30. 11. 87 Official Journal of the European Communities No C 319/55 
Opinion on the proposal for a Council Directive amending Directive 71/305/EEC concerning 
the Co-ordination of procedures for the award of public works contracts 
(87/C 319/17) 
On 26 January 1987 the Council decided to ask the Economic and Social Committee to 
deliver an Opinion, in accordance with Article 100 of the Treaty establishing the European 
Economic Community on the abovementioned proposal. 
The Section for Industry, Commerce, Crafts and Services, which was responsible for preparing 
the Committee's work on the matter, adopted its Opinion on 2 September 1987. The 
rapporteur was Mr Speirs. 
At its 248th plenary session (meeting of 24 September 1987) the Economic and Social 
Committee adopted by a majority vote with 7 votes against and 2 abstentions the following 
Opinion: 
1. Introduction — Neither the letter nor the spirit of the Directives 
have been generally respected. 
1.1. Contracts awarded in the twelve Member States 
of the Community by governments, or by public sector 
enterprises, in pursuance of concessions granted to 
them, amount in value to about 400 billion ECU per 
year. However, this vast market (which covers both 
public works and public procurement) has not to any 
material extent been opened to competition at Com­
munity level; for example, only 2 % of public procure­
ment contracts have been awarded to companies from 
other Member States. The Commission has estimated 
that this lack of open competition is costing some 40 
billion ECU per year(!). 
In drawing attention to the above facts the Committee 
aims to make clear the context in which the present 
Commission proposal should be set: the achievement 
of an internal market in public procurement still has 
far to go. This goal has been given formal priority by 
the heads of State and Governments because it is of 
vital importance in the development of a true internal 
market by 1992. The Committee wholeheartedly 
endorses this approach. It is in this perspective, i.e. the 
present proposal's contribution to the realization of this 
goal in less than 60-months' time, that the Committee 
has looked at the Commission document. 
1.2. The present Directive dating back to 26 July 
1971 has not worked. Around 2% of public works 
contracts are awarded to other EEC nationals and the 
largest part of these are cross-border enterprises, i.e. 
firms who are basically 'locals'. An opening-up of the 
market has not been achieved. 
1.3. The Commission in its communication on Public 
Procurement in the Community (doc. COM(86) 375 
final), candidly lists the reasons for the basic Directive's 
failure: 
(!) For the Committee's view of this and other problems related 
to the construction sector, see its Opinion of 3 July 1981 (OJ 
No C 230, 10. 9. 1981). — Over-extensive interpretation of the exempted 
areas. 
— Deliberate project splitting. 
— Major abuse of the procedures of the Directives, i.e. 
-the restricted procedure has been frequently used 
under both Directives to exclude the participation 
of non-nationals. 
— The use of non-competitive tendering under the 
Works Directive reaches on average 25% of all 
contracts, a level considerably in excess of that 
which might be expected for an exceptional pro­
cedure. 
— The Directives are inadequate to ensure the achieve­
ment of their objectives. They do not permit suf­
ficient transparency to give an equal chance to all 
potential tenderers. 
— The bid times allowed by the Directives are too 
short to allow foreign participation. 
— The control mechanisms are lacking. 
— The areas where public procurement is of import­
ance in industrial terms have been excluded from 
the coverage of the Directives. 
In order to remedy this situation the Commission now 
proposes to: 
— extend the application of the Directive to important 
sectors hitherto excluded, i.e. land, air and sea trans­
port and water, and energy production, transport 
and distribution. This eliminates the obstacle of the 
difference of legal status (public or private sector) 
of transport, energy and water concerns; an obstacle 
which had been deemed sufficient to exclude these 
services from the Directives on public works con­
tracts, 
No C 319/56 Official Journal of the European Communities 30. 11. 87 
— tighten rules against overzealous interpretation of 
exemptions, notably pertaining to 'conventional' 
and 'non-conventionaP works contracts, 
— increase the threshold for the publication of work 
contracts from 1 to 7 million ECU in such a manner 
as to ensure that the Directive covers all the complex 
markets demanding major specialized works and 
excluding the simple markets of a local character; 
these latter, however, will in excess of 700 000 ECU 
be covered by all remaining stipulations of the 
Directive, 
— require the pre-publication of future works con­
tracts, 
— rationalize the publication procedures and the 
lengthening of the time limits, 
— limit the use of the restricted and single tender 
procedures, 
— modify the Directive to take into account the new 
forms of contracts in awarding contracts (pro­
motions, management contracts, etc.), 
— impose the obligation to use European technical 
standards where these exist. 
2. General comments 
2.1. The Commission should be congratulated on 
having adopted a functional approach by extending 
the definition of the contracting authorities under the 
Directive to not only State, regional and local authori­
ties and legal persons governed by public law, but also 
to public or private undertakings holding public service 
concessions, or to whom the State or regional or local 
authorities have granted special or exclusive rights, thus 
de facto extending the areas the Directive covers and 
making circumventions more difficult. The Committee 
also welcomes the Commission's attempt to include 
hitherto excluded sectors by presuming that any public 
works in the exempted areas are 'conventional' and 
therefore must not be conferred on specialized contrac­
tors unless specified expressis verbis by the contracting 
authority. 
2.2. The Committee notes that measures dealing 
with the specialized, non-conventional contracts of the 
excluded sectors, energy, water supply and transport 
are to be presented later on in the year but understands 
that the abovementioned extension of the scope of 
the Directive, which will take immediate effect once adopted, could lead to the inclusion of up to 80-85 % 
of the hitherto excluded sectors if successfully 
implemented. 
2.3. The Committee agrees with the Commission's 
main objective of transparent and open competition. It 
believes, however, that the Commission proposal, 
which is intended to achieve that objective, is based on 
two false assumptions. The first is that major contrac­
tors are only interested in securing contracts above 
7 million ECU in value thus justifying a publication 
threshold at that level; the second is that the lower 
application threshold of 700 000 ECU will protect SME 
located close to frontiers. 
2.4. The Committee is not convinced that the raising 
of the publication threshold will of itself substantially 
increase the chances of achieving more competition in 
public works contracts. The Committee wholeheartedly 
supports the proposals such as Article 8 against project 
splitting, Articles 7 and 9 restricting the use of non­
competitive tendering, Article 12 on pre-publication 
and Articles 14 to 16 to extend time-limits. But given 
the Commission's own admission 'that neither the letter 
nor the spirit of the Directive have been generally 
respected', the Committee finds it difficult to believe 
that just because contracting authorities no longer have 
to advertise contracts under 7 million ECU firms will 
suddenly feel it worthwhile to venture into another 
EEC country when the main obstacles still remain, i.e. 
the absence of a real guarantee of a fair deal. 
Indeed the Committee feels that the setting of too high 
a publication ceiling will adversely affect the ability of 
industry in general to secure contracts in other EEC 
countries through lack of knowledge that such contracts 
are about to be let. This point is of even greater signifi­
cance since the Directive is intended to include the 
important sectors previously excluded; it is the starting 
point for the Committee's argument in favour of a 
lower threshold. 
2.4.1. The Committee is in favour of any measures 
which serve to encourage greater SME participation in 
public contracts (*). It cannot however agree with the 
Commission's proposal for a double threshold with a 
lower level at 700 000 ECU in favour of certain con­
tracts for SME. A two-threshold situation to protect 
not all firms but just those based near borders flies in 
the face of the basic objective of the proposal which 
(') See its opinion on the Action Programme for SME of 1 July 
1987 (OJ No C 232, 31. 8. 1987, p. 58). 
30. 11. 87 Official Journal of the European Communities No C 319/57 
is to put firms (and SME) everywhere on an equal 
competitive footing in bidding for public contracts 
throughout the Community. 
2.4.2. The Committee therefore proposes, in line 
with the recommendation of the Bureau d'information 
2.5. The Committee also draws attention to the 
Commission's statement in its 1986 communication on 
Public Procurement that 'abuse of procedures continues 
virtually at the same level as in the past since the present 
Directives do not provide any means whereby such 
abuse can be controlled'; this statement is still valid. In 
the Committee's opinion the logical conclusion to be 
reached from the Commission's own analysis of the 
situation is that means to control abuse must now be 
established. The question then, as now, is 'how'. 
2.5.1. The Committee feels that the key to achieving 
an opening up of the public works market lies in making 
sufficient resources available to the Commission to 
implement and enforce the Community legislation in 
this area. The Committee therefore repeats its sugges­
tion put forward in its earlier Opinion (!) on public 
procurement that parallel with a public procurement 
unit a public works unit (like the Task Force for SME) 
be set up within the Commission composed of Com­
mission staff with clearly defined terms of reference 
and adequate financial resources. The unit should be 
responsible for: 
0) OJ No C 68, 16. 3. 1987, p. 7. et de previsions economiques (BIPE), that a single 
threshold limit of 3,5 million ECU be set. This would 
mean that two thirds of the value of the market would 
still be covered. One limit would also do away with 
confusion and possible misinterpretations of the Direc­
tives' threshold of application. 
— Serving as a point of contact to furnish enterprises 
and awarding authorities with information. 
— Surveying permanently tenders which have been 
published, in order to detect cases of non-com­
pliance with the Directives. 
— Intervening to prevent or to discipline cases of brea­
ches of Community discipline. 
— Establishing a system of rapid redress even permit­
ting intervention during award procedures. 
2.5.1.1. An important corollary to the setting-up of 
this public works unit is, in the Committee's view, the 
need to invest this unit with the power to ensure that 
Community legislation in this area is respected. The 
Committee in this context refers to an Opinion under 
elaboration on the application of Community rules on 
procedures for the award of public supply and public 
works contracts. 
2.5.1.2. Moreover, this unit must have the means to 
communicate to all interested parties at central, local 
and regional level both the spirit and the letter of 
the Directives and the mutual long-term advantages of 
applying them. The cost of doing this would, in the 
Committee's view, be more than offset by the potential 
savings of a common market in public works con­
tracting. Establishing a threshold of 3,5 million ECU would have the following consequences: 
Invitations to tender < 3,5 million ECU 
% of invitations to tender 
% of total value 
Average value in million ECU 
Invitations to tender > 3,5 million ECU 
% of invitations to tender 
% of total value 
Average value in million ECU 
Total 
Average value in million ECU Italy 
80 % 
35 % 
1,5 
20 % 
65 % 
13,1 
3,6 France 
73,5% 
31 % 
1,5 
26,5% 
69 % 
9,0 
3,5 United 
Kingdom 
70,5% 
33 % 
1,9 
29,5% 
67 % 
9,4 
4,1 Total 
77,5% 
33,5% 
1,6 
22,5% 
66,5% 
11,0 
3,7 
Source: BIPE (Bureau d'information et de previsions economiques) 
No C 319/58 Official Journal of the European Communities 30. 11. 87 
2.5.2. In order to do this, however, it is of vital 
importance that one of the Commission's potentially 
most important tools in monitoring the application of 
the Directives should not be limited. If the threshold 
for publication is raised to 7 million ECU a substantial 
percentage of the value of works contracts will 
no longer have to be published at Community level 
thus depriving the Commission of the possibility of 
using a system of checking publications in national 
journals with Official Journal publications to identify 
defaulters. 
2.6. Articles 23 and 24 of the basic Directive should 
be reworded in such a way as to ensure that social 
legislation and collective wage agreements are complied 
with at all levels of the undertakings involved and that 
tenders not in accordance with this basic requirement 
are disregarded. 
3. Specific comments 
3.1. Article 2 (a) 
The Committee invites the Commission to re-examine 
the list of professional activities in Annex I as referred to 
in this. Article in order to avoid loopholes or uncertainty 
about which building and civil engineering activities 
fall under the scope of the Directive. 
3.2. Article! (b) 
3.2.1. The Committee accepts the firm definition of 
'contracting authorities' in this Article, which seems a 
step forward in avoiding circumvention of the Directive. 
It supports the general approach of the Commission 
which is to take the competitive situation of the public 
or private contracting authority in question (con­
cession) as the main criterion and consequently to define 
as contracting authorities those undertakings, be they 
public or private, which are not subjected to open 
competition by virtue of the fact that the public authori­
ties have granted them either public service concessions 
or special rights within the meaning of Article 90 of the 
EEC Treaty. Although it fully accepts this functional 
approach the Committee invites the Commission to 
examine ways to communicate to contracting authori­
ties in the Member States, who have hitherto felt 
exempted from the Directive, a legal interpretation of 
the amended Directive within the meaning of Article 
90 as contained in the jurisprudence of the European 
Court of Justice. 
3.2.2. The Committee also notes that there is no 
provision in the proposed Directive to require that 
concessions or special or exclusive rights are declared 
or registered. In the absence of such a provision it will be difficult to identify those undertakings which enjoy 
such privileges and those which do not. There should 
be a requirement on Member States to declare such 
concessions or special or exclusive rights and to whom 
they have been granted to the Commission. 
3.2.3. It is important to ensure that the field where 
the Directive is to be applied is not interpreted different­
ly (particularly depending on whether the contracting 
authority is public or private). In the case of electricity, 
for example, exclusive rights generally apply to distri­
bution or transport, which provides a very high degree 
of dominance — but not a legal monopoly — over 
production. In such cases, it will be necessary to estab­
lish — regardless of whether the company concerned 
has public or private status — if the public contract 
tender arrangements apply to production or not. 
3.2.4. The Committee also understands that private 
or public companies in certain Member States, whose 
activity is distribution of water and energy but which 
neither hold concessions nor have been granted special 
or exclusive rights, are not subject to the stipulations 
of the Directive. 
3.2.4.1. This exemption seems to be completely dis­
criminatory, and steps should be taken to remove it, 
for instance by referring to the idea of a de facto 
monopoly and by adding the following words at the 
end of Article 2 b) of the proposal after 'exclusive 
rights': 'or which benefit, bearing in mind the circum­
stances, from a de facto monopoly or near-monopoly'. 
3.3. Article 3 
The object of this Article is to extend the scope of the 
Directive to works contracts awarded by other entities 
than those defined in Article 1 (b); the Committee 
suggests that a more precise and unequivocal wording 
of this Article be made to avoid divergent interpret­
ations of such terms as financed 'in part', 'directly' or 
'indirectly'. In more specific terms, it should also be 
made clear, for the avoidance of doubt, that, for the 
purposes of this Article, tax concessions shall be regard­
ed as equivalent to finance from public funds. 
3.4. Article 4 
The Committee welcomes the main stipulations of this 
Article: 
a) that the present Directive will apply immediately to 
all areas of public contracts of a conventional nature 
including those of hitherto excluded sectors like air, 
land and sea transport and the sectors of water and 
energy; 
30. 11. 87 Official Journal of the European Communities No C 319/59 
b) that all contracts are to be presumed conventional 
and the onus of proving that works require particu­
lar specialization lies with the contracting authori­
ties. Problems of interpretations are to be dealt with 
by the Commission's Advisory Committee; 
c) that the insertion of 31 December 1992 as the latest 
date by which the provisions of the Directive shall 
apply also to the hitherto excluded sectors is a kind 
of safety net relevant only in so far as the Council 
has not in the meantime adopted particular meas­
ures for public works requiring specialist contrac­
tors to be proposed by the Commission in the near 
future. 
The Committee finds it however difficult to understand, 
not least in view of the fact that the hitherto excluded 
sectors are of considerable importance in industrial 
terms, why no more attention has been paid to the 
main problem of this Article, i.e. how to avoid circum­
vention of the Directive through deliberate misinter­
pretation as to which works are 'specialized' and there­
fore exempt from the EEC rules. The Committee conse­
quently suggests that the Member States, according to 
criteria and definitions established by the Commission 
in cooperation with its Advisory Committee and the 
new Committee on the opening-up of public procure­
ment, set up by the Commission's decision of 26 May 
1987, transmit lists of what constitute specialized works 
in their respective countries to the Commission so that, 
subject to the Commission's harmonization and 
approval of these lists, the contracting authorities know 
which exemptions are permitted. The Committee can­
not agree with the present wording which seems to 
leave this interpretation to the contracting authorities 
themselves on the basis of rather vague criteria. 
/ 
3.5. Article 5 (c) 
The provision that the Directive shall not apply to 
public contracts awarded 'pursuant to the particular 
procedure of an international organization' is so all-
embracing as to make the Directive worthless in its 
application to international organizations. The Com­
mittee considers that the only exclusion permitted 
should be for undertakings in pursuance of an inter­
national agreement related to the stationing of troops. 
3.6. Article 8, 4 
The precautions against splitting of large contracts into 
smaller lots to avoid the application of the Directive 
should be strengthened to require all contracts let separ­
ately, but within one project area, to be aggregated for 
the purpose of the Directive in a two-year period. 3.7. Article 9, 1 (b) 
In order to avoid this paragraph being used as a loop­
hole, it should be reworded so as to make it clear that 
'purposes of research, experiment, etc', all pertain to 
the field of construction. 
3.8. Article 9, 2 (a) 
This paragraph should be more stringently worded, 
especially the reference to exclusive rights, in order to 
avoid, for example, that satisfactory contractors and 
products are left out merely because a certain patent is 
not held. 
3.9. Article 9, 3 
This paragraph, in concordance with statements from 
the Commission representative, should be redrafted in 
order to make it clear that the Article concerns the case 
of a contracting authority's decision being declared null 
and void if the negotiated procedure has been unduly 
applied by the authority. Furthermore the paragraph 
should be amended to allow for subcontractors being 
paid for work carried out prior to the contracting 
authority's decision being declared null and void. 
3.10. Article 10 
This Article requires the contracting authority to define 
technical specifications by reference to European stan­
dards or European harmonization documents where 
these exist. This reference is mandatory. Where such 
standards do not exist, the Commission invites, but 
does not oblige, contracting authorities to refer to a 
series of other standards in a certain order of preference. 
Since European standards or European harmonization 
documents are adopted by the European Committee 
for Standardization (CEN) where all EEC countries are 
represented, and according to a procedure which obliges 
Member States to withdraw national standards that 
might conflict with the European norm in question, the 
Committee does not hesitate to welcome this important 
step in doing away with those barriers to trade that are 
related to national norms. It once again invites the 
Commission to speed up the process of mutual recog­
nition of testing stations without which the abovemen-
tioned step forward will remain of a symbolic nature. 
3.11. Article 15, 5 and 16, 4 
The Committee invites the Commission to draft these 
paragraphs in such a way as to make the delay of not 
less than 40 days on points 5 and 4 respectively equally 
No C 319/60 Official Journal of the European Communities 30. 11. 87 
applicable to telephone requests subsequently con­
firmed in writing. 
3.12. Article 22 
The Committee agrees with the objective of this Article 
which is to create more transparency as to the pro­
portion of contracts subcontracted for small- and me­
dium-sized firms; this is wholly in line with an earlier 
suggestion in the Committee's Opinion on Public Sup­
plies Contracts that 'the firm being awarded the main 
contract should be obliged to publish information on 
sub-contracts above a certain amount' thus taking 'an important step in the direction of creating a European 
public procurement data centre'^). It does not feel, 
however, that merely asking the tenderer 'to indicate 
in his tender any share of the contract he may intend 
to subcontract to third parties' will be of any real value 
in achieving an objective and proposes therefore that 
the phrase be amended as follows: '... share of the 
contract to be subcontracted to third parties'. 
(!) 16 December 1986 (OJ No C 68, 16. 3. 1987, p. 7). 
Done at Brussels, 24 September 1987. 
The Chairman 
of the Economic and Social Committee 
Alfons MARGOT