WRITTEN QUESTION E-3329/01

by Erik Meijer (GUE/NGL) to the Commission

(30 November 2001)

Subject: Increase in the cost of goods and services purchased as a result of tasks previously carried out by the authorities being replaced by a system of calling for tenders

1. Can the Commission confirm that more and more authorities at various levels in the Member States of the European Union are making increasing use of the invitation to tender procedure for purchasing and commissioning goods and services from companies, in other words that bids are invited from companies offering similar products or services and the cheapest bid chosen?

2. Can the Commission also confirm that not only the method of purchasing of goods and services referred to above but also the contracting out of tasks previously carried out by the authorities themselves are part of a policy being promoted by the Commission through relevant European legislation in a number of areas?

3. Is the Commission aware that, following recent investigations in particular by an office of the Amsterdam authorities, it has again been found that such systems of inviting tenders may lead to deals being agreed between companies concerning which of them is to tender the lowest price for a given contract, as a result of which the cheapest bid is still substantially higher than the real cost price adjusted by a normal profit and risk margin, with the over-payment by the authorities subsequently being divided up between the companies concerned?

4. Is the Commission also aware that part of the higher payments resulting in this way are used for the purpose of bribing officials in order to enable companies to obtain advance information on the calculations on the basis of which the invitation to tender is being issued by the authority concerned?

5. How apart from via existing penalties if it can be proved that cooperation of this kind has taken place or insider knowledge has been obtained does the Commission envisage ensuring that the system of calling for tenders leads in the near future to lower prices with adequate quality being maintained?

6. What alternative solutions does the Commission see to the system of calling for tenders if the objectives set out in question 5 cannot be achieved in a permanent way under such arrangements?

Answer given by Mr Bolkestein on behalf of the Commission

(21 January 2002)

1. The Commission confirms that more and more contracting authorities are applying the directives. This should be seen as the result of better compliance with the rules.

The Commission would also like to point out that application of the procurement directives does not mean that contracting authorities are obliged to choose the cheapest tender. As the purpose of the directives is to ensure an optimum price/quality ratio for the contracting authority, there is always the possibility of choosing a tender which is considered the most economically advantageous one.

2. The Commission would point out that the decision whether or not to carry out specific tasks or to contract out these tasks, is to be made by the contracting authority itself and is no policy of the Commission. The public procurement directives do not apply to processes whereby divisions or departments of contracting authorities are made autonomous or are being privatised. Policy on the decentralisation or privatisation of a contracting authority's departments is a matter for the contracting authority itself. If such newly created or privatised entity is to be regarded as a contracting authority itself, this authority has to, where appropriate, award its contracts in compliance with the procurement directives.

3. to 6. The Commission is aware of the fact that it has recently been established in the Netherlands that agreements are being made between tenderers for public works contracts with the result that the tender eventually selected offers a poorer price/quality ratio than would be the case under conditions of fair competition. Such behaviour could be in conflict with the Community rules on competition and proceedings could be initiated under these rules. The Commission has also heard that officials have been bribed to give companies prior knowledge of information on a tender. Fraud is a phenomenon in itself and is by no means the result of, nor is it assisted by, applying the directives on the award of public contracts. The prosecution of these criminal offences should therefore be conducted using the appropriate means. In this context, the Commission has heard that the national authorities have already opened (criminal) investigations into the matter.

On the basis of the above, the Commission is of the opinion that the proper application of the rules on procurement results in the achievement of an optimal price/quality ratio, which is one of the objectives of these directives. In this respect, there are numerous examples of local authorities which have themselves calculated the savings and higher quality of services they have achieved through open invitations to tender. This being so, the Commission does, in this respect, not envisage any alternatives to the current system.