Opinion on the proposal for a European Parliament and Council Directive amending Directive 93/38/EEC coordinating the procurement procedures of entities operating in the water, energy, transportation and telecommunication sectors ()

(95/C 256/02)

On 8 June 1995 the Council decided to consult the Economic and Social Committee, under Article 100a of the Treaty establishing the European Community, on the above-mentioned proposals.

The Section for Industry, Commerce, Crafts and Services, which was responsible for preparing the Committee's work on the subject, adopted its Opinion on 7 June 1995. The Rapporteur was Mr Mobbs.

At its 327th Plenary Session (meeting of 5 July 1995), the Economic and Social Committee adopted unanimously the following Opinion.

1. Introduction

1.1. Public procurement has been the subject of a number of Directives with the aim of opening up this very substantial market to competition (the GPA () content alone is thought to be of the order of ECU 350 billion each year). Most of the Water, Energy, Transport, and Telecommunication Utilities, sometime known as the 'Excluded Sectors', are now also covered.

1.2. The last of the Directives was adopted in 1993 and all should be effective now. However, it is a fact that not all Member States have transposed the Directives into their national legislation.

1.3. In December 1993, the negotiations on a revision to the 1979 Agreement on Government Procurement (GPA) were concluded. The new Agreement includes supplies, works and services contracts awarded by the State, as well as certain contracts awarded by public authorities at regional and local level. Also included are certain contracts awarded within the water, electricity, urban transport, ports and airports sectors.

1.4. On 15 April 1994, in parallel with the conclusion of the Uruguay GATT Round, the European Union signed the new Agreement with a view to achieving greater liberalization and expansion of world trade.

1.5. As a result, contracting authorities which are subject to both the EC Directives and the Agreement must apply two distinct legal orders to the same contract. Where the provisions of the Agreement are more favourable on certain points than the Community rules, the functioning of the Community regime will be affected.

1.6. The Commission proposes to align the provisions of the EC Directives with those of the Agreement in order to guarantee that EU suppliers, contractors and service providers benefit from a treatment which is as favourable as that reserved for providers from third countries who have signed the Agreement.

2. The Commission proposal

2.1. Public Sector Directives 92/50 (Services), 93/36 (Supplies), and 93/37 (Works) are all subject to identical changes.

- Thresholds are aligned with those of the Agreement.

- Assistance in preparing technical specifications is forbidden where this would have the effect of precluding competition.

- Information must be provided on the advantages of the chosen tender except where there would be legitimate reasons for not disclosing this type of information.

- Member States are requested to forward more statistical information on the contracts to the Commission.

- Opportunities for access to public contracts for undertakings, products and services from Member States must be at least as favourable as those provided for by the Agreement for undertakings, products and services from third countries who sign the Agreement.

2.2. Utilities Directive 93/38 changes are mainly the same as for the Directives above. There is in addition:

- Access to qualification systems can take place continuously.

3. General comments

3.1. Council Decision 94/800/EC () approved the Government Procurement Agreement (GPA) and this effectively presents the Committee with a fait accompli. The Committee's comments are therefore limited in their scope.

3.2. The Committee has consistently supported the Commission in its effort to achieve liberalization of the Public Procurement market within the European Union. The opening up of this once 'reserved market' is considered by the Committee as an essential feature of a true and functioning Single Market.

3.3. The Commission's concern that Community firms should not be disadvantaged vis-à-vis those from third countries signatories of the Agreement is shared by the Committee.

3.4. The Committee acknowledges therefore that there is a need to align the provisions of the existing Directives with those of the Agreement.

3.5. While generally approving the Commission's proposal, the Committee does not agree in certain areas and these are commented upon in detail in Section 4.

3.5.1. The main area of disagreement concerns the changes proposed by the Commission which are not required by the GPA and which do not, in the Committee's view, simplify or improve the functioning of the existing Directives. The Committee understands that the Commission will be reviewing all Public Procurement Directives over the next four years. Thus it would seem sensible to complete the review, which it is assumed will include full consultation, before making any changes which are not legally required by the Agreement and so avoid unnecessary work.

3.6. The Committee doubts if the additional costs or administrative burdens will be offset by the benefits stemming from improved transparency and increased competition in, for example, such areas as (i) proposals for lowering thresholds and (ii) increased statistical reporting.

3.6.1. The Committee is aware that any increase in costs will ultimately have to be borne by consumers or taxpayers.

4. Specific comments

4.1. Thresholds ()

The threshold for Central Government services has been substantially reduced from ECU 200 000 to ECU 128 000 and would align with that for supplies. It is noted that the proposal applies the lower threshold to all services including Research and Development and Part B services, neither of which are covered by the Agreement. A major question is whether the benefit of having a single threshold will outweigh the extra cost burden it represents (see Section 4.6).

4.2. Information to rejected candidates and tenders ()

4.2.1. The proposal for the Utilities and Services Directives requires contracting entities to advise the 'characteristics and relevant advantages of the tender selected' when requested in writing to so do. An issue at stake is whether this additional data will give any additional benefit and whether it is in accordance with best commercial practice. Many organizations actively promote de-briefing of bidders on the grounds that having gone to the risk and expense of bidding, there is a moral obligation to the tenderers and importantly the bidders will benefit from it in readiness for the next time they bid. Best commercial practice suggests that this is often done (and preferred) orally and in a climate of openness. The requirement for written information may well lead to guarded responses and the risk of litigation. Neither of these is desirable whether for contracting entities or suppliers.

4.2.2. The GPA requires that rejected candidates and tenders be supplied promptly, whenever requested, with relevant information. The Commission's proposal replaces the word 'promptly' with 'within 15 days' in order to align this provision of the Utilities Directive with the other Directives. The Committee considers that the GPA text is clearer and easier to administer.

4.3. Assistance in the preparation of technical specifications ()

The philosophy of this Article is understandable since it would be undesirable for an interested party to influence a specification to an extent that true competition could not take place. However a flexible approach needs to be adopted, as a rigid application of this rule could totally negate any serious technical dialogue between purchasers and suppliers. In specialist markets particularly, those suppliers who have the ability to contribute to the formulation of a specification are also likely to have a commercial interest in any subsequent procurement. This may have the undesirable net effect of either reducing competition for the specific procurement by excluding some potential suppliers or resulting in a reluctance by others to discuss technical issues at the specification stage in case of their exclusion at a later stage.

4.4. Conditions for submission of tenders ()

The GPA provision requires that where it is permissible to submit a tender by telex, telegram or fax, the tender must be confirmed promptly by letter or by the despatch of a signed copy of the telex, telegram or fax. The Commission has gone beyond the requirements of the GPA and the Committee considers that the GPA text is clearer and should be reflected in all the Commission's proposals.

4.5. Statistical obligations ()

The tightening-up of requirements for statistical information by the contracting entities on contract awards must be rejected for at least the private contracting entities in the utilities as these are not subject to the GPA. The GPA does not stipulate any expansion in the statistical information over and above that which is already available to the Commission through the publication of contract award notices. The Committee also notes that it would appear that parties subject to Directive 92/50/EEC are required to provide statistics on Annex 1B services and R& D services where these are above the threshold. This additional burden would seem to do little to improve the effectiveness of the regime and should be dropped.

4.6. Commission extension into areas not covered by WTO/GPA

There should not be any extension to include telecommunications, research and development services, non-urban railway transportation, upstream oil and gas industries, since it is not a requirement of the GPA.

Amending the EC Utilities Directive beyond Government owned enterprises within the meaning of the GPA in relation to utilities whose activities are based 'on sole or special rights' should be opposed. On one hand the EC Directive applies to all European utilities irrelevant of whether public or privately owned whereas on the other the GPA covers only those in government ownership. This by definition does not require an equal degree of market opening and there is no justification for it.

4.7. Contract awards without tendering procedure in case of additional contracts of Utilities Directive (93/38) ()

The GPA provisions apply only to additional construction services, for additional works or services not included in the project initially awarded or in the contract first concluded but which have, through unforeseen circumstances, become necessary for the execution of the contract.

However, the Commission's proposal applies the 50% maximum limit to both additional works and additional services. The Committee finds this unacceptable, since it is not required by the GPA and is not in line with practical requirements.

4.8. Changes to annexes ()

4.8.1. Annex XIII - I and II - refers to the Notice of Existence of a Qualification System. The current Directive includes a simple clear format for the publication of qualification notices. However the Commission has complicated issues by creating two versions. One is as a call for competition and the other not as a call for competition. In the case of the first, there are incorporated additional fields currently required by conventional contract notices but which are inappropriate for qualification systems. The Committee considers the current Annexes should remain unchanged.

4.8.2. The Commission's proposal requires in Article 24(2) that the contract award notice include the price paid as a mandatory disclosure (point I.11 of Annex XV). This is currently optional and, in practice, may be withheld on grounds of commercial sensitivity, and remains so under Article 18(4) of the GPA. The Committee thinks that the GPA provision should have been retained in the Commission's proposal.

5. Conclusions

5.1. The Committee has commented only on the proposed changes to the existing Directives, avoiding deliberately to analyze the Directives themselves.

5.2. The Committee is aware that the Directives are shortly to be the subject of a four year review and it will give its Opinion then in the light of lessons learned from the application of the Directives and on the basis of prior consultation. The reviews should take into due consideration the social aspects involved in the application of these Directives.

5.3. The Committee would like to take this opportunity to stress the importance to the functioning of the Single Market of the urgent transposition into national law in all Member States of the Public Procurement Directives.

Done at Brussels, 5 July 1995.

The Chairman

of the Economic and Social Committee

Carlos FERRER

() OJ No C 138, 3. 6. 1995, pp. 1-49.

() GPA = Government Procurement Agreement.

() OJ No L 336, 23. 12. 1994.

() Point 1 of COM(95) 107 - Article 7(1) of Directive 92/50.

() Point 3 of COM(95) 107 - Article 12(1) of Directive 92/50.

Point 2 of COM(95) 107 - Article 7(1) of Directive 93/36.

Point 2 of COM(95) 107 - Article 8(1) of Directive 93/37.

Point 18 of COM(95)107 - Article 41(1) of Directive 93/38.

() Point 5 of COM(95) 107 - Article 14(7) of Directive 92/50.

Point 3 of COM(95) 107 - Article 8(7) of Directive 93/36.

Point 3 of COM(95) 107 - Article 10(7) of Directive 93/37.

Point 5 of COM(95) 107 - Article 18(9) of Directive 93/38.

() Point 8 of COM(95) 107 - Article 23 of Directive 92/50.

Point 6 of COM(95) 107 - Article 15 of Directive 93/36.

Point 6 of COM(95) 107 - Article 18 of Directive 93/37.

Point 30 of COM(95) 107 - Article 28(6) of Directive 93/38.

() Point 10 of COM(95) 107 - Article 39 of Directive 92/50.

Point 8 of COM(95) 107 - Article 31 of Directive 93/36.

Point 3 of COM(95) 107 - Article 34 of Directive 93/37.

Point 19 of COM(95) 107 - Article 42 of Directive 93/38.

() Point 6 of COM(95) 107 - Article 30(9) of Directive 93/38.

() Point 22 of COM(95) 107 - Article 30(9) of Directive 93/38.

Point 22 of COM(95) 107 - Article 24(1) of Directive 93/38.