GREEN PAPER - PUBLIC PROCUREMENT IN THE EUROPEAN UNION: EXPLORING THE WAY FORWARD
Date: 1996-11-27
Institutions: European Commission
Subjects: application of EU law, competition, public contract, single market

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 27.11.1996 
COM(96)583  final 

GREEN  PAPER 

PUBLIC PROCUREMENT 
IN THE EUROPEAN UNION: 

EXPLORING THE WAY FORWARD 

(presented by the Commission) 

CONTENTS 

1. 

INTRODUCTION 

2. 

THE BACKGROUND  TO THE DEBATE 

I. 

The objectives of the Union's public procurement  policy 

H. 

The impact so far 

HI.  Questions 

3. 

APPLICATION  OF PUBLIC PROCUREMENT LAW 
CURRENT STATE OF PLAY AND TRENDS 

I. 

Introduction 

H. 

Directives  must be implemented  into national law 

HI. 

The law on public procurement  must be correctly  applied 

A 

Issues linked  to incorrect application  of the  Directives 

(a) 
(b) 
(c) 
(d) 

(e) 

Basic definitions  in the Directives 
Excessive use.of negotiated  procedures 
Unsatisfactory  quality of  notifications 
Excessive use of accelerated  procedures  and  imposition 
of deadlines that are too short 
Selection  and award  criteria 

B 

Issues  linked  to situations  which  do  not  fall  within  the scope  of 
the Directives 

(a) 
(b) 

(c) 

Concessions or similar contracts 
Public  procurement  contracts  below  the  thresholds  laid 
down in the Directives 
Changes  to  rules  in  the  course  of  individual  award 
procedures 

C 

Preliminary  conclusions 

IV 

IV.  Monitoring application  of the law on public  procurement 

A 

B 

C 

The Remedies  Directives 

Appropriate sanctions 

Complaints 

(a) 
(b) 

At Community level 
At national level 

D 

Other means for settlement of disputes 

(a) 
(b) 

Attestation 
Conciliation 

V. 

Questions 

4. 

IMPROVING ACCESS TO PUBLIC  PROCUREMENT 

MONITORING,  INFORMATION, TRAINING,  ELECTRONIC 
TENDERING 

I. 

Monitoring  public  procurement 

H. 

Information 

(a) 

Improved  readability of the legal  framework 

(b) 

Dissemination  of  notifications 

III. 

Training 

IV. 

Electronic  tendering 

(a) 
(b) 
(c) 
(d) 
(e) 
(f) 
Questions 

V. 

Current state of play 
Electronic  notification 
Electronic  dissemination 
A fully electronic tendering system 
Experience outside the European  Union 
Conclusion 

lb 

5. 

PUBLIC PROCUREMENT AND OTHER COMMUNITY  POLICIES 

I. 

SMEs 

II. 

Standardisation 

HI. 

Trans-European  Networks (TENs) and transport in  particular 

(a) 
(b) 
(c) 

The pre-tendering  phase 
The award of concessions to consortia 
The use of the negotiated  procedure 

IV. 

Procurement  involving Union  funds 

(a) 
(b) 

Structural  and Cohesion  Funds 
Public  procurement  by  the  European  institutions  or 
financed  by  non  member  countries  benefiting  from 
Community  resources 

V. 

Procurement  and  social  aspects 

VI. 

Procurement and  the environment 

VII.  Defence  procurement 

VHI  Procurement  and  consumer  policy 

IX.  Questions 

6. 

PROCUREMENT  OUTSIDE THE UNION 

I. 

II. 

Access to world  procurement  markets - Getting a fair deal for Europe 

Laying  the  foundations  for  opening  up  procurement  in  Central  and 
Eastern European  Countries and in the Mediterranean  countries 

III.  Questions 

VI 

/, 

1. 

INTRODUCTION 

An effective  public procurement  policy  is fondamental to  the  success  of the  single 
1.1 
market  as a whole.  Every year,  the European  Union's public  authorities  spend  about  720 
billion  ECU  buying  goods  and  services:  this  represents  11%  of  EU  Gross  Domestic 
Product.  With the completion  of the Community's legal framework for  public  procurement, 
it  is  essential  to  launch  thinking  and  discussions  on  how  best  to  achieve  its  full  potential: 
discussions  in  which  the  Member  States,  the  European  Parliament,  and,  crucially,  the 
contracting authorities and suppliers themselves are invited to take part. 

The  European  Union  has  already  made  considerable  progress  in  its  public 
1.2 
procurement  policy.  The  legislative  framework  for  open  and  competitive  public 
procurement  is  in  place  and  is  now  being  implemented  by  Member  States.  The  parties 
involved  in  public  procurement  are  gradually  adapting  to  the  new  situation.  This  policy 
framework  will  continue  to  be  an  incentive  for  major  change  in  traditional  purchasing 
practices  in  the  Member  States,  thus  contributing  to  an  environment  favourable  to 
economic development  in Europe as a whole.  Public procurement  is already  more open  to 
competition  than  ever  before.  Wider  access  to  public  procurement  in  other  countries, 
including  those  outside 
is  already  generating  significant  new  market 
opportunities. 

the  Union, 

1.3 
If  our  public  procurement  policy  represents  new  opportunities,  it  also  presents  a 
formidable  challenge.  New  rules  necessarily  involve  major  efforts  to  adapt  traditional 
ways  of working.  For  a contracting  entity  this  means having  to  deal  with  new  companies, 
often  from  another Member  State right from the outset.  For a supplier,  it means: increased 
exposure  to  competition;  the  need  to  test  new  markets  and  the  crucial  requirement  to 
remain  internationally  competitive.  For  the  Governments  of  the  Member  States  too,  the 
challenge  is  real.  As  the  major  purchasers,  they  must  follow  the  rules;  they  are  also 
responsible  for  the transparency  of the  system; and  they  have to  implement  the  Directives 
into their national legislation  in accordance with their political  commitments. 

1.4  Now is the time to look at what we have achieved  and what is still to be done.  The 
process  of  transformation  is  already  under  way. 
It  is  the  adoption  of  the  Community 
Directives and their implementation,  even if only partial,  and  the action  of the  Commission 
to  protect  the  rights  to  which  they  give  rise,  which  have  put  into  place  the  essential 
elements  of efficient  purchasing.  However,  it is a difficult  and  sometimes  painful  process, 
particularly where  relationships  based  on habit,  special  links and  national  preferences  once 
reigned.  Long-standing  purchasing traditions that bred  inefficiency  are being  progressively 
abandoned.  Some  contracting  entities  have  alread  been  able  to  demonstrate  that,  by 
applying  the  Community  rules,  they  are  getting  the  oest  value  for  money.  Procurement 
markets of other Member  States  are beginning to  open  up; competition  is intensifying  and 
our industry is becoming better and better prepared to face  challenges at international level. 
Yet  more  remains  to  be  done  if  our  public  procurement  policy  is  to  achieve  its  full 
potential. 

1.5 
Of  course,  the  primary  responsibility  for  the  success  of  this  process  lies  with  the 
contracting  entities  and  suppliers,  whatever  their  size.  But  the  Commission  and  the 
Member  States  themselves  have  a major  role to  play;.  They  must  work  together  to  create 

1  G A -^ 

the  conditions  in  which  competitive  procurement  can  take  place  and  our  enterprises  can 
flourish.  The  potential  in  economic  growth  and,  ultimately,  employment  will  go  largely 
unexploited  if barriers to cross-border  transactions  in goods and  services  are not  removed. 
The smooth functioning  of the internal market in procurement  is, therefore,  of relevance in 
the context of the evolving debate on a European Confidence Pact for  Employment. 

This  Green  Paper  is  intended  to  provide  a  framework  for  a  wide-ranging  debate. 
1.6 
The  chapters  that  follow  set  out  the  background  against  which  the  Commission  is 
developing its initial thinking on a number of issues central to the Community's present  and 
future  public  procurement  policy.  These  issues  include  the  effective  implementation  into 
national  law  and  application  of  legislation;  how  market  access  can  be  facilitated  by 
information  and  training  and  by  the  development  of  electronic  procurement;  how  the 
correct  application  of  public  procurement  law  can  be  pursued  while  implementing  other 
Community  policies,  in  particular  with  regard  to  policy  on  small  and  medium-sized 
enterprises  (SMEs),  Trans-European  Networks  (TENs),  standardisation,  the  Cohesion 
Fund and the Structural  Funds and contracts awarded by the European  institutions or using 
Community  resources,  on  social  policy,  consumer  policy  and  environment  policy;  and, 
finally,  on  access  to  other  countries'  procurement  markets.  To  assist  the  reader,  a  brief 
summary  is  provided  at  the  beginning  of  each  chapter  and  a  short  list  of  key  issues  for 
debate at the end. 

The  Commission  invites  all  interested  parties  (Council,  the  European  Parliament, 
1.7 
Economic  and  Social  Committee,  Committee  of  the  Regions, 
trade  associations, 
contracting  entities,  suppliers  and  consumers)  to  present  their  views.  Responses  to  all  or 
part of the Green Paper should be made in writing no later than 31st. March  1997. 

For the attention  of: 
The Director-General  - DG XV 
Internal Market and Financial  Services 
Rue de la Loi 200 
B-1049 Brussels 

Fax: (+32 2) 295.65.00 
E-mail: John.MOGG@DG15.cec.be 

At the end of this written consultation  phase, the Commission  will decide whether or not to 
hold a hearing in Brussels with interested parties. 

1.8 
The  Commission  will  draw  up  a  special  communication  on  public  procurement  on 
the basis of the  contributions to  the Green paper  and the analysis and  reflection  stimulated 
by  the  communication  on  the  impact  and  effectiveness  of  the  Internal  market  .  That 
communication,  which will include a plan  of action,  should  set  out  what  needs  to  be  done 
to bolster the effectiveness  of the legal framework  and more fully  achieve the objectives  of 
the Community's public procurement  policy. 

Document  COM(96)  520. 

2. 

THE BACKGROUND  TO THE  DEBATE 

The  objective  of  the  Union's  public  procurement  policy  is  to  achieve  fair  and  open 
competition  for  public  contracts,  thereby  allowing  suppliers  to  gain  the  full  benefits  of  the 
single market  and  contracting  authorities to choose from  a more competitive and  wider  range 
of  bids.  The  basic  Community  legal  framework  needed  to  meet  these  objectives  has  now 
been  established:  it  strikes  a  fair  balance  between  legal  certainty  and  operational  flexibility. 
The  results  already  achieved  on the  transparency  front  are  highly  encouraging.  As far  as  the 
economic  impact  of  the  rules  is  concerned,  however,  the  data  available  are  less  favourable 
and  show  that  problems  still  remain  in terms  of the  practical  effectiveness  of the  legislation, 
even if certain positive signs are beginning to emerge. 

I. 

The  objectives  of the Union's  public  procurement  policy 

The foundations  of the Community's open procurement  rules are to be found  in the 
2.1 
EC  Treaty,  particularly  in those  provisions  which  guarantee  the  free  movement  of goods, 
services  and  capital,  establish  fundamental  principles  (equality  of  treatment,  transparency 
and  mutual  recognition)  and  prohibit  discrimination  on  grounds  of  nationality.  To  render 
these basic Treaty  provisions  more effective,  detailed  secondary  legislation  (in  the form  of 
directives)  was  required.  These  cover  the  award  of  public  works,  supplies  and  service 
contracts  (the  traditional  sectors)  by  public  authorities  and  by  entities  operating  in  the 
water,  energy,  transport  and  telecommunications  sectors (utilities)  and  also  provide  means 
of redress for  suppliers (for  details, see Annex 1). 

2.2 
Before  the  present  Community  legal  framework  was  in  place,  procurement  tended 
to  be focused  on  the  market  of each Member  State.  There was  at  times  a high  degree  of 
protection  for  domestic  suppliers  and  a large  proportion  of  public  sector  contracts  were 
usually awarded  to domestic suppliers with little regard to value-for-money  criteria.  Under 
these  conditions,  there  was  little  incentive  for  a  domestic  supplier  to  the  public  sector  to 
improve its competitiveness.  As a result,  past  purchasing  policies  all  too  frequently  failed 
to  take  sufficient  account  of  commercial  considerations,  with  the  result  that  the  taxpayer 
and  consumer  were,  probably  unknowingly,  left  to  bear  the  consequences  in  inefficiency 
and extra costs. 

2.3 
The  primary  objectives  of  the  Union's  public  procurement  policy,  set  within  this 
context, have remained  unchanged: to create the necessary competitive  conditions in which 
public  contracts  are  awarded  without  discrimination  and  value  for  taxpayers'  money  is 
achieved  through  the  choice  of the  best  bid  submitted;  to  give  suppliers  access  to  a  single 
market  with  major  sales  opportunities;  and  to  ensure  that  the  competitiveness  of  the 
European  supplier  base  is  strengthened.  Developing  an  effective  European  public 
procurement  policy  is  essential  if  the  single  market  is  to  deliver  long-term  sustainable 
growth  and job  creation; a European  supplier base that can exploit the opportunities  of the 
largest  integrated  domestic  market  in  the  world  and  continue  to  compete  successfully  in 
global  markets;  and  better  public  services  at  lower  costs  to  the  taxpayer  and  the  utility 
customer.  Public  authorities  and  public utilities in the EU  spend  some ECU  720 billion  per 
year on goods and  services, which in  1994 was  11,5% GNP of the  15 Member  States  or, in 
other  words,  the  totality  of  the  Belgian,  Danish  and  Spanish  economies,  i.e.  nearly  ECU 
2  000  per  EU  citizen.  The  extent  of  European  public  procurement  means  that  buying 

goods  and  services  by  effective  purchasing  systems  can  make  significant  savings  for 
governments  and thus for taxpayers.  Such considerations  are all the  more relevant  in view 
of  the  strong  pressure  to  cut  budget  deficits  in  line  with  the  Maastricht  convergence 
criteria. 

2.4 
There  are,  of  course,  many  other,  perhaps  less  obvious,  benefits  of  a  more  open 
procurement  policy.  Fair,  non-discriminatory  and  transparent  procurement  procedures 
render  perpetration  of fraud  and  corruption  in public  administration  more  difficult.  Whilst 
transparent  procedures  are  not  sufficient  in themselves  to  eradicate  fraud  and  corruption, 
an  effective  and  dissuasive  system  of  monitoring,  procedural  checks  and  proportional 
penalties  helps to  protect  against  breaches  of  public trust.  In  addition,  it  should  be  noted 
that,  where  Community  funds  are  involved, 
instruments  establishing  standards  of 
protection  are  already  in  existence2  to  deal  with  the  problem  of  fraud  and  corruption,. 
These could  provide a useful  source of reflection  for an in-depth  discussion. 

II. 

The  impact  so  far 

The  Cecchini  report  on  the  cost  of  non-Europe3  estimated  that  savings  of  around 
2.5 
ECU 22 billion  could result from  greater transparency  and  an increased  openness  of public 
contracts.  There is as yet no hard evidence that  savings on this scale have been  made.  The 
same  is  true  about  price  convergence  or  greater  intra-community  trade  flows  in  public 
contracts  for  sensitive  sectors. 
In  co-operation  with  EUROSTAT,  methods  of 
investigation  have  been  drawn  up  to  assess  in  a  comparable  and  harmonised  way  the 
importance and structures of public contracts in the various Member  States.  Two Member 
States  (Portugal4  and  Greece5)  have  already  volunteered  to  test  these  methods  which 
quantify  the  significance  of  public  contracts  in  these  two  countries  by  collecting  different 
types  of  information  (amount  and  number  of contracts  awarded  by  public  entities,  type  of 
award  procedure,  products bought,  features  of  firms  who  have  won  contracts,  etc.,...).  A 
similar exercise is planned for  Germany before the end of the year. 

2.6 
The  Commission  presented  a  communication  on  the  impact  and  efficiency  of  the 
legislation  on  the  Internal  Market  ("1996  Review")6.  One  theme  is  the  liberalisation  of 
public  procurement  contracts.  It  discusses  whether  certain  of  the  expected  benefits  have 
been  obtained  in this  sector  by analysing  in particular  the  effects  of  legislation  on  demand 
and  supply,  import  penetration,  price  evolution  and  estimates  of  economies  realised.  The 
results show that  public procurement  markets in Europe are developing  significantly  even if 
public  procurement  policy  has  not  yielded  all  the  benefits,  particularly  because  Member 
States have failed  to incorporate the Directives into national law. 

See,  for  Community  administrative  penalties,  Regulation  concerning  the  protection  of 
financial  interests  n°  2988/95,  OJ  n°  L312,  8.12.1995,  p.  1;  regarding  criminal 
penalties  see  the  Convention  on  the  protection  of  the  European  Communities  financial 
interests  (against  fraud),  2607.95,  OJ  N°  C316,  27.11.1995,  p.  48  and  the  first 
additional  protocol  (regarding  corruption),  27.9.1996,  OJ n°  C313,  23.10.1996,  p.  1. 

"The cost  of non-Europe  in Public  Sector  Procurement"  WS  Atkins  Management 
Consultants,  1987. 
Instituto  Nacional  de Estatistica,  Portugal,  March  1995. 
National  Statistical  Service of Greece,  February  1995. 
See  footnote  1. above. 

2.7 
The  most  visible  effect  of  the  Directives  has  thus  undoubtedly  been* a  major 
increase  in  the  transparency  of  contract  award  procedures.  The  number  of  tenders 
advertised  in the  Supplement  to  the Official  Journal  (and  in its electronic version,  Tenders 
Electronic  Daily)  has  steadily  increased.  The  total  number  of  procurement  notices  rose 
from  12.000 in  1987 to  nearly 95.000  in  1995.  Projections  for  the next two years  suggest 
further  increases to  nearly  200.000.  These figures are themselves a useful  indicator  of the 
effects  of the public procurement  Directives on the transparency  of public contracts  award 
procedures.  Moreover,  an enquiry  of  1.600  suppliers has shown  increased  response  rates 
to  new  business  opportunities  (90%  for  local  markets  and  70%  for  markets  beyond  the 
frontier).  Nevertheless,  it must be added that of the some  110.000 entities and  contracting 
authorities  to  which  the  Directives  apply,  about  85%, especially  local  authorities,  do  not 
comply with their advertising and transparency  requirements. 

Firms  supplying  equipment  to  the  public  transport,  telecommunications,  electrical 
2.8 
and  health  service  sectors  -  all  with  important  public  sector  clients  -  have  undergone 
considerable  structural  change  due  to  different  factors,  among  which  the  rules  on  public 
contract  award  procedures  can  be  assumed  to  have  played  a  part.  Joint  ventures  and 
mergers  have  taken  place,  allowing  research  and  development  efforts  to  be  pooled.  The 
overall  result  is, without  doubt,  a more  efficient  European  industry,  better  placed  to  take 
advantage  of  the  economies  of  scale  offered  by  the  single  market  and  better  prepared  to 
compete at the global level. 

2.9 
Despite  these  few  encouraging  signs,  there  is  still  a  major  problem  of  non 
compliance.  Some  Member  States  have  not  incorporated  the  Directives  into  national  law. 
Only three Member  States  have  fully  incorporated  all texts.  Need  one  emphasise  that  the 
Commission  has initiated  39 infringement  procedures against the Member  States  concerned 
for  failure  to  incorporate  the  Directives  into  national  law  ?  This  is  a  problem  connected 
with  ensuring  greater  compliance  with  the  legislation  which  is  discussed  in  the  next 
chapter. 

2.10  Moreover,  it  seems  that  in  a number  of  sectors,  contracting  entities  are  not  seeing 
the  benefits  which  justify  the  efforts  necessary  to  fulfil  the  obligations  imposed  by  the 
Directives and  are also detecting  reluctance  on the part  of would-be  suppliers  (particularly 
those  from  other  Member  States)  to  bid  for  their  contracts.  This  may be  an  indication  of 
the  existence  of  a time-lag  for  economic  operators  to  adapt  behaviour  to  take  account  of 
new rules and respond  to  new market  opportunities.  No doubt,  certain  economic  operators 
have responded  to  observed  or  perceived  competitive  threats  in a defensive  manner  rather 
than  by  expansionist  strategies  to  build  up  presence  and  market  share  in  other  Member 
States. 

2.11  Finally,  the  share  of  imports  for  public  contracts  in  Europe  remains  modest  :  for 
direct  cross-frontier  business,  they  have  risen  from  1.4%  in  1987  to  3%  in  1995; and  for 
purchases  made  through  importers  or  local  subsidiaries,  they  have  increased  from  4%  in 
1987 to 7% in 1995. 

III. 

1. 

2. 

Questions 

Do you  have any other  economic  statistics  which would  be useful  for  assessing  the 
impact of the Directives and their effects  on employment? 

Why are economic operators reluctant to tender for contracts in other Member 
States? 

3. 

APPLICATION  OF  PUBLIC PROCUREMENT  LAW 
CURRENT STATE OF PLAY AND TRENDS 

A  legislative  framework  has  been  set  in  place  for  public  procurement.  The  Commission 
recognises  the  need  for  a  period  of  stability  and  does  not  therefore  intend  to  make  any 
fundamental  changes to  the framework.  Neither  does it renounce  its right  of initiative,  of 
course  and  it  is  prepared  to  take  or  to  propose  the  most  appropriate  measures  wherever 
this should prove necessary. 

The  Commission  stresses  that  efforts  have  to  be  stepped  up  with  regard  to  both 
implementation  and application  of the legal framework,  in order to achieve a level-playing -
field for operators seeking public contracts throughout the Union. 

In  carrying  out  its task  of  monitoring  the  application  of Community  law,  the  Commission 
has  found  a  number  of  problems  to  do  with  both  implementation  of  the  Directives  into 
national  law  and  actual  application  of the  rules by  contracting  authorities  and  contracting 
entities.  These  are  initial  observations  that  the  Commission  will  incorporate  into  the 
detailed  examination  of the application  of the existing rules which it is required  to  carry out 
in accordance with the Directives. 

For  enforcement  of the  law  on  public  procurement  to  be  successful,  speedy  and  effective 
means  of  redress  must  function  satisfactorily  at  both  Community  and  national  level.  The 
ways in which  remedies  operate  do  not  always fulfil  these  conditions.  With  the  Remedies 
Directives  in  place,  most  of  the  problems  should  now  be  tackled  at  national  level. 
Encouraging  the  practice  of  attestation  and  making  the  conciliation  procedure  more 
accessible are also fundamental  issues to be tackled. 

I. 

Introduction 

A  Union-wide  legislative  framework  for  public  procurement  is  now  in  place  (see 
3.1 
Annex  1).  At this  stage,  the  Commission  recognises  the  need  for  a period  of  stability,  as 
the framework  has not yet produced  its full  effects.  This stability should give all  interested 
parties  time  to  adapt  to  the  new  procurement  rules  and  practices.  Therefore,  without 
prejudice  to  its  right  to  initiate  legislation,  the  Commission  does  not  envisage  any 
fundamental  modification  of the  existing  regime  and  confirms  its  determination  to  pursue 
its  action  in  this  area  in  accordance  with  the  principles  already  established  as  far  as  the 
method  chosen  and  the  substance  of  the  rules  are  concerned.  Clearly,  should  new 
developments  raise problems in specific  areas or reveal  shortcomings  in the legislation,  the 
Commission  would  not  hesitate  to  take  the  most  appropriate  measures  to  ensure  that 
European  purchasers  continue  to  benefit  from  an  open  and  competitive  supply  and  that 
suppliers  continue  to  have  genuine  access  to  public  procurement  contracts  while 
strengthening 
the 
telecommunications  and  other  utilities sectors. With regard  to the application  of the  public 
procurement  Directives,  the Commission  will check  whether this liberalisation  leads to  the 
establishment  of conditions of effective  competition  in the sector. If this should be the case, 

their  competitiveness. 

taking  place 

Liberalisation 

is  now 

in 

it will  consider  how  best  to  respond  to  the  situation.  It  should  also  be  noted  that  most  of 
the Directives  require the  Commission  to  review  the application  of the  rules.  It  will  have 

to  carry  out  a  detailed  examination  of  their  application  in  the  near  future.  The  debate 
prompted  by this Green Paper should provide useful  input for that exercise. 

3.2 
Community Directives  must be implemented  into  national  law.  Their  application  -
whether  by  national,  regional  or  local  administrations  or  by  contracting  entities  in  the 
utilities  sectors  - must  not jeopardise  the  overall  objective  of  establishing  a  level-playing-
field in public  procurement  throughout, the  Union.  The  perception  that  not  everybody  is 
playing according to the same set of rules can be a major  disincentive to  opening up  public 
procurement. 

II. 

Directives  must  be implemented  into  national  law 

3.3 
The Directives are an essential  instrument  for  our public procurement  system. They 
make  it  possible  to  boost  economic  efficiency  and  enable  the  internal  market  to  function 
properly.  The  state  of  Member  States'  implementation  of  internal  market  legislation  is 
regularly  published  by  the  Commission  and  discussed  with  Member  States,  including  at 
ministerial  level.  The Commission  has frequently  expressed  its continuing  concern  that  the 
current  level  of  implementation  of  public procurement  Directives  is  inadequate  (Table  1). 
Public procurement  is one of the  internal  market  areas where there  are the most  problems 
both  in terms  of communication  of the implementing  measures  and  in terms  of the  quality 
of  implementation.  The  Services  Directive,  the  consolidated  Supplies  Directive  and  the 
consolidated  Utilities Directive are particular problem areas. 

3.4 
Even  though  most  of  the  provisions  of  the  Directives  have  "direct  effect"  in  legal 
terms,  failure  to  implement  and/or  faulty  implementation  prevent  European  citizens  and 
businesses  from  taking full  advantage  of the internal  market  in public  procurement.  Thus, 
for  example,  major  disparities  can  be  observed  between,  on  the  one  hand,  the  share  of 
Community  Gross  National  Product  accounted  for  by  some  of the  Member  States  which 
have  not  correctly  implemented  the  Directives  and,  on  the  other,  the  number  of  notices 
published  in these countries as a proportion  of the total  number  of notices  published  in the 
Community. 
In  other  words,  the  number  of  notices  published  in  these  Member  States 
appears  low  in  comparison  with  their  economic  importance.  The  Commission  therefore 
again  calls  on  Member  States  to  ensure  that  public  procurement  legislation  is, first of all, 
implemented  into  national  law.  The  lack  of  any  implementing  measures  can  provide 
contracting  authorities  and  contracting  entities  with  a ready-made  excuse for  not  applying 
the rules. 

As a next  step, it is essential  that  Member  States  draft  their  national  implementing 
3.5 
provisions with the utmost  care if the quality of implementation  is to be sufficiently  high to 
ensure  that  the  objectives  of  the  Community  legislation  are  fully  achieved.  Faulty 
implementation  can,  in certain  cases, weaken the  rights which the Directives  create for  the 
benefit  of operators and place the bodies which have to  apply the rules in a situation  where 
Community  and  national  legislation  are  in  conflict  and  consequently  cause  them  to  apply 
the  Community  rules  in  force  incorrectly.  Such  a  situation  is  just  as  serious  as  non-
implementation,  because  it  has  the  same  effect  in  practice.  Therefore,  whatever  the 
method  used  for  incorporating  the  provisions  of the Directives  into  national  law,  Member 
States  must  be  sure to  eliminate  any contradiction  between  pre-existing  national  rules  and 
the  principles  and  provisions  of Community  law,  so that  operators  will  interpret  and  apply 

them  properly.  The  Commission  also  calls  on  Member  States  to  ensure  that,  wherever 
possible, the national legislative frameworks  into which the Directives are incorporated  are 
made clearer,  for  example by limiting references  to  other instruments  and  endeavouring  to 
group together  all the relevant provisions in a single text.  This would  facilitate  application 
of the rules by purchasing entities and access to contracts for interested firms. 

3.6 
The  Commission  is  aware  of  the  fact  that  Community  instruments  are  complex. 
Their complexity can perhaps explain some of the difficulties  in implementation  and,  above 
all, in their application.  But, this is a direct consequence of the fact that the questions to be 
to  achieve  the  objectives  pursued,  are  themselves  complex.  In 
solved 
implementing  the  Directives,  the  Commission  is  willing  to  afford  the  Member  States,  on 
request,  all the necessary assistance to facilitate  the understanding  and  simplification  of the 
existing texts. 

in  order 

3.7 
In  any  event,  according  to  the  information  at  the  Commission's  disposal,  in  some 
cases,  the  adoption  cf  implementing  measures,  for  which  drafts  were  prepared  in  good 
time, has been delayed for  no apparent  reason.  In other cases, Member  States have  refused 
to implement  certain provisions of Community  law.  The Commission  doubts whether  such 
situations  are justified  and  would,  at  the  very  least,  be  interested  to  ascertain  any  other 
reasons which might account  for  the difficulties  encountered. 

3.8 
The Court  of Justice of the European  Communities has given judgement  in  several 
cases concerning  the protection  of individuals' rights under Community  law when  Member 
States are in breach of their obligations, particularly where the implementation  of directives 
into  national  law  is concerned.  In Francovich  , the  Court  established  the  principle  of  the 
liability  of  the  State  for  damage  caused  to  individuals  by  the  non-implementation  of  a 
directive,  the  provisions  of  which  grant  rights  to  the  individual,  even  though  such  rights 
may  not  have  direct  effect. 
In  Brasserie  du  Pêcheur-Factortame  ,  the  Court  went  even 
further,  recognising that  under  certain  conditions,  State liability may be incurred  in respect 
of  damage  caused  by  any  breach  of  Community  law,  regardless  of  the  State  body  whose 
action  or  omission  is  responsible  for  the  breach.  It  is  thus  probable  that  individuals  will 
avail themselves of this case law before  national judges in order to obtain  compensation  for 
damage  suffered,  including  loss  of  profit,  and  thereby  enjoy  effective  protection  of  their 
rights. 

Judgement of 19.11.1991 in Joined Cases C-<5/90 and C-9/90 [19911 ECR 1-5403. 

Judgement of 5.03.1996  in Joined Cases C-46/93 and C-48/93  [1996] ECR 1-1029.  See also the 
Judgement of 26.03.1996 in Case C-392/93 British  Telecom  [1996] ECR I - 1631 

EOT.  The law on  public procurement  must  be correctly  applied 

3.9  While  it  is  essential  that  the  proper  legislative  framework  should  be  in  place 
through  faithful  implementation  of the Directives into  national  law,  it  is equally  important 
that  the  rules  should  be  correctly  applied  by  contracting  authorities  and  contracting 
entities. 

In carrying out the task conferred  on it by Article  155 of the EC Treaty of ensuring 
3.10 
that  Community  law  is  complied  with,  the  Commission  has  identified  a  number  of  cases 
where  application  of  the  rules  by  purchasing  entities  has  caused  problems.  Without 
claiming  to  be  exhaustive,  the  following  points  group  together  some  exemplary  cases  of 
incorrect  application  of Community law. 

A 

Issues linked to incorrect application of the Directives 

(a) 

Basic definitions  in the Directives 

3.11  The first type  of  problem  encountered  has to  do  with  the  correct  interpretation  of 
the  scope  of the  different  concepts  used  in the Directives.  For  example,  in Beentjes9  the 
Court  of Justice  defined  more precisely  what  is meant  by the term  "contracting  authority" 
used  in  the  Directives,  stressing  the  need  to  interpret  the  concept  in  functional  terms. 
Experience  has  also  shown  how  difficult  it  is  to  circumscribe  the  notion  of  "contracting 
entity"  as used  in the  Utilities Directive,  since it  refers  both  to  the  subjective  character  of 
entities and to the activity carried  on in one of the utilities  sectors.  The Directive  specifies 
a  large  number  of  special  cases  where  purchasing  bodies,  although  covered  by the  notion 
of contracting entity are not subject to the rules of this Directive. 

3.12 
It has also proven  difficult  in several  cases to  establish  precisely  what  constitutes  a 
"public  procurement  contract".  The  Directives  define  public  procurement  contracts  in 
fairly  broad  terms  in order  to  bring within  the  scope  of  the  Community  rules  all  kinds  of 
contracts  for  consideration  concluded  in  writing  between  a  contracting  authority  and  a 
firm.  Despite  this  broad  definition,  certain  contracting  authorities  have 
contracting 
endeavoured  to  evade application of the Directives. 

3.13 
Similar  points  can  also  be  made  with  regard  to  other  concepts  used  in  the 
Directives,  and  in particular  that  of a "work",  for  which  some guidance  is given in the text 
itself, but which  can be given different  interpretations  in certain  cases.  For  other  concepts, 
such as that  of  "supplies" or  "services", the Commission  notes that  some purchasers try  to 
take  advantage  of  the  flexibility  of  the  definitions  in  order  to  evade  application  of  the 
Directives by artificially  splitting up different  contracts that do in fact  form  a whole. 

3.14  The  fairly  general  nature  of these  concepts  i  a necessary  consequence  of  the  fact 
that  they  have to  be  applied  in a wide variety  of national  situations  and  legal  systems; the 
Community legislator had to  strive to take account  of this variety.  Care must therefore be 
taken  to  ensure  that  the  concepts  concerned  are  interpreted  in  a way  which  is  consistent 
with the intentions of the legislator and enables his objectives to be achieved. 

Judgement of 20.09.1988 in Case 31/87 [1988] ECR 4635. 

(b) 

Excessive use of negotiated  procedures 

3.15  A second  type of problem  has to  do with  the choice of contract  award  procedures, 
and more specifically  the use of  negotiated  procedures.  Under  the  "traditional"  Supplies, 
Works and  Services  Directives,  the  negotiated  procedure  -  particularly  where  there  is  no 
prior  publication  of  a notice  -  is an  exceptional  means  of awarding  contracts  that  may  be 
used  only  in  exhaustive  list  of  cases.  The  Court  of  Justice  has  stated  (in  Commission  v 
Italy1  ) that the provisions governing the negotiated  procedure  must  be interpreted  strictly 
and that the burden of proving the actual  existence  of exceptional  circumstances  justifying 
the derogation  lies on the person  seeking to rely on those circumstances.  But  a number  of 
infringement  proceedings brought by the Commission  and judgements handed  down  by the 
Court  bear  witness  to  the  fact  that  contracting  authorities  use  the  procedure  much  more 
than  they  should  under  the  existing  strict  rules,  in  particular  by  claiming  extreme  urgency 
where  there  is  none  or  where  the  urgency  has  arisen  owing  to  factors  for  which  they  are 
responsible,  or by wrongly  claiming that there is only one supplier  or contractor  capable of 
performing  the contract. 

In  cases  where  it  is  allowed,  the  negotiated  procedure  appears  to  enable  an 
3.16 
economically more efficient  outcome to be arrived  at than a traditional  call for  competition, 
thus  proving  to  be  a rational  method  of  reducing  public  purchasers'  costs  while  achieving 
the objectives  pursued.  The fact  remains, however,  that the procedure  is less favourable  to 
the goal of market  transparency. 

(c) 

Unsatisfactory  quality of  notifications 

3.17  A  third  type  of  problem  concerns  the  advertising  of  contracts.  Some  of  t 
particulars  specified  in  the  model  notices  annexed  to  the  Directives  are  missing  froi 
large  number  of  contract  notices  published  in  the  Official  Journal.  Cross-checks  OK 
published  notices have also revealed  that the obligation  to  publish  prior  information  notices 
and contract  award  notices is still widely ignored. 

3.18  However,  transparency,  which  is  a  necessary  precondition  for  opening  up  public 
procurement,  requires contract  notices to  be complete.  Failure to advertise  contracts  rules 
out  effective  competition  and  the resulting  benefits.  Each  type  of notice  laid  down  by  the 
Directives  follows  a specific  line of reasoning.  The  prior  information  notices  (or  periodic 
information  notices  in the Utilities Directive)  are intended  to  enable  firms,  and  particularly 
SMEs, to  ascertain  purchasers' procurement  requirements  sufficiently  early  and to  organise 
themselves  accordingly  so  that  they  can  submit  better  tenders.  The  purpose  of  tender 
notices  proper  is  to  give  economic  operators  all  the  information  they  need  in  order  to 
decide  whether  and  how  to  bid  for  a particular  contract.  Contract  award  notices  enable 
firms which  have taken  part  in the  tendering  procedure  to  check  that  their  rights  have  not 
been  infringed  and  provide  useful  information  for  analysing  market  trends  in  different 
sectors. 

10 

Judgement  of  10.03.1987  in Case  199/85  11987| ECR  1039. 

10 

(d) 

Excessive  use  of  accelerated  procedures  and  imposition  of  deadlines  that 
are too  short 

3.19 
A fourth  type of difficulty  relates to the shortening of deadlines through  the use of 
accelerated  procedures.  Scrutiny of notices published in the "S"  Supplement  to the  Official 
Journal  in  pursuance  of Directive  92/50/EEC  has  revealed  that  a  large  proportion  of  the 
contracts  concerned  are  awarded  by  accelerated  procedure  and  that,  in  consequence,  the 
periods  allowed  for  submitting  requests  to  participate  and  tenders  are  shortened 
substantially.  Since  these  periods  are  thus  reduced  to  minima  of  15  days  and  10  days 
respectively,  it becomes  extremely  difficult  for firms from  other  Member  States  to  bid  for 
such  contracts.  Unlike  the  Utilities  Directive,  the  "traditional"  Directives  allow  the 
accelerated  form  of  restricted  and  negotiated  procedures  to  be  used  only  in  cases  where 
urgency  renders  the  normal  deadlines  impracticable.  This  means  that  accelerated 
procedures  should  be  exceptional.  In  the  light  of the  above  findings,  it  would  appear  that 
they are not regarded  as such by contracting authorities. 

3.20  A  similar  but  more  serious  problem  arises  in  the  fairly  frequent  case  where 
purchasing  entities  set  deadlines  for  participation  in  contract  award  procedures  that  are 
shorter  than  the  minimum  periods  laid  down  by the  Directives.  Clearly,  such  behaviour, 
which  is  in  breach  of  the  applicable  rules,  considerably  restricts  or  even  completely 
prevents genuine competition between  all interested  suppliers. 

(e) 

Selection  and  award  criteria 

3.21  A fifth type of problem has to do with the criteria  applied by contracting  authorities 
in  contract  award  procedures  when  checking  the  suitability  of  candidates  (selection 
criteria) and awarding contracts (award criteria). 

3.22 
In a number  of  cases  the  Commission  has  challenged,  and  the  Court  of Justice  has 
found  incompatible  with  Community  law  (Transporoufe  ),  the  practice  adopted  by  some 
contracting authorities of laying down criteria for the technical capacity  of candidates  other 
than those listed  exhaustively  in the Directives.  It has also been found  that the suitability of 
candidates has in some award  procedures been tested  on the basis of clauses that  cannot  be 
regarded  as selection  criteria. 

3.23  Furthermore,  although  the  Court  has  made  it  perfectly  clear  that  selection  and 
contract  award  are  quite  separate  phases  and  therefore  that  the  rules  and  criteria  used  in 
the  two  phases  should  not  be  confused  (Beenfjes1  ),  experience  shows  that  many 
contracting  authorities  continue  to  take  account,  when  awarding  the  contract,  of  factors 
that are covered by the selection  criteria. This can lead,  in certain  cases, to the contract  not 
being  awarded  on  the  basis  of  the  best  tender  for  that  particular  contract  but  to  the 
candidate  with  the  most  experience  or  financial  strength.  Similar  problems  arise  where 
purchasers,  sometimes  relying  on national  rules which  are not  compatible  with  Community 
law,  use  award  criteria  based  on  factors  which  are  not  provided  for  in  the Directives  and 
are  therefore  unacceptable.  Cases  where  the  award  criteria  are  based  fairly  loosely  on 
regional,  social  or  environmental  considerations  provide  ample  illustration  of  this 
problem. 

Judgement  of  10.02.1982  in Case 76/81  [1982J ECR 471. 

11 
12 

See footnote  9. 
The  issues are further  discussed  in Chapter 5. 

11 

B 

Issues linked to situations which do not fall within the scope of the Directives 

3.24  Community  law on public procurement  is based  on  a set  of  rules  and  principles, in 
particular  the  principles  of  non-discrimination,  equality  of  treatment,  transparency  and 
mutual  recognition.  As the  Court  has emphasised  {Commission v Italy1  ),  the  Directives 
are designed  only to  ensure the effective  attainment  of these  principles,  but  it is clear  that, 
given their nature, the principles must apply in all situations where public procurement  and 
similar  contracts  are  involved,  and  in  particular  contracts  which  are  not  covered  by  the 
Directives.  Some situations which are particularly  significant  are mentioned  below by way 
of example. 

(a) 

Concessions or similar contracts 

3.25 
For  the  completion  and/or  management  of  large  infrastructures  as  well  as  for  the 
supply of certain  services, contracting  authorities  have recourse  more and  more  frequently 
to  legal  mechanisms  such  as concessions  or  similar  contracts  or other  awards  of special  or 
exclusive  rights.  This  is,  in  many  cases,  the  result  of  budgetary  constraints  to  which  the 
contracting  authorities  are  subject  and  it  also  meets  their  concerns  to  ensure  better 
management  of  the  services.  Many  projects  relating  to  trans-European  networks  are  an 
illustration  of this.  At  all events,  many complaints  received  by the  Commission  concern 
concessions,  similar contracts or other awards of special or exclusive rights. 

3.26  Contracting  authorities appear  to  consider  that  Community  law is not  applicable  to 
the  award  of  these  contracts  or  rights  and,  in  many  cases,  they  do  not  implement  the 
measures  necessary  to  ensure transparency  and  open  competition.  On  the  contrary,  in this 
type  of  situation,  contracting  authorities  must  respect  the  provisions  of  the  EC  Treaty,  in 
particular the rules governing  free  movement  of goods  and  services  as well  as  fundamental 
principles  such  as  non-discrimination,  equality  of  treatment,  transparency  and  mutual 
recognition.  Moreover, by virtue of the Works Directive, Member  States are also bound by 
the  rules  relating  to  publicity  when  awarding  works  concessions.  The  Commission 
considers that this lack of respect  for these fundamental  principles of the Treaty  is far  from 
satisfactory  as it obstructs the proper functioning  of the internal  market.  It  does not  allow 
contracts  (or  rights)  in which  important  economic interests are at  stake to  be opened  up to 
competition. 

3.27  At  a  later  stage  and  with  a view  to  reinforcing  the  opening  up  the  award  of  these 
contracts to  even  more competition,  consideration  could  be given  to  the  adoption  of rules 
governing  procedures  for  the  competitive  award  of  exclusive  rights  to  provide  public 
services  through  a system  of concessions.  The  aim  of introducing  such  rules  would  be to 
afford  new  public or  private operators  easier  access to  contracts  for  public  services  and  to 
instil  in  existing  operators  an  enterprise  culture  which  is  closer  to  the  concerns  of  users, 
while still allowing exclusive rights to be granted  where these are necessary  for  maintaining 
a service in the general  economic  interest.  Such  an approach  would  enable Member  States 
to  choose for  their citizens operators of public  services who  are the  most  efficient  in terms 
of both  cost-effectiveness  and  quality  of  service.  In  the  case  of  inland  transport  services, 
the  Commission  has  already  presented  this  approach  in  its  Green  Paper  entitled  "Citizens' 
network." 

14 

15 

See footnote  10. 

See also Chapter  5, point  III. 

COM(95)601  fin-29.11.95 

12 

(b) 

Public procurement  contracts below the thresholds laid down in the 
Directives 

3.28  The  procedures  provided  for  by  the  Community  Directives  apply  exclusively  to 
public  procurement  contracts  whose  estimated  value  exceeds  the  specified  thresholds. 
Some  contracting  authorities  consider  that,  for  procurement  contracts  below  these 
thresholds, no Community  provision  applies, with the consequence that  these  procurement 
contracts  are  sometimes  awarded  without  being  put  out  to  tender.  Such  contracts  are 
often  of  considerable  importance,  particularly  for  small  and  medium-sized  enterprises.  As 
in  the  case  of  the  granting  of  concessions  and  similar  rights,  these  contracts  must  be 
awarded  in accordance with the provisions of the EC Treaty concerning the free  movement 
of  goods  and  services  as  well  as  its  underlying  fundamental  principles  of  non 
discrimination,  equality of treatment  and transparency. 

(c) 

Changes to  rules in the course of individual  procedures 

3.29 
In  several  cases  brought  to  the  Commission's  attention,  contracting  authorities  or 
contracting  entities  have,  when  awarding  public  contracts  whose  value  exceeds  the 
thresholds  laid  down  in  the  Directives,  engaged 
in  behaviour  or  taken  decisions 
incompatible  with  Community  law,  even  if the  rule  or  prohibition  to  be  complied  with  is 
not  expressly  laid  down  in the Directives.  This is the case,  for  example,  where  substantial 
amendments  are  made  to  the  tender  specifications  in  the  course  of  the  procedure.  One 
contracting  authority  thus  changed  the  site  of the  work  to  be  performed  while  continuing 
with  the  award  procedure.  In  another  case,  the  authority  cancelled  a  large  proportion  of 
the  works  initially  planned.  Another  case  revealed  changes  to  the  financing  terms.  The 
Commission  maintained 
that  these  changes  were  substantial  and  should  entail  the 
cancellation  of  the  procedure  under  way  and  launching  of  a  new  procedure  through 
publication  of  a  new  contract  notice.  Certain  cases  have  revealed  a  different  problem, 
namely  negotiation  with  one  or  more  candidates  in  open  or  restricted  procedures.  The 
Commission  held  that  such  negotiation  was not  allowed  as it was contrary  to  the  principle 
of  equal  treatment  and  its  interpretations  have  been  confirmed, by  the  Court  of  Justice. 
The  same  considerations  as  those  developed  above  in  connection  with  concessions  and 
contracts  below  the  thresholds  apply  here  since,  even  if these  situations  are  not  regulated 
by the Directives, they are nevertheless subject  to the general  principles of Community law. 

C 

Preliminary  conclusions 

3.30  The examples cited  above  demonstrate  that  the application  of the Community  legal 
framework  in the Member  States  still  lacks consistency.  It therefore  appears that  there  is a 
clear  need  for  further  explanation  and  elucidation  of the  applicable  rules.  To  this  end,  the 
Commission  considers  it timely to  intervene to clarify  some of the points mentioned  earlier 
either  by  means  of  interpretative  communications  and/or  through  guidelines  or  even 
through  other  appropriate means or new rules. 

17 

S ee  judgements  of  22.06.1993  in  Case  C-243/89  Commission  v  Denmark 
and  25.04.1996  in  Case  C-87/94  Commission  v  Belgium  (not  yet  published). 

[1993]  ECR  1-3385 

13 

3.31  This situation  is clearly unsatisfactory,  since the efforts  to ensure that the Directives 
are completely  and  correctly  implemented  into national  law would  come to  nothing  if they 
were  not  properly  applied  in  practice.  The  Commission  is  determined  to  tackle  these 
problems  actively.  The  remainder  of  this  Green  Paper  (and  particularly  this  and  the 
following  chapters)  sets  out  a  number  of  options  envisaged  for  achieving  more  effective 
application of the public procurement rules. It is important  for the Commission  to  ascertain 
whether  the  sectors  concerned  think  that  these  options  are  likely  to  provide  satisfactory 
solutions to the problems mentioned or whether other solutions can be envisaged. 

IV.  Monitoring  application  of the law on  public  procurement 

3.32 
If  we  are  to  remedy  the  problems  that  have  arisen  in  connection  with  the 
implementation  and  application  of Community law and  therefore  achieve the objectives  we 
are  pursuing,  all  the  authorities  concerned  must  play  their  part  and  take  the  most 
appropriate  initiatives,  starting  with  systems  for  monitoring  the  behaviour  of  contracting 
authorities  and  entities,  to  act  swiftly  in  order  to  restore  compliance  with  the  law.  Such 
systems  and  powers  already  exist  at  Community  and  national  level,  but  they  need  to  be 
strengthened. 

3.33  Member  States  and  the European  Commission  must  shoulder  their  responsibilities. 
Member  States  must  ensure  that  obligations  deriving  from  Community  legislation  are 
fulfilled,  inter  alia,  through  appropriate  systems of control  and  sanctions  (penalties),  which 
are both effective  in practice and  have a deterrent  value (Article  5 of the EC Treaty).  The 
Commission,  for  its  part,  is  required  by  Article  155  of  the  EC  Treaty  to  ensure  that 
Member  States  respect  and  fulfil  these  obligations,  taking  into  account  not  only  the  letter 
of  the  law,  but  also  the  objectives  the  legislation  is  intended  to  achieve.  Enforcement 
measures  must  improve  compliance  and  build  confidence  among  suppliers  in  the 
satisfactory  operation  of the system. 

A 

The Remedies Directives 

3.34 
It  is clear  that  the reactions  of suppliers  provide  the best  and  most  immediate  way 
of  ensuring  that  contracting  entities  practise  open  and  competitive  tendering.  They  are 
best  placed  to  see whether  the  procurement  rules  are being  followed  and  they  can,  where 
necessary,  quickly  draw  purchasing  entities'  attention  to  breaches  they  have  committed. 
Sometimes, breaches are immediately  corrected  when  the contracting  entity  is made  aware 
of  them.  When  they  are  not  corrected,  however,  formal  remedies  can  be  used,  including 
action through the courts. 

3.35  With the Remedies Directives  in place, economic  operators  in every Member  State 
have the possibility of lodging before  a national  court  or tribunal (or body whose  decisions 
are  subject  to judicial  review)  a complaint  for  violation  by  purchasing  entities  of the  rules 
laid  down  in the Directives.  The Remedies Directives  require the bodies  in question  to be 
empowered  to  grant  interim relief (by suspension  of the  contract  procedure,  for  example), 
to  deliver judgements  on  the  compatibility  of  procurement  procedures  with  the  rules  and, 
where appropriate, to  set aside or ensure the setting-aside of decisions taken unlawfully,  to 
require  the  offending  terms  to  be  removed  from  calls  for  tender  and  to  award  damages. 
The  extent  of  the  remedies  available  to  suppliers  should  make  them  the  most  effective 
means of protecting the rights of firms bidding for  contracts. 

14 

3.36 
Suppliers  need  to  be given  full  information  about  their  rights  under  the  Remedies 
Directives with  regard  to  other Member  States' procedures.  The  Commission  will  publish 
guides  to  make  economic  operators  aware  of  what  can  be  done  when  potential 
infringements  in  other  Member  States  are  identified,  including  the  procedures  that  are 
available; how  they  can be used  and  the  possible  rights to  compensation  they  may  enjoy. 
Mention  should  also be made here of the possibilities offered  by the recent  case-law of the 
Court  of  Justice  on  the  damage  suffered  by  individuals  as  a  result  of  breaches  of 
Community law committed by Member States (see point 3.8 above). 

B 

Appropriate  sanctions 

In  the  establishment  of  the  legal  framework  on  public  procurement  by  national 
3.37 
In  its 
authorities,  an  essential  element  is  the  introduction  of  appropriate  sanctions. 
communication  to  the  Council  and  Parliament  on  the  role  of  sanctions 
,  the  Commission 
has already highlighted  public procurement  as a sector where the possibility  of  introducing 
a  common  system  of penalties  might be  considered  with  a view to  upholding  the  integrity 
of  the  law,  and  where  discrepancies  between  the  sanctions  applied  by  different  Member 
States  in cases  of infringements  of  Community  law  could  hamper  the  effectiveness  of  this 
policy.  The  Council,  for  its  part,  in  its  resolution  of  29th  June  1995  on  the  issue  of 
penalties  in  Community  law  ,  has  also  recognised  the  importance  of  this  issue.  It  has 
encouraged  the  Commission  to  ensure  efficient  implementation  of  Community  legislation, 
including  sanctions.  If  necessary,  this  could  involve  provisions  relating  to  sanctions  in 
future  Commission  proposals.  Moreover,  it  has  asked  Member  States  to  give  positive 
support to Community action in this  field. 

3.38  The  Commission  is  concerned  that,  in  practice,  the  application  of  the  Remedies 
Directives  may  vary  considerably  between  Member  States,  and  sometimes  even  within  a 
Member  State.  It  has  also  been  made  aware  of  the  considerable  differences  which  exist 
between  Member  States,  particularly  as  regards  the  requirement  for  complainants  to 
provide  proof  of  an  infringement  in  order  to  receive  damages,  as  well  as  the  amount  of 
damages  awarded. 
In  some  cases,  courts  and  tribunals  have  awarded  successful 
complainants  only  a  purely  symbolic  amount;  in  others  complainants  have  been  awarded 
only  the  costs  of  putting  together  their  bid  (these  costs  can  be  substantial  but  in  no  way 
provide full  compensation  for  losing  a contract).  The  Commission  invites  Member  States 
and  other  interested  parties  to  comment  on  the  effectiveness  of  existing  remedies  in 
Member  States  and  on  any discrepancies  that  may  exist  between  the  sanctions  applied.  In 
addition  to  the  obligation  to  provide  for  full  compensation  for  damages  suffered,  the 
Commission  would  also  welcome  reactions  to  the  desirability  of  the  award  consisting  of 
liquidated  damages of a sufficiently  dissuasive sum, exceeding the damage  suffered. 

18  COM(95)  162  final,  3.5.1995. 

19  O J N oC  188, 22.7.1995, p. 1. 

15 

C 

Complaints 

(a) 

At Community level 

3.39  The  Commission,  as  guardian  of  the  Treaty,  investigates  complaints  it  receives 
from firms which  consider  that  they  have been  harmed  and  seeks to  resolve  the  problems 
raised.  Many such cases have been  settled  as a result of the Commission's intervention  and 
without referral  to the Court of Justice.  However, when the Commission  finds  itself in the 
situation  where  it  must  pursue  a  case,  experience  has  demonstrated  that  the  infringement 
procedure provided for under Article  169 of the EC Treaty is not capable of ensuring rapid 
and  effective  redress.  Whilst  the  Commission  is  committed  to  speeding  up  its  internal 
procedures,  the different  stages  in the  procedure  leading to  a Court judgement  (involving, 
in  the  first  instance,  a  letter  of  formal  notice  to  the  Member  State  authorities  concerned 
and, in the second,  a reasoned  opinion)  can last up to three years and,  in some cases, even 
longer.  This particularly  arises  when  the  requisite  information  cannot  be  obtained  in time. 
In public procurement  such lengthy procedures may often  be  ineffective. 

3.40  As  indicated  in  its  opinion  on  the  Intergovernmental  Conference  "Reinforcing 
political  union  and  preparing  for  enlargement",  the  Commission  considers  that  the  means 
used  to  ensure  the  application  of  Community  law  should  be  made  more  effective,  in 
particular  as  far  as the  internal  market  is concerned.  The  Commission  has  also  taken  the 
view  that  the  role  of  the  Court  of  Justice  should  be  reinforced,  especially  in  relation  to 
compliance with its judgements. 

3.41 
Some  commentators  have  pointed  to  a number  of  avenues  that  could  be  explored 
with  a  view  to  achieving  these  objectives.  One  possibility  would  be  to  confer  on  the 
Commission  more  effective  investigative  powers  than  it  has  at  present,  since  they 
considerably  limit the effectiveness  and  promptness  of its action  in the  public  procurement 
field.  The  system  based  on  Regulation  (EEC)  No  17/62  in  the  competition  field  could 
provide  a  useful  example  of  this  approach.  In  the  same  way,  some  observers  have 
considered  extending  the supervision  procedures and  measures provided  by the  Regulation 
(Euratom,  EC)  2185/9620  for  the  protection  of  the  financial  interests  of  the  European 
Communities to public procurement  in general. These provisions are, in fact,  applied to  the 
award  of  public  contracts  involving  Community  financing,  for  example,  in  the  case  of 
trans-European  networks  (TENs),  the  Structural  and  Cohesion  Funds  or  contracts  with 
third  countries (see Chapter 5). 

(b) 

At national level 

3.42  The  Commission  has  neither  the  resources,  nor  the  information,  to  identify  and 
resolve  each  and  every  breach  of  Community  rules  throughout  the  EU.  From  a  practical 
point  of view, the vast  majority  of individual  problems encountered  by economic  operators 
should  be tackled  at national  level.  It goes without  saying, however,  that the  Commission 
will  not  hesitate  to  intervene  where  appropriate  to  maintain  the  integrity  of  Community 
public  procurement  law.  The  Commission  also  confirms  its  determination  to  play  its  full 
role  in  enforcement,. in  particular  in  the  pursuit  of  cases  where  there  are  important 
economic interests and/or legal issues at stake. 

20 

OJ  of  15.11.1996 

16 

3.43  The emphasis the Commission  wishes to  place on  the full  and  effective  application 
of public procurement  rules at national level has already been  recognised  by some Member 
States.  Sweden, for  example, has entrusted  the supervision  of its contracting entities to an 
independent  authority.  Experience  suggests  that  not  only  does  this  authority  handle 
particular  complaints,  its  very  existence  may  even  prevent  behaviour  giving  rise  to 
complaints,  thereby  reducing  the potential  burden  on  national  courts  and  tribunals  as well 
as on the Community institutions.  With a view to monitoring application  of the rules more 
effectively  at  national  level,  it  could  be  worthwhile  for  other  Member  States  to  set  up  a 
similar body. 

3.44 
In  order  to  be  effective  (and  recognised  as  such)  an  authority  such  as  this  would 
need  to  be  genuinely  independent  and  have  the  power  to  require  contracting  entities  to 
correct  procedural  errors.  However,  the  standard  by  which  its  potential  contribution 
should  be  evaluated  should  not,  in  the  first  place,  be  the  detection  of  errors  but  the 
achievement  of  better  procurement.  Such  authorities  could  play  a  key  role  in  improving 
procurement  systems:  they  could  provide  useful  advice  to  contracting  entities,  check 
procurement  practices  to  promote  efficiency  and  ensure  that  mandatory  reporting 
requirements  were  in  place  to  enable  Member  States  to  supply  any  necessary  statistical 
data  to  the  Commission.  Moreover,  it  might  be useful  to  exchange  information  regularly 
among  similar  bodies. 
In  this  way,  a  permanent  administrative  network  could  evolve 
between  Member  States.  The  creation  of  authorities  of  this  kind  cannot  undermine  the 
current  distribution  of powers between  the Commission,  as guardian  of the Treaty,  and  the 
national  courts,  responsible  inter  alia  under  the  Remedies  Directives  for  protecting  the 
rights  of  businesses.  Any  dispute  that  might  arise  between  the  Commission  and  these 
authorities would  have to  be settled  by the Court  of Justice,  which  ensures,  in  accordance 
with  Article  164  of  the  EC  Treaty,  that  Community  law  is  interpreted  uniformly  and 
applied  correctly. 

invites  Member.  States  to  consider 

3.45  The  Commission 
the  establishment  or 
appointment  of  such  an  independent  authority.  The  Commission  believes  that,  in  some 
cases, existing bodies could be used for that purpose.  Indeed  the tasks of such an authority 
could  form  part  of  the  functions  of  a Member  State's  national  court  of  auditors  or  of  an 
equivalent  authority with genuine and unquestionable  independence.  The Commission will 
pay  particular  attention  to  the  reactions  of all  interested  parties  to  the  concept  of  national 
independent  authorities  for  public  procurement.  It  invites  any  Member  State(s)  to  run  a 
pilot project  to test how feasible  the application  of the concept  might be. 

D 

Other means for  settlement  of disputes 

(a) 

Attestation 

3.46  Among the measures under  consideration  with  a view to  ensuring  that  the  existing 
rules are applied  more effectively,  the Commission  considers that greater  advantage should 
be  taken  of  the  attestation  and  conciliation  procedures,  which  have  already  been 
established  under the Remedies for  Utilities Directive but have so far  not been used. 

17 

3.47  Those contracting  entities which  apply best  procurement  practice  and  set up  sound 
procedures  internally  are  most  likely  to  reap  maximum  benefits  from  the  Community 
It  is  for  this  reason  that  the  Remedies  for  Utilities 
procurement  regime  now  in  force. 
Directive  provides  for  the  creation  of  an  attestation  procedure  under  which  contracting 
entities can undergo  independent  attestation  of procurement  procedures to  check  that  they 
are  in compliance  with  the  Directive  and  geared  to  a rational  use  of  public  money.  Such 
attestation,  rather  like  a financial  audit,  is undertaken  by an  objectively  independent  body 
qualified  and authorised to carry out this function.  There is no comparable provision  in the 
Remedies Directive applicable to the  "traditional" sectors. 

3.48 
In  order  to  be  awarded  a  certificate  of  good  procurement  practice,  contracting 
entities  must  demonstrate  they  have  procedures  in  place  which,  on  the  basis  of  past 
experience,  appear  to  work  and  to  be in conformity  with  the  rules.  While an  examination 
of the past  procurement  record  does  not,  in itself,  offer  an  absolute  guarantee  as to  future 
procurement,  it  does  afford 
the  contracting  entity  a  degree  of  confidence  that  its 
procedures  are sound.  The publication  of the attestation  in the Official  Journal  could  help 
to  give would-be  suppliers  confidence  that  it is worth  the trouble  of tendering  because  the 
attested  entity  has  a proven  record  of competitive  and  open  public  procurement.  Utilities 
that accept and meet the prescribed  standards could  enjoy  the advantages  of greater  choice 
of suppliers and more competitive bids and so obtain best value for  money. 

3.49 
In  conformity  with  the  mandate  given  by  the  Commission  to  the  European 
standardisation  bodies  CEN  and  CENELEC,  a  European  standard  for  attestation  was 
approved  in  June  199521.  Member  States  must  now  make  appropriate  arrangements  to 
ensure that  attestators  are appointed  and  can begin  work.  The  Commission  is keen  to  se^ 
utilities  seek  attestation.  Moreover,  in  view  of  the  benefits  of  attestation  procedures  t' 
Commission  also  believes  that  similar  arrangements  could  usefully  be  extended 
contracting  entities  outside  the  utilities  sectors  and  it  would  welcome  a  debate  on  this 
issue. 
Similarly,  the  Commission  intends,  as  a  priority,  to  apply  the  attestation 
arrangements  to  contracting  entities  awarding  contracts  involving  the  Community  Funds 
(see Chapter 5  below). 

(b) 

Conciliation 

3.50 
Settling disputes amicably is always to be preferred.  In this regard  the Remedies  for 
Utilities  Directive  makes  provision  for  a  "conciliation"  procedure,  whereby  suppliers  and 
contracting  entities  may  agree  to  discuss  and  settle  any  disputes  that  arise  between  them 
about  the  correct  application  of  Community  law  by  using  independent  conciliators. 
However,  in  their  three  years  of  operation,  these  procedures  have  not  so  far  been  used. 
This may  in part  be  due  to  a  lack  of  information  among  suppliers  and  contracting  entities 
on  how  the  procedure  works.  The  Commission  would  welcome  a  debate  involving 
Member  States,  experienced  conciliators,  contracting  entities  and  industry  on  how  to 
improve the conciliation  procedure and ensure that it is more accessible and  operational. 

Standard  EN 45503  :  1996,  published  by CEN/CENELEC  on  24.1.1996 

V. 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

9. 

Questions 

Do  you  have views  on  the  effectiveness  of Member  States'  implementation  of  the 
Directives?  What,  in your  opinion,  are the reasons for  the  difficulties  encountered 
by Member States in this area ? 

Do  you  agree  with  the  list  of  problems  to  do  with  application  of  Community 
legislation  as  presented?  Should  attention  be  given  to  other  types  of  erroneous 
application  of  Directives?  Do  you  think  that  there  are  other  reasons  for  the 
problems than those mentioned in the text? 

What,  in  your  view,  are  the  points  on  which  interpretative  communications  or 
guidelines would be useful  in order to explain and elucidate the applicable rules? 

How  effective  are  existing  remedies  in  the  Member  States?  Have  you  found 
discrepancies  between  the  remedies  and  sanctions  applied  within  and  between 
Member  States that  are liable to  affect  the  smooth  operation  of the internal  market 
in this area?  If so, should  action be taken? 

Would  liquidated  damages exceeding the actual loss suffered  be  useful? 

Do  you  think  that,  in  order  to  be  able  more  effectively  and  more  swiftly  to  carry 
out its task of monitoring compliance with Community law, the Commission  should 
be given  more  effective  investigative  powers than  it  has  at  present,  along the  lines 
of those conferred  on it by Regulation No  17/62 in the competition field? 

Could  the  establishment  of  an  independent  supervisory  authority  in  each  Member 
State  improve  procurement  systems  and  aid  effective  enforcement  of  the  rules? 
Should  the  Commission  establish  systems  of  co-operation  at  Community  level 
between  such  independent  authorities,  calculated  to  promote  a uniform  application 
of  the  rules  for  awarding  public  contracts  and  fairer  access  for  all  to  public 
procurement? 

Do  you  agree  that  attestation  should  be  promoted  as  an  effective  means  of 
achieving  sound  public  procurement  procedures  ?  Should  attestation  be  extended 
to  contracting  entities  outside  the  utilities  sectors?  If  so,  how  could  this  best  be 
achieved  (for  example, could it be on a voluntary basis)? 

What is your opinion  on the reasons why the conciliation  procedure provided  for in 
the Remedies for the Utilities Directive has not yet been used? 

19 

4. 

IMPROVING ACCESS TO PUBLIC  PROCUREMENT 
MONITORING,  INFORMATION, TRAINING,  ELECTRONIC 
TENDERING 

Now  that  the  regulatory  framework  is  in  place,  entities  and  suppliers  must  exploit  the 
opportunities  it offers  and  maximise benefits.  Through  monitoring,  information  has to  be 
collected  for  evaluation  of  the  economic  impact  of  the  regime  and  to  allow  suppliers  to 
analyse the specific  public procurement  demand  in the whole of the Union.  Monitoring is 
also  necessary  in  order  to  enable  the  Commission  to  check  application  of  the  rules 
Information  and  training  can  contribute  decisively  to  optimally  ensuring 
consistently. 
effective,  value- for-  money public procurement.  Yet  many contracting  entities  appear  to 
lack detailed  knowledge of their legal obligations; suppliers,  particularly  SMEs,  frequently 
seem  unaware  of  the  market  opportunities  that  exist.  This  is  where  the  opportunities 
offered  by  training  and  information  must  be  fully  exploited.  Training  stimulates  the 
adjustment  of  old  ways  of  thinking  and  acting  towards  a  culture  that  promotes 
transparency  and  openness  in  the  choice  of  suppliers  and  procurement  to  the  highest 
commercial  standards.  Information  is  the  driving-force  for  efficient  public  procurement 
and  by  improving  its  quality,  it  will  be  made  easier  for  both  contracting  entities  and 
suppliers  to  exploit  the  opportunities  offered.  Looking  into  the  future,  electronic 
tendering  will  play  a  key  role  in  further  enhancing  transparency  and  access  to  public 
procurement. 

I. 

Monitoring  public  procurement 

4.1 
The  supervision  of  correct  application  of  the  existing  legal  framework  has  to  be 
complemented  by  permanent  monitoring  of  public  procurement  practice.  A  full 
understanding  of  the  economic  realities  underlying  the  award  of  public  contracts  is 
necessary.  The  relatively  homogeneous - EU  regulatory  regime  covers  increasingly 
heterogeneous  contracts.  Services  procurement  in  particular  needs  to  be  monitored 
because  it  has  only  recently  become  subject  to  the  Community  rules.  Such  monitoring 
could  involve,  for  example, obtaining  regular  information  on the classification  of  contracts 
in  accordance  with  Annexes  IA  and  IB  to  Directive 92/50/EEC  and  on  the  behaviour  of 
contracting  authorities  in  this  area.  To  allow  monitoring  of  the  economic  impact  of  the 
Union's  public  procurement  regime,  analysis of  competition  and  prices  paid  by the  entities 
is needed,  together  with a sound  understanding  of the size and the structure  of the  demand 
side  and  the  information  needs  of  the  supply  side.  On  this  basis  it  will  be  possible  to 
consider to  what  extent  the current  regime is meeting the needs of contracting  entities and 
economic operators. 

4.2 
The Commission intends to design a framework  for  the monitoring of the economic 
impact  of public procurement  and  is currently  studying  ways of optimising  the  use  of data 
collected  from  various  sources  (Tenders  Electronic  Daily  -  TED,  EUROSTAT).  The 
monitoring  exercise  should  eventually  permit  the  development  of  price  indicators  for  a 
representative  basket  of goods  purchased  by  entities  subject  to  the  Community  rules.  As 
previously  stated,  it  is  only  by  securing  the  best  and  most  competitive  supplier  that 
contracting entities will be able to provide the best service to the public. 

20 

4.3 
The Commission  reaffirms  its commitment  to ensuring day-to-day  compliance with 
the Community's Directives in accordance with the principles enshrined  in the Treaty.  The 
economic  monitoring  should  also  allow  the  market  analysis  of  particular  procurement 
sectors  in  all Member  States.  On  this basis the  Commission  will  be  able  systematically  to 
identify  problem  areas  and  to  carry  out  its role of supervision  in a more  coherent  manner, 
rather  than  simply  reacting  to  individual  complaints.  Databases  (including  Tenders 
Electronic Daily)  are valuable  instruments  for  the  collection,  analysis  and  dissemination  of 
information  and  can  perform  a useful  function  in monitoring  compliance  with  the  law.  A 
system  of  periodic  controls  to  identify  consistent  cases  of  non-publication  of  tenders  has 
also been  set up.  However,  the sheer volume of public procurement  transactions  (and  the 
number  and  range  of  public  entities)  makes  detailed  monitoring  by the  Commission  alone 
an  impossible  task.  This  is  especially  true  in  determining  whether  public  entities  publish 
information  about all relevant tenders.  Against this background,  the Commission  would  be 
interested  in receiving  suggestions  on  improving  the  monitoring  of  public  contract  award 
procedures,  both  at  Community  and  at  national  level. 
It  would  also  like  to  receive 
reactions to the question  of whether  the Commission  should  look  again  at the operation  of 
a  European  Observatory.  This  observatory  was  created  within  the  framework  of  the 
Advisory  Committee  on  Public  Procurement  to  monitor  the  application  of  the  public 
procurement  rules by Member  States' contracting  authorities, but has not,  so far,  been  fully 
operational,  despite  the  fact  that  it  is  in  no  way  intended  to  develop  into  a  technical 
assistance  department  or  an  agency.  The  idea  of  introducing  cross-checking  procedures 
could  also be usefully  exploited  in this context. 

II. 

Information 

Information  related  not  only  to 

the  legal  framework  and  the  data  available  on 
4.4 
public procurement  contracts, but  also to observed  irregularities and  malfunctioning,  is the 
key to ensuring optimally effective  and honest value-for-money  procurement. 

(a) 

Improved  readability of  the legal  framework 

4.5 
Improvements  in  transparency  and  the  dissemination  of  information  are  crucial  to 
support  efforts  to  improve  procurement  practice.  The  Commission  has  already  taken  a 
number of steps to improve both the quality and  quantity of information  about  the rights of 
suppliers  and  the  obligations  of  procurement  entities  under  EU  rules.  Although  all  EU 
public  procurement  directives  have  been  brought  together  and  published  in  a  single 
volume,  the  rules  themselves  would  be  easier  to  understand  if  each  Directive  were 
consolidated  in  such  a  way  as  to  group  together  all  the  provisions  applicable  to  public 
procurement  in  a  particular  sector.  For  public  supply  contracts,  public  works  contracts 
and contracts  in the utilities sectors (water,  energy, transport  and telecommunications),  the 
adoption  by the Council  of Directives 93/36/EEC, 93/37/EEC  and  93/38/EEC has brought 
about  a formal  consolidation.  But  such  a formal  consolidation  may  not  be  possible  each 
time  a  procurement  Directive  is  amended.  Where  it  is  not,  other  means  could  be 
envisaged. 

21 

4.6 
To  facilitate  understanding  of  the  public  procurement  rules,  the  Commission  is 
committed to publishing a number of Vademecums (interpretative communications) which 
will explain and clarify questions on the application of the Directives.  These Vademecums 
will  update  those  first  published  in  1987  (on  the  Works  and  Supplies  Directives)  and 
provide  equivalent  texts  in  respect  of  the  Services  and  Utilities  Directives.  The 
Commission  reaffirms  that it will  also  make available written guides  on  national  remedies 
procedures and the means by which suppliers can pursue their rights. 

(b) 

Dissemination of notifications 

4.7 
Providing  information  to  clarify  the  legal  framework  is  important.  Equally 
important is ensuring the availability of information and data for suppliers to be able to bid 
for  contracts.  Good  and  easily  available  data  is  vital  in  exploiting  procurement 
opportunities.  Now,  over  130 000 procurement notices are published each year in the EC 
Official  Journal and it is no easy task for suppliers to identify  out of this mass, the  specific 
calls for  tender  in which  they  have  an interest.  The  Commission  is  aware  that  there are 
problems  disseminating  this  amount  of  information  in a transparent  way  by  means  of the 
paper copy of the Supplement  of the Official  Journal. The possibility  of ultimately  shifting 
the publication system away from the paper version is under consideration. 

4.8 
The  Commission  has  already  carried  out  a  market  survey  of  subscribers  to  the 
Supplement to the Official  Journal and TED in order to find opt what improvements can be 
made to the information  and to  its presentation.  This  survey  has shown  that  only  a small 
number of subscribers prefer the current publication to any other possible alternatives.  The 
majority would  prefer to find the information  on the World  Wide Web  or on  a CD-ROM 
with  search  facilities.  Selective  subscriptions  to  the  Supplement  may  also  be  possible  so 
that users would  receive  information  only on contracts which  are of  particular interest  to 
them.  Whilst  it  is  expected  that  such  improvements  will  make  public  contracts  more 
accessible  to  businesses,  we  must  go  further  and  improve  access  to  information  in  step 
with each and every advance in technology. 

4.9 
Today,  problems  with  the  quality  of  tender  notices  are  also  frequent.  Although 
several Directives require the nature of the procurement to be described  using a code from 
the  CPA  (Classification  of  Products  by  Activity)  or  the  CPC  (Central  Product 
Classification),  only a few entities use these nomenclatures. This is costly for the European 
taxpayer. The Commission has developed the Common Procurement  Vocabulary (CPV) as 
a  list  of  codes  based  on  the  CPA  but  geared  to  the  specific  needs  of  the  procurement 
process.  The  CPV  has  recently  been  published  in  a  revised  version22  together  with  a 
recommendation23 to encourage its use by entities, in order to allow definition  of the nature 
of the procurement in CPV terms by those responsible for procurement.  Extending the use 
of the  CPV  to  all  entities  and  contracting  authorities  could  improve  the  transparency  of 
public procurement in the Union and allow significant  savings for the taxpayer because the 
publication process,  including translation into all  11 languages,  could by made easier. The 
Commission seeks comments from the interested parties on whether, in this context, use of 

22 

23 

OJS  169 of  3.9.96 
O JL  222 of  3.9.96 

22 

the CPV  should be made obligatory.  An alternative solution would  be to  levy a charge on 
those  entities  which  have  not  used  the  CPV  and  the  standardised  electronic  forms  to 
identify  the nature of their procurement,  proportional  to the extra costs of processing these 
notices. 

EOT.  Training 

4.10  Changing traditional  procurement  practices will only succeed  if there  is a change in 
management  ethos  away from  closed  relationships with  national  suppliers to  a  transparent 
and  truly  commercial  environment  where  doors  are  open  to  other  bidders  and  value  for 
money  is  the  primary  motivation.  Training  on  procurement  rules  and  best  practice  may 
well be the best and least costly way to achieve such a change.  Yet for  some governments, 
this  is sometimes  depicted  as a costly  luxury, the first to  suffer  cuts  in times  of  budgetary 
stringency.  New  procurement  techniques,  such  as  electronic  notification  and  electronic 
tendering,  will  not  deliver  greater  efficiency  and  lower  costs  unless  procurement  officers 
know how to use them. 

4.11  Welcome  changes  are  visible.  Current  discussions  on  improving  Europe's 
competitiveness  increasingly  focus  on  the  importance  of  continuing  education  and  the 
application  of  knowledge.  For  procurement,  this  must  result  in  still  greater  efforts  to 
provide  systematic  and  rigorous  training  for  officials  in  order  to  give  them  the  tools  that 
effective  procurement  demands. 

4.12  However  pressing  the  need,  we  cannot  expect  those,  whose  practices  are 
traditional, to  change overnight.  To nurture an optimal  procurement  policy demands a real 
awareness  of what  procurement  of the highest  commercial  standard  actually  entails.  The 
Commission believes that  steps must now be taken to stimulate the training of  procurement 
officers  in the new  and  evolving  skills they need  and to help them to better  understand  the 
new  role they  are  called  upon  to  play.  If we  are  to  bring  about  real  change,  however,  a 
programme  needs  to  be  developed  which  spreads  training  throughout  the  Community;  a 
programme  that focuses  on  best  procurement  practice  and  which  is  not  simply  a  one-off 
event.  The  application  of  information  technology  in  procurement  and  the  exchange  of 
information  on  best  practice  could  be  covered.  The  elaboration  of  such  a  programme 
would 
the  Commission,  Member  States,  national  sectoral 
associations, businesses, universities and other interested  parties. 

involve  many  players: 

IV. 

Electronic  tendering 

tendering.  Now, 

4.13  Our  current  procurement  regime  is based  on  the  use  of  traditional  administrative 
practices  and  means  of  communication:  it  is mainly  a  paper-based  system  of  notification, 
dissemination  and 
in  data  processing  and 
telecommunications,  we do not  need to  proceed  as we have in the past.  It  is time to  take 
our procurement  policy into the future;  to benefit  from  the opportunities offered  by today's 
advances  in  information  technology.  In  the  short  term,  new  information  technologies  are 
helping  us  to  introduce  electronic  notification  of  tender  notices  and  the  dissemination  of 
In  the  longer  term,  the  use  of  computer  systems  and 
information 

thanks  to  progress 

to  suppliers. 

23 

telecommunications  will  revolutionise  the  way  in  which  contracts  are  awarded.  An 
"electronic  marketplace"  could  be  developed  in  which  suppliers  could  list  products  and 
prices  in  electronic  catalogues,  and  contracting  entities  could  compare  prices  and 
conditions and order electronically the best value item that  meets their needs.  We all stand 
to  benefit;  electronic  procurement  will be  more  transparent,  more  open  to  dialogue  with 
suppliers, and far more efficient  than any present  paper-based  system. 

in 

this  area. 

to  fall  behind 

4.14  The  European  Union  cannot  afford 
The 
recommendations  of  the  Bangemann  Group  report24  to  the  European  Council  identified 
public  procurement  as  one  of the  ten  top-priority  applications  for  the  use  of  information 
technology  in the public sector.  The report  suggested  that  at  least  10% of all  contracting 
entities  should  have  electronic  tendering  procedures  in  place within  the  next  two  to  three 
years.  Clearly,  two  years  later,  major  efforts  are  needed  at  all  levels  to  meet  that  target. 
At  the  G7  Summit  Conference  on  the  Information  Society  held  in  1995,  the  participants 
called  on  the  private  sector  to  seize the  initiative  and  committed  themselves  to  encourage 
the  private-sector  development  of  information  networks  and  the  provision  of  new 
information-related  services. 

(a) 

Current  state of play 

4.15  The notification  and dissemination  of tender notices is the most appropriate point  at 
which  to  apply  information  technology  to  public  procurement.  Under  our  Directives, 
contracting entities are under the obligation to publish notices about their calls for tender in 
the Supplement  of the EU Official  Journal.  This supplement  already runs to  more than  300 
pages per daily issue and the expectation  is of continued  expansion  in the year  ahead.  Not 
surprisingly,  suppliers  find  it  difficult  to  identify  the  tender  opportunities  which  interest 
them.  The system must, quite simply, be made more efficient  and more simple to use. 

4.16  Considerable progress has already been made.  The TED database was introduced  a 
decade  ago  and  has  been  updated  recently  by  the  development  of  more  user-friendly 
software,  the  application  of  the  Common  Procurement  Vocabulary  (CPV)  and  the 
provision  of access to the INTERNET.  Further improvements are now under way.25 

(b) 

Electronic  notification 

4.17  With  today's technology,  opportunities  abound  for  increasing  transparency,  cutting 
operating  costs  and  reducing  delays.  To  this end,  the Commission  has embarked  upon  an 
ambitious  programme  known  under  the  acronym  SIMAP  ( "Système  d'information  pour 
les marchés  publics")  which  builds on the  experience  of TED.  SIMAP  covers  a range  of 
different  projects. 
Its  most  immediate  aim  is  to  increase  the  capacity  of  the  current 
publication  system  so  as  to  cope  adequately  with  the  growing  number  of  notices  which 
need  to  be  published.  SIMAP  will  eventually  make  it  possible  to  provide  better  tender 
information  more quickly - a change which is both urgently needed  (given the rapid  growth 
in  published  tenders),  and  vital  if  we  are  to  improve  the  transparency  of  contract  award 

24 

25 

Europe  and  the  Global  Information  Society:  Recommendations  presented  to  the  European 
Council at Corfu, Brussels, 26.5.1994. 

See also points 4.7 to 4.9. 

24 

procedures  in  Europe.  SIMAP  offers  the  prospect  of  improved  monitoring,  market 
analysis  and  the  exchange  of  a variety  of  other  useful  information  so  as  to  make  it  easier 
for  suppliers to identify  sales opportunities. 

4.18  Under  SEMAP a  number  of  pilot  projects  have  already  been  launched  involving  a 
limited  number  of  contracting  entities  and  information  providers.  They  focus  on  the 
electronic  communication  of  procurement  notices  between  contracting  entities  and  the 
Official  Journal  and TED, and on facilitating  on-line access to information  for  suppliers.  If 
these pilots  are  successful  - and  the first signs  are  encouraging  - they  could  eventually  be 
developed  into  an  operational  system  of  electronic  notification  and  dissemination  of 
information  to  which  all  interested  parties  in  the  Union  would  have  access  (using  a 
Community-wide electronic bulletin board  system on procurement). 

4.19  Using  such  a  system,  contracting  entities  would  have  the  means  for  transmitting 
their notices electronically  rather  than  in paper form.  A key question  will be  how the  shift 
from  paper  to  electronic  transmission  can  be  achieved.  The  latest  modifications  to  the 
legislative  texts  already  propose  changes  to  permit  the  electronic  transmission  of  notices. 
Initially,  and  for  a period  of  several  years, the  paper-based  and  electronic  systems will  co 
exist.  We  shall  need  to  decide  whether  such  a  change  could  be  achieved  on  a  voluntary 
it  would  be  advisable  to  legally  oblige  contracting  entities  to  transmit 
basis  or  whether 
notices  in  electronic  form  and,  whether  such  an  obligation  should  be  introduced  first  in  a 
limited  way  at  central  government  and  utilities  level,  before  extending  it  to  other 
contracting authorities.  Such electronic transmission  of notices could  also make it possible 
to  shorten  the  time  needed  for  disseminating  the  information  and  perhaps,  ultimately,  the 
deadlines for bidding.  The Commission  invites comments on this issue. 

(c) 

Electronic  dissemination 

4.20 
It  is  clear  that,  with  the  steady  rise- in  the  number  of  notices  published  and  the 
improvements  in technology for  electronic publishing, the paper version  of the OJ/S will in 
time be superseded  by electronic versions. The market  survey of subscribers  has  confirmed 
that the majority  would  prefer  to find the information  over the World  Wide Web and  many 
would  be  interested  in  a  CD-ROM.  A  CD-ROM  is  already  being  developed  and  further 
improvements  to  the  TED  database  such  as  the  development  of  INTERNET  access  will 
doubtless attract  more interest. 

4.21  There  are  currently  around  13,000  subscribers  to  the  Official  Journal  Supplement. 
This  can  only  be  a  small  part  of  the  number  of  suppliers  potentially  interested.  The 
electronic  or  on-line  versions  must  be  designed  to  attract  new  subscribers,  as  well  as  to 
replace  the  paper  version  for  existing  subscribers,  for  whom  it  is  becoming  increasingly 
difficult  to use. 

4.22  Once  these  replacement  systems  are  in  place  and  accepted  by  subscribers,  the 
obligation  to  publish  the  OJ  supplement  on  paper  could  be  modified  to  refer  to  electronic 
means, so that the paper version could be phased  out as demand  falls. 

25 

4.23  As a result  of the findings  of the market  survey,  the Commission  is considering  the 
possibility  of  printing  short  summaries  of  notices  in  a  much  slimmer  OJ  supplement  and 
giving  full  information  only  in  a  database,  also  available  as  a  CD-ROM  or  via  the 
INTERNET.  It  is also  considering  the  possibility  of producing  only  the  database  version 
or of providing the information  only through third parties under licence. 

4.24  The  Commission  would  be  interested  in  reactions  to  or  comments  upon  these 
various  options  from  all  the  interested  parties,  Member  States,  contracting  entities  and 
suppliers. 

(d) 

Fully electronic tendering system 

the 

than 

technology  are  wider 

4.25  The  opportunities  offered  by 
relatively 
straightforward  electronic  transmission  and  dissemination  of  notices.  In  the  longer  term, 
the  way  forward  for  electronic  procurement  will  undoubtedly  be  a  fully  electronic 
tendering  system.  This  could  include  the  extension  of  electronic  procurement  to  meet 
existing  mandatory  requirements  under  the  Directives  (such  as  the  obligation  to  publish) 
but,  far  more  dramatically,  to  cover  every  other  part  of  the  procurement  process.  A  full 
electronic  tendering  system  could  cover  the  exchange  of tender  documents  and  tenders  as 
well  as  information  exchange  during  the  life  of  the  contract  (including  invoices  and 
payments).  However,  unlike  the  publication  of  notices,  such  applications  would  fall 
outside  the  Commission's  direct  area  of  responsibility;  it  would  be  a  matter  for  the 
commercial judgement  of  contracting  entities  and  economic  operators.  The  Commission 
will,  of  course,  be  closely  associated  with  these  developments:  they  will  certainly 
significantly  affect  the EU  regulatory framework  for  public procurement;  and there  are real 
dangers that  incompatible  national  systems  could  create major  new  internal  (and  external) 
trade barriers. 

4.26  Our  regime  must  be  responsive  and  ready  to  meet  the  challenge  posed  by  a 
constantly  changing  public procurement  environment.  No  specific  provisions  in the  public 
procurement  directives  deal  with  the  use  of  information  technology.  Our  existing  rules 
will, whenever  possible,  be interpreted  in such  a way as to  allow  and  to  accommodate  the 
new  developments.  Although  the  Commission  starts  from  a  presumption  that  no 
amendments  to  the  legal  framework  on  public  procurement  will  be  proposed,  it  is  not 
excluded  that  those  stemming  from  changes  of  a  technical  nature  which  do  not  overturn 
the  essential  principles  of  the  regime  may  call  for  specific  legal  proposals.  Electronic 
procurement  could be one such area. 

(e) 

Experience  outside the European  Union 

4.27  How  developments  in information  technology  will be  integrated  in  procurement  in 
the coming years is uncertain, but important pointers are available.  The  US  Administration 
has  licensed  information  on  tender  notices  to  a  dozen  private  companies  which  have 
developed  so-called  value-added  networks  (or  VANs).  These  networks  offer  high-quality 
information  about  procurement  possibilities  in the US  and  abroad.  Similar  private  sector 
involvement  can  be  found  in  Canada.  Because  of  the  commercial  value  of  procurement 

See also Chapter 6. 

26 

data,  the  private  sector  may  be  interested,  for  example,  in  their  dissemination  in  Europe, 
even  if  multilingualism  in  the  EU  might  retard  the  process.  The  Commission  would 
welcome  expressions  of  interest  from  private  sector  operators.  Consideration  must  be 
given  as  to  how  the  availability  of  information  about  potential  suppliers  of  goods  and 
services  can be improved  and how industry  can be stimulated  to  provide  the  infrastructure 
for  electronic  trading  with  contracting  entities.  This  requires  much  thought  from  all 
interested  parties, in particular to find ways of co-operating  to  develop  the necessary  tools 
and services. 

include 

the  greater  availability  of 

incompatible  systems  -  making  it  more  difficult 

4.28  Electronic  procurement  is a global  phenomenon.  Our  major  trading  partners  have 
all  embarked  on  ambitious  programmes  to  develop  integrated  electronic  access  to  their 
procurement  information  and to expand electronic tendering for their acquisitions.  As with 
many  new  and  exciting  developments,  there  are  opportunities  as  well  as  threats.  The 
opportunities 
information  on  public  contracts: 
sophisticated  software  programmes  can  now  give  suppliers  the  information  they  need  at 
the push  of a button  - irrespective  of their geographic  location.  The threat  is that  national 
policies  and  interests  could  prove  to  be  too  great  for  governments.  This  could  result  in 
technically 
to  communicate;  and 
consequently  we  may  not  be  able  to  reap  the  expected  benefits  of  electronic  tendering. 
With  the  Commission's  support,  the  Government  Procurement  Committee  of  the  World 
Trade  Organisation  (WTO)  -  which  deals  with  matters  relating  to  the  Government 
Procurement  Agreement  (GPA)  -  has  already  begun  to  discuss  the  application  of 
information  technologies in public procurement.  Industry  is also inviting us to  examine the 
possibility  of  establishing  a  system  of  public  purchasing  using  electronic  means  of 
communication,  compatible  between  the  European  Union  and  the  United  States.  These 
discussions  within  the  GPA  Committee  also  aim  to  reach  a  consensus  on  compatible 
systems  in  all  GPA  signatory  countries.  The  key  issues  of  internationally  acceptable 
standards and technical  procedures will therefore  be tackled. 

(0 

Conclusion 

4.29  Having  considered  reactions  to  this  Green  Paper,  the  Commission  will  publish-a 
strategy  paper  on  electronic  procurement  which  will  take  account  of  reflections  on 
electronic  commerce and  the  information  society.  Its aim will be to  prepare,  with  the help 
of  Member  States,  an  action  plan  setting  out  the  way  electronic  procurement  could 
develop over the next five years. 

V. 

1. 

Questions 

Is  sufficient  attention  given  to  monitoring  the  application  of the  procurement  rules 
as  a  way  of  preventing  problems  or  detecting  possible  breaches?  Are  there 
suggestions  to  improve  Community  and  Member  State  monitoring  systems?  Do 
you  see merit in cross-border  monitoring, for example by developing the concept  of 
the European  Observatory  to look  at rates of compliance in the public  procurement 
market? 

27 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

9. 

Positive  incentives  to  stimulate  efficient  follow-up  procedures  in  this  sector  are 
vital.  Are there incentives  (cross-checking,  publication  of results achieved,  awards 
etc.) that could be applied at national level? 

Are  you  satisfied  with  the  information  provided  by  the  Commission  or  Member 
States  on  public  procurement  issues?  Would  a  regular  information  bulletin 
reporting  on  public  procurement  developments  and  stimulating  the  exchange  of 
views and experience at the European level be useful? 

What  other  sources  of  information  are  available?  What  sort  of  statistical 
information  would  meet information  and transparency  requirements? 

Regulations  are now  in place to  protect  the Community's  financial  interests.  These 
contain  provisions  obliging  Member  States  to  communicate  cases  involving  fraud 
or  other  irregularity  to  the  Commission  on  a  regular  basis.  These  obligations 
already apply to  public procurement  dossiers,  where there  is Community  financing. 
Could this information  system be extended  to public procurement  in general? 

Are there  any  training  initiatives  in  your  Member  State?  (Please  give  details.)  Is 
sufficient  attention  being  paid  to  training  in  relation  to  the  application  of 
information  technology  in public procurement? 

Is  a  Community-wide  programme  needed  to  stimulate  training  and  spread  best 
procurement  practice?  What  form  should  it take  and  what  should  be its  duration? 
How can Member  States, the procurement  profession,  academics  and  business play 
their full  part in such a programme? 

What  improvements  to  the  Official  Journal  Supplement  or  to  the  Tenders 
Electronic Daily database are needed? 

Does electronic notification  and tendering offer  opportunities  to  make  procurement 
more  efficient  and  more  accessible  to  suppliers?  Can  they  contribute  to  the 
opening-up of public procurement? 

10. 

How can increased  electronic transmission  of notices by contracting  entities best be 
encouraged  (voluntarily  or as a legal obligation)?  What  incentives can be provided 
to encourage such transmission? 

11.  What  elements  would  you  regard  as  essential  to  exploit  the  wider  potential  of 
electronic  tendering  in  public  procurement?  What  role  should  be  played  by  the 
Commission,  the  Member  States,  contracting  entities,  suppliers  and  software 
writers ? 

12. 

13. 

Is the private sector  interested  in providing  procurement  information  services in the 
Union? 

Should  discussions  aimed  at reaching consensus with our major  trading  partners on 
the technical  compatibility  of electronic tendering systems be given high priority? 

28 

5. 

PUBLIC PROCUREMENT AND OTHER  COMMUNITY  POLICIES 

Public  procurement  policy  has  positive  spin-off  effects  on  other  Community  policies. 
Although  SMEs  firms  still  face  a  number  of  difficulties  in  effectively  winning  contracts, 
more transparent  market  access,  for  example,  allows  these firms to  unlock  new  potential 
the  Commission  presents  measures  that  could  improve  the 
markets.  In  this  chapter, 
situation. 

In the  field  of  standards,  the  Commission  intends  to  step  up  efforts,  in  agreement  with 
business,  to  ensure that  the  standards  institutions  draw  up  European  standards  for  use  in 
contract  documents, 
to  "the  effective  opening-up  of  public 
procurement. 

thereby  contributing 

The  massive  capital  commitment  required  for  Trans-European  Networks  is  encouraged 
with  contract  award  procedures  laid  down  by the  Directives  that  guarantee  an  acceptable 
return  for  investors.  The  Commission  is  prepared  to  clarify  the  legislative  framework 
should  this  prove  necessary  in  order  to  build  partnerships  between  the  public  and  private 
sectors for these  projects. 

Correct  application  of  the  Community  rules  also  helps  to  allocate  Community  resources 
from  the  Structural  and Regional  Funds in the most  efficient  way.  With  this objective,  the 
Commission  is proposing  a number  of measures to  improve compliance  with  these rules in 
procedures  for  the  award  of  contracts  part-financed  by  these  Funds.  The  Green  Paper 
deals with  contracts  awarded  by the  Community  institutions  or  by  non-Member  countries 
who benefit  from  Community resources. 

Public  procurement  rules  can  contribute  to  the  achievement  of  social  and  environment 
policy objectives.  A description  of the possibilities  offered  by the Directives  in these  areas 
is given  in this  chapter.  In  the  light  of  the  outcome  of  the  debate  initiated  by  the  Green 
Paper,  the  Commission  will  consider  how  better  account  can  be  taken  of  social  and 
environmental  aspects  in the application of the rules. 

Lastly,  the  Commission  would  welcome  any  initiative  aimed  at  stimulating  competition  in 
defence  procurement,  with  a  view  to  conferring  a  European  identity  on  security  and 
defence policy and at the same time strengthening the competitiveness  of our  industry. 

I. 

SMEs 

5.1  Most of our larger companies now have considerable experience in bidding for  public 
contracts  in  other  countries.  They  are  usually  well  placed  to  obtain  information  about 
particular calls for tender and  sufficiently  experienced  in order to participate in them.  They 
often  continue  to  submit  tenders  through  their  local  subsidiaries  or  via  consortia  in  which 
the lead company  is from  the same Member State as the purchasing  entity.  The  number of 
contracts  won  directly  by  firms  based  in  other  Member  States  remains  small.  This  also 
holds  true  for  small  and  medium-sized  enterprises  (SMEs),  which  face  greater  difficulties 
on account  of their  size.  Although  a survey of  SMEs undertaken  in  1994 by the Euro  Info 

29 

27  • 

* 

Centres 
isolated  cases that cannot be used to establish a general  trend. 

identified firms which had  won  contracts  in other  Member  States,  these  are only 

5.2  And yet SMEs should win a larger share of public contracts given their importance in 
the  European  economy:  they  account  for  over  65% of  turnover  generated  by the  private 
sector in the European  Union.  Wider SME participation  in public procurement  would  lead 
to  the creation  of a core  of  SMEs  capable of seizing  opportunities  offered  by open  public 
procurement  not  only  within  the  European  Union  but  also  in  countries  covered  by  the 
GATT Agreement  on Government Procurement  (see Chapter 6) and would  also in the long 
run  enable  SMEs  to  make  a  greater  contribution  to  growth,  competitiveness  and 
employment.  The  basic  objectives  of  an  internal  market  in  procurement  (widening  the 
choice  of  value-for-money  suppliers  for  procurement  entities  and 
the 
competitiveness  of  EU  industry)  will  not  be  met  unless  SMEs  can  also  secure  genuine 
access to Europe's markets. 

increasing 

5.3  Work  carried  out  on  the  basis  of  various  communications  or  resolutions  on  the 
subject  of  SMEs  and  the  internal  market"  has  identified  a  long  list  of  obstacles 
encountered  by  SMEs  during  contract  awards,  both  upstream  and  downstream  of  the 
award  procedure. 

5.4  When planning their business  activities,  SMEs thus  already  encounter  difficulties  in 
organising themselves in order to bid  effectively  for  the contracts of interest  to  them.  This 
is  because  they  find  it  difficult  to  adjust  their  activities  to  market  demand;  they  lack 
practical  information  on  contracts  put  out  to  tender  in  their  sector;  they  lack  the  trained 
staff  and  technical  assistance  necessary 
to  cope  with  prequalification  procedures, 
particularly  in  the  utilities  sectors,  and  where  appropriate,  to  prepare  bids;  they  have 
problems  in  meeting  quality  certification  requirements;  and  they  are  often  too  small  in 
comparison  with  the  contracts  covered  by  the  Directives  and  put  up  for  competition  at 
Community  level.  The  problem  of  size  is  compounded  by  the  difficulty  in  setting  up 
effective  and advantageous forms  of partnership between  SMEs. 

27 

28 

Survey  on  the  impact  of  the  internal  market  on  business,  involving  more  than  140  small  and 
medium-sized  companies  in  12  Member  Slates.  See  Commission  press  release  IP  (95)  364, 
10.4.1995. 

See,  for  example, 
the  Commission  communications;  of  7.5.1990  on  promoting  SME 
participation  in  public  procurement  in  the  Community  (COM  (90)  166);  of  1.6.1992  on  SME 
participation  in public procurement  in the Community  (SEC (92) 722);  of 3.6.1992  on  measures 
relating  to  the  industries  supplying  utilities  sectors  in  the  structurally  disadvantaged  regions  of 
the  Community  (SEC  (92)  1052);  of  18.11.1992  on  the  problem  of  the  time  taken  to  make . 
payments in commercial  transactions  (SEC (92) 2214); of 22.12.1993  on  making the most of the 
internal  market:  Strategic  programme  (COM  (93) 632); and  of 3.6.1994  on  the  implementation 
of  an  integrated  programme  in  support  of  SMEs  (COM  (94)  207);  the  Council  resolutions  of 
22.11.1993  on  strengthening  the  competitiveness  of  enterprises,  in  particular  small  and 
medium-sized  enterprises  and  craft  enterprises,  and  developing  employment  in  the  Community 
(OJ  No  C  326/1)  and  of  22.4.1996  on  the  coordination  of  Community  activities  in  favour  of 
small  and  medium-sized  enterprises  and  the  craft  sector  (OJ  No  C  130/1);  and  Parliament's 
resolution  of  21.4.1993  on  the  Commission  communications  "Towards  a  European  market  in 
subcontracting"  and  "SME  participation  in  public  procurement  in  the  Community"  (OJ  No  C 
150/71). 

30 

5.5 
SMEs also have to contend with a number of problems in the contract award  phase. 
For  example,  it  is difficult  for  them  to  gain  rapid  access  to  the  information  necessary  for 
preparing  bids,  especially  for  identifying  and  interpreting  tender  notices  potentially  of 
interest  to  them,  the  subject-matter  of  the  contract,  the  regulations  applicable  (including 
national  rules)  and  the  standards  and  technical  specifications  to  be  complied  with. 
In 
particular,  a  recent  study  has  shown  that  late  transmission  of  contract  documents  by 
contracting  authorities  is a  real  barrier  to  participation  by  SMEs,  since  in  many  instances 
(over  50%  of  the  cases  studied)  it  prevents  them  from  submitting  a  valid  bid  before  the 
deadline expires.  The costs  of submitting tenders  and the securing  of financial guarantees 
at competitive rates are also substantial  obstacles for these  firms. 

5.6 
Even  when  performing  contracts  they  have won,  SMEs face  special  difficulties:  in 
meeting  the  requirements  of  performance  bonds  they  have  accepted  when  contracts  were 
concluded; in securing payment for their works or supplies on time; in settling any disputes 
quickly and cheaply; and in obtaining adequate protection as subcontractors. 

Action  has already been taken to tackle these problems at Community  level.  As far 
5.7 
as  the  availability  of  information  is  concerned,  some  Community  sponsored  networks 
(including  a  core  group  of  Euro  Info  Centres  specialised  in  public  procurement)  have 
already  developed  information  and  market  support  services,  in  co-operation  with  private 
consultants.  These  networks,  together  with  a  number  of  local,  sectoral  or  national 
services,  provide  information  ori  contract  opportunities  even  below  the  thresholds  of  the 
Directives  -  as  well  as  additional  information  about  the  procurement  plans  of  specific 
contracting  authorities.  Moreover,  the new design  of tender  notices  published  daily  in the 
Official  Journal  certainly facilitates  the task  of SMEs, which  have access to  it,  in  obtaining 
sufficient  information  on procurement  opportunities, particularly in other Member States. 

The  Commission  has  also  adopted  a  number  of  measures  aimed  at  providing 
5.8 
information  and  technical  assistance  to  SMEs  in  disadvantaged  regions  in  breaking  into 

30 

European  procurement  markets.  These  include  PRISMA 
(Preparation  of  Regional 
Industry  for  the  Internal  Market),  which  ran  unfil  1994,  and  the  newly  launched  SMEs 

39 

• 

initiatives,  which  also  cover  the  promotion  of  partnerships  between 

and  INTERREG  II 
SMEs in different  Member  States and specialised  training. 
5.9 
comments on the options for  action envisaged  in this area and described  below. 

The  Commission  believes that  other  initiatives  should  be taken.  It  would  welcome 

5.10  As far  as general  information  is concerned,  it could  prove useful  to draft  a practical 
guide for  SMEs,  explaining  how  they  can  prepare  for  participation  in  public  procurement, 
and  to  draw  up  interpretative  documents  on  some  aspects  of the  Directives  that  concern 

29 

30 

31 

32 

Euro  Info  Centre  Aarhus  County,  Analysis  of  irregularities  occurring  in  tender  notices 
published  in the Official  Journal  of  the European  Communities  1990-1993.  Study  presented  to 
the Commission  in  1996. 

PRISMA  (91/C 33/05), OJ No C 33/9 of 8.2.1991. 

SMEs Initiative  (94/C  180/03), OJ No C  180/10 of  1.7.1994. 

INTERREG  II (94/C  180/13), OJ No C  180/60 of  1.7.1994.. 

31 

these  types  of  business  more  particularly,  such  as  the  splitting  of  contracts  into  lots,  the 
publication  of prior  information  notices, and the problem  of the time limits for  distributing 
documentation  on contracts. 

5.11  As  regards  information  on  specific  contracts,  consideration  could  be  given  to 
adapting  TED to the specific  requirements of SMEs.  Another  possibility would  be to  take 
advantage of the increasing popularity of the INTERNET  and World  Wide Web to  provide 
access to  such  information  for  a much wider  audience.  There  are  few  technical  obstacles 
to  such  developments,  but  there  may  be  a  need  for  co-ordination  at  a  European  level  if 
such  initiatives  are to  succeed.  It could  also be useful  to  press  for  greater  transparency  on 
the  part  of  contracting  authorities  by  encouraging  them  to  use  wherever  possible  the 
Common  Procurement  Vocabulary  (CPV)  and  standard  forms  for  procedural  documents, 

which would  facilitate electronic data interchange. 

• 

33 

5.12  As far  as preparing for contract award procedures is concerned,  the opening-up and 
simplification  of  contracting  authorities'  practices  through  the  training  of  procurement 
officers,  the  exchange  of  officials  and  the  exchange  of  information  on  good  procurement 
practice could  only make it easier for  SMEs to bid for contracts. 

5.13  Given  their  size,  it  would  be  easier  for  SMEs  to  take  part  effectively  in  an  ever 
It 
more  global  market  if  frameworks  were  established  for  co-operation  between  them. 
could  therefore  be  worth  looking  into  the  question  of  whether  the  European  Economic 
Interest  Grouping  (EEIG)  is  suitable  for  promoting  co-operation  between  SMEs, 
particularly  for  cross-border public procurement. 

5.14  An aspect  which  is extremely  important  for  SMEs, but  is not  dealt  with  directly by 
the  Directives,  is  subcontracting.  The  Commission  has  been  called  upon  to  "pursue,  in 
concert  with the Member  States, its general  role of instigating,  initiating  and  co-ordinating 
measures  aimed  at  creating  a  propitious  environment  for  subcontracting" 
.  To  that  end, 
action  could  be  taken  in  this  area,  for  example  to  improve  the  existing  network  of 
databases  on  subcontracting  and  to  encourage  the  establishment  of  approved  codes  of 
practice  and  standard  contractual  clauses.  In  order  to  gauge  the  economic  importance  of 
sub-contracting,  pilot  studies  have been  carried  out  in  10 Member  States  using "as à basis 
the  common  methodology  developed  by EUROSTAT.  These  studies  were  carried  out  on 
sub-contracting  enterprises  or  those  ordering  in three  economic  sectors  (cars,  electronics, 
textiles/clothing)  and the results will be published  before  the end of  1996. 

5.15  Another aspect which closely concerns SMEs is payment  periods.  On this topic the 

.

.. 

. 

35 

Commission,  after  carrying  out  wide-ranging  consultations,  adopted  a  recommendation  * 
in  which  it  calls  on  Member  States  to  ensure  that  their  contracting  authorities  are 
disciplined  in the matter of payment.  The recommendation  thus  provides,  for  example,  for 
a time limit by which payments should be made and for  the payment  of interest  in the event 

33 

34 

35 

See in  this connection  the arguments developed  in  Chapter  4. 

See  Council  resolution  of  26th  September  1989  on  the  development  of  subcontracting  in  the 
Community  (OJ No C 254/1 of 7.10.1989). 

Commission  recommendation  on  payment  periods  in  commercial  transactions  (OJ  No  L  127/19 
of  10.6.1995 and  OJ No C  144/3 of  10.6.1995). 

32 

of  late payment.  Member  States  are  to  submit  reports  by the  end  of  1997  on  the  action 
they have taken to implement the recommendation; the Commission would  be interested  in 
having at this stage the reactions of the parties concerned  on this matter. 

5.16  On a more general  note, the Commission  takes the view that the effective  access  of 
SMEs to  public procurement  could  be achieved  through  a set  of concrete  measures  based 
on  a thorough  analysis  of these firms' practical  needs  and  opportunities,  and  in  particular 
through the development  of networks of support  services which  would  provide them  with 
the  necessary  information,  technical  assistance  and  suitable  training.  Following  the 
consultations  launched  by  this  Green  Paper,  the  Commission  intends  to  present  a 
communication  on the measures it proposes in this area. 

II. 

Standardisation 

5.17 
Standards  and  technical  specifications  describing  the  characteristics  of  the  works, 
supplies or services covered by contracts play a crucial  role in our efforts  to open  up  public 
procurement.  The  use  of  national  standards  can  significantly  restrict  access  to  contracts 
for  non-national  suppliers.  With  this  in  mind,  the  Directives  provide  that  contracting 
authorities define technical specifications  with reference  to European  standards or technical 
approvals,  without  prejudice  to  mandatory  national  technical  rules,  in  so  far  as  these  are 
compatible  with  Community  law.  This was  a problem  the Directives  sought  to  resolve  by 
requiring  contracting  entities  to  refer  to  European  standards  where  they  exist.  Under 
Commission  mandates  issued  within  the  framework  of  the  1985  Council  resolution  on  a 
new  approach  to  standards  and  technical  harmonisation, 
the  European  standardisation 
bodies (CEN, CENELEC, ETSI) have developed  many European  standards which  are then 
In  addition  mandates  in  support  of  public 
implemented 
procurement  have been  issued  on  a number  of occasions.  This  effort  must  be  stepped  up 
since certain markets are to this day still in practice  closed  off,  chiefly  owing to  insufficient 
standardisation  work.  Together  with  industry,  the  Commission  is  currently  determining 
where  further  mandates -are  needed.  The  Commission  would  welcome  comments  from 
interested  parties  on  the  general  issue  of  standardisation  and  technical  specifications  in 
public  procurement  and  on  the  identification  of  areas  where  the  absence  of  European 
standards poses problems for the opening-up of public procurement. 

into  national  standards. 

III. 

Trans-European  Networks  (TENs) and  transport  in  particular 

5.18  The Maastricht  Treaty committed  the European Union to promoting  the creation  of 
energy  ;  and 
a  web  of  Trans-European  Networks 
telecommunications  sectors.  Successfully  developing  TENs  will  contribute  to  the  optimal 
use of the opportunities  offered  by the single market; investing in TENs is an investment in 
our  future.  This  policy  is crucial  to  the  overall  competitiveness  of  the  EU  economy  and, 
both  directly  and  indirectly,  to  the  creation  of  employment.  Several  key  projects  are 
already  under  way,  including  the  0resund  road  and  rail  link  between  Denmark  and 

transport, 

(TENs) 

the 

in 

36  Resolution  of 7.4.85,  OJ  C  136/1 of 4.6.1985. 

33 

Sweden,  upgrading  Malpensa  airport  for  Milan  and  the  rail  link  between  Cork  and 
Stranraer.  However,  progress on other priority TENs has been  slow. 

5.19  Against  a  background  of  ever  tighter  government  budgets,  thé  European  Council 
has  emphasised  the  importance  of  private  finance  in  the  Union's  efforts  to  increase 
Investment  projects  are  increasingly  unlikely  to  be 
investment  in  TENs  infrastructures. 
funded  only  by  grants  from  local  or  national  governments.  They  demand  a  massive 
financial  commitment.  There  is  therefore  a  need  to  find  fresh  ways  of  raising  capital. 
Many  private  sector  organisations  have  made  it  clear  that  they  are  increasingly  ready  to 
invest  substantially  in TENs projects  and are willing to do so on  a risk-financing  basis. But 
a number of obstacles still have to be overcome. 

5.20  The  Commission's  report  to  the  Madrid  European  Council  (December  1995) 
outlined  ways  of  overcoming  obstacles  to  the  private  financing  of  Trans-European 
Network  projects.  Apart  from  the problem  of how to  ensure  an  acceptable  rate  of  return 
for  projects,  the report  also referred  to the problem of non-commercial  risks arising due to 
changes  in public policy.  The Commission  is presently  looking  into this issue. The  private 
sector has also  expressed  concern  about the application  of EU public procurement  rules; in 
some circles, it has been claimed  that the Directives may inhibit private sector  involvement. 

5.21  The  ultimate  objective  of  the  Community's  public  procurement  directives  is  to 
achieve fair  and  open  competition  for  procurement  contracts  in the internal  market.  Their 
aim  is  to  facilitate  and  not  to  obstruct  private  sector  involvement  in  projects.  The 
Commission  believes  that  the  Community  public  procurement  rules  can  facilitate  private 
sector  participation  in  Trans-European  Networks,  without  any  need,  at  this  stage,  to 
amend  the  existing  legal  framework. 
Should  clarification  of  the  framework  prove 
necessary,  the  Commission  is  prepared  to  tackle  the  different  questions  arising  with  the 
parties  concerned  to  ensure that  partnership between the public and  private sectors is in no 
way  inhibited.  As  announced  in  its  report  to  the  Madrid  European  Council,  the 
Commission  has  also  set  up  a  TENs  Help  Desk  to  provide  a  one-stop  shop  to  answer 
enquiries from  private sector TENs participants. 

5.22  To  date,  industry  has  identified  three  principal  concerns  which,  while  not  being 
exclusively  concerned  with  TENs projects,  are certainly  of considerable  importance  in that 
particular  area.  These  concern  the  pre-tendering  phase,  concessions  to  consortia  and  use 

of the negotiated  procedure. 

37 

(a) 

The pre-tendering  phase 

5.23  The  private  sector  has  indicated  its reluctance  to  engage  in  pre-tender  discussions 
or  studies without  an assurance that  it will not be excluded  from  the  subsequent  tendering 
procedures,  fearing  a  potential  infringement  of  the  principle  of  equal  treatment.  The 
Commission  recognises  that,  in view  of the  complexity  of  most  of the  projects  -  some  of 
which  may require  solutions never  attempted  before  - a technical  dialogue  before  the  calls 
for  tender  between  the  awarding  authority  and  private  parties  involved  may  be  necessary. 
If,  through  the  introduction  of  specific  safeguards  - affecting  matters  of  substance  as well 

37 

See discussion in Chapter 3. 

34 

as procedure - contracting authorities refrain  from  requesting or accepting information  that 
would have the effect  of restricting competition, the principle of equal treatment will not be 
violated. 

(b)  The award of concessions to  consortia 

5.24  As  previously  stated  (see  Chapter  3),  the  award  of  a  public  works  concession  is 
the usual way of enabling the private sector to participate on a risk basis in the building and 
operation  of infrastructure  projects  in partnership with the public sector.  The  Commission 
notes  that,  in  line  with  the  applicable  Community  -rules,  it  is  essential  that  consortia, 
participating  on  a  risk  basis,  can  bid  for  concessions  knowing  they  will  be  able to  award 
contracts  to  their  associates  within  the  consortium  in  respect  of  the  necessary  supplies, 
works  or  services.  The provisions  of the public works Directive  applying  to  the award  of 
works  concessions  for  the  construction  of  public  transport  infrastructures  permit  the 
winning consortium  to do so. 

(c)  The use of the negotiated  procedure 

5.25 
Complex  works  and  services  contracts  may  in  some  cases justify  the  use  of  the 
negotiated  procedure.  Under the Utilities Directive, contracting entities already have a free 
choice between  three procedures  (i.e. open,  restricted  or  negotiated  procedures)  involving 
a  prior  call  for  competition. 
In  the  traditional  sectors,  however,  as  has  already  been 
mentioned  (see  Chapter  3),  the  negotiated  procedure  may  be  used  only  in  certain  well-
defined  circumstances  that  are  listed  exhaustively  in  the  Directives.  For  example,  the 
public  services  Directive  allows  an  award  by  negotiated  procedure  where  a  service  is 
complex  and  cannot  be  specified  with  sufficient  precision,  particularly  in  the  field  of 
intellectual  services.  The  public  works  Directive  allows  the  use  of  the  competitive 
negotiated  procedure  in exceptional  cases  where,  for  instance,  the  nature  of the  works  or 
the attendant  risks do not permit prior, overall pricing. 

IV. 

Procurement  involving Union  funds. 

(a) 

Structural  and  Cohesion Funds 

5.26  The Structural  and  Cohesion Funds have contributed  over ECU  50 billion to  public 
authority  investments  in  the  Member  States  during  the  past  two  years.  Through  other 
financial  instruments  (including  European  Investment  Bank  loans  and  grants  from  other 
Community sources) the Union  has provided  a further  contribution  of over ECU 34 billion. 
Moreover,  by  means  of  financing  from  the  Funds,  the  Union  expects  to  spend  ECU  57 
billion over the next two years.  It is undeniable that Member  States  must  have  confidence 
amongst themselves that each  and  every one of them  respects the rules; that  the best value 
for  money is being achieved  in the expenditure  of European  taxpayers'  money and that  the 
risk of fraud  is minimised.  Our  rules  on  public  procurement  and  on  the  protection  of  the 
financial interests  of the Community  have a central  role to play in this, it being  understood 
that there can be no discrimination  in their application, whether  it is a question  of  contracts 
financed  from  national  resources  or  contracts  qualifying  for  support  from  the  Structural 
and Cohesion Funds. 

35 

5.27  The  present  system  of  control  is based  on  the  1989  Commission  communication  to 

38 

It  clarifies  the  obligation  on  Member  States  to  ensure,  systematically,  that 
the  Council. 
the  public  procurement  rules  have  been  respected  and  to  confirm  that  for  each  and  every 
request to the Commission for  payment  of funds  the rules have been  honoured.  However, 
very  few  Member  States  have  put  into  place  a  systematic  and  thorough  mechanism  for 
monitoring  compliance with  the public procurement  rules.  The  Commission,  for  its  part, 
can release the funds  only upon  explicit confirmation  of that compliance.  If the rules have 
not been followed  (for  example, if tenders have not been correctly advertised)  funding  can 
be  suspended,  and  then,  if necessary,  withdrawn  and  infringement  procedures  started.  In 
the  case  of  the  Cohesion  Fund,  and  large  ERDF  projects  an  ex  ante  verification  is 
systematically made as part of the examination of applications for  part-financing. 

5.28  The  Commission  must  increasingly rely on Member  States to  fulfil  their  obligations, 
especially  since  the  volume  of  individual  projects  is  steadily  growing.  The  problem  has 
become  more  acute  and  needs  resolution.  Indeed,  following  the  reform  of  the  Structural 
Funds,  the  management  of  funds  (particularly  the  choice  of  and  follow-up  to  funded 
projects),  has  been  devolved  to  each  Member  State.  Greater  authority  over  fund 
management  goes  hand  in  hand  with  greater  responsibility  to  control  compliance  with 
procurement  rules.  Improving  the  current  system  of  control  at  the Member. State  level  is 
therefore  vital.  It  is  appropriate  to  recall  that  an  important  discussion  is  taking  place  as 
part  of  SEM  2000  on  the  need  for  greater  transparency  and  rigour  in  the  use  of  the 
Structural  Funds.  In  this  context,  concrete  proposals  will  be  submitted  to  the  Dublin 
European Council, directed  at clarifying  certain  criteria and also at promoting  co-operation 
and  dialogue  between  Member  States  and  the  Commission  in  the  framework  of 
partnership,  and  in  the  interest  of  the  beneficiaries.  The  conditions  for  the  application  of 
financial  adjustments  in cases of fraud  and irregularity are also tackled,  including net 
correction  in the  extreme  case  where  a  Member  State  persists  in failing  to  meet  its  audit 
obligations. Work  will continue in  1997. At the same time, one should  recall  and  underline 
the  rules  of  transparency,  under  which  there  is  an  obligation  to  communicate  established 
cases of irregularity or fraud  to the Commission. 

5.29  Although ultimately,  responsibility for improvingprocedures rests with the Member 
States, the Commission  will use its best  offices  to ensure that  improved  systems of control 
are  introduced  as  soon  as  possible.  Any  solution  must  go  beyond  identifying  particular 
problems  in  specific  projects.  Our  goal  must  be  to  create  a  regime  that  adds  value. 
Accountability,  performance  and  results  must  become  bywords  in  Structural  Fund 
management.  The likely benefits  are clear: considerable savings at all levels; more  effective 
spending  of  limited  resources;  a  healthier  employment  situation  in  the  regions  concerned; 
more confidence  from  our citizens that EU money is well spent; and  projects  that work  for 
their  users.  To  demonstrate  proper  regard  for  the use  of  public  money  and  to  win  public 
support,  the  Commission  believes that  Member  States  should  publicise  the  fact  that  value-
for-money  has been achieved  in any particular  project. 

38  COM  (88) 2510 and OJ No C 22 of 28.1.1989. 

36 

5.30 
Improvements  to  the  regime  itself  could  be  made  by  introducing  relatively  small 
changes in procedures.  One such  change would  be the introduction,  for  each  project,  of a 
statement  signed  by  the  responsible  national  official  that  the  Union's  public  procurement 
rules have been complied  with.  Such a statement  of personal  accountability  has been  used 
in other areas and in some third  countries, most  notably in the United  States; it has proved 
to be one of the most effective  ways of securing the best price and preventing fraud.  More 
widely,  thought  could  be  given  to  developing  a  code  of  good  conduct  to  which  national 
officials  could commit themselves.  Clearly, the feasibility  of such  measures would  have to 
be looked  into  in the light  of the different  systems  of staff  regulations  for  civil  servants in 
Member States. 

5.31  The  idea  of individual  accountability  is inspired  by the  notion  of  prevention.  Our 
policy in handling  Structural  Funds  must  anticipate -  prevention  is better  than  cure.  The 
application of the system of attestation (see Chapter 3) to contracting  entities receiving EU 
funds  could  significantly  improve the situation  and  provide assurances  that  recipients  have 
mechanisms in place that are capable of securing value-for-mcney  equal to best  commercial 
It  is  our  common  interest  that  EU  funds  are  spent  effectively.  Certifying  by 
practice. 
means of attestation  that  an  effective  procurement  system  is in place  calls  for  only a small 
effort  from  public  authorities  in  return  for  the  benefit  of  saving  considerable  sums  of  EU 
money. 

5.32  A  more  far-reaching  proposal  could  be  the  use  of  the  independent  authorities 
referred  to in Chapter  3 to promote compliance with public procurement  rules in respect  of 
European  Union  funds.  Without  prejudice  to  the  Commission's  competence,  such  bodies 
could  play  a  key  role  not  only  in  monitoring  public  authorities'  behaviour,  but  also  in 
advising  them.  These  functions  could  also  be  the  responsibility  of  a  Member  State's 
national court of auditors or an equivalent  independent  authority. 

5.33 
Implementing  proposals  will  not  solve  each  and  every  problem.  A  transformation 
of public procurement  that  involves funds  of the Union - permanently  and structurally  - will 
only be achieved  if such specific  solutions are accompanied  by a process of ongoing  change 
in  close  partnership  with  the  Member  States. 
It  may  be  necessary  to  formalise  such 
initiatives  (for  example  to  establish  accountability)  in  order  for  real  and: lasting  change  to 
be  achieved.  This  is  also  in  keeping  with  the  spirit  and  objectives  of  the  "good  sound 
management"  exercise  (SEM  2000)  carried  out  by  the  Commission  and  the  personal 
representatives  of  Member  States,  following  on  from  the  impetus  given  by  the  Madrid 
European  Council  in  1995.  The  conclusions  of  this  group  confirm  the  need  to  be 
concerned  about  rigour  and  transparency  in making good  use  of appropriations  and  about 
sharing responsibilities,  and will be presented  to the Dublin European  Council  in December 
1996. 

5.34  With  an improved  system  of checks  in place at  national  level,  the  Commission,  for 
its part,  could  concentrate  on  an ex post  verification  of  projects  (for  example  in  close  co 
operation  with  the  independent  body designated  in each Member  State).  The  Commission 
could  also  be  invited  to  carry  out  an  audit  of  the  checking  systems  established  in  each 
country.  The Commission will, in addition,  seek to improve information  flows  between  the 
Commission  and  the  Member  States  on  projects,  especially  through  the  use  of  modern 
information  technologies. 

37 

(b) 

Public procurement  by the European institutions or financed  bv non 
Member countries benefiting from  Community  resources 

5.35  When awarding contracts for their own operational  requirements  or for  the  purposes 
of  implementing  the  different  policies  for  which  the  Community  is  responsible,  the 
European  institutions  are  required  by  Article  56  of the  Financial  Regulation  to  follow  the 
same  rules  as  those  applicable  to  national  contracting  entities  under  the  Directives  on 
public  procurement.  Furthermore,  only  contracts  awarded  by  the  Council  and  the 
Commission  are  covered  by  the  provisions  of  the  GPA  of  the  World  Trade  Organisation 
(see  Chapter  6).  The  exceptions  to  the  obligations  laid,  down  by  these  instruments 
concern:  (a)  in the  case of the  GPA,  contracts  concluded  in connection  with  food  aid;  (b) 
in  the  case  of  the  obligations  deriving  from  Article 56  of  the  Financial  Regulation39,  the 
same derogations  as those laid  down  in the Directives  plus, in accordance with  Title IX  of 
the  Financial  Regulation,  contracts  awarded  in  the  context  of  external  aid  financed  from 
the  Community  budget,  with  the  exception  of  public  service  contracts  awarded  for  the 
Commission's  own  requirements,  to  which  the  normal  rules  apply.  Clearly,  although  they 
fall  outside  the  scope  of  the  Directives,  all  of  these  contracts,  which  are  financed  from 
Community  resources  (general  budget,  EAGGF  and  under  EDF)  and  under  Community 
programmes  (e.g. PHARE,  TACIS, MEDA, etc.), are  still  subject  to  specific  rules and  the 
fundamental  principles  governing  the  award  of  contracts,  in  particular  transparency  and 
equality of treatment. 

5.36  These  wide-ranging  general  obligations  have  been  spelt  out  in  greater  detail  by 
recent  amendments  to  the  Financial  Regulation  and  will  be  clarified  further  still  by  other 
amendments  which  the  Commission  intends to  propose  with  a view  to  circumscribing  the 
above mentioned  derogations in order to ensure that  they are interpreted  restrictively.  The 
Commission's action forms part of its efforts  to improve financial  management,  as provided 
for  in the guidelines of the SEM 2000 operation. 

5.37  The  aim  of  this  legislative  framework  is,  by  encouraging  competitive  tendering,  to 
enable more  efficient  use to  be made of the  Community's  general  budget  and  of  funds  for 
development  co-operation.  The departments concerned  must therefore  endeavour to  apply 
it  as  comprehensively  as  possible.  The  Commission  wishes  to  ascertain  whether  the 
measures  taken  are  sufficient  to  ensure  fair  access  to  contracts  awarded  both  by  the 
European 
third  countries  under  Community 
programmes  and  using  Community  funds.  In  this  connection,  third  countries  in  receipt  of 
financial  aid  from  the  Community  budget  should  also  be  invited  to  commit  themselves  to 
meeting  certain  obligations,  particularly  as regards  on-the-spot  checking  for  irregularities, 
recovering  sums misappropriated  and penalising irregular dealings. 

institutions  and  by  other  bodies  or 

39 

Financial  Regulation  of  21.12.1977  applicable  to  the  general  budget  of 
the  European 
Communities,  as  last  amended  by  Council  Regulation  (ECSC,  EC,  Euratom)  No  2335/95  of 
18.09.1995 (OJ  No L 240 of  7.10.1995). 

38 

V. 

Procurement  and social  aspects 

5.38  The  European  Union's  social  policy  contributes  to  promoting  a  high  level  of 
employment  and  social  protection  (Article 2  of  the  EC  Treaty),  the  free  movement  of 
workers,  equality of opportunity  between  men  and  women,  stronger economic  and  social 
cohesion,  better  living  and  working  conditions,  a  high  level  of  health  protection,  high 
standards  of  education  and  training  and  the  integration  of  the  disabled  and  other 
disadvantaged groups into society. 

5.39  Contracting  authorities  and  contracting  entities  may  be  called  upon  to  implement 
various  aspects  of  social  policy  when  awarding  their  contracts,  as public procurement  is a 
tool  that  can  be  used  to  influence  significantly  the  behaviour  of  economic  operators.  As 
examples  of  the  pursuit  of  social  policy  objectives,  one  can  mention  legal  obligations 
relating, to  employment  protection  and  working  conditions  binding  in  the  locality  where  a 
works  contract  is being  performed  or  so-called  "positive  action".  The  latter  occurs  where 
public  procurement  is used  as  a means  of achieving  the  desired  objective,  for  example by 
providing  a captive market  for  a disabled  workshop  which  could  not  reasonably  expect  to 
compete  on  equal  terms  with  normal  commercial  enterprises  enjoying  normal  levels  of 
productivity. 

5.40  The legal framework  created  by the Treaty and the Directives continues  to  apply in 
these  situations.  For  this  reason,  since  the  entry  into  force  of  the  public  procurement 
directives,  questions  have  constantly  arisen  as  to  whether  and  to  what  extent  social 
objectives  can  or  should  be  pursued,  given  the  specific  limitations  imposed  by  the  public 
procurement  directives in order to prevent their whole purpose being  frustrated. 

5.41  Provisions  which  have been  included  in all the Directives  offer  an  initial  possibility 
for  pursuing  social  objectives  by  allowing  contractors  or  suppliers  to  be  excluded  where 
they have been  convicted  of an offence  concerning their professional  conduct  or  have been 
found  guilty  of  grave  professional  misconduct.  These  rules  clearly  also  apply  where  the 
offence  or  misconduct  involves  an  infringement  of  legislation  designed  to  promote  social 
objectives. 
In  these  cases,  then,  the  provisions  in  question  indirectly  allow  contracting 
authorities  to  pursue  such  objectives  by  excluding  from  contract  award  procedures 
candidates who have failed  to comply with such  legislation. 

5.42  Another  possibility  is  to  require  successful  tenderers  to  comply  with  social 
obligations  when  performing  contracts  awarded  to  them,  for  example  obligations  aimed  at 
promoting  the  employment  of  women  or  the  protection  of  certain  disadvantaged  groups. 
Checking of compliance with  such  conditions  should  take place outside the contract  award 
procedure  (see the judgement  of the  Court  in Beentjes,  cited  earlier,  and  the  Commission 
communication  on  public  procurement:  regional  and  social  aspects  ).  Clearly,  contract 
performance  conditions  are  allowed  only  where  they  do  not  result  in  direct  or  indirect 
discrimination  against  tenderers  from  other  Member  States.  Sufficient  transparency  must 
also  be  ensured  by  mentioning  the  conditions  in  the  contract  notices  or  contract 
documents. 

40  Commission  communication  of 22.9.1989. COM(89) 400 final,  OJ No C 31 lof  12.12.1989. 

39 

5.43  On the other hand, the Directives do not currently allow social considerations to be 
taken  into account  when  it comes to  checking the  suitability  of candidates  or tenderers  on 
the basis of the  selection  criteria,  which  relate to  their  financial  and  economic  standing  or 
their  technical  capability,  nor  when  it  comes  to  awarding  contracts  on  the  basis  of  the 
award  criteria, which must  relate to the economic qualities required  of the supplies,  works 
or  services  covered  by the  contract.  As against  this, however,  it  should  be  added  that,  in 
the  case  of  contracts  falling  below  the  thresholds  for  application  of  the  Directives, 
purchasers  may  include  social  preferences  in  the  award  criteria,  provided  that  they  are 
extended without  discrimination to all Community nationals with the same characteristics. 

5.44  The  question  that  arises  here  is,  first,  whether  the  possibilities  offered  by  public 
procurement  law  for  pursuing  Community  and  national  social-policy  objectives  in  respect 
of  the  different  groups  concerned  need  to  be  clarified  by  means  of  an  interpretative 
communication  and,  second,  whether  these  possibilities  are  sufficient  to  satisfy  needs  or 
whether  other  measures  need  to  be  taken  in order  to  achieve  these  objectives  in  applying 
the Community rules on public procurement,  while safeguarding  fair  competition. 

VI. 

Procurement  and  the  environment 

5.45  Environmental  protection  policy has become one of the most important  Community 
policies, following  the amendments made to the EC Treaty first by the Single Act  and then 
by the Maastricht  Treaty.  Over 2Gv>  legislative  instruments  have been  adopted,  concerning 
inter alia action to  combat  air, water  and  soil pollution,  waste management,  product  safety 
standards,  environmental  impact  assessment,  and the protection  of nature.  Article  130r of 
the EC Treaty also provides that environmental  protection  requirements must be integrated 
into  the  definition  and  implementation  of  other  Community  policies.  Several  Member 
States  have,  for  their  part,  developed  extremely  advanced  environmental  protection 
policies. 

to 

In  this  specific  sector,  Member  States  (and  their  public  authorities)  have, 
5.46 
increasingly,  started 
their  public 
integrate  environmental  considerations 
procurement  practices.  Because  of  its  size,  public  procurement  can  have  an  enormous 
impact  on  certain  business  activities; 
it  can  even  give  a  major  push  to  the  commercial 
development  of certain  products.  The Danish  Government  has recently  adopted  an 'Action 
plan for  a sustainable environmental/'green'  policy for  public procurement'.  Other Member 
States  are  also  examining  what  steps  can  be  taken  to  promote  procurement  of  green 
products  and  services.  In  addition,  the  OECD  recently  adopted  a  Recommendation  on 
improving  the  environmental  performance  of  government,  which  urges  member 
countries,  and  in particular  their  governments,  to  establish  and  implement  policies  for  the 
procurement  of environmentally  friendly  goods and services. 

into 

5.47  The  application  of  the  public  procurement  directives  does  indeed  leave  scope  for 
public authorities to promote environmental  protection.  It would  undoubtedly be desirable 
in  this  connection  to  clarify  the  possibilities  offered  by  the  general  provisions  of  existing 

41  OECD  Council  Recommendation  C(596)39/Final,  20.2.1996. 

40 

legislation  for  taking  environmental  concerns into account  and,  at the  same time, to  define 
more precisely the limits to these possibilities. 

5.48  First,  as with  social  objectives,  environmental  protection  can  be  achieved  through 
specific  rules for  the infringement  of which a supplier  or contractor  can be convicted  of an 
offence  concerning  his  professional  conduct  or  found  guilty  of  grave  professional 
misconduct.  In  such  cases,  the  Directives  allow  contracting  authorities  and  contracting 
entities  to  exclude  from  contract  award  procedures  any  supplier  or  contractor  who  has 
been found  guilty of breaching such rules. 

5.49 
Second,  environmental  protection  considerations  can  be  incorporated  into  the 
technical  requirements  relating  to  the  characteristics  of  the  works,  supplies  or  services 
covered by contracts, namely the technical  specifications  which purchasers must indicate in 
the general  contract  documents and with which tenderers must comply,  in accordance with 
the  Directives.  Efforts  should  be  made  to  develop  European  standards  or  common 
technical  specifications  which  incorporate  and  promote  environmental  concerns  while 
avoiding the negative implications for the single market that would  result  from  establishing 
criteria  that  are  over-specific.  An  example  of  such  a  specification  could  be  a  European 
eco-label,  complying  with  Community  law.  In  any  event,  purchasing  entities  can  already 
encourage firms to  adopt  a more  active  approach  towards  the  environment  by  ceasing  to 
reject  tenders  for  goods  that  incorporate  reconditioned  components  or  recycled  materials 
despite the fact  that  their  technical  characteristics  satisfy  the requirements  laid  down  in the 
contract  documents. 

5.50  Third,  the  Directives  allow,  under  certain  conditions,  environmental  protection 
objectives  to  be  included  among  the  criteria  for  selecting  candidates.  These  criteria  are 
designed  to  test  candidates'  economic,  financial  and  technical  capacity  and  may  therefore 
include environmental  concerns depending on the expertise required  for  specific  contracts. 

5.51  Fourth,  during the contract  award  phase environmental  factors  could  play a part  in 
identifying  the  most  economically  advantageous* tender,  but  only  in  cases  where  reference 
to  such factors  makes it possible  to  gauge  an economic  advantage  which  is specific  to  the 
works,  supplies  or  services  covered  by  the  contract  and  directly  benefits  the  contracting 
authority  or  contracting  entity.  In  the  case  of  contracts  falling  below  the  thresholds  for 
application  of the Directives, environmental  preferences  may be used  as an  award  criterion 
provided  that  they  are  non-discriminatory  and  open  to  all tenderers  in  the  Community  on 
the basis of the mutual  recognition  principle. 

5.52  Fifth,  purchasing  entities  can  pursue  environmental  protection  objectives  through 
performance  conditions  imposed  contractually  on  successful  tenderers.  In  other  words,  a 
contracting  entity  can  require  the  supplier  whose  tender  has been  selected  to  perform  the 
contract  in  accordance  with  certain  constraints  aimed  at  protecting  the  environment. 
Clearly,  such  performance  conditions  should  not  be  discriminatory  or  in  any  way  disturb 
the  smooth  functioning  of the  single market.  The  conditions  should  also  be  mentioned  in 
tender  notices  or  contract  documents  to  ensure that  bidders  are  sufficiently  aware  of their 
existence.  Lastly, verification  of the successful  tenderer's ability to  perform  the contract  in 
accordance with the conditions  should take place outside the contract  award  procedure. 

41 

5.53  Within the limits of the possibilities  set  out  above,  the  Commission  would  be  most 
interested  to  receive  information  on  the  experience  of  Member  States  or  individual 
in  their 
contracting  entities  in  taking  environmental  objectives 
purchasing.  The  Commission,  in  its  proposed  Decision  on  the  review  of  the  5th.Action 
programme  for  the environment,  has already  indicated  that  further  action  could  be  needed 
to  take  better  account  of  environmental  considerations  in  the  application  of  Community 
public procurement  rules, while safeguarding  fair  competition. 

into  consideration 

VII.  Defence  procurement 

5.54 
In  1990  the  total  defence  procurement  expenditure  by  EU  defence  ministries 
amounted  to  ECU  65-70 billion.  Whilst  a large part  (around  one third)  of such  purchases 
is already covered  by the public procurement  directives,  the benefits  of open  procurement 
in this sector  are still to be  fully  exploited.  A  1992 study carried  out  for  the  Commission 
on  the  costs  of  non-Europe  in  defence  procurement,  including  contracts  for  military 
equipment,  suggested  that major  savings (ranging from  ECU  5 billion  to ECU  11 billion on 
the basis  of  1990 figures,  according  to  the  different  possible  scenarios)  can be  achieved  in 
this  area.  The  Commission  welcomes  any  move  to  introduce  more  competition  into 
defence  procurement.  This  will  result  not  only  in  direct  economic  savings,  but  also  in 
economies  of  scale  from  longer  production  runs  and,  ultimately,  in  a  more  competitive 
European  defence  industry.  As  a  contribution  to  the  debate  the  Commission  recently 
issued  a  communication  entitled  "The  challenges  facing  the  European  defence-related 
industry  -  A  contribution  for  action  at  European  level" 
.  Since  the  defence-related 
industry  depends almost exclusively  on public purchases,  public procurement  is extensively 
dealt  with  in  this  communication.  Nevertheless,  as  a  competitive  European  defence 
industry is also an essential  precondition  for  conferring  a European  identity on  security and 
defence  policy,  the  special  nature  of the  sector  has  to  be  taken  into  account.  This  could 
prompt  some  adjustments  to  the  procedures  laid  down  in  the  public  procurement 
directives.  Neither  should  initiatives  taken  by  the  Western  European  Union  (WEU)  and 
other similar organisations working in the defence  co-operation field be overlooked. 

VIII.  Procurement  and  consumer  policy 

5.55.  The  implementation  of  an  effective  procurement  policy,  which  improves  market 
access  and  transparency  in  an  increasingly  integrated  Single  Market  can  bring  significant 
benefits  to  consumers,  providing  them  with  better  quality  and  more  economically  efficient 
services  and  infrastructures.  In  this  context,  it  would  seem 
important  to  take  greater 
account  of  consumer  policy  in  Union  procurement  policy.  Promoting  more  transparency 
and dialogue with consumer  organisations would  be particularly  welcome. 

42  Commission  communication  of 24lh January  1996, COM  (96)  10 final. 

42 

IX. 

Questions 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

9. 

For general  information  purposes, do you think that it would be useful  to compile a 
practical  guide  explaining  to  SMEs  how  to  prepare  themselves  for  taking  part  in 
public procurement,  and for interpretative notices to be drawn up  on  aspects  of the 
application  of  the  Directives  which  are  of  special  interest  to  SMEs?  On  what 
topics, in your view,  should these documents particularly  focus? 

Given  that  some  Community-sponsored  networks  already  supply  additional 
information  on  procurement,  particularly to  SMEs, should  their role be  reinforced? 
If so, how? 

What  is  your  opinion  on  the  options  under  consideration  for  improving  the 
information  available to  SMEs  about  specific  contracts  (adaptation  of TED,  using 
the INTERNET,  the CPV and  standard  forms)?  Do you  think  that  there  are  other 
avenues which should be explored? 

Is the EEIG (European  Economic Interest  Grouping)  an appropriate  instrument  for 
in  cross-border  public 
promoting  co-operation  between  SMEs,  especially 
procurement? 

Do  you  think  that,  to  promote  greater  SME  participation  in  public  procurement, 
other  action  should  be  taken  at  Community  level,  particularly  on  the  issues  of 
If  so,  what  type  of  action?  For  example, 
subcontracting  and  payment  periods? 
should  one  consider  the  fixing  of  mandatory  payment  periods,  after  which  interest 
on late payment and, if need be, damages and interest would be due? 

What are, in your view, the most appropriate ways of developing  networks of  SME 
support  services?  What  type  of services  in  particular  should  be  provided  by  these 
networks? 

In  your  opinion,  to  what  extent  has  the  standardisation  policy  pursued  by  the 
European  standards  bodies  (CEN,  CENELEC,  ETSI)  on  the  basis  of  Commission 
mandates  been  successful  in  eliminating  obstacles  to  the  opening-up  of  public 
procurement? 

Which  product  sectors should  be given  priority in determining  further  mandates  for 
European  standards? 

A number  of  anxieties  expressed  by the  private  sector  have been  dealt  with  in the 
part  of  this  Chapter  concerned  with  TENs.  Has  the  clarification  of  the  relevant 
provisions  been  sufficient  to  dispel  these  anxieties  or  should  further  written 
guidance be given on the application  of the Directives to public tendering for  TENs 
or other major  projects  (for  example, through  an interpretative  communication)? 

10. 

11. 

Do you  know  of any other issues related to tendering procedures  for  contracts  that 
need.clarification  or  resolution  to  facilitate  private  participation  in  TENs  or  other 
public/private  partnerships? 

Do  you  agree  that,  as  an  incentive  to  the  effective  management  of  the  Structural 
Funds,  wider  publicity  should  be given  by  Member  States  and  contracting  entities 
to  the  fact  that  value  for  money  has  been  achieved  in  procurements  for  EU  co-
financed projects? 

43 

12.  Would  it be useful  to  require the  persons  responsible  to  sign  a personal  statement 
that,  in respect  of a particular  project,  value for  money  has been  obtained  and  that 
the public procurement  rules have been  followed? 

13. 

14. 

15. 

16. 

17. 

18. 

19. 

Are there any other ways of increasing the effectiveness  of the public  procurement 
rules when structural funds  are utilised ? 

Do  you  think  that  contracting  entities  receiving  funds  from  the  Union  should  be 
encouraged  to  undergo  attestation  to  ensure that  an  effective  procurement  system 
is in place? 

Do  you  think  that  it  could  be  useful  and  efficient  if  an  independent  national 
authority,  co-operating  closely  with  the  Commission,  were  to  assist  contracting 
authorities when their procurements are financed  from  Community  funds? 

Do  you  think  that  the  rules  governing  contracts  awarded  by  the  Community 
institutions  and  contracts  awarded  by  other  bodies  or  third  countries  under 
Community  programmes  and  using  Community  resources  are  adequate  to  ensure 
fair access to these contracts for  all interested  parties? 

In your opinion, do the possibilities offered  by public procurement  law for  pursuing 
Community  and  national  social  policy  objectives  need  to  be  clarified,  for  example 
by means of an interpretative  communication? 

Do  you  think  that  these  possibilities  are  sufficient  to  satisfy  needs?  If  not,  what 
other  measures  do  you  think  could  be  taken  in  order  to  ensure  that  social  policy 
objectives  are more  effectively  achieved  in the application  of the  Community  rules 
on public procurement,  while safeguarding  fair  competition? 

In your opinion,  are obligations relating to health  and safety  at the workplace taken 
sufficiently  into  account  during  the  preparation  of  tender  notices  and  contract 
documents?  What improvements can you  suggest? 

20.  What  has  been  your  experience  with  the  promotion  of  "green"  products  and 
services procurement  under the Directives?  Is there a need  for  the  Commission  to 
clarify  the  possibilities  for  incorporating  environmental  protection  concerns  in  the 
application  of  the  public  procurement  directives  (e.g.  by  means  of  a  Commission 
communication)? 

21. 

Do  you  think  that  the  possibilities  offered  are  sufficient  to  attain  the  objectives 
pursued?  If not, what measures do you think could be taken in order to ensure that 
environmental  protection  objectives  are more effectively  achieved  in the  application 
fair 
the  Community  rules  on  public  procurement,  while  safeguarding 
of 
competition?  Should  the  eco-label  be  included  among  the  technical  specifications 
mentioned  in the general  contract  documents,  or  should  application  for  registration 
under  the  Environmental  Management  and  Audit  Scheme  figure  among  the 
selection  criteria? 

22. 

Given  the  absence  of competition  in the military  equipment  sector,  should  this  not 
be governed by a system of public procurement  as desired by some Member  States? 

44 

6.  PROCUREMENT  OUTSIDE THE UNION 

With a  new  World  Trade  Organisation  Government  Procurement  Agreement  (GPA)  in 
place,  globalisation  of  public  procurement  is  certain  to  grow.  Our  industry  must  reply 
positively  and  effectively  to  this  challenge;  world-wide  competition  will  be  intensifying 
and  success  will  hinge  on  innovation  and  international  thinking  to  meet  the  challenge. 
Further  market  opening must be actively pursued;  a constructive,  ongoing  dialogue  with 
our industry  is critical to identify  new market  opportunities  and to  help  set  objectives  for 
any  future  negotiations.  To  this  end,  the  Commission  invites  Member  States  and 
industry  to  provide  information  on  any  problems  particular  markets  might  pose  and  to 
suggest  possible  solutions,  in  particular  where  market  opening  agreements  are  under 
negotiation. 

The preparation  of the associated  countries  of Central  and  Eastern  Europe  for  accession 
to  the  Union  remains  a  rnajor  priority.  The  Commission's  White  Paper  provides 
guidelines on the full  range of single market  policies,  including  public procurement.  The 
Commission  and the Member  States have already  made considerable  efforts  in helping to 
lay  the  foundations  for  an  effective  public  procurement  system.  These  efforts  must  be 
intensified.  Training  on  best  procurement  practice  and 
ready  access  to  sound  legal 
advice are paramount. 

Similarly,  in  line with  the  Commission's  attempts  to  improve  links  with  countries  in  the 
Mediterranean  basin  and  as  is  provided  for  in  the  agreements  concluded  with  Turkey, 
Morocco  and  Tunisia,  the  Commission  will  also  look  at  ways  of  assisting  in  the 
development  of competitive public procurement  practices there. 

I. 

Access  to world  procurement  markets - Getting  a fair  deal  for  Europe 

6.1 
Increased  liberalisation  of  EU  markets  must,  to  the  greatest  extent  possible,  be 
mirrored  throughout  the  world  in  order  to  maximise  the  benefits  to  our  industry  of 
competitive tendering.  The EU has been instrumental  in achieving large-scale  procurement 
liberalisation  with 
the  first-generation  GATT 
trading  partners,  through 
Agreement  on  Government  Procurement  of  1979,  the  European  Economic  Area  (EEA), 
the Europe Agreements, and more recently through  a new WTO  Government  Procurement 
Agreement  (GPA), concluded  alongside the Uruguay  Round. 

its  major 

The  new  GPA  came into  force  on  1st  January  1996.  In  addition  to  the  European 
6.2 
Union,  the  contracting  parties  are  the  US,  Canada,  Japan,  Israel,  South  Korea,  Norway 
and  Switzerland.  Aruba and Liechtenstein  recently joined  the agreement,  and  Singapore is 
in the process of acceding.  The agreement's coverage includes contracts  awarded  by lower 
levels of government  (such as individual  states in federal  countries,  provinces and cities) as 
well  as  by  entities  operating  in  a  number  of  utilities  sectors  (such  as  electricity,  urban 
transport,  water,  ports and  airports).  Whereas the  1979 GPA was  limited  to  public supply 
contracts,  public works  and  public  service  contracts  now  fall  within  the  scope  of the  new 
GPA.  Significantly,  suppliers  will  also  have the  right  to  challenge  the  award  of  contracts 
where  they  feel  that  they  have  been  discriminated  against.  The  Commission  estimates 

45 

overall  that  the  new  GPA  will  open  to  international  competition  public  contracts  worth 
around  ECU  450  billion  every  year.  That  represents  approximately  a  tenfold  increase  in 
the value of contracts opened to bidding under the  1979 GPA. 

6.3  Many  discriminatory  provisions  which  kept  EU business  out  of  huge  procurement 
markets  in  third  countries  were  removed  at  the  beginning  of  this  year.  New  business 
opportunities have been created for  industries as diverse as banking and  heavy engineering. 
In  the US,  most  discriminatory  "Buy  American"  provisions,  some  dating  from  the  1930s, 
have  been  removed  by  the  Federal  Government  as  well  as  by  39  of  the  50  state 
governments  (including  California,  New  York,  Texas,  Illinois  and  Florida).  As  a  result, 
market  opportunities  worth  around  ECU  100  billion  per  annum  will  be  available  to  EU 
business.  The GPA also represents  major  progress on opening up procurement  markets in 
south-east  Asia.  Japan  for  example  agreed  to  cover  the  award  of  contracts  by  its  47 
prefectures  which  are  responsible  for  the  bulk  of procurement  expenditure,  particularly  in 
the area  of construction  and  civil  engineering.  In  South  Korea,  which  will  apply  the  GPA 
from  1997,  EU  business  will  be  able  to  bid  for  contracts  throughout  the  public  sector 
without  the  compulsory  technology  transfer,  buy-back  or  local  content  arrangements  that 
applied in the past. 

6.4 
But  we  cannot  stand  still.  Despite  major  progress  achieved  to  date,  not  all 
restrictions  on  tendering  opportunities  have  been  removed;  certain  important  restrictions 
have  remained  in  place  in the  countries  which  are  signatories  to  the  GPA  (in  which  case, 
the  Community  has  followed  the  principle  of  reciprocity).  Moreover,  the  GPA,  which  is 
for  the time being a plurilateral  agreement,  is intended  to become a multilateral  agreement, 
which means that  a large number of countries have yet to accede.  As the European  market 
is  generally  open  for  suppliers  from  third  countries,  it  is  in  the  interest  of  European 
business that  the  Community  should  seek,  in negotiations  with  third  countries,  to  agree on 
market-access  arrangements which  achieve full  reciprocal  liberalisation  of procurement. 

6.5 
Further  opening-up  of  public  procurement  world-wide  will  therefore  remain  our 
key target.  Results will be sought from  the multilateral process in the WTO, by completing 
the  coverage  of  existing  parties  to  the  GPA  and  by  enlarging  its  membership.  Future 
applicants  for  membership  of  the  WTO  such  as China  and  Taiwan  should,  as  a  matter  of 
principle,  join  the  GPA,  if  necessary  after  a  transitional  period. 
(Indeed,  Taiwan  has 
already  tabled  an  offer  to  join.)  The  Commission  already  strongly  encourages  present 
WTO  members  to  accede  to  the  GPA,  particularly  those  with  observer  status  under  the 
Agreement.  The  multilateral  approach  through  the  WTO  remains  the  key  forum  for  our 
efforts.  A  parallel  negotiation  should  be  initiated  in  order  to  reach  an  agreement  on 
transparency,  opening  up  and  systems  of  remedies  in  public  procurement.  The  end 
objective  remains  national  treatment  and  the  effective  application  of  the  most  favoured 
nation  clause  for  all  the  public  contracts  and  all  Members  of  the  WTO.  To  further  this 
process,  the  European  Union  also  proposes  an  advance  revision  of  the  GPA  of  1994, 
which  would  include  the  extension  of  the  Agreement,  the  abolition  of  discriminatory 
measures  and  practices  and  its  simplification  and  improvement.  Bilateral  negotiations  are, 
nonetheless,  still  needed.  The  Commission  is  therefore  already  in  negotiation  with 
In  a  similar  vein,  the  Commission  is  looking  at  gaining 
Switzerland  and  South  Korea. 
market  access for  EU  suppliers in the countries of the Mediterranean  Basin.  Further  to  the 
Barcelona Declaration  which  aims to  establish  a Free Trade  Area between  the  Community 

46 

and  the  Mediterranean  countries  in  time  for  the  beginning  of  the  next  century, 
an 
Association  Agreement  covered by Article XXIV of the GPA has been reached with Israel. 
This  agreement  has  been  completed  by  two  specific  agreements  on  public  procurement. 
These,  which  are  not  yet  ratified,  aim to  broaden  offers  made  on  a  reciprocal  basis  under 
the  GPA  and  to  open  the  telecommunication  procurement  markets  of  both  parties.  A 
Customs  Union  Agreement  with  Turkey  has  also  been  concluded  which  makes  provision 
for  future  access to  public procurement  on a reciprocal  basis. A similar approach  has been 
taken in two Interim  Association agreements concluded with Morocco and Tunisia. 

European  industry  already  has  much  detailed  knowledge  of  local  difficulties  in 
6.6 
tendering  in  third  countries.  As  indicated  in  its  Communication  on  a  market  access 
strategy43,  the  Commission  must,  if this  strategy  is to  be  effective,  have  first-hand  up-to-
date  knowledge  of the problems  that  suppliers face  in third  country  markets  so that  it can 
remove  those  barriers which  are most  harmful  to  European  interests.  It  would  be  helpful 
to  have details of the experience industry has. The new interactive  data base, accessible on 
the INTERNET,  makes it possible for  industry to inform  the Commission  directly about  its 
market  access  problems. This will enable the Commission  to  evaluate  the problems  and  to 
examine and  decide upon what action  should  be taken  to  resolve them.  On the other  hand, 
in  order  to  identify  problems  of  access  and  to  help  set  objectives  for  future  negotiations 
with  third  countries,  the  Commission  has  launched  a  major  multi-country  study  on  public 
procurement  regimes  in  19  countries  in  Asia,  the  Middle  East  and  Latin  America.  The 
results of the study will be available shortly.  The contribution  of European  industry to this 
study would  be most welcome. 

6.7 
However,  compiling  and  analysing  information  is only  half the battle.  Agreements 
are  only  useful  if they  can  be  made  to  work  in  practice.  The  Commission  will  therefore 
take steps to  ensure that the GPA is made to work effectively.  It will  draw  on its  network 
of  delegations  in  third  countries  to  assist  it  in  this  task.  The  Commission  also  invites 
Member  States  to  provide  assistance  where  necessary  to  ensure  that  its  suppliers  are 
treated  fairly.  When  necessary  and  appropriate,  the  Commission  will  not  hesitate  to  use 
the consultation  procedures provided  under the GPA.  If these consultations fail  to  resolve 
the issue, the Community may make use of the WTO dispute settlement  procedures. 

6.8 
But  competition  is not  a one way  street.  The  Community  and  the  Member  States 
can  help  in  creating  the right  conditions, but  European  industry  must  itself be prepared  to 
fight  strong  competition  for  public  sector  contracts  inside  the  Union  from  third  country 
suppliers who  now benefit  from  the GPA.  Suppliers  should,  in time,  seek  to  maximise the 
commercial  opportunities  the Agreement  offers  to  increase their exports to  third  countries, 
and  increase  their  share  of  third  country  procurement  markets.  Those  who  adapt  to 
change and  seek  to find new markets will generally be the most  successful.  Those who  are 
complacent  and wait are most at risk. 

doc.  COM(96) 53  final 

47 

II. 

Laying  the  foundations  for  open  procurement  in  Central  and-  Eastern 
European  Countries and  in the Mediterranean  countries 

6.9 
Following  the  entry  into  force  of  the  Europe  Agreements,  which  are  covered  by 
Article XXIV of the GPA, suppliers from Hungary, Poland, the Czech Republic,  Slovakia, 
Bulgaria, Romania,  Slovenia (and shortly the Baltic States) have access to public tenders in 
the EU.  At the  end  of  a ten-year  transitional  period,  suppliers  based  in the EU  will  also 
have  access  to  public  tenders  in  the  associated  countries. 
It  is,  therefore,  vital  that 
suppliers  in  the  associated  countries  take  up  the  challenge  of  participating  in  contract 
award  procedures  in the EU.  They must  also begin  to  make  advances  in  competitiveness 
that  will  enable  them  to  compete  effectively  with  EU  companies  in  domestic  tender 
procedures  following  the  transitional  period.  Similarly,  in  line  with  the  Commission's 
attempts to  improve links with  countries  in the Mediterranean  Basin  and as is provided  in 
the  agreements  concluded  with  Turkey,  Morocco  and  Tunisia,  the  Commission  will  also 
look  at  ways  of  assisting  in the  development  of  competitive  public  procurement  practices 
there. 

6.10  One of the major  challenges facing  the Union is to help the countries of Central  and 
Eastern Europe (CEECs) to prepare themselves for  EU membership.  A key element  in the 
pre-accession  phase  is  the  alignment  by  the  CEECs  of  their  legislation  with  Community 
legislation governing the single market.  At the request  of the Essen European  Council,  the 
Commission  set  out  the  basis  of  us  strategy  in the  White Paper  on  the  preparation  of  the 
associated  countries of Central  and  eastern Europe for  integration  into the internal  market 
of the Union.  4  Presented  to  the Cannes European  Council  in June  1995, the White  Paper 
gives  guidance  on  the  legislative  measures  that  the  countries  concerned  need  to  put  in 
place in order to  set up the necessary  regulatory  structure by the time of their  accession  to 
the EU.  The White Paper  makes it clear  that,  in the  area  of public  procurement,  the  right 
administrative  procedures  must  be  established  by  law  in  order  to  foster  competitive 
tendering  for  public  contracts  and  to  encourage  competition  between  suppliers  for  those 
contracts. 

6.11  However,  open  and  competitive  public  procurement  procedures  are  a  relatively 
new  phenomenon  for  most  suppliers  and  contracting  entities  in  the  CEECs.  Aligning 
domestic  legislation  with  that  of  the  internal  market  will  not  in  itself  bring  about  the 
changes  that  are  necessary  for  suppliers  and  contracting  entities  to  establish  an  efficient 
procurement  system.  The legislative framework  that is being put in place will be  reinforced 
by  relevant  and  targeted  technical  assistance.  Procurement  officials  need  to  be  given  the 
appropriate training to be able to define the goods and services that they are seeking to buy 
as effectively  as possible, based  on a thorough  understanding  of the economic and  financial 
implications.  Training  will  also  help  in improving  the  administrative  and  managerial  skills 
that  are  needed  to  run  an  efficient  procurement  and  contract  management  system. 
Suppliers  too  must  adapt  themselves  to  the  culture  of  providing  the  goods  and  services 
that their public clients require, and improve their ability to prepare and  submit  competitive 
tenders. 

44  COM (95)  163 of 3.and  10.05.95. 

48 

6.12  The European Union is already supporting the CEECs in their first efforts to lay the 
foundations  for  efficient  and  open  procurement.  Valuable  assistance,  especially  in  the 
drafting  of  laws  and  the  setting-up  of  administrative  frameworks,  is  being  delivered 
through PHARE  and the mostly  PHARE-financed  SIGMA  programme45,  which  operates 
under  the  auspices  of  the  OECD.  The  Commission  has  also  established  a  new  multi-
country facility  called  the Technical  Assistance  Information  Exchange  Office.  The  Office 
will be a focal point for enquiries for help and advice from the Commission.  It will also be 
a 'one-stop shop' where information  on technical  assistance relating to  the internal  market 
can be delivered and exchanged. 

III.  Questions 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

9. 

How  effective  in  terms  of  market  opening  has  the  Government  Procurement 
Agreement been?  Is there a need for further  initiatives? 

From  a  business  perspective,  which  countries  (or  group  of  countries)  and  which 
business  sectors  should  be  given  the  highest  priority  in  future  market  opening 
initiatives? 

Do  you  believe  that  a  set  of  common  principles  (such  as  transparency  and  non 
discrimination)  would  be  enough  to  ensure that  real  market  opening  is achieved  in 
future  in developing  countries? 

Are  there  any  other  barkers  (regulatory  or  non-regulatory)  preventing  successful 
participation  in third  countries' procurement that fall outside the scope of the GPA? 

Would  it be useful  to  set  up  an advisory group  of industry  representatives  to  assist 
the Commission  on matters relating to access to procurement  in third  countries? 

What  additional  steps  could  be taken  by the  Community  or  by the  Member  States 
to  help  suppliers  enforce  their  rights  under  the  GPA  and  ensure  that  other 
contracting parties play by the rules? 

Do  you  believe  that  the  Community  should  give  priority  to  helping  the  CEECs  to 
develop  public procurement  skills?  If so; what  would  be the  most  effective  means 
of providing  training for  the CEECs? 

Would  the  procurement  profession  be  ready  to  take  an  active  role  in  providing 
assistance  and  lending  expertise to the CEECs? Have you already been  involved  in 
any  training  programme?  If  so,  what  conclusions  would  you  draw  from  your 
experience for future  programmes? 

Given  that  the  Commission  is  looking  at  ways  of  assisting  in  the  development  of 
public  procurement  practice  in  the  Mediterranean  Basin,  what  initiatives  do  you 
think appear appropriate in this matter? 

Support  for  Governance and  Management  in Central  and Eastern  European  Countries. 

49 

Annex  I 

limited,  contribution 

The  first  Community  procurement  Directives,  on  public  works  (71/305)  and  public 
supplies  (77/62)  made  a  positive,  but 
to  more  competitive 
procurement.  The  scope  of  these  Directives  was  restricted.  Major  portions  of  public 
procurement,  such  as procurement  in the water,  energy,  transport  and  telecommunications 
sectors  and  contracts  for  services, were not  covered  by these rules.  Moreover,  there  was 
no  harmonisation  of  remedies  procedures,  so  that  suppliers  excluded  from  contracts  in 
violation  of  the  Directives  often  had  no  means  of  challenging  doubtful  procurement 
decisions  or  seeking  compensation.  The  rules  also  left  open  too  many  loopholes  for 
procurement  entities  to  avoid  open  procedures  on  grounds  that  were  not  objectively 
justified.  Subsequently  changes  have been  made to  the  EU  procurement  rules  to  respond 
to  public  and  political  reaction  to  past  improprieties  and  perceived  weaknesses  in  the 
system. 

The  EU  legal  framework  for  public  procurement  was  completed  between  1987  and  1993 
as  part  of  the  1985  Internal  Market  White  Paper  programme.  The  public  supplies  and 
public  works  Directives  were  updated, 
in  1988  and  1989  respectively,  and  then 
consolidated  in  1993  (as  Directives  93/36  and  93/37).  Procurement  of  service  contracts 
was  included  in  the EU's  open  procurement  regime  by  Directive  92/50,  in  force  since  1st 
July  1993.  A  Directive  on  supplies  and  works  procurement  by  utilities  in  the  water, 
energy,  transport  and  telecommunications  sectors,  covering  both  public  undertakings  and 
undertakings  to  which  Member  States  have  granted  special  or  exclusive  rights,  was 
adopted  by  the  Council  in  1990  (Directive  90/531/EEC).  A  consolidated  version  of  the 
Utilities  Directive,  including  service  contracts,  was  adopted  in  June  1993  (Directive 
93/38),  superseding Directive 90/531 with effect  from  its entry into  force  on  1st July  1994 
(1st January  1997 for  Spain and  1st January  1998 for  Greece  and  Portugal).  Two  specific 
Directives  on  remedies  exist,  one  for  the  'traditional'  procurement  sectors  (89/665,  as 
amended  by  the  Services  Directive  92/50)  and  one  for  the  utilities  sectors  (92/13).  The 
Remedies Directives require Member  States to  ensure that  administrative  or legal  remedies 
are available to  suppliers in the event of non-compliance with the substantive rules on open 
procurement. 

The Directives  require Member  States to  ensure  that  award  procedures  for  contracts  over 
specific  thresholds  are transparent  and  competitive.  The  Directives  include  rules  covering 
the  publication  of  tenders; the  procedures  for  awarding  contracts  which  must  be  followed 
(for  example,  technical  specifications  must  normally  refer  to  European  standards  where 
they  exist  or,  in  the  absence  of  European  standards,  to  national  standards  referring  to 
international  standards);  and  the  selection  and  award  criteria  which  may  be  used.  The 
thresholds  defining  which contracts  fall  under the Directives' rules are  set  at  ECU  200  000 
for  supplies  and  service  contracts  (ECU  400  000  for  contracts  awarded  in  the  utilities 
sectors  and  approximately  ECU  130  000  for  contracts  falling  within  the  scope  of  the 
application  of  the  agreement  on  public  contracts  of  the  World  Trade  Organisation)  and 
ECU  5 million  for  works  contracts.  These thresholds  are  defined  with  a view  to  ensuring 
the competitive  procurement  rules apply to contracts  likely to  interest  suppliers  from  other 
Member  States while allowing administrative  and  procedural  costs  on  smaller  contracts  to 
be kept to a minimum. 

50 

STATUS  OF IMPLEMENTATION  OF THE PUBLIC PROCUREMENT  DIRECTIVES 

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DIRECTIVES 
89/440/EEC 
Works (18.7.1989) 
In force since 19.7.1990 
GR.E.P:  1.3.1992 
AT.FI.SE:  1.1.1994 
replaced by 93/37/EEC 
88/29S/EEC 
Supplies (2.3.1988) 
In force since 1.1.1989 
GR.E.P:  1.3.1992 
AT. FI, SE: 1.1.1994 
-  89/665/EEC 
Remedies (21.12.1989) 
In force since  21.12.1991 
AT.FI.SE: 1.1.1994 

90/531/EEC 
Utilities (17.9.1990) 
In force since 1.1.1993 
E: 1.1.1996 
GR,P:  1.1.1998 
AT.FI.SE:  1.1.1994 
92/13/EEC 
Remedies for Utilities 
(25.2.1992) 
In force since  1.1.1993 
AT.FI.SE:  1.7.1994 
E: 30.6.1995 
GR.P: 30.6.1997 
92/50/EEC 
Services (18.6.1992) 
In force since 1.7.1993 
AT.FI.SE:  1.7.1994 

93/36/EEC 
Supplies (14.6.1993) 
In force since  14.6.1994 
AT.FI.SE:  1.7.1994 

93/38/EEC 
Utilities (14.6.1993) 
In force since 1.7.1994 
AT.FI.SE:  1.7.1994 
E: 1.1.1997 
GR,P:  1.1.1998 

Key: 

National  implementing  measures  not communicated  or  only partly  communicated 
National  implementing measures communicated  and checked; infringement  proceedings for non-
compliance under way 
National  implementing measures  communicated 
Derogation granted to Member State 

D 

51 

FINANCIAL STATEMENT 

1  TITLE OF OPERATION 

Green  Paper  "Public  Procurement  in  the  European  Union:  exploring  the way 
forward". 

2  BUDGET HEADING INVOLVED 

See paragraph 10 below. 

3  LEGAL BASIS 

Directives  92/50/EEC,  93/36/EEC,  93/37/EEC,  93/38/EEC,  89/665/EEC, 
92/13/EEC. 

4  DESCRIPTION OF OPERATION 

4.1  General objective 

The above mentioned  Directives which  are the legal  basis of  this Green 
Paper  have  established  a  complete  legal  system  for  public  contracts  at 
Union level.  It is difficult  to apply it in a complete and effective  way to 
achieve the hoped  for objectives.  Public contracts in Member States are 
being  opened  up,  competition  is increasing  and  the purchasing  practices 
of contracting authorities are giving ever better results.  Nevertheless all 
actors concerned  need  to make still  more effort  ïFCommunity  policy  in 
this area is to bring about the maximum benefits. 

This  Green  Paper  is intended  to  stimulate a wide ranging  debate.  In  it 
the  Commission  develops  its  initial  thoughts  on  a  certain  number  of 
questions essential for  present and future  policy and  invites all interested 
parties 
institutions, 
professional  organisations,  entities and contracting  authorities,  suppliers) 
to give their point of view. 

(authorities  of  Member  States,  Community 

By  its  nature  this  Green  Paper  does  not  contain  proposals  of  the 
Commission  which  could  have  direct  budgetary  effects. 
In  most  cases 
the  Commission  only  envisages  taking,  or  supporting,  some  initiatives 
if,  after  discussion  with  the actors  concerned,  these  would  be  useful  or 
even essential to achieve its policy objectives in public contracts. 

The  Green  Paper  announces  only  one  action  with  budgetary  effects. 
This is the possible organisation,  after  initial  replies have been  analysed, 
of a meeting in Brussels with the most representative interested parties of 
the Member States. 

fz 

4.2 

Period covered and arrangements for renewal 

Expenses incurred  following  action  stated  in point 4.1  (organisation  of a 
meeting in Brussels) will have to be provided  for during 1997. 

5 

CLASSIFICATION OF EXPENDITURE OR REVENUE 

5.1  DNO 
5.2 
CND 
"5.3  None 

6 

TYPE OF EXPENDITURE OR REVENUE 

Expenditure  relates  to  the  possible  organisation  of  a  meeting  in  Brussels, 
following  a  first  analysis  of  replies  received,  with  the  most  representative 
interested  parties  of  the  Member  States,  namely  the  reimbursement  of  travel 
costs (and, if need be, accommodation  expenses) 

7 

FINANCIAL IMPACT 

NONE 

8 

FRAUD PREVENTION MEASURES 

Action provided  for  at point 4.1  will be directly  executed  by  the  Commission's 
Services,  by  applying  rules  concerning  the  reimbursement  of  travel  and 
accommodation  costs as well as disbursements incurred  by people foreign  to the 
Commission who have been called upon as experts. 

9 

ELEMENTS OF COST-EFFECTIVENESS ANALYSIS 

9.1 

Specific  and quantified  objectives; target  population 

The  specific  object  is  to  make  all  interested  actors  aware  of  the 
reflections  and  options  which  the  Commission  envisages  on  the various 
themes running  through  its policy on public contracts to open  up a large 
debate on  the line  to be followed  in  the future.  If  necessary  a  meeting 
could  be  organised  in  Brussels  after  the  written  communication  phase. 
In  this  meeting  the  representatives  of  the  actors  most  concerned  who 
have taken part in the written phase could  set out their point of view and 
help the Commission  to decide on the most appropriate  follow-up  to the 
Green Paper. 
Those concerned  are the institutional  interlocutors in the Member States, 
the  purchasing  bodies,  professional  organisations  and  enterprises 
working in the sectors of public contracts. 

fS 

9.2  Grounds for the  operation 

The  Community  is  responsible  for  putting  into  place  policies  on  the 
completion  and  functioning  of  the  Internal  Market,  such  as  public 
contracts' policies.  As was said above the Green Paper seeks to open up 
a  debate  which  will  show  initiatives  which  are  opportune  or  even 
necessary  to benefit  fully  from  Community  policy  on  the  subject.  The 
nature  of  the  initiatives  in  the  Green  Paper  implies  their  direct 
management by the Commission. 

As  the  objective  is  to  open  up  a  debate  on  a  number  of  questions  on 
public  contracts,  the  instrument  to  be  used  by  the  Commission  is  the 
publication and distribution of a Green Paper. 

Neither  at  national  nor  at  Community 
conducted  which are similar to, or the same as,  this action. 

level  have  activities  been 

This  initiative  has been  envisaged  after  the need  for  it  was  expressed  in 
different  ways by the actors involved.  Therefore one can expect  that the 
Green  Paper  will  be  well  received  by  the  public  and  that  its  specific 
objectives will be achieved. 

9.3  Monitoring  and evaluation  of the  operation 

opening  up a large debate on  the themes  dealt  with  in  the  Green 

The success of the action envisaged  will be evidenced by: 
(a) 
Paper; 
(b) 
(c) 
(d) 

better application of the legislation by the actors concerned; 
deeper knowledge of the trends and structures in public contracts 
greater effectiveness  of existing rules. 

Directorate  XV-B  will  take action  after  receiving  reactions  to the  Green 
Paper  and  the  various  initiatives  already  envisaged.  As  already  said, 
after  the actors concerned  have been  consulted  in  writing,  consideration 
will  be  given  as  to  whether  it  is  appropriate  to  organise  a  hearing  in 
Brussels with all interested parties. 
On  the  basis  of  these  contributions  the  Commission  will  draw  up  a 
communication  on  public  contracts  intended  for  Community  institutions 
comprising  an  action  plan  and  setting  out  measures  to  be  taken  to 
strengthen  the effectiveness  of  the legal  framework  and to achieve  better 
the objectives of  Community policy on public contracts in the future. 

10 

ADMINISTRATIVE EXPENDITURE  (SECTION III,  PART  A  OF THE BUDGET) 

The administrative resources  necessary  will  be found  by the annual  Commission 
decision  on  resource  allocation  taking  account  of  the  staff  and  supplementary 
sums accorded by the budgetary authority. 

9A 

10.1 Effect  ou the number of posts 

Type of post 

Staff  to be assigned to 
managing the operation 
Permanent 
posts 

Temporary 
posts 

A 
Officials  or 
B 
temporary 
C 
staff 
Other resources 
Total 

2 
1 
1 

4 

Duration 

Additional 
resources 

lyr 
lyr 
lyr 

Source 

Existing 
resources in 
the DG or 
department 
concerned 
2 
1 
1 

4 

10.2 Overall financial impact of additional human resources 

Officials 
Temporary  staff 
O t h er  reSOUrCeS  (indicate budget heading) 

Amounts 
NONE 

Method of calculation 

Total 

1  NONE 

1 

The expenses  relating  to  human  resources  necessary  for  the completion  of  this  action 
will be covered by rescheduling existing resources, as follows: 

Officials  (Titles Al,  A2, A4 and A5): 

400,000 Ecus/year. 

10.3 Increase  in  other  administrative  expenditure  as  a  result  of  the 

operation 

Budget heading 

Amounts 
NONE 

Method of calculation 

Total 

1 

1 

A250 General meetings: 
(on a basis of  +/-  30 participants at  +/-  695/participant) 

22,000 Ecus -  1997 budgetary year 

A3410 Publication  of the Green Paper  12,130 Ecus -  1996 budgetary year 
(on a basis of  +/-  9,300 copies) 
The  resources  necessary  to  cover  administrative  expenses  mentioned  above  will  be 
obtained  by  rescheduling  existing  financial  resources  and  will  not  entail  further 
expenses. 

1? 

ISSN 0254-1475 

COM(96) 583 final 

DOCUMENTS 

EN 

08  10 

Catalogue number  :  CB-CO-96-627-EN-C 

ISBN  92-78-12855-4 

Office  for Official  Publications of the European Communities 

L-2985 Luxembourg