are clear: considerable savings at all levels; more effective 
spending of limited resources; a healthier employment situation in the regions concerned; 
more confidence from our citizens that EU money is well spent; and projects that work for 
their users. To demonstrate proper regard for the use of public money and to win public 
support, the Commission believes that Member States should publicise the fact that value-
for-money has been achieved in any particular project. 
38 COM (88) 2510 and OJ No C 22 of 28.1.1989. 
36 
5.30 Improvements to the regime itself could be made by introducing relatively small 
changes in procedures. One such change would be the introduction, for each project, of a 
statement signed by the responsible national official that the Union's public procurement 
rules have been complied with. Such a statement of personal accountability has been used 
in other areas and in some third countries, most notably in the United States; it has proved 
to be one of the most effective ways of securing the best price and preventing fraud. More 
widely, thought could be given to developing a code of good conduct to which national 
officials could commit themselves. Clearly, the feasibility of such measures would have to 
be looked into in the light of the different systems of staff regulations for civil servants in 
Member States. 
5.31 The idea of individual accountability is inspired by the notion of prevention. Our 
policy in handling Structural Funds must anticipate - prevention is better than cure. The 
application of the system of attestation (see Chapter 3) to contracting entities receiving EU 
funds could significantly improve the situation and provide assurances that recipients have 
mechanisms in place that are capable of securing value-for-mcney equal to best commercial 
practice. It is our common interest that EU funds are spent effectively. Certifying by 
means of attestation that an effective procurement system is in place calls for only a small 
effort from public authorities in return for the benefit of saving considerable sums of EU 
money. 
5.32 A more far-reaching proposal could be the use of the independent authorities 
referred to in Chapter 3 to promote compliance with public procurement rules in respect of 
European Union funds. Without prejudice to the Commission's competence, such bodies 
could play a key role not only in monitoring public authorities' behaviour, but also in 
advising them. These functions could also be the responsibility of a Member State's 
national court of auditors or an equivalent independent authority. 
5.33 Implementing proposals will not solve each and every problem. A transformation 
of public procurement that involves funds of the Union - permanently and structurally - will 
only be achieved if such specific solutions are accompanied by a process of ongoing change 
in close partnership with the Member States. It may be necessary to formalise such 
initiatives (for example to establish accountability) in order for real and: lasting change to 
be achieved. This is also in keeping with the spirit and objectives of the "good sound 
management" exercise (SEM 2000) carried out by the Commission and the personal 
representatives of Member States, following on from the impetus given by the Madrid 
European Council in 1995. The conclusions of this group confirm the need to be 
concerned about rigour and transparency in making good use of appropriations and about 
sharing responsibilities, and will be presented to the Dublin European Council in December 
1996. 
5.34 With an improved system of checks in place at national level, the Commission, for 
its part, could concentrate on an ex post verification of projects (for example in close co­
operation with the independent body designated in each Member State). The Commission 
could also be invited to carry out an audit of the checking systems established in each 
country. The Commission will, in addition, seek to improve information flows between the 
Commission and the Member States on projects, especially through the use of modern 
information technologies. 
37 
(b) Public procurement by the European institutions or financed bv non 
Member countries benefiting from Community resources 
5.35 When awarding contracts for their own operational requirements or for the purposes 
of implementing the different policies for which the Community is responsible, the 
European institutions are required by Article 56 of the Financial Regulation to follow the 
same rules as those applicable to national contracting entities under the Directives on 
public procurement. Furthermore, only contracts awarded by the Council and the 
Commission are covered by the provisions of the GPA of the World Trade Organisation 
(see Chapter 6). The exceptions to the obligations laid, down by these instruments 
concern: (a) in the case of the GPA, contracts concluded in connection with food aid; (b) 
in the case of the obligations deriving from Article 56 of the Financial Regulation39, the 
same derogations as those laid down in the Directives plus, in accordance with Title IX of 
the Financial Regulation, contracts awarded in the context of external aid financed from 
the Community budget, with the exception of public service contracts awarded for the 
Commission's own requirements, to which the normal rules apply. Clearly, although they 
fall outside the scope of the Directives, all of these contracts, which are financed from 
Community resources (general budget, EAGGF and under EDF) and under Community 
programmes (e.g. PHARE, TACIS, MEDA, etc.), are still subject to specific rules and the 
fundamental principles governing the award of contracts, in particular transparency and 
equality of treatment. 
5.36 These wide-ranging general obligations have been spelt out in greater detail by 
recent amendments to the Financial Regulation and will be clarified further still by other 
amendments which the Commission intends to propose with a view to circumscribing the 
above mentioned derogations in order to ensure that they are interpreted restrictively. The 
Commission's action forms part of its efforts to improve financial management, as provided 
for in the guidelines of the SEM 2000 operation. 
5.37 The aim of this legislative framework is, by encouraging competitive tendering, to 
enable more efficient use to be made of the Community's general budget and of funds for 
development co-operation. The departments concerned must therefore endeavour to apply 
it as comprehensively as possible. The Commission wishes to ascertain whether the 
measures taken are sufficient to ensure fair access to contracts awarded both by the 
European institutions and by other bodies or third countries under Community 
programmes and using Community funds. In this connection, third countries in receipt of 
financial aid from the Community budget should also be invited to commit themselves to 
meeting certain obligations, particularly as regards on-the-spot checking for irregularities, 
recovering sums misappropriated and penalising irregular dealings. 
39 
Financial Regulation of 21.12.1977 applicable to the general budget of the European 
Communities, as last amended by Council Regulation (ECSC, EC, Euratom) No 2335/95 of 
18.09.1995 (OJ No L 240 of 7.10.1995). 
38 
V. Procurement and social aspects 
5.38 The European Union's social policy contributes to promoting a high level of 
employment and social protection (Article 2 of the EC Treaty), the free movement of 
workers, equality of opportunity between men and women, stronger economic and social 
cohesion, better living and working conditions, a high level of health protection, high 
standards of education and training and the integration of the disabled and other 
disadvantaged groups into society. 
5.39 Contracting authorities and contracting entities may be called upon to implement 
various aspects of social policy when awarding their contracts, as public procurement is a 
tool that can be used to influence significantly the behaviour of economic operators. As 
examples of the pursuit of social policy objectives, one can mention legal obligations 
relating, to employment protection and working conditions binding in the locality where a 
works contract is being performed or so-called "positive action". The latter occurs where 
public procurement is used as a means of achieving the desired objective, for example by 
providing a captive market for a disabled workshop which could not reasonably expect to 
compete on equal terms with normal commercial enterprises enjoying normal levels of 
productivity. 
5.40 The legal framework created by the Treaty and the Directives continues to apply in 
these situations. For this reason, since the entry into force of the public procurement 
directives, questions have constantly arisen as to whether and to what extent social 
objectives can or should be pursued, given the specific limitations imposed by the public 
procurement directives in order to prevent their whole purpose being frustrated. 
5.41 Provisions which have been included in all the Directives offer an initial possibility 
for pursuing social objectives by allowing contractors or suppliers to be excluded where 
they have been convicted of an offence concerning their professional conduct or have been 
found guilty of grave professional misconduct. These rules clearly also apply where the 
offence or misconduct involves an infringement of legislation designed to promote social 
objectives. In these cases, then, the provisions in question indirectly allow contracting 
authorities to pursue such objectives by excluding from contract award procedures 
candidates who have failed to comply with such legislation. 
5.42 Another possibility is to require successful tenderers to comply with social 
obligations when performing contracts awarded to them, for example obligations aimed at 
promoting the employment of women or the protection of certain disadvantaged groups. 
Checking of compliance with such conditions should take place outside the contract award 
procedure (see the judgement of the Court in Beentjes, cited earlier, and the Commission 
communication on public procurement: regional and social aspects ). Clearly, contract 
performance conditions are allowed only where they do not result in direct or indirect 
discrimination against tenderers from other Member States. Sufficient transparency must 
also be ensured by mentioning the conditions in the contract notices or contract 
documents. 
40 Commission communication of 22.9.1989. COM(89) 400 final, OJ No C 31 lof 12.12.1989. 
39 
5.43 On the other hand, the Directives do not currently allow social considerations to be 
taken into account when it comes to checking the suitability of candidates or tenderers on 
the basis of the selection criteria, which relate to their financial and economic standing or 
their technical capability, nor when it comes to awarding contracts on the basis of the 
award criteria, which must relate to the economic qualities required of the supplies, works 
or services covered by the contract. As against this, however, it should be added that, in 
the case of contracts falling below the thresholds for application of the Directives, 
purchasers may include social preferences in the award criteria, provided that they are 
extended without discrimination to all Community nationals with the same characteristics. 
5.44 The question that arises here is, first, whether the possibilities offered by public 
procurement law for pursuing Community and national social-policy objectives in respect 
of the different groups concerned need to be clarified by means of an interpretative 
communication and, second, whether these possibilities are sufficient to satisfy needs or 
whether other measures need to be taken in order to achieve these objectives in applying 
the Community rules on public procurement, while safeguarding fair competition. 
VI. Procurement and the environment 
5.45 Environmental protection policy has become one of the most important Community 
policies, following the amendments made to the EC Treaty first by the Single Act and then 
by the Maastricht Treaty. Over 2Gv> legislative instruments have been adopted, concerning 
inter alia action to combat air, water and soil pollution, waste management, product safety 
standards, environmental impact assessment, and the protection of nature. Article 130r of 
the EC Treaty also provides that environmental protection requirements must be integrated 
into the definition and implementation of other Community policies. Several Member 
States have, for their part, developed extremely advanced environmental protection 
policies. 
5.46 In this specific sector, Member States (and their public authorities) have, 
increasingly, started to integrate environmental considerations into their public 
procurement practices. Because of its size, public procurement can have an enormous 
impact on certain business activities; it can even give a major push to the commercial 
development of certain products. The Danish Government has recently adopted an 'Action 
plan for a sustainable environmental/'green' policy for public procurement'. Other Member 
States are also examining what steps can be taken to promote procurement of green 
products and services. In addition, the OECD recently adopted a Recommendation on 
improving the environmental performance of government, which urges member 
countries, and in particular their governments, to establish and implement policies for the 
procurement of environmentally friendly goods and services. 
5.47 The application of the public procurement directives does indeed leave scope for 
public authorities to promote environmental protection. It would undoubtedly be desirable 
in this connection to clarify the possibilities offered by the general provisions of existing 
41 OECD Council Recommendation C(596)39/Final, 20.2.1996. 
40 
legislation for taking environmental concerns into account and, at the same time, to define 
more precisely the limits to these possibilities. 
5.48 First, as with social objectives, environmental protection can be achieved through 
specific rules for the infringement of which a supplier or contractor can be convicted of an 
offence concerning his professional conduct or found guilty of grave professional 
misconduct. In such cases, the Directives allow contracting authorities and contracting 
entities to exclude from contract award procedures any supplier or contractor who has 
been found guilty of breaching such rules. 
5.49 Second, environmental protection considerations can be incorporated into the 
technical requirements relating to the characteristics of the works, supplies or services 
covered by contracts, namely the technical specifications which purchasers must indicate in 
the general contract documents and with which tenderers must comply, in accordance with 
the Directives. Efforts should be made to develop European standards or common 
technical specifications which incorporate and promote environmental concerns while 
avoiding the negative implications for the single market that would result from establishing 
criteria that are over-specific. An example of such a specification could be a European 
eco-label, complying with Community law. In any event, purchasing entities can already 
encourage firms to adopt a more active approach towards the environment by ceasing to 
reject tenders for goods that incorporate reconditioned components or recycled materials 
despite the fact that their technical characteristics satisfy the requirements laid down in the 
contract documents. 
5.50 Third, the Directives allow, under certain conditions, environmental protection 
objectives to be included among the criteria for selecting candidates. These criteria are 
designed to test candidates' economic, financial and technical capacity and may therefore 
include environmental concerns depending on the expertise required for specific contracts. 
5.51 Fourth, during the contract award phase environmental factors could play a part in 
identifying the most economically advantageous* tender, but only in cases where reference 
to such factors makes it possible to gauge an economic advantage which is specific to the 
works, supplies or services covered by the contract and directly benefits the contracting 
authority or contracting entity. In the case of contracts falling below the thresholds for 
application of the Directives, environmental preferences may be used as an award criterion 
provided that they are non-discriminatory and open to all tenderers in the Community on 
the basis of the mutual recognition principle. 
5.52 Fifth, purchasing entities can pursue environmental protection objectives through 
performance conditions imposed contractually on successful tenderers. In other words, a 
contracting entity can require the supplier whose tender has been selected to perform the 
contract in accordance with certain constraints aimed at protecting the environment. 
Clearly, such performance conditions should not be discriminatory or in any way disturb 
the smooth functioning of the single market. The conditions should also be mentioned in 
tender notices or contract documents to ensure that bidders are sufficiently aware of their 
existence. Lastly, verification of the successful tenderer's ability to perform the contract in 
accordance with the conditions should take place outside the contract award procedure. 
41 
5.53 Within the limits of the possibilities set out above, the Commission would be most 
interested to receive information on the experience of Member States or individual 
contracting entities in taking environmental objectives into consideration in their 
purchasing. The Commission, in its proposed Decision on the review of the 5th.Action 
programme for the environment, has already indicated that further action could be needed 
to take better account of environmental considerations in the application of Community 
public procurement rules, while safeguarding fair competition. 
VII. Defence procurement 
5.54 In 1990 the total defence procurement expenditure by EU defence ministries 
amounted to ECU 65-70 billion. Whilst a large part (around one third) of such purchases 
is already covered by the public procurement directives, the benefits of open procurement 
in this sector are still to be fully exploited. A 1992 study carried out for the Commission 
on the costs of non-Europe in defence procurement, including contracts for military 
equipment, suggested that major savings (ranging from ECU 5 billion to ECU 11 billion on 
the basis of 1990 figures, according to the different possible scenarios) can be achieved in 
this area. The Commission welcomes any move to introduce more competition into 
defence procurement. This will result not only in direct economic savings, but also in 
economies of scale from longer production runs and, ultimately, in a more competitive 
European defence industry. As a contribution to the debate the Commission recently 
issued a communication entitled "The challenges facing the European defence-related 
industry - A contribution for action at European level" . Since the defence-related 
industry depends almost exclusively on public purchases, public procurement is extensively 
dealt with in this communication. Nevertheless, as a competitive European defence 
industry is also an essential precondition for conferring a European identity on security and 
defence policy, the special nature of the sector has to be taken into account. This could 
prompt some adjustments to the procedures laid down in the public procurement 
directives. Neither should initiatives taken by the Western European Union (WEU) and 
other similar organisations working in the defence co-operation field be overlooked. 
VIII. Procurement and consumer policy 
5.55. The implementation of an effective procurement policy, which improves market 
access and transparency in an increasingly integrated Single Market can bring significant 
benefits to consumers, providing them with better quality and more economically efficient 
services and infrastructures. In this context, it would seem important to take greater 
account of consumer policy in Union procurement policy. Promoting more transparency 
and dialogue with consumer organisations would be particularly welcome. 
42 Commission communication of 24lh January 1996, COM (96) 10 final. 
42 
IX. Questions 
1. For general information purposes, do you think that it would be useful to compile a 
practical guide explaining to SMEs how to prepare themselves for taking part in 
public procurement, and for interpretative notices to be drawn up on aspects of the 
application of the Directives which are of special interest to SMEs? On what 
topics, in your view, should these documents particularly focus? 
2. Given that some Community-sponsored networks already supply additional 
information on procurement, particularly to SMEs, should their role be reinforced? 
If so, how? 
3. What is your opinion on the options under consideration for improving the 
information available to SMEs about specific contracts (adaptation of TED, using 
the INTERNET, the CPV and standard forms)? Do you think that there are other 
avenues which should be explored? 
4. Is the EEIG (European Economic Interest Grouping) an appropriate instrument for 
promoting co-operation between SMEs, especially in cross-border public 
procurement? 
5. Do you think that, to promote greater SME participation in public procurement, 
other action should be taken at Community level, particularly on the issues of 
subcontracting and payment periods? If so, what type of action? For example, 
should one consider the fixing of mandatory payment periods, after which interest 
on late payment and, if need be, damages and interest would be due? 
6. What are, in your view, the most appropriate ways of developing networks of SME 
support services? What type of services in particular should be provided by these 
networks? 
7. In your opinion, to what extent has the standardisation policy pursued by the 
European standards bodies (CEN, CENELEC, ETSI) on the basis of Commission 
mandates been successful in eliminating obstacles to the opening-up of public 
procurement? 
8. Which product sectors should be given priority in determining further mandates for 
European standards? 
9. A number of anxieties expressed by the private sector have been dealt with in the 
part of this Chapter concerned with TENs. Has the clarification of the relevant 
provisions been sufficient to dispel these anxieties or should further written 
guidance be given on the application of the Directives to public tendering for TENs 
or other major projects (for example, through an interpretative communication)? 
10. Do you know of any other issues related to tendering procedures for contracts that 
need.clarification or resolution to facilitate private participation in TENs or other 
public/private partnerships? 
11. Do you agree that, as an incentive to the effective management of the Structural 
Funds, wider publicity should be given by Member States and contracting entities 
to the fact that value for money has been achieved in procurements for EU co-
financed projects? 
43 
12. Would it be useful to require the persons responsible to sign a personal statement 
that, in respect of a particular project, value for money has been obtained and that 
the public procurement rules have been followed? 
13. Are there any other ways of increasing the effectiveness of the public procurement 
rules when structural funds are utilised ? 
14. Do you think that contracting entities receiving funds from the Union should be 
encouraged to undergo attestation to ensure that an effective procurement system 
is in place? 
15. Do you think that it could be useful and efficient if an independent national 
authority, co-operating closely with the Commission, were to assist contracting 
authorities when their procurements are financed from Community funds? 
16. Do you think that the rules governing contracts awarded by the Community 
institutions and contracts awarded by other bodies or third countries under 
Community programmes and using Community resources are adequate to ensure 
fair access to these contracts for all interested parties? 
17. In your opinion, do the possibilities offered by public procurement law for pursuing 
Community and national social policy objectives need to be clarified, for example 
by means of an interpretative communication? 
18. Do you think that these possibilities are sufficient to satisfy needs? If not, what 
other measures do you think could be taken in order to ensure that social policy 
objectives are more effectively achieved in the application of the Community rules 
on public procurement, while safeguarding fair competition? 
19. In your opinion, are obligations relating to health and safety at the workplace taken 
sufficiently into account during the preparation of tender notices and contract 
documents? What improvements can you suggest? 
20. What has been your experience with the promotion of "green" products and 
services procurement under the Directives? Is there a need for the Commission to 
clarify the possibilities for incorporating environmental protection concerns in the 
application of the public procurement directives (e.g. by means of a Commission 
communication)? 
21. Do you think that the possibilities offered are sufficient to attain the objectives 
pursued? If not, what measures do you think could be taken in order to ensure that 
environmental protection objectives are more effectively achieved in the application 
of the Community rules on public procurement, while safeguarding fair 
competition? Should the eco-label be included among the technical specifications 
mentioned in the general contract documents, or should application for registration 
under the Environmental Management and Audit Scheme figure among the 
selection criteria? 
22. Given the absence of competition in the military equipment sector, should this not 
be governed by a system of public procurement as desired by some Member States? 
44 
6. PROCUREMENT OUTSIDE THE UNION 
With a new World Trade Organisation Government Procurement Agreement (GPA) in 
place, globalisation of public procurement is certain to grow. Our industry must reply 
positively and effectively to this challenge; world-wide competition will be intensifying 
and success will hinge on innovation and international thinking to meet the challenge. 
Further market opening must be actively pursued; a constructive, ongoing dialogue with 
our industry is critical to identify new market opportunities and to help set objectives for 
any future negotiations. To this end, the Commission invites Member States and 
industry to provide information on any problems particular markets might pose and to 
suggest possible solutions, in particular where market opening agreements are under 
negotiation. 
The preparation of the associated countries of Central and Eastern Europe for accession 
to the Union remains a rnajor priority. The Commission's White Paper provides 
guidelines on the full range of single market policies, including public procurement. The 
Commission and the Member States have already made considerable efforts in helping to 
lay the foundations for an effective public procurement system. These efforts must be 
intensified. Training on best procurement practice and ready access to sound legal 
advice are paramount. 
Similarly, in line with the Commission's attempts to improve links with countries in the 
Mediterranean basin and as is provided for in the agreements concluded with Turkey, 
Morocco and Tunisia, the Commission will also look at ways of assisting in the 
development of competitive public procurement practices there. 
I. Access to world procurement markets - Getting a fair deal for Europe 
6.1 Increased liberalisation of EU markets must, to the greatest extent possible, be 
mirrored throughout the world in order to maximise the benefits to our industry of 
competitive tendering. The EU has been instrumental in achieving large-scale procurement 
liberalisation with its major trading partners, through the first-generation GATT 
Agreement on Government Procurement of 1979, the European Economic Area (EEA), 
the Europe Agreements, and more recently through a new WTO Government Procurement 
Agreement (GPA), concluded alongside the Uruguay Round. 
6.2 The new GPA came into force on 1st January 1996. In addition to the European 
Union, the contracting parties are the US, Canada, Japan, Israel, South Korea, Norway 
and Switzerland. Aruba and Liechtenstein recently joined the agreement, and Singapore is 
in the process of acceding. The agreement's coverage includes contracts awarded by lower 
levels of government (such as individual states in federal countries, provinces and cities) as 
well as by entities operating in a number of utilities sectors (such as electricity, urban 
transport, water, ports and airports). Whereas the 1979 GPA was limited to public supply 
contracts, public works and public service contracts now fall within the scope of the new 
GPA. Significantly, suppliers will also have the right to challenge the award of contracts 
where they feel that they have been discriminated against. The Commission estimates 
45 
overall that the new GPA will open to international competition public contracts worth 
around ECU 450 billion every year. That represents approximately a tenfold increase in 
the value of contracts opened to bidding under the 1979 GPA. 
6.3 Many discriminatory provisions which kept EU business out of huge procurement 
markets in third countries were removed at the beginning of this year. New business 
opportunities have been created for industries as diverse as banking and heavy engineering. 
In the US, most discriminatory "Buy American" provisions, some dating from the 1930s, 
have been removed by the Federal Government as well as by 39 of the 50 state 
governments (including California, New York, Texas, Illinois and Florida). As a result, 
market opportunities worth around ECU 100 billion per annum will be available to EU 
business. The GPA also represents major progress on opening up procurement markets in 
south-east Asia. Japan for example agreed to cover the award of contracts by its 47 
prefectures which are responsible for the bulk of procurement expenditure, particularly in 
the area of construction and civil engineering. In South Korea, which will apply the GPA 
from 1997, EU business will be able to bid for contracts throughout the public sector 
without the compulsory technology transfer, buy-back or local content arrangements that 
applied in the past. 
6.4 But we cannot stand still. Despite major progress achieved to date, not all 
restrictions on tendering opportunities have been removed; certain important restrictions 
have remained in place in the countries which are signatories to the GPA (in which case, 
the Community has followed the principle of reciprocity). Moreover, the GPA, which is 
for the time being a plurilateral agreement, is intended to become a multilateral agreement, 
which means that a large number of countries have yet to accede. As the European market 
is generally open for suppliers from third countries, it is in the interest of European 
business that the Community should seek, in negotiations with third countries, to agree on 
market-access arrangements which achieve full reciprocal liberalisation of procurement. 
6.5 Further opening-up of public procurement world-wide will therefore remain our 
key target. Results will be sought from the multilateral process in the WTO, by completing 
the coverage of existing parties to the GPA and by enlarging its membership. Future 
applicants for membership of the WTO such as China and Taiwan should, as a matter of 
principle, join the GPA, if necessary after a transitional period. (Indeed, Taiwan has 
already tabled an offer to join.) The Commission already strongly encourages present 
WTO members to accede to the GPA, particularly those with observer status under the 
Agreement. The multilateral approach through the WTO remains the key forum for our 
efforts. A parallel negotiation should be initiated in order to reach an agreement on 
transparency, opening up and systems of remedies in public procurement. The end 
objective remains national treatment and the effective application of the most favoured 
nation clause for all the public contracts and all Members of the WTO. To further this 
process, the European Union also proposes an advance revision of the GPA of 1994, 
which would include the extension of the Agreement, the abolition of discriminatory 
measures and practices and its simplification and improvement. Bilateral negotiations are, 
nonetheless, still needed. The Commission is therefore already in negotiation with 
Switzerland and South Korea. In a similar vein, the Commission is looking at gaining 
market access for EU suppliers in the countries of the Mediterranean Basin. Further to the 
Barcelona Declaration which aims to establish a Free Trade Area between the Community 
46 
and the Mediterranean countries in time for the beginning of the next century, an 
Association Agreement covered by Article XXIV of the GPA has been reached with Israel. 
This agreement has been completed by two specific agreements on public procurement. 
These, which are not yet ratified, aim to broaden offers made on a reciprocal basis under 
the GPA and to open the telecommunication procurement markets of both parties. A 
Customs Union Agreement with Turkey has also been concluded which makes provision 
for future access to public procurement on a reciprocal basis. A similar approach has been 
taken in two Interim Association agreements concluded with Morocco and Tunisia. 
6.6 European industry already has much detailed knowledge of local difficulties in 
tendering in third countries. As indicated in its Communication on a market access 
strategy43, the Commission must, if this strategy is to be effective, have first-hand up-to-
date knowledge of the problems that suppliers face in third country markets so that it can 
remove those barriers which are most harmful to European interests. It would be helpful 
to have details of the experience industry has. The new interactive data base, accessible on 
the INTERNET, makes it possible for industry to inform the Commission directly about its 
market access problems. This will enable the Commission to evaluate the problems and to 
examine and decide upon what action should be taken to resolve them. On the other hand, 
in order to identify problems of access and to help set objectives for future negotiations 
with third countries, the Commission has launched a major multi-country study on public 
procurement regimes in 19 countries in Asia, the Middle East and Latin America. The 
results of the study will be available shortly. The contribution of European industry to this 
study would be most welcome. 
6.7 However, compiling and analysing information is only half the battle. Agreements 
are only useful if they can be made to work in practice. The Commission will therefore 
take steps to ensure that the GPA is made to work effectively. It will draw on its network 
of delegations in third countries to assist it in this task. The Commission also invites 
Member States to provide assistance where necessary to ensure that its suppliers are 
treated fairly. When necessary and appropriate, the Commission will not hesitate to use 
the consultation procedures provided under the GPA. If these consultations fail to resolve 
the issue, the Community may make use of the WTO dispute settlement procedures. 
6.8 But competition is not a one way street. The Community and the Member States 
can help in creating the right conditions, but European industry must itself be prepared to 
fight strong competition for public sector contracts inside the Union from third country 
suppliers who now benefit from the GPA. Suppliers should, in time, seek to maximise the 
commercial opportunities the Agreement offers to increase their exports to third countries, 
and increase their share of third country procurement markets. Those who adapt to 
change and seek to find new markets will generally be the most successful. Those who are 
complacent and wait are most at risk. 
doc. COM(96) 53 final 
47 
II. Laying the foundations for open procurement in Central and- Eastern 
European Countries and in the Mediterranean countries 
6.9 Following the entry into force of the Europe Agreements, which are covered by 
Article XXIV of the GPA, suppliers from Hungary, Poland, the Czech Republic, Slovakia, 
Bulgaria, Romania, Slovenia (and shortly the Baltic States) have access to public tenders in 
the EU. At the end of a ten-year transitional period, suppliers based in the EU will also 
have access to public tenders in the associated countries. It is, therefore, vital that 
suppliers in the associated countries take up the challenge of participating in contract 
award procedures in the EU. They must also begin to make advances in competitiveness 
that will enable them to compete effectively with EU companies in domestic tender 
procedures following the transitional period. Similarly, in line with the Commission's 
attempts to improve links with countries in the Mediterranean Basin and as is provided in 
the agreements concluded with Turkey, Morocco and Tunisia, the Commission will also 
look at ways of assisting in the development of competitive public procurement practices 
there. 
6.10 One of the major challenges facing the Union is to help the countries of Central and 
Eastern Europe (CEECs) to prepare themselves for EU membership. A key element in the 
pre-accession phase is the alignment by the CEECs of their legislation with Community 
legislation governing the single market. At the request of the Essen European Council, the 
Commission set out the basis of us strategy in the White Paper on the preparation of the 
associated countries of Central and eastern Europe for integration into the internal market 
of the Union. 4 Presented to the Cannes European Council in June 1995, the White Paper 
gives guidance on the legislative measures that the countries concerned need to put in 
place in order to set up the necessary regulatory structure by the time of their accession to 
the EU. The White Paper makes it clear that, in the area of public procurement, the right 
administrative procedures must be established by law in order to foster competitive 
tendering for public contracts and to encourage competition between suppliers for those 
contracts. 
6.11 However, open and competitive public procurement procedures are a relatively 
new phenomenon for most suppliers and contracting entities in the CEECs. Aligning 
domestic legislation with that of the internal market will not in itself bring about the 
changes that are necessary for suppliers and contracting entities to establish an efficient 
procurement system. The legislative framework that is being put in place will be reinforced 
by relevant and targeted technical assistance. Procurement officials need to be given the 
appropriate training to be able to define the goods and services that they are seeking to buy 
as effectively as possible, based on a thorough understanding of the economic and financial 
implications. Training will also help in improving the administrative and managerial skills 
that are needed to run an efficient procurement and contract management system. 
Suppliers too must adapt themselves to the culture of providing the goods and services 
that their public clients require, and improve their ability to prepare and submit competitive 
tenders. 
44 COM (95) 163 of 3.and 10.05.95. 
48 
6.12 The European Union is already supporting the CEECs in their first efforts to lay the 
foundations for efficient and open procurement. Valuable assistance, especially in the 
drafting of laws and the setting-up of administrative frameworks, is being delivered 
through PHARE and the mostly PHARE-financed SIGMA programme45, which operates 
under the auspices of the OECD. The Commission has also established a new multi-
country facility called the Technical Assistance Information Exchange Office. The Office 
will be a focal point for enquiries for help and advice from the Commission. It will also be 
a 'one-stop shop' where information on technical assistance relating to the internal market 
can be delivered and exchanged. 
III. Questions 
1. How effective in terms of market opening has the Government Procurement 
Agreement been? Is there a need for further initiatives? 
2. From a business perspective, which countries (or group of countries) and which 
business sectors should be given the highest priority in future market opening 
initiatives? 
3. Do you believe that a set of common principles (such as transparency and non­
discrimination) would be enough to ensure that real market opening is achieved in 
future in developing countries? 
4. Are there any other barkers (regulatory or non-regulatory) preventing successful 
participation in third countries' procurement that fall outside the scope of the GPA? 
5. Would it be useful to set up an advisory group of industry representatives to assist 
the Commission on matters relating to access to procurement in third countries? 
6. What additional steps could be taken by the Community or by the Member States 
to help suppliers enforce their rights under the GPA and ensure that other 
contracting parties play by the rules? 
7. Do you believe that the Community should give priority to helping the CEECs to 
develop public procurement skills? If so; what would be the most effective means 
of providing training for the CEECs? 
8. Would the procurement profession be ready to take an active role in providing 
assistance and lending expertise to the CEECs? Have you already been involved in 
any training programme? If so, what conclusions would you draw from your 
experience for future programmes? 
9. Given that the Commission is looking at ways of assisting in the development of 
public procurement practice in the Mediterranean Basin, what initiatives do you 
think appear appropriate in this matter? 
Support for Governance and Management in Central and Eastern European Countries. 
49 
Annex I 
The first Community procurement Directives, on public works (71/305) and public 
supplies (77/62) made a positive, but limited, contribution to more competitive 
procurement. The scope of these Directives was restricted. Major portions of public 
procurement, such as procurement in the water, energy, transport and telecommunications 
sectors and contracts for services, were not covered by these rules. Moreover, there was 
no harmonisation of remedies procedures, so that suppliers excluded from contracts in 
violation of the Directives often had no means of challenging doubtful procurement 
decisions or seeking compensation. The rules also left open too many loopholes for 
procurement entities to avoid open procedures on grounds that were not objectively 
justified. Subsequently changes have been made to the EU procurement rules to respond 
to public and political reaction to past improprieties and perceived weaknesses in the 
system. 
The EU legal framework for public procurement was completed between 1987 and 1993 
as part of the 1985 Internal Market White Paper programme. The public supplies and 
public works Directives were updated, in 1988 and 1989 respectively, and then 
consolidated in 1993 (as Directives 93/36 and 93/37). Procurement of service contracts 
was included in the EU's open procurement regime by Directive 92/50, in force since 1st 
July 1993. A Directive on supplies and works procurement by utilities in the water, 
energy, transport and telecommunications sectors, covering both public undertakings and 
undertakings to which Member States have granted special or exclusive rights, was 
adopted by the Council in 1990 (Directive 90/531/EEC). A consolidated version of the 
Utilities Directive, including service contracts, was adopted in June 1993 (Directive 
93/38), superseding Directive 90/531 with effect from its entry into force on 1st July 1994 
(1st January 1997 for Spain and 1st January 1998 for Greece and Portugal). Two specific 
Directives on remedies exist, one for the 'traditional' procurement sectors (89/665, as 
amended by the Services Directive 92/50) and one for the utilities sectors (92/13). The 
Remedies Directives require Member States to ensure that administrative or legal remedies 
are available to suppliers in the event of non-compliance with the substantive rules on open 
procurement. 
The Directives require Member States to ensure that award procedures for contracts over 
specific thresholds are transparent and competitive. The Directives include rules covering 
the publication of tenders; the procedures for awarding contracts which must be followed 
(for example, technical specifications must normally refer to European standards where 
they exist or, in the absence of European standards, to national standards referring to 
international standards); and the selection and award criteria which may be used. The 
thresholds defining which contracts fall under the Directives' rules are set at ECU 200 000 
for supplies and service contracts (ECU 400 000 for contracts awarded in the utilities 
sectors and approximately ECU 130 000 for contracts falling within the scope of the 
application of the agreement on public contracts of the World Trade Organisation) and 
ECU 5 million for works contracts. These thresholds are defined with a view to ensuring 
the competitive procurement rules apply to contracts likely to interest suppliers from other 
Member States while allowing administrative and procedural costs on smaller contracts to 
be kept to a minimum. 
50 
STATUS OF IMPLEMENTATION OF THE PUBLIC PROCUREMENT DIRECTIVES 
DIRECTIVES 
89/440/EEC 
Works (18.7.1989) 
In force since 19.7.1990 
GR.E.P: 1.3.1992 
AT.FI.SE: 1.1.1994 
replaced by 93/37/EEC 
88/29S/EEC 
Supplies (2.3.1988) 
In force since 1.1.1989 
GR.E.P: 1.3.1992 
AT. FI, SE: 1.1.1994 
- 89/665/EEC 
Remedies (21.12.1989) 
In force since 21.12.1991 
AT.FI.SE: 1.1.1994 
90/531/EEC 
Utilities (17.9.1990) 
In force since 1.1.1993 
E: 1.1.1996 
GR,P: 1.1.1998 
AT.FI.SE: 1.1.1994 
92/13/EEC 
Remedies for Utilities 
(25.2.1992) 
In force since 1.1.1993 
AT.FI.SE: 1.7.1994 
E: 30.6.1995 
GR.P: 30.6.1997 
92/50/EEC 
Services (18.6.1992) 
In force since 1.7.1993 
AT.FI.SE: 1.7.1994 
93/36/EEC 
Supplies (14.6.1993) 
In force since 14.6.1994 
AT.FI.SE: 1.7.1994 
93/38/EEC 
Utilities (14.6.1993) 
In force since 1.7.1994 
AT.FI.SE: 1.7.1994 
E: 1.1.1997 
GR,P: 1.1.1998 B 
>" 
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1 L NL P 
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Key: 
National implementing measures not communicated or only partly communicated 
National implementing measures communicated and checked; infringement proceedings for non-
compliance under way 
National implementing measures communicated 
D Derogation granted to Member State 
51 
FINANCIAL STATEMENT 
1 TITLE OF OPERATION 
Green Paper "Public Procurement in the European Union: exploring the way 
forward". 
2 BUDGET HEADING INVOLVED 
See paragraph 10 below. 
3 LEGAL BASIS 
Directives 92/50/EEC, 93/36/EEC, 93/37/EEC, 93/38/EEC, 89/665/EEC, 
92/13/EEC. 
4 DESCRIPTION OF OPERATION 
4.1 General objective 
The above mentioned Directives which are the legal basis of this Green 
Paper have established a complete legal system for public contracts at 
Union level. It is difficult to apply it in a complete and effective way to 
achieve the hoped for objectives. Public contracts in Member States are 
being opened up, competition is increasing and the purchasing practices 
of contracting authorities are giving ever better results. Nevertheless all 
actors concerned need to make still more effort ïFCommunity policy in 
this area is to bring about the maximum benefits. 
This Green Paper is intended to stimulate a wide ranging debate. In it 
the Commission develops its initial thoughts on a certain number of 
questions essential for present and future policy and invites all interested 
parties (authorities of Member States, Community institutions, 
professional organisations, entities and contracting authorities, suppliers) 
to give their point of view. 
By its nature this Green Paper does not contain proposals of the 
Commission which could have direct budgetary effects. In most cases 
the Commission only envisages taking, or supporting, some initiatives 
if, after discussion with the actors concerned, these would be useful or 
even essential to achieve its policy objectives in public contracts. 
The Green Paper announces only one action with budgetary effects. 
This is the possible organisation, after initial replies have been analysed, 
of a meeting in Brussels with the most representative interested parties of 
the Member States. 
fz 
4.2 Period covered and arrangements for renewal 
Expenses incurred following action stated in point 4.1 (organisation of a 
meeting in Brussels) will have to be provided for during 1997. 
5 CLASSIFICATION OF EXPENDITURE OR REVENUE 
5.1 DNO 
5.2 CND 
"5.3 None 
6 TYPE OF EXPENDITURE OR REVENUE 
Expenditure relates to the possible organisation of a meeting in Brussels, 
following a first analysis of replies received, with the most representative 
interested parties of the Member States, namely the reimbursement of travel 
costs (and, if need be, accommodation expenses) 
7 FINANCIAL IMPACT 
NONE 
8 FRAUD PREVENTION MEASURES 
Action provided for at point 4.1 will be directly executed by the Commission's 
Services, by applying rules concerning the reimbursement of travel and 
accommodation costs as well as disbursements incurred by people foreign to the 
Commission who have been called upon as experts. 
9 ELEMENTS OF COST-EFFECTIVENESS ANALYSIS 
9.1 Specific and quantified objectives; target population 
The specific object is to make all interested actors aware of the 
reflections and options which the Commission envisages on the various 
themes running through its policy on public contracts to open up a large 
debate on the line to be followed in the future. If necessary a meeting 
could be organised in Brussels after the written communication phase. 
In this meeting the representatives of the actors most concerned who 
have taken part in the written phase could set out their point of view and 
help the Commission to decide on the most appropriate follow-up to the 
Green Paper. 
Those concerned are the institutional interlocutors in the Member States, 
the purchasing bodies, professional organisations and enterprises 
working in the sectors of public contracts. 
fS 
9.2 Grounds for the operation 
The Community is responsible for putting into place policies on the 
completion and functioning of the Internal Market, such as public 
contracts' policies. As was said above the Green Paper seeks to open up 
a debate which will show initiatives which are opportune or even 
necessary to benefit fully from Community policy on the subject. The 
nature of the initiatives in the Green Paper implies their direct 
management by the Commission. 
As the objective is to open up a debate on a number of questions on 
public contracts, the instrument to be used by the Commission is the 
publication and distribution of a Green Paper. 
Neither at national nor at Community level have activities been 
conducted which are similar to, or the same as, this action. 
This initiative has been envisaged after the need for it was expressed in 
different ways by the actors involved. Therefore one can expect that the 
Green Paper will be well received by the public and that its specific 
objectives will be achieved. 
9.3 Monitoring and evaluation of the operation 
The success of the action envisaged will be evidenced by: 
(a) opening up a large debate on the themes dealt with in the Green 
Paper; 
(b) better application of the legislation by the actors concerned; 
(c) deeper knowledge of the trends and structures in public contracts 
(d) greater effectiveness of existing rules. 
Directorate XV-B will take action after receiving reactions to the Green 
Paper and the various initiatives already envisaged. As already said, 
after the actors concerned have been consulted in writing, consideration 
will be given as to whether it is appropriate to organise a hearing in 
Brussels with all interested parties. 
On the basis of these contributions the Commission will draw up a 
communication on public contracts intended for Community institutions 
comprising an action plan and setting out measures to be taken to 
strengthen the effectiveness of the legal framework and to achieve better 
the objectives of Community policy on public contracts in the future. 
10 ADMINISTRATIVE EXPENDITURE (SECTION III, PART A OF THE BUDGET) 
The administrative resources necessary will be found by the annual Commission 
decision on resource allocation taking account of the staff and supplementary 
sums accorded by the budgetary authority. 
9A 
10.1 Effect ou the number of posts 
Type of post 
Officials or 
temporary 
staff A 
B 
C 
Other resources 
Total Staff to be assigned to 
managing the operation 
Permanent 
posts 
2 
1 
1 
4 Temporary 
posts Source 
Existing 
resources in 
the DG or 
department 
concerned 
2 
1 
1 
4 Additional 
resources Duration 
lyr 
lyr 
lyr 
10.2 Overall financial impact of additional human resources 
Amounts Method of calculation 
Officials NONE 
Temporary staff 
Other reSOUrCeS (indicate budget heading) 
Total 1 NONE 1 
The expenses relating to human resources necessary for the completion of this action 
will be covered by rescheduling existing resources, as follows: 
Officials (Titles Al, A2, A4 and A5): 400,000 Ecus/year. 
10.3 Increase in other administrative expenditure as a result of the 
operation 
Budget heading Amounts Method of calculation 
NONE 
Total 1 1 
A250 General meetings: 22,000 Ecus - 1997 budgetary year 
(on a basis of +/- 30 participants at +/- 695/participant) 
A3410 Publication of the Green Paper 12,130 Ecus - 1996 budgetary year 
(on a basis of +/- 9,300 copies) 
The resources necessary to cover administrative expenses mentioned above will be 
obtained by rescheduling existing financial resources and will not entail further 
expenses. 
1? 



ISSN 0254-1475 
COM(96) 583 final 
DOCUMENTS 
EN 08 10 
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ISBN 92-78-12855-4 
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