WRITTEN QUESTION P-0875/01

by Hans-Peter Mayer (PPE-DE) to the Commission

(13 March 2001)

Subject: Law governing the award of public contracts

The municipality of G concludes with undertaking D a buildings management contract (general contractor's agreement), also known as a caretaking contract. No public invitation to tenders was issued in respect of this contract because the municipality of G claims that it is impossible to draw up a detailed, comprehensive requirements specification. The contract is for work by skilled tradesmen and services to be performed in the field of space management (in other words, it is not development planning but the management of premises within municipality buildings), asset management and maintenance management (in other words, public works).

The total amount of the contract is not known: it might be more or less than 200 000.

The general contractor or facility management undertaking is using external subcontractors and its own undertakings to perform the contract and is not issuing public invitations to tender for the individual contracts.

It is claimed that the facility management contractor (the general contractor) has no need to issue public invitations to tender because they are private undertakings, and that negotiations can be held with subcontractors before and after the contract is concluded.

The aim of the municipality of G in so doing is inter alia to keep as many contracts as possible within the remit of the municipality.

The trade associations and chambers of trade regard this conduct as a breach of the EU directives on the award of public contracts and consider that it renders meaningless the German VOB (Verdingungsordnung für Bauleistungen contracting rules for the award of public works contracts) and VOL (Verdingungsordnung für Leistungen contracting rules for the award of public supply contracts) adopted under implementing regulations by the ministers of the Länder.

What is the legal situation with regard to contracts the value of which is less than 200 000?

What is the legal situation with regard to contracts the value of which is more than 200 000?

Answer given by Mr Bolkestein on behalf of the Commission

(26 April 2001)

The municipality mentioned in the given example is a contracting authority in terms of European public procurement law. Therefore, Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of public service contracts(1) and Council Directive 93/37/EEC of 14 June 1993 concerning the coordination of procedures for the award of public works contracts(2) as amended by Parliament and Council Directive 97/52/EC of 13 October 1997(3) applies to certain public works and public service contracts of the municipality.

The municipality has to put the building management services out for tender if the following two conditions are met: the services are building-cleaning services, property management services or integrated engineering services in terms of categories 12 and 14 of Annex I A of Directive 92/50/EEC and the overall value of the services to be executed is at least 200 000. In contrast, the municipality has to put public works out for tender only in case the overall value of the works is at least 5 million. If the building management services cover both public services and public works, the application of the Directive has to be decided on grounds of what the main performance of the contract is (works or services).

The contract has to be put out for tender via publication of a tender notice. In general, the municipality must award the contract under the open or restricted procedure. Under particular circumstances, the municipality may award a public service contract by negotiated procedure with prior publication. This is the case when the nature of the services to be procured, in particular in the case of intellectual services, is such that contract specifications cannot be established with sufficient precision to permit the award of the contract by selecting the best tender according to the rules governing open or restricted procedures. The burden of proving the existence of exceptional circumstances justifying the negotiated procedure lies on the municipality seeking to rely on the circumstances.

From the point of view of European law, the municipality is not hindered from awarding the contract to a general contractor and allowing him to subcontract with third parties. In any case the contract of the municipality must have been put out for tender via publication of a tender notice. Furthermore, it must have been awarded according to the rules of the respective Directive. The rules of the Directives apply to the subcontracting to third parties only in case the general contractor himself is a contracting authority in terms of the Directives.

In case the overall value of the contracts is below the thresholds, Directives 92/50/EEC and 93/37/EEC do not apply. Nonetheless the municipality has to abide by Community law while awarding the contracts. In particular, the municipality has to behave in accordance with the principle of non-discrimination as laid down in the EC Treaty.

(1) OJ L 209, 24.7.1992.

(2) OJ L 199, 9.8.1993.

(3) OJ L 328, 28.11.1997.