WRITTEN QUESTION P-1329/97 by Giacomo Santini (UPE) to the Commission (10 April 1997)

Subject: Directive 92/50/EEC on public service contracts

Since the entry into force of Directive 92/50/EEC ((OJ L 209, 24.7.1992, p. 1. )) and of Legislative Decree No 157 of 17 March 1995 giving effect to that Directive, almost all public service contracts have been awarded to the lowest tenderers.

This is leading to an imbalance in the market, as pirate companies are being awarded contracts at prices which bear no relation to the real costs which must be borne by a firm operating properly on the market.

Article 25 of Legislative Decree No 157 of 17 March 1995 stipulates that abnormally low tenders (i.e. those which are more than one fifth lower than the average of the tenders submitted and admitted) shall be verified by the contracting authority. This happens regularly but, given that no official assessment criteria have been laid down, the contracting authority is not in a position to determine whether a tender is abnormally low or not and so the contract is awarded even if the tender in question is 50% lower.

1. What steps does the Commission intend to take to ensure that such tenders are deemed abnormally low and accordingly rejected?

2. What steps does it intend to take to ensure that a firm can take part in tendering procedures on the basis of its technical and financial merits without being excluded by a contracting authority for which it has never previously provided services?

3. How does the Commission intend to guarantee equal conditions for firms taking part in tendering procedures?

4. What steps does it intend to take to check on the actual effects produced by the rules on exempting contributions from tax?

Answer given by Mr Monti on behalf of the Commission (4 June 1997)

Pursuant to Article 36 of Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of public service contracts, the contracting authority can award a contract not merely on the basis of the lowest price, but also on the basis of the economically most advantageous tender, whereby various aspects such as quality, technical merit, aesthetic and functional characteristics, technical assistance and the delivery date can be taken into account. This Article was transposed into national legislation by Article 23(1) and (2) of Legislative Decree No 157 of 17 March 1995.

1. Article 37 of the aforementioned Directive does not allow tenders deemed to be abnormally low to be excluded on the basis of an automatic (mathematical) criterion. Provision must be made for an adversarial procedure with a view to verifying the constituent elements of the tender before deciding to reject it, the aim being to avoid discrimination between companies. The contracting authority must therefore ensure that it has instruments enabling it correctly to assess the explanations provided by tenderers when verifying tenders which appear to be abnormally low.

2. Article 29 of Directive 92/50/EEC lists the cases where service providers may be excluded from participation in a contract, whereas Articles 31 and 32 specify the selection criteria applied on the basis of financial and economic standing and technical capabilities. Nowhere is it stated that a company can be excluded because it has never previously provided services to the contracting authority. An exclusion clause of that type would not merely be contrary to the aforementioned provisions, it would also fall foul of the general prohibition on discrimination on the grounds of nationality enshrined in Article 7 of the EC Treaty and freedom to provide services as provided for in Articles 59 et seq. of the Treaty.

3. The Commission takes the view that the current legislative framework is sufficient to guarantee equal conditions for companies taking part in public procurement procedures. Equal conditions are guaranteed by the Articles of the EC Treaty concerning free movement of goods and freedom to provide services and by the public procurement Directives, which clarify these Articles and guarantee, as the Court of Justice has often noted, the effectiveness of rights vested in individuals by the aforementioned provisions. Apart from the principle of equal treatment, the other principles laid down by the Court of Justice also apply, such as the principle of publication and transparency of procurement notices and all the conditions governing participation, the principle of recognition of applicants' qualifications and skills and the principle of proportionality. Some problems tend to concern transposal of Community rules into national legislation by the Member States and the practical implementation of these rules by the contracting authority.

4. The Commission would ask the Honourable Member to be more specific as regards the last question.