Communication from the Commission - Public procurement in the European Union
Date: 1998-03-11
Institutions: European Commission
Subjects: application of EU law, competition, corruption, public contract, single market

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 11.03.1998 
COM(1998) 143  final 

COMMUNICATION FROM THE COMMISSION 

PUBLIC PROCUREMENT 

IN THE EUROPEAN UNION 

1 

2 

3 

4 

INTRODUCTION 

:. 

ADAPTING  THE  REGULATORY  FRAMEWORK  TO MARKET CHANGES 
rules:  simplification  and 
2.1 

response 

flexible 

to  market 

The  ground 
developments 
2.1.1 
2.1.2 

Objective.... 
Presentation of a legislative package 
2.1.2.1 

2.1.2.2 
2.1.2.3 
2.1.2.4 

Adjustment  of  the  scope  of  Directive  93/38/EEC  in  line 
with changes  in the sectors  it covers 
Facilitating  dialogue 
The role of framework  contracts 
Treatment  of  concessions 
pubiic-private  partnership 

and  other 

forms  of 

2.1.3 

Clarification  and consolidation 

2.2 

the 

implementation  of  public  procurement  policy:  a 

joint 
the  Commission  and  economic 

for 

the  Member States, 

Improving 
responsibility 
operators 
2.2.1 
2.2.2 
2.2.3 
2.2.4 
2.2.5 
2.2.5 
2.2.7 

Objective 
Improving checks aï the Community  level 
Independent  authorities 
Market  monitoring 
Attestation: a guarantee of non-discriminatory  procurement 
Fighting corruption 
Contracts awarded by the Commission 

DEVELOPING  A  FAVOURABLE  ENVIRONMENT  FOR  BUSINESSES,  AND  IN 
PARTICULAR  SMES 
3.1 

, 

Training, information and measures  helping SfvîEs 
3.1.1 
3.1.2 
3.1.3 
3.1.4 
3.1.5 
Towards  efficient electronic  procurement 
3.2.1 

Objective 
Information 
Training and commercial practices ("best practice") 
Measures  in favour of SMEs 
Qualification of suppliers 

^... 

Preparing  the  EU  to  meet  the  exciting  new  challenge  of  electronic 
commerce 
The way ahead: pan-European electronic  procurement 
Measures proposed 

3.2.2 
3.2.3 

3.2 

COMPLEMENTING  AND.ACHIEVING  SYNERGY  WITH  OTHER  COMMUNITY 
POLICIES 
4.1  Objective 
4.2 
4.3 
4.4 
4.5 
4.6 

Defence..... 
Protection of the environment 
Public  procurement and social aspects 
Consumer  protection 
Internationa! aspects 
4.6.1 

. 

, 

Opening  up third-country  public  procurement  markets  for  European 
companies 
Integrating  neighbouring  economies 
procurement  policy 
Ensuring  efficiency  in  the  award  of  contracts  financed  by  the  EU 
within the context of external aid.... 

the  Union's  public 

into 

4.6.2 

4.6.3 

ANNEX  1 : STATE OF TRANSPOSITION.. 
ANNEX 2 : TIME TABLE 

I 

5 

5 
.....5 
5 

6 
7 
8 

8 
10 

11 
11 
12 
13 
14 
15 
15 
16 

18 
18 
18 
18 
19 
19 
20 
20 

20 
22 
23 

25 
25 
.25 
26 
28 
.29 
29 

29 

30 

30 
32 
33 

Optimising the functioning  of the internal market is of vital importance for the European 
Union.  The  Commission's  Single  Market  Action  Plan1,  which  was  endorsed  by  the 
Amsterdam  European  Council  and  the  European  Parliament,  is  intended  to  ensure  that 
the  single  market  fulfils  its  potential.  As  part  of  the  Action  Plan,  the  Commission 
published,  in  November  Î 997,  the  first  edition  of  the  Scoreboard2 containing  detailed 
indicators on the state of implementation and application of single market legislation. 

The  Scoreboard  confirmed  that public procurement  is one of the key areas of the single 
market  where  results  do  not'yet  meet  expectations.  This  is  particularly  significant 
because of the economic importance of public procurement markets: they represent more 
than ECU 720 billion or about  11% of the Union's GDP, equivalent to half of the GDP of 
the Federal Republic of Germany. 

Existing policy aims to open up national public procurement markets to competition  from 
other  Member  States,  offering  competitive  suppliers  significant  opportunities.  Today 
these opportunities extend to the EEA countries and Europe's major trading partners, the 
USA, Canada and Japan.  As regards the EEA, this extension results from the integration 
of the Community  "acquis" in public procurement in the Agreement on the EEA and, in 
consequence,  in  the  legislation  of  the  EFTA  countries  signing  it.  The  agreement 
guarantees access of these countries' suppliers to the Community market in the same way 
as  Community  firms  are  guaranteed  access  to  the  markets  of  the  EFTA  countries. 
Existing policy  seeks to encourage  transparent  and competitive purchasing  behaviour  in 
order  to  deliver  the  best  value  for  money.  Community-wide  competition  for  public 
contracts will lead to an efficient  allocation of resources and thus enhance the quality  of 
public  sendees,  improve  economic  growth,  competitiveness  and job  creation.  Efficient 
procurement  is  particularly  important  on  the  eve  of  the  single  currency  and  in  the 
prevailing  climate  of  stability  and  budgetary  restraint  necessary  for  such  fundamental 
change  to occur  and  develop  under  satisfactory  conditions. A good  public  procurement 
policy,  by  preventing  inefficient  public  spending  and  by  providing  a  major  means  of 
avoiding  corruption,  can  give  taxpayers  confidence  that  their  money  is  being  spent 
correctly and thus reinforce public trust in government. While the fight against corruption 
is not the primary objective of public procurement, improvements in public procurement 
procedures  can  make  a  useful  contribution3.  Accordingly,  proposals 
this 
communication  aimed  at  enhancing  transparency  and  clarity,  such  as  publication  of 
tendering  information  or  the  designation  of  independent  authorities  in  each  Member 
State, will help create a system which minimises opportunities for corruption. 

in 

1  CSE (97)1 final, 4.6.1997. 
2 
•*  See  Commission  Communication  to  the  Council  and  the  European  Parliament  on  A  Union Policy against 

Single Market Scoreboard, No 1, November  ! 997, SEC 97/2196. 

Corruption (COM(97)()192 - C4-0273/97). 

The  legal  framework  composed  of  the  principles  and  rules  enshrined  in  the  Treaty  and 
developed  in  detail  by  six  Directives,  was  completed  nearly  four  years  ago,  the  first 
Directives  dating  back  more  than  twenty  years.  However,  several  Member  States  have 
failed  to  implement  all the Directives.  As the November  1997 Scoreboard  shows, public 
procurement  is  one  of  the  areas  where  the  deficit  in  transposition  is  greatest,  with  only 
55.6%4  of  the  Directives  correctly  implemented  in  all  Member  States.  Moreover,  the 
Commission's  communication  on  the  Impact  and  Effectiveness  of  the  Single  Market5 
makes  it  clear  that  the  economic  results  so  far  achieved  fall  short  of  expectations.  The 
level  of  import  penetration  in  the  public  sector  (that  is,  the  sum  of  direct  and  indirect 
imports  by  public  purchasers)  may  have  risen  from  6%  in  1987 to  10% today.  It  can  be 
observed,  however,  that  specific  sectors  remain  closed  because  of  the  use  of  standards 
and  certification  and  qualification  systems. Moreover,  there  is no  clear  evidence  of  price 
convergence between Member  States over the same period. 

to  implement 

the  Directives  and  by 

in  the  European  Union:  Exploring 

Concerned  by  Member  States'  failure 
the 
disappointing  economic  results,  the  Commission  launched  its  Green  Paper  on  Public 
in 
Procurement 
November  1996. The  high  level  of response to the  Green  Paper  is gratifying.  Nearly  300 
contributions  have  been  received  from  a wide  range  of  key  players  and  the  Commission 
thanks  all  -  institutions,  Member  States,  suppliers  and  purchasers,  representative 
organisations  on  the  demand  and  the  supply  sides  and  other  interested  parties  -  for  their 
valuable  contribution.  Discussions  in the Council,  in the  European  Parliament  and  in the 
Advisory  Committees  for  public  procurement  have  been  extremely  productive  and 
helpful. 

the  Way  forward6,  published 

The  Commission  has  carefully  analysed  all  of  the  contributions  received.  The  measures 
proposed  by the  Commission  in the present  communication  take them  fully  into  account, 
recognise  that  procurement  policy  needs  to  be  reinvigorated  in  order  to  reap  the  full 
benefits  of  the  regime  and  define  the  direction  that  public  procurement  policy  in  the 
European Union will take over the next five years. 

The  conclusions  the  Commission  draws  from  the  debate  are  twofold.  First,  the  Union 
must  take  action  to  ensure  the public  procurement  regime  in place  delivers  the  economic 
benefits  it  has  promised.  Secondly,  it  must  adapt  existing  instruments  to  the  changing 
economic  environment.  Achieving  this  will  require  enormous  effort  from  all  those 
involved:  the  Commission,  the  Member  States  and  the  private  sector.  While  the  aims  of 
the  internal  market  policy  have  remained  the  same  since  the  adoption  of  the  Treaty  of 
Rome,  Europe  has  gone  through  immense  changes  since  the  adoption  of  the  first  public 
procurement  Directives  in the  1970s. These  are the  information  revolution,  the  change  of 
attitude  to  the  State's  role  in  the  economy  combined  with  the  introduction  of  budgetary 
restraint  -  privatisation,  liberalisation  of  utilities,  public-private  partnerships  -  and  the 
increase of cross-border  trade in goods and services brought about by the internal  market. 
Together,  they  have  resulted  in  a  highly  competitive  commercial  environment  and  an 
increased  public  awareness  of  the  need  to  fight  corruption  and  prevent  misuse  of  public 
finance. 

See Annex I. 

COM  (96) 520  final,  30.10.1996. 

COM  (96)  583  final,  27.! 1.1996. 

-2-

The  main  theme  emerging  from  the  Green  Paper  debate  is the need  to  simplify  the  legal 
framework  and  adapt  it  to  the  new  electronic  age  while  maintaining  the  stability  of  its 
basic  structure  and  avoiding  unnecessary  changes  involving  further  legislative  work  at 
Community  and national  level. 

The  Community's  response  and  the  measures  proposed  in  this  communication  contain 
the following  main elements: 

•  The  Commission  recognises  that  a  stable  legal  framework  is  crucial  to  the  smooth 
operation  of  public  procurement  markets  and  to  maintaining  market  players' 
confidence  in the efficiency  of the system. However, the current  legal  framework  does 
not  exist  for  its own  sake but  in order to attain the benefits  of the  single market  in  the 
area  of  public  procurement.  Rules,  policy  and  enforcement  should  follow  reality 
rather  than  the  other  way  round.  In  the  light  of  the  momentous  changes,  which  have 
occurred  since the publication  of the  first  Directives  in the  seventies, the  Commission 
recognises the need to re-orient  its policy and streamline its rules. 

The Commission  acknowledges  the complexity  of the current  legal framework  and the 
rigidity  of  its  procedures.  It  intends,  therefore,  to  simplify  the  former  and  make  the 
latter  more  flexible.  Simplification,  in  this  context  implies,  on  the  one  hand,  the 
clarification  of  existing  rules  and,  on  the  other  hand,  their  amendment.  In  order  to 
preserve  the  stability  of  the  framework,  priority  will  be  given  to  clarification  of 
existing  rules to resolve  the most  complex  issues. Where  clarification  is not  sufficient 
or  where  it is felt  that the  current  framework  is not  flexible  enough  to take  account  of 
new  practices  or  market  reality,  the  Commission  intends  to  propose  amendments 
through a legislative  package. 

The  use  of  information  and  communication  technologies  (ICT)  in public  procurement 
will  determine, our  ability  to  adapt  in the  future  and  maintain  a competitive  European 
industry.  Fully-fledged  electronic  procurement  will  allow the procurement  process  to 
take place much more rapidly  and significantly  reduce transaction costs over the  entire 
lifecycle  of the goods or services  purchased. 

Simply  laying  down  and  enforcing  legal  rules  cannot  on  its own  guarantee  economic 
benefits.  Other  measures  aimed  at improving  market  access are equally  important  and 
necessary: 

- 

It  is  of  the  utmost  importance,  if  one  seeks  to  achieve  efficient  purchasing,  to 
give  the  different  operators  involved  in  a  given  public  procurement  a  training, 
which  makes  real  professionals  of  them.  This  training  should  not  focus  on  the 
legal provisions as such but on how to use them in an effective  way in day-to-day 
procurement  and  on  how to  develop  new ways  of working  in a changing  market 
environment. 

-  The  relatively  low  response  from  suppliers  to  the  enormous  volume  of  contract 
opportunities needs to be addressed through raising awareness of what is at stake, 
improving  transparency  of,  and  access  to, information  on  contract  opportunities, 
general market monitoring and other useful  information. 

-  Specific  action  in  favour  of  the participation  of  SMEs  has  been  sought  by  the 
European  Parliament.  Measures  will  be  taken  in  connection  with  the  general 
problems of supplier participation. 

In the process of ensuring a single market for procurement, Member States and European 
industry have a key role to play. Governments, by enforcing  the legal framework  and by 
setting a good example themselves, will help to build confidence  in the openness of their 
procurement  markets.  European  industry,  for  its  part,  should  actively  seek  out  new 
market opportunities  and when  it encounters difficulties,  should  be more courageous  in 
defending  its rights. Public procurement is too fundamental  for the European economy to 
be left  in the hands of a limited  number of specialists:  only the  establishment  of a real 
partnership between the Community, the Member States and industry will bring about the 
benefits that are to be expected. 

2  ADAPTING THE REGULATORY FRAMEWORK TO 

MARKET CHANGES 

2.1  The  ground  rules:  simplification  and  flexible  response  to 

market developments 

2.1.1  Objective 

It is evident from  the debate launched  by the Commission's  Green Paper that the  existing 
legal  framework7  and  procedures  need  to  be  simplified.  The  Commission  endorses  the 
call  for  simplification,  which  is  in  line  with  one  of  the  strategic  targets  of  its  Single 
Market  Action  Plan,  namely  that  of  strengthening  the  existing  legal  framework  by 
simplifying  and improving national and Community  rules (Strategic Target  1, Action 4). 

The Commission  is in any event under the obligation to re-examine the application  of the 
Directives within the deadlines laid down therein, as Parliament pointed out in its  opinion 
on  the  Green  Paper.  This  communication  is  therefore  a  response  both  to  Parliament's 
request and to the obligation  laid down in the Directives. 

"Simplification"  means  in  this  context  both  the  clarification  of  provisions  which  are 
obscure  or  complex  and  adjustment  of  the  rules  in  force  where  the  problems  to  be 
addressed cannot be resolved through interpretation  of the provisions. 

The  Commission  takes  the  view  that  certain  important  issues  cannot  be  dealt  with 
through  mere  interpretative  documents  and  that  the  legislation  needs  to  be  amended. 
Such  amendment  will  not  be  tantamount  to  over-regulation  but  will  endeavour  on  the 
contrary  to  make  the  rules  and  procedures  clearer  and  more  flexible.  Amendments  will 
be  precisely  targeted  so  as  to  preserve  the  structure  and  foundations  of  the  legal 
framework. 

These  amendments  are  in  line  with  measures  announced  in  the  Single  Market  Action 
Plan,  in  which  the  Commission  stressed  the  need  to  remedy  weaknesses  in  the  existing 
legal  framework  for  public  procurement  in  order  to  ensure  that  the  single  market 
functions  properly  in this area (Strategic Target  1, Action 5). 

2.1.2  Presentation of a legislative package 

Although the Commission  is convinced  of the need to adjust  some aspects of the  existing 
legal  framework,  it  would  stress  that,  three  years  after  expiry  of  the  deadline  for 
transposing  the  last  of  the  Directives  adopted  in  the  public  procurement  field,  the 

Directives  93/36/EEC,  93/37/EEC  and  92/50/EEC  on  public  supplies,  public  works  and  public  services  (the 
"traditional" Directives)  as amended  by  directive  97/52/EC;  Directive  93/38/EEC  on  procurement  procedures  of 
entities  operating  in  the  water,  energy,  transport  and  telecommunications  sectors  (the  "Utilities  Directive"); 
Directives 89/665/EEC  and 92/13/EEC on review procedures (the "Remedies Directives"). 

requisite  national  legislation  is still  not  fully  in place  in  all  Member  States.  Many  of  the 
contributions  prompted  by  the  -Green  Paper,  and  in  particular  Parliament's  opinion, 
deplore this state of affairs  and call on the Commission to act as a matter of urgency. 

The Commission  invites the Member  States  to demonstrate  their  political  commitment  to 
putting  an  end  to  delays  in  transposition  at  the  earliest  possible  opportunity.  Since  the 
transposition  and  correct  application  of  the  Directives  is  a  precondition  for  the  proper 
implementation  of  public  procurement  policy, 
its 
determination  to  take  all  the  necessary  steps  to  ensure  that  Member  States  fulfil  their 
obligations.  It is proposing  a set of measures to that end (see point 2.2 below). 

the  Commission 

reaffirms 

The  Commission  intends  to  table  a  set  of  amendments  to  the  existing  legal  framework 
concerning the following  aspects: 

• 

Submission  of  proposals  to  exclude  from  the  field  of  application  of  Directive 
93/38/EEC,  the  sectors  or  services  to  which  it  currently  applies  (water,  energy, 
transport  and  telecommunications)  that  operate,  in  each  of  the  Member  States,  under 
conditions of effective  competition. 

introduction  of  more  flexible  procedures,  namely  a  competitive  negotiated  procedure 
and  framework  contracts, in response to the criticism  sometimes  levelled  at the  system 
that  procedures  are  excessively  rigid  and  formalistic  and,  where  complied  with 
strictly, can lead to malfunctioning  in the award of contracts; 

adoption  of  rules  to  take  account  of  certain  trends,  such  as  concessions  and  other 
forms  of  partnership  between  the  public  and  private  sectors  and  privatisation,  to 
ensure that their proper  functioning  is compatible with that of the single  market; 

fully  electronic procurement  (see point  3.2 below). 

These measures will be tabled by the Commission  în a legislative  package 
designed  to  make  certain  adjustments  to  the  existing  Segal framework  in 
areas  where  interpretation  of  the  rules  to  take  account  of  changing 
circumstances would not be sufficient to solve the problems. 

2.1.2.1 Adjustment  of 

the  scope  of  Directive  93/38/EEC  m 

line  with 

changes  in  the sectors  it  covers 

Following  the  liberalisation  of  some  of the  sectors  covered  by  Directive  93/38/EEC,  it  is 
necessary  to  examine  the  degree  of  openness  to  competition  of  the  liberalised  sectors 
with  a  view  to  deciding  whether  the  constraints  the  directive  impose  on  contracting 
entities  are  still  justified.  They  were  introduced  because  of  the  lack  of  competition 
resulting  from  the  State's  decision  to  grant  a  monopoly  or  a  privileged  position  to  an 
operator.  In  return  for  this  preferential  treatment  by  the  State,  the  operators  concerned 
had  to  comply  with  certain  advertising  and  procedural  requirements  when  awarding 
contracts.  If  a  sector  is  found  to  be  effectively  open  to  competition,  the  constraints 
imposed by the directive  should be  removed. 

The  Commission  was  the  prime  mover  in  the  process  of  liberalisation  in  the  sectors 
the 
covered  by  Directive  93/38/EEC  (see  3.  Report  on  the 

implementation  of 

-6-

telecommunication  regulation  package8).  It  must  now  take  account  of  the  changes  that 
have  occurred  and  the  new  factors  that  are  emerging  on  the  market,  by  excluding  from 
the scope of the Directive  entities operating under real competitive  conditions  in the  same 
way  as private entities which  base their decisions on purely  economic  criteria. 

The  Commission  intends,  before the end of 1938, to submit  proposals  to 
exclude  from  the  field  of  application  of  Directive S3/33/EEC  sectors  or 
services 
transport  Sitid 
telecommunications)  which  operate, in each  of the Member  States  under 
conditions of real competition. 

to  which  Et  appelés 

(water,  energy, 

in  the  immediate  future, the Commission  is  resolved,  in the light  of the 
Jurisprudence  of the Court of Justice, to use the possibilities  provided by 
Article  8  of  Directive  93/38/EEC 
the 
telecommunications  sector  operating  in a fully  competitive  environment. 
Accordingly, the Commission  invites the contracting entities to notify the 
services that they consider excluded from the scope of the Directive. 

to  exempt  services 

In 

In its evaluation  of the real operation of competition, the Commission  vlil 
take  particular  account of the degree of transposition &nû implementation 
of the relevant Community  legal framework. 

2.1.2.2  Facilitating dialogue 

Many  contributions  confirmed  the  Commission's  finding  that,  especially  in  the  case  of 
particularly  complex  contracts  in  areas  that  are  constantly  changing,  such  as  high 
technology,  purchasers  are well  aware of their  needs  but  do  not  know  in  advance  what  is 
the  best  technical  solution  for  satisfying  those  needs.  Discussion  of  the  contract  and 
dialogue  between  purchasers  and  suppliers  are therefore  necessary  in such  cases.  But  the 
standard  procedures  laid  down  by  the  "traditional"  Directives  leave  very  little  scope  for 
discussion  during  the  award  of  contracts  and  are  therefore  regarded  as  lacking  in 
flexibility  in situations of this type. 

The Commission wHI therefore  propose  amendments to the existing  texts 
of  the  Directives  with  a  view  to  making  procedures  more  flexible  and 
allowing  dialogue  in  the  course  of  such  procedures  and  not  just  in 
exceptional circumstances.  It will  propose a new standard  procedure, the 
"competitive  dialogue",  which  would  operate  alongside  open  and 
restricted  procedures  and  would 
the  existing  negotiated 
procedure with  prior publication of a notice.  The conditions  and the rules 
under  which  contracting  authorities  would  be  avowed  to  use  this  new 
procedure and the details  of the  procedure  itself will  have to be spelt out 
and  will  be based  inter  alia  on the principles  of  transparency  and equal 
treatment.  The only  remaining  exceptional  procedure  would  then  be a 
"direct-agreement  procedure", the conditions for the application  of which 
must be construed strictly, in line with the case law of the Court of Justice. 

replace 

COM (98) 80,  19.2.1998 

This  is  an  initiative  which  does  not  aim  to  introduce  new  regulatory  constraints:  on  the 
contrary,  it  is  clearly  designed  to  achieve  the  procedural  simplification  and  flexibility 
called  for  by all interested  parties who took part  in the Green Paper  debate, whether  from 
the  institutional  sphere  or  the  private  sector. 
It  will  give  operators  more  room  for 
manoeuvre,  which  will  not  fail  to  yield  beneficial  effects  in  terms  of  the  quality  and 
efficiency  of procurement. 

2.1.2.3  The role of framework purchasing 

On  markets,  which  are  constantly  changing,  such  as  the  markets  for 
information 
technology  products  and  services, it is not  economically justifiable  for  public  purchasers 
to be tied to fixed  prices and conditions.  Public purchasers therefore  increasingly  feel  the 
need  to  manage  their  procurement  on  a  long-term  basis.  The  essential  features  of 
contracts  of this nature  should  consequently  offer  the necessary  flexibility.  The  question 
of the  compatibility  of  such  flexibility  with the traditional  Directives  was raised  in many 
of the contributions. 

With  a  view  to  simplifying  procedures  and  clarifying  the  situation,  the 
Commission will propose amendments to the existing instruments, which 
would  permit  more  extensive  use  of  flexible  contracts  allowing  product 
developments  and  price  changes  to  be  taken  into  account.  Long-term 
contracts  may,  however,  pose  a threat  to  competition  in that they  could 
cause positions to become entrenched and certain firms to be shut out.  It 
is essential therefore that precise  rules be laid down for the use of these 
procedures.  Without  anticipating  the  direction  that  will  be  taken  by 
discussions  on this  issue, the  Commission  takes the view that  objective 
and transparent information should be published on framework contracts. 
Once candidates had come forward, lists of potential contractors could be 
drawn up.  To ensure that these contracts are not walled off,  lists should 
either  be valid  only  for  a  limited  period  or  be  kept  permanently  open to 
new firms. 

2.1.2.4  Treatment  of  concessions  and  other  forms  of  public-private 

partnership 

The  concept  of  public-private  partnership  encompasses  the  different  ways  in  which 
private  capital  can  take  part  in the  financing  and  operation  of  infrastructures  and  public 
services.  The  role,  which  the  public  authorities  still  play  in  such  partnerships,  varies 
greatly  according  to  the  situation  concerned.  The  Commission  has  no  intention  of 
intervening  in  Member  States'  decisions  as to  whether  these  infrastructures  and  services 
are to  be  financed  and  operated  by  the  public  or  the  private  sector,  since  such  decisions 
are their responsibility.  However,  if it is to be fully  in tune with  reality, the  Commission 
has  a duty  to devise  a legal  framework,  which  allows the  development  of these  forms  of 
partnership,  while  guaranteeing  compliance  with 
the 
fundamental  Treaty principles. 

the  competition  rules  and 

-8-

At present,  only  works  concessions  are  subject  to  specific  rules  laid  down  in a Directive; 
service concessions, public service contracts or other partnerships  involving the  provision 
of  services  are  not  covered9.  Treaty  rules  and  principles  such  as  equal  treatment  and 
non-discrimination  are of course applicable, but cannot always be readily  implemented  in 
specific  cases.  A  legal  framework  therefore  needs  to  be  devised  for  these  arrangements 
in  order  to  clarify  and  simplify  the  conditions  in  which  they  may  operate,  thereby 
ensuring  greater legal  certainty. 

In  the  interests  of  simplification  and  clarification,  the  Commission 
envisages  the following  action  to  establish  uniform  principles  for all 
types of concession. 

In  the  first  stage,  the  Commission  will  draw  up  an  interpretative 
document  explaining  and spelling  out the  rules  and principles  that  it 
considers, on the basis of the cases it has had to deal with, should apply 
to concessions. In this context, the Commission will also be examining 
other forms of public-private  partnership  in order to determine  whether 
and  to  what  extent  the  public  procurement  rules  can  constitute  an 
appropriate  legal  framework  for  ensuring  compliance  with  the  Treaty 
rules without hindering the development of these forms of co-operation. 
This  rethink  could  lead  to clarification  or even  adjustment  of  existing 
instruments. In the same way, the Commission  intends to tackle  some 
urgent  interpretation  problems  that  have  arisen  in  connection  with 
It  has  already  announced  to the 
Trans-European  Networks  (TENs). 
high-level group chaired by Mr Kinnock and to other bodies its intention 
to  publish an explanatory  guide  providing  concrete  solutions to certain 
questions arising in this area in the light of the existing legal framework. 

In a second stage, the Commission envisages proposing amendments to 
the Directives in order to cover all forms of concessions, that are not yet 
subject to regulation. The  aim would be to guarantee that partners were 
chosen after  Community-wide  competition  ensured  by prior  publication 
of  a  notice  and minimum  procedural  rules,  which,  in the  interests  of 
flexibility, allow ample scope for, dialogue  between the parties  involved 
while  upholding  the  principle  of  equal  treatment.  To  respond  to the 
legitimate concerns voiced by certain operators, the amendments would 
include provisions allowing the chosen consortium to award contracts to 
its partners, provided that the existence of such contracts is announced 
during the award procedure. 

One  aspect  of  the  public-private  partnership  issue  is  the  trend  towards  privatisation  in 
which the public authorities transfer  to the private  sector responsibility  for  tasks that  they 
previously  carried  out  themselves.  The  process  can  take  many  different  forms,  ranging 
from  a  simple  transfer  of  assets  to  more  complex  arrangements.  These  could  combine 
transfer  of ownership  from  a public  body  to the private  sector  and  the  establishment  of  a 
contractual  relationship  (purchase  of  goods  or  services,  concessions,  etc.)  between  that 
body  and the privatised  entity  in question. 

Except  for the public  tendering  procedures  in cases  where  for  reasons  which  are in the public  interest,  Member 
States restrict  access to intra-Community air routes or to the ground  handling  markets at Community  airports. 

-9-

The  option  of whether  or not to carry  out such  privatisation  falls  entirely  within the 
competence  of  Member  States.  The  Commission  ought  nevertheless  to  ensure  the 
removal of all the obstacles that could unduly hinder this type of transaction. 

It is clear that the rules and principles of the Treaty, particularly Articles 34, 52,  59 and 
67 on free  movement of goods, the right of establishment, freedom to provide  services 
and free movement of capital have a valid application as regards the transfer of assets to 
private purchasers. 

The Commission will look into the problems arising in this area from the 
standpoint  of  the  public  procurement  Directives  and, in the  interests  of 
clarity, publish an interpretative document on the topic. 

2.1.3  Clarification and consolidation 

As stressed  in the introduction to this communication, the Commission is convinced of 
the  importance  of a stable  legal  framework  in providing  a favourable  environment for 
businesses.  The framework  must, however, also be transparent.  The Commission  will 
therefore  endeavour, wherever possible, to avoid constantly  amending legislation and to 
solve problems that arise through interpreting the law in a manner that takes account of 
changing  circumstances  and in the light  of the principles  developed  by the Court, the 
only  institution  which has the power to give an authentic  interpretation  of Community 
law. 

The  Commission  therefore  undertakes  to  shoulder  its  responsibilities  by 
clearly stating  its position on the complex questions which  have arisen in 
relation to the application of Community  law and which were mentioned in 
responses to the Green Paper.10 

'"  The Commission proposes to clarify the following particular topics in an interpretative document: 

• definitions  of such  basic  concepts  as "body  governed  by public  law", "work",  "special  or exclusive rights", 
"contracting authority" and "contracting entity" and the borderline between works contracts and service contracts; 
• service contracts covered by the Directive, in particular the situation of financial services and R&D services; 
•  "in-house" contracts, i.e. contracts awarded within the public administration, for example between a central and 
local administration or between an administration and a company wholly owned by it; 
• the "technical dialogue" whereby a contracting authority enters into technical discussions with potential bidders 
when  determining  its needs, before  the contract  award  procedure  is initiated,  while  observing the principle of 
equal treatment and safeguarding competition; 
• the methods to be used for calculating whether or not a contract exceeds the thresholds for application  of the 
Directives; 
• an operational distinction between selection criteria and award criteria; 
• identification  of "abnormally low tenders" within the meaning of the Directives; 
• definition  of the concept of "irregular", "unacceptable" and "inappropriate" tenders within the meaning of the 
Directives; 
• the conditions in which "variants" may be used; 

The Commission also intends to adopt interpretative communications, particularly in the following areas: 
• 

the Treaty  rules applicable to contracts not covered  by the directives and the relevant principles clarified  by the 
jurisprudence  of  the  Court  of  Justice,  such  as, for  example,  the  principles  of  equality  of  treatment,  non 
discrimination,  transparency,  mutual  recognition  and proportionality  and the principles  applicable  to the stage 
following contract award; 

-10-

Bringing  the  Commission's  position  on these problems  to the attention  of all  parties  will 
enhance  legal  certainty,  and  this will  in turn  help to create  a favourable  climate  that  will 
encourage firms to be more active in bidding for contracts. 

The  view  is  also  taken  in  many  quarters  that  the  "traditional"  Directives  (on  supplies, 
works and services)  should be consolidated  in order to iron out inconsistencies  and  make 
them easier to understand. 

The Commission  intends  ultimately, once the work on  interpretation  and 
adjustment  of the  existing  legislation  is  complete, to  combine  the  three 
"traditional"  Directives  into  a  single  instrument.  The  consolidation 
exercise would  be strictly  confined to incorporating the adjustments and 
clarifications made since the Directives were adopted and eliminating any 
inconsistencies. 

It should  not be  forgotten,  however, that  if consolidation  of the Community  Directives  is 
genuinely  to  result  in  greater  clarity  of  the  rules  applicable  in  the  field  of  public 
procurement,  it  must  be  backed  up  by  consolidation  and  clarification  of  the  relevant 
national rules. 

2.2  Improving the implementation of public procurement policy: 
the 
for 

the  Member States, 

a 
responsibility 
Commission and economic operators 

joint 

2.2.1  Objective 

If  the  single  market  is  to  function  properly,  the  ground  rules  must  be  applied  and 
observed  uniformly  in all Member States; this is far  from  being the case at present, a  fact 
which is highlighted by various surveys and many of the contributions. 

For  this  purpose,  Member States  must  shoulder  their  responsibilities  for  ensuring 
compliance  with  the  existing  rules,  and  it  is  up  to  economic  operators  to  use  the 
instruments  (particularly  the  means  of  redress)  available  to  them  to  make  the  single 
market  work  in  the  field  of  public  procurement.  This  allocation  of  responsibilities  is  in 
line with the principle of subsidiarity  and in tune with the idea of the partnership  between 
the  Community  institutions,  the  Member States  and  economic  operators,  which  is 
necessary  for the successful  liberalisation of public  procurement. 

The  Commission  recognises  the need  to continue  streamlining  infringement  proceedings 
under  Article  169  of  the  Treaty  and  its  own  internal  procedures.  However,  it  must  also 

the  conditions  under  which  environmental  criteria  can  be  taken  into  account  in  public  procurement  (the  use  of 
'"eco-labels",  "eco-audit"  systems, taking  into  account  of  production  and  working  methods  and  the correct  use  of 
standards at different  levels will  be dealt with, inter alia), 
the conditions  under which  social  criteria can  be taken  into account  in public  procurement. 

-11-

establish  better  co-operation  with  Member  States,  for,  in  view  of  the  large  number  of 
cases  concerning  public  procurement,  it  is  necessary  that  the  citizen  can  quickly  obtain 
satisfaction  as regards to the difficulties  he encounters. 

This  is  why,  in  pursuance  of  the  subsidiarity  principle,  the  Commission  is  encouraging 
Member  States  to  set  up  or  to  designate  independent  authorities,  which  would  deal  with 
the  vast  majority  of  disputes  in  the  public  procurement  field.  The  Commission  would 
thus concentrate  on cases having a Community-wide impact or raising major  questions of 
interpretation.  The objective  pursued is to deal with problems at the appropriate level. 

The  Commission 
procurements under two aspects i.e. 

is  also  concerned  with  fighting 

irregularities  affecting  public 

-  Corruption occurring during the procedure for awarding the contract. 

-  Irregularities occurring during the execution of the contract once  awarded. 

This  is  particularly  true  for  the  contracts  either  awarded  by  the  Commission  (direct 
expenditure)  or  financed  by 
the 
Communities'  financial  interests are at stake. 

(indirect  expenditure)  where 

the  Commission 

2.2.2  Improving checks at the Community level 

Infringement  proceedings  under  Article  169  of  the  Treaty  are  the  main  weapon  in  the 
Commission's  arsenal  for  enforcing  Community  law.  But  the  Article  169  procedure 
cannot  on  its  own  guarantee  the  rapid  and  effective  settlement  of  disputes  which  is 
necessary  in  public  procurement:  by  the  time  the  dispute  is  settled,  contracts  have  more 
often  than not already been awarded, or even  performed. 

The  European  Parliament  proposes  strengthening  the  Commission's  powers  to  conduct 
investigations  and  impose penalties  in this area, along the  lines of the powers  it  exercises 
in  the  competition  field,  so  that  it  can  enforce  the  legal  framework  effectively.  The 
Amsterdam  European  Council  has also requested the Commission  to make proposals to it 
for  the  setting  up  of  an  efficient  mechanism  for  combating  serious  infringements  of 
Community  law in the field  of free  movement  of goods. 

The  Commission  will  consider  whether  it  is  opportune  to  provide,  if  necessary,  such  a 
mechanism  for  dealing  with  infringements  of the  public  procurement  rules.  It could  also 
consider  having  recourse,  in  appropriate  cases,  to  Article  90,  paragraph  3,  of  the  EC 
Treaty. 

The Commission  is determined to speed up its own  procedures for  dealing 
with infringement  cases. 

However,  these  efforts  also  require  the  co-operation  of  Member  States,  which  should 
respond  to  the  Commission's  requests  within  the  specified  time  limits.  More  generally, 
the  Commission  is  firmly  resolved,  in  all  cases  where  it  proves  necessary,  to  use  the 
procedure  available  under  Article  171  of  the  EC  Treaty,  under  which  the  Commission 

-12-

can request the Court of Justice to impose penalty payments on Member  States which  fail 
to comply with a Decision establishing a breach of the public procurement rules. 

Another  shortcoming  pointed  up  by  certain  contributions  resides  in  the  fact  that  the 
Commission  does not  act  systematically  against  infringements  of the public  procurement 
rules but haphazardly, as and when it receives complaints. 

In  response  to  this  criticism,  the  Commission  undertakes  to  follow  an 
approach, which will be less reactive and more proactive. It will therefore 
first  seek  to  prevent  infringements  by  reinforcing  co-operation  with 
Member States e.g. when they prepare for major events or when they plan 
large 
infrastructure  projects  having  particular  public  procurement 
relevance. In the second place, the Commission will pay special attention 
to particularly serious infringements brought to its knowledge by whatever 
means,  including  the  media;  in  such  cases  it  will  take  the  initiative  in 
launching  proceedings  under  Article  169.  Finally,  when  a  specific  case 
brought  to  its  attention  raises  a  general  problem  of  application,  it  will 
check the situation  in all Member States and  initiate  proceedings  against 
all similar infringements. 

2.2.3 

Independent  authorities 

In  its  Green  Paper,  the  Commission  invited  the  Member  States to  designate  independent 
authorities  specialised  in public  procurement. 

The Commission  is not proposing that new institutions  are set up from  scratch, but  rather 
that  already  existing  bodies,  such  as audit  offices  or  competition  authorities,  be  used  for 
the  purpose.  Without  trying  to  evade  its  responsibilities  as the  guardian  of  Community 
law,  the  Commission  takes  the  view  that  it  cannot  set  itself  up  as  a  kind  of  "super 
enforcement  authority"  for  settling  all  disputes  in the  public  procurement  field.  Neither 
does  it have enough  human and material  resources  to solve all the problems  arising.  The 
aim  of  devolving  the  handling  of  disputes  to  national  authorities  is  to  relieve  the 
Commission  of  some  of  the  caseload  of  disputes  currently  submitted  to  it.  This  would 
enable  it  to  concentrate  on  its  rule-making  tasks  and  on  those  cases  which  have  a 
Community-wide  impact  or  raise  major  questions  of  interpretation,  while  complainants 
would be able to find  solutions to their disputes at national  level. 

The  Commission  therefore  encourages  Member States  to  set  up  or 
designate independent authorities with the task of  identifying  problems of 
interpretation  and  discussing  the  treatment  of  individual  cases.  These 
authorities  would  serve  as  contact  points  for  the  rapid, informal  solution 
of  problems  encountered  in  gaining  access  to  contracts,  and  could  co 
operate  with  each  other  and  with  the  Commission,  in  the  latter  case 
inter alia with a view to producing reliable statistics. 

-13-

•

\. 

These  positive  effects  will  be  further  enhanced  following  the  pilot  project  for  co 
ordination and co-operation  between these authorities  suggested by Denmark and soon to 
be  implemented.11  Under  this  project,  a  supplier  facing  a  problem  with  a  procurement 
procedure  in another  Member  State can contact the independent  authority  in that  country. 
However,  he  can  also  address  himself  to  the  authority  in  his  own  country,  which  would 
then  contact  the  authority  in the Member  State  concerned.  These  contacts  should  enable 
a rapid,  informal  and adequate  solution to be found.  This could contribute to the  creation 
of  a  genuinely  open  European  procurement  market  without  obliging  suppliers  to  go  to 
court. 

2.2.4  Market monitoring 

An  effective  public  procurement  policy  is  feasible  only  if  all  the  parties  involved 
(purchasers,  suppliers  and  public  authorities)  have  sufficient  information  on  the  real 
operation  of  the  market  and  on  the  -  particularly  economic  -  impact  of  the  policies 
pursued. 

Very  little  information  is currently  available.  What  does exist  is too patchy  to  serve  as a 
tool  for  assessing  the  effectiveness  of  current  policy  and  the  economic  benefits  for  the 
main  players.  Member  States  and  contracting  entities  currently  supply  the  statistics 
required  by  the  Directives  and  the  Agreement  on  Government  Procurement  (GPA)  very 
late,  if  at  all.  The  amount  and  complexity  of  the  information  required  goes  some  way 
towards explaining this  situation. 

The  Commission  will  propose  that  these  statistical  requirements  be scaled 
down to the minimum strictly necessary for effectively monitoring the market. 
It will ensure that statistical reporting obligations are complied with. 

In  future,  an  alternative  solution  for  obtaining  these  statistical  data  could  be  based  on 
contract  award  notices  within  the  SIMAP  system.  The  necessary  information  could  be 
gathered  from  these  notices  if  the  format  was  adjusted  and  notices  actually  published. 
The  possibility  of  requiring  price  information  only  on  a  confidential  basis,  enabling  the 
Commission  to aggregate the data, could be  considered. 

The  Commission  insists  on  compliance  with  the  obligation  to  publish 
contract  award  notices  (CANs)  and  will  use  all  necessary  means  at  its 
disposal in order to enforce it.  If the obligation were complied with, it could 
consider abolishing the requirement to supply statistical data. 

Within  the  SIMAP  system  a  market  analysis  tool  will  be  developed  to  present  market 
in  a  user-friendly  manner.  Suppliers  and  purchasers  could  use  this 
information 

11  The  pilot  project  suggested  by  the  Danish  Government  is  supported  by  the  Commission.  It  is  the  first  concrete 
project  following  up  ideas developed  in the  Action  Plan  for  the  Single  Market  under  Strategic  Target  1, Action  2 
(establish  a framework  for  enforcement  and  problem  solving)  and  follows  the  logic  of the  so-called  observatory, 
launched  via the Advisory  Committee  for  Public  Procurement  in  1994. 

-14-

information  to gain  a better  understanding  of the markets they  are working  in.  Such a 
system would significantly  improve transparency of procurement markets. 

In  order  to  pursue  the  series  of  statistical  surveys  in  the  Member  States, 
which  have  so  far  been  carried  out,  by  the  national  statistical  offices  in 
Greece, Portugal and Germany, the Commission invites other Member States 
to volunteer for such a study. 

Bringing together all the information  available, the Commission will define  indicators to 
measure market trends and the impact of public procurement policy over time. 

Alongside these planned actions, the Commission will if necessary carry out 
additional economic studies. 

2.2.5 

Attestation: a guarantee of non-discriminatory procurement 

Bearing  in mind that prevention  is better than cure, the EU set up an attestation  system 
for  purchasers.  Nevertheless, as can be seen from  the contributions to the Green  Paper 
debate, if the system is to be used, it must confer certain benefits on the entity undergoing 
attestation. 

Among these benefits, the Commission is thinking in particular of exemption 
from certain constraints currently  imposed by the Directives, which could be 
seen  as  an  excessive  burden  for  an  entity  that  had  agreed  to  undergo 
attestation. 

Nevertheless, even if an entity were exempted from certain requirements, the 
basic  principles,  such  as  transparency,  non-discrimination  and  equal 
treatment of all suppliers, would still apply. 

2.2.6  Fighting corruption 

The  Commission  in  its  Communication  on  Corruption12  highlights  the  importance  of 
public procurement for an effective  Union-wide policy to the fight against corruption. 

The  Commission  will  explore the  possibility  of  obliging  public  procurement 
entities to enter  into anti-corruption pledges and a corresponding  obligation 
on tenderers to agree that they will not use bribery to obtain a contract. 

See  Commission  Communication  to  the  Council  and  the  European  Parliament  on  A  Union  Policy 
against  Corruption  (COM(97)0J92  -  C4-0273/97). 

-15-

The need  for  a blacklisting  system  has been raised within the  European  Union on at  least 
two  fronts.  Firstly,  the  Commission's  Communication  on  Corruption  mentioned  above 
commits  the  Commission  to  working  on  a  scheme  of  blacklisting  applicable  to  areas 
where  Community  finances  are  at  risk.  Similarly,  the  European  Council  in  June  1997 
for  Combating  Organised  Crime13.  This  contains  a 
adopted  an  Action  Plan 
recommendation  that  Member  States  and  the  Commission  provide  for  the  possibility  of 
exclusion  from  public  tender  procedures  of  an  applicant  who  has  committed  or  is  under 
investigation  or  prosecution  for  having  committed  an  offence  connected  with  organised 
crime. 

The Commission will explore how a blacklisting system could be used as an 
anti-corruption tool. 

2.2.7  Contracts awarded by the Commission 

The  Commission  has  been  criticised  by  other  Community  institutions  (the  Council 
(internal  market)  and  the  Economic  and  Social  Committee)  and  by  economic  operators 
with  regard  not  only  to  its  own  contract  award  procedures  but  also  to  the  contracts  it 
finances  (on the latter, see point 4.6.3 below). 

Other  shortcomings, such as excessive  delays in paying contractors  and failure  to  publish 
indicative  and  contract  award  notices,  as  required  by  the  Directives,  have  also  been 
mentioned. 

The  Commission  is nevertheless  convinced  that considerable  progress  has been  achieved 
in  recent  years,  particularly  in  the  wake  of  the  SEM 200  (Sound  and  Efficient 
Management  200)  programme,  which  is  aimed  at  rationalising  its  procurement  and 
managing  it on a more professional  basis. 

As regards the fight against  corruption  and financial  irregularities concerning  contracts  to 
be  awarded  by  the  Commission,  its  communication  on  "Sound  Financial  Management 
and  Administration  Improving  Action  against  Incompetence,  Financial  Irregularities, 
Fraud and Corruption"14  of November  1997 explicitly  deals with public procurement  and 
announces  a  number  of  measures  to  be  taken  to  improve  its  procedures  for  awarding 
contracts.  In particular,  it has  improved  its internal  administrative  procedures  concerning 
public procurement  and established  an internal early warning  system. 

The  Commission  reaffirms  its  commitment  to  observing  the  same  rules  as 
national  authorities.  The  contract  award  procedures  of  the  Community 
institutions  already  provide  for  the  application  of  the  Council  public 
procurement  directives  on  works,  supplies  and  services.  The  Commission 
proposes  to  add  a  reference  to  the  multilateral  agreement  on  public 
procurement concluded within the framework of the WTO. It undertakes to be 

13  OJC 251 of  15.8.97, page 1 

14  SEC(97) 8198  18/11/97. 

-16-

more  careful  in  complying  with  the  Directives  and  to  tighten  its  payment 
discipline.  The  Commission  has  undertaken  to  include  in  all  its  contracts 
involving  identifiable  deliverables, a clause obliging  payment within 60 days 
of  receipt  of  the  claim  with  interest  in  case  of  delay.  For  contracts  falling 
below the thresholds  laid down in the Directives, it will likewise observe the 
principles of transparency, non-discrimination and equal treatment 

The  Commission  intends  to  explore  the  different  possible  methods  of  re-
enforcing  monitoring of observance of the principles and rules applicable to 
the  award  of  public  contracts,  including  the  designation  of  an  independent 
authority  accessible  to  goods  and  services  providers. This  authority  could 
exercise  monitoring  responsibilities  and other functions, especially  those of 
conciliation and assistance. 

In  the  interests  of  transparency,  Commission  departments  will  make  more 
extensive  use  of  new  IT systems,  in  particular  the  Internet.  They  will  thus 
offer  access  to  much  more  information  than  is  currently  available  via  the 
Official  Journal  and  the  TED  database, thereby  making  it  possible,  among 
other things, to consult tender specifications  on the  Internet and even  print 
them  direct,  so  that  interested  suppliers  can  obtain  these  documents 
forthwith. 

-17-

3  DEVELOPING  A  FAVOURABLE  ENVIRONMENT 
FOR BUSINESSES, AND IN PARTICULAR  S M ES 

3.1  Training, information and measures helping SMEs 

3.1.1  Objective 

The opening-up of public procurement  markets to competition  is a significant  supply-side 
operation.  Eliminating  red  tape  is  of  enormous  economic  importance,  creating  business 
opportunities  for competitive  European suppliers from  nearly all economic sectors. 

The  weakness  of  the  impact  of  the  Community  regime  is  due  in  particular  to  the  low 
response  rate  of  suppliers.  This  is  confirmed  by  the  findings  on  public  procurement 
published  in  the  "The  Single  Market  Review"15.  Moreover,  a  recent  supplier  survey 
revealed  that  an  average  of  only  10%  of  suppliers  answer  calls  for  tenders.  In  this 
connection, many contributions to the Green  Paper, and in particular that of the  European 
Parliament, highlight the disappointing  record of SMEs and their specific  problems. 

An  efficient  public  procurement  policy  needs  to  increase  supplier  participation.  The 
Commission  therefore  proposes  a  set  of  measures  addressing  the  various  aspects  of  the 
problem:  Making  markets  more  transparent  through  better  information;  Increasing 
confidence  in  contract  procedures  by  training  focused  on  professionalism  and  best 
practice; Specific  action to help  SMEs overcome  obstacles to selling to the public  sector; 
Promoting  mutual  recognition  of  qualification  procedures  by  contracting  entities,  thus 
reducing the costs to suppliers of entry to public  procurement. 

3.1.2 

Information 

The  information  given  on  public  procurement  is  a  key  element  in  creating  a  business 
friendly  environment.  Indeed,  low supplier participation may indicate that information  on 
potential public procurement markets must be extended and made more accessible. 

The Commission will therefore exchange the present system of publication 
for  an  Internet  based  solution.  This  will  allow  free  and  easy  access  to 
information essential to  potential contractors, including  purchaser  profiles 
(see  point  3.2)  and  market  monitoring  information  (see  point  2.2.4). 
Commission and Member States need to work together to make information 
on the legal framework in the different Member States and on administrative 
procedures available. The Commission will also draw up interpretative texts 
(see point 2.1.3). 

15  The  Single  Market  Review, Subseries  III: Dismantling of  Barriers, Volume 2: Public  Procurement  (OPOCE  1996). 

-18-

3.1.3  Training and commercial practices ("best practice") 

improve  the  environment 

A  higher  degree  of  professionalism  among  both  purchasers  and  suppliers  could 
significantly 
in  which  public  procurement  takes  place. 
Adequate training is therefore  of the utmost  importance in the opening up of markets, and 
there  is wide  support  for  a Community  initiative for  this purpose. Given the wide  field  to 
be  covered,  the  diversity  of  administrative  cultures  and  training  programmes,  a  training 
policy  will  only  be  effective  with  the  participation  of  Member  States  and  economic  and 
training  actors  at  national,  regional  and  local  levels.  The  Commission,  for  its  part,  will 
develop a framework  for  implementing  an effective  public procurement  training policy  in 
the  Union.  This  policy  will  also  take  into  account  measures  to  integrate  environmental, 
social and consumer protection  objectives. 

The  Commission,  on  the  basis  of  contributions  from  Member  States  and 
other  interested  parties,  will  complete  a  stocktaking  of  existing  training 
needs, best practices, actions and current programmes in this field. 
The Commission will examine the results of the stocktaking exercise with a 
view to developing guidelines on a public procurement training policy. This 
policy  will  make  full  use  of  the  possibilities  offered  by  information 
technology. 

3.1.4  Measures in favour of SMEs 

SMEs have the potential to supply that additional competition, flexibility  and capacity  for 
innovation  essential  to  the  successful  opening  up  of  public  procurement  markets.  Every 
effort  to  make  public  procurement  more  accessible  for  businesses  should  start  off  from 
the  point  of view of the  SME.  While the  Community  regime has enabled  SMEs to  enjoy 
some  success  in  breaking  into  regional  and  national  procurement  markets,  however, 
experience of direct participation in cross-border contracts has remained  disappointing. 

Replies to the  Green  Paper  suggest  many  reasons  for  this failure.  SMEs  face  obstacles  at 
every  stage of the procurement  procedure. SMEs must  surmount  many  problems, such as 
lack  of  information  about  potential  contracts,  inability  to  draw  up  business  plans, 
mismatch  between  the size of the enterprise and the large size of many  contracts,  anxiety 
about  currency 
to  meet  standards,  certification  and 
qualification  requirements.  Other  problems,  such  as delays  in payment,  may  arise  in  the 
post award  stage. 

fluctuations,  and 

the  need 

The Commission will adopt a comprehensive  and concerted approach  in a 
communication  on  SMEs  and  public  procurement.  This  strategy  will,  in 
particular,  develop  the  possibilities  of  improving  access  to  information, 
crucial 
information  and 
communications technology. 

for  SME,  by  consistent  application  of 

-19-

This  approach  will  be  based  particularly  on  an  information  policy  based  on  electronic 
communication,  high  quality  services  provided  by  European-scale  networks  focused  on 
SMEs,  on  better  mutual  recognition  of  qualification  systems,  on  clarification  of  general 
provisions  generally  applicable  to  below  thresholds, on  promoting  co-operation  between 
SMEs and on the conditions for  SMEs participation in large-scale  projects.16 

3.1.5  Qualification  of  suppliers 

Purchasers  must  be  given  the  confidence  to  deal  with  new  and  previously  unknown 
suppliers.  Several Member  States have set up nation-wide qualification  systems, while in 
other  Member  States  individual  contracting  entities  have  created  their  own  qualification 
system. 

The  Commission  sees  an  important  role for qualification  systems, provided 
they do not result in additional barriers for suppliers.  The principle of mutual 
recognition  applies  in this  area: a supplier which  has  been  qualified  in one 
Member State should also be able to use this qualification  in others, without 
having to be qualified again or at least without  having to go through the full 
qualification  procedure  in other Member States. The Commission will use all 
the  means available to  it, in particular  the powers  conferred  on it by Article 
169, to ensure that the  principle  of mutual recognition  is respected and that 
qualification systems are used to open up markets rather than to create new 
barriers. 

In  order  to  make  different  national  qualification  systems  in  the  construction  industry 
more  comparable,  the  Commission  has  given  a  mandate  to  the  standardisation  bodies 
CEN  and  CENELEC  to  develop  a  European  standard  for  qualification  of  construction 
enterprises  for  contracts  covered  by  Directive 93/37/EEC.  This  standard,  which  the 
Commission  awaits,  will  ensure  a  balance  between  the  legitimate  requirements  of 
contracting  authorities  to  have  certain  information  at  their  disposal  and  the  wish  of 
suppliers  to see administrative requirements limited to a strict  minimum. 

The Commission will also consider in which other areas a similar  process of 
harmonisation of qualification systems can be undertaken. 

3.2  Towards efficient electronic  procurement 

3.2.1  Preparing  the EU to meet the exciting  new challenge  of electronic  commerce 

One  of  the  most  exciting  and  challenging  developments  for  the  future  of  public 
procurement  is the emergence  of the new Information  and  Communication  Technologies 
(ICTs).  These technologies  allow the current procedures to run more smoothly  and  could 

16  See also  points  2.1.3,  3.1.2.,  3.1.3., 3.1.5., 3.2. of this communication  and  OJ  C 285  of 20.9.1997, p.  17. For  the 

European  Economic  Interest  Grouping  (E.E.I.G.). 

-20-

enable  a  more  efficient  purchasing  process,  reducing  the  need  for  detailed  regulation. 
They  also offer  the best possibility  yet to ensure meaningful  participation  of  SMEs in the 
procurement  process.  The  Commission  and  the  Member  States  are  co-ordinating  their 
efforts  in  this  regard  within  the  SIMAP  project,  which  has  been  funded  through  the 
Commission's  IDA project17. 

On  12th  December  1997,  the  Commission  proposed  a  second  phase  of  the  IDA 
programme  to the EP and the Council. In this second phase, the Commission  proposes  to 
enhance and extend the SIMAP-project to comprise the entire procurement process. 

The  Commission  will ensure that the tools  and systems developed through 
its SIMAP Information System will be compatible with and not duplicate tools 
already  developed  by  the  private  sector  The  Commission  will  furthermore 
ensure that all the requirements of the Member States are taken into account 
in the SIMAP framework. 

The  SIMAP  system  for  electronic  creation  and  submission  of  procurement  notices  has 
been  tested  through  pilot  projects  with  a  limited  number  of  purchasers  and  suppliers 
throughout  the  Community  and  the  EEA  and  will  now  be  made  available  to  all 
contracting entities. 

The  Commission  will  provide  the  possibility  to  all  contracting  entities  to 
electronically  prepare  and  submit  their  notices  for  publication  through 
procurement transparency system operated by the EU institutions.  Several 
options, including electronic mail and the Internet, will be provided. 

The software  developed through  Simap has been found  to result in substantial  savings  for 
the  EU  taxpayer  and  deliver  better  information  to  suppliers  through  more  consistently 
accurate  notices.  However,  costs to  the taxpayer  will  remain  unacceptably  high  so  long 
as contracting  entities continue to submit poor-quality  notices, which do not comply  with 
the legal obligations imposed by the Directives.  Finally  several comments  stress the high 
costs  of  TED  and  the  difficulties  of  using  the  paper  OJ  "S"  series  on  account  of  the 
increasing number of notices published. 

The Commission will consider incentives to encourage contracting entities 
to  use these  electronic  means  of  submission. Currently  a  notice  must  be 
published within twelve days of being sent.  Where electronic mail and the 
Internet are used to provide instant publication the Commission  intends to 
propose to reduce the overall length of the procedure, for example from 52 
to 40-45 days (in an open procedure). 

The  Commission  will  continue  to  publish  notices  without  cost  to  the 
procuring  entity  only  when  it  submits  a  notice  which  complies  with  the 

17  Interchange of Data between Administrations 

-21-

formai  requirements  of the  Directives,  includes  a reference  to the  CPV and 
follows  standard  forms  or  model  notices. 
In  other  cases  the  costs  of 
ensuring  notices  meet  those  requirements  will  be  recovered  from  the 
contracting entity concerned. 

The  Commission  has  decided  to  discontinue  the  publication  of  the  paper 
version  of the Supplement to the  Official  Journal from July  1938.  It will be 
replaced by the CD-ROM version already being available. Moreover, the TED 
database will be made available to all users for free over the Internet. 

For ease of use suppliers  should be able to find  all notices in one single location.  In order 
to  prepare  a  bid,  however,  suppliers  need  more  information  than  that  provided  in  the 
notice.  They  need  in particular  the tender  documents  themselves.  The  new  ICTs, and  in 
particular  the  emergence  of the  Internet,  offer  important  new opportunities  in this  regard. 
Another  basic  characteristic  of this development  will  be  to  make  it easier than  at  present 
to publish tender notices  in all the Community  languages. 

The Commission  will encourage the  publication of all tender documents, in 
particular in open procedures, on the Internet.  It invites contracting  entities 
who  already  have  a  site  ("homepage")  on  the  Internet,  to  make  tender 
documents  available  on a "purchaser profile" on their homepage.  3n  order 
to  promote  the  establishment  of  such  purchaser  profiles  the  Commission 
will make mode! software available over its SIMAP homepage. 

3.2.2  The way ahead: pan-European  electronic  procurement 

Although  the  Commission  has  a clear  role  in  the  collection  and  dissemination  of  public 
procurement  notices, the development  of fully-fledged  electronic  procurement  systems  is 
not  its direct  responsibility. 

The  Commission  calls  for  the  active  participation  of  interested  purchasers 
and suppliers, companies active in the ICT sector and others, including Euro 
Info  Centers,  in  order  to  stimulate  the  development  of  a  pan-European 
electronic  procurement  environment  in  which  a  substantial  number,  for 
example  25%, of  all  procurement  transactions  takes  place  electronically  by 
the year 2003. 

Member  States  also  have  a  very  important  role  to  play  in  promoting  electronic 
procurement.  The  highest  potential  for  savings  will  probably  exist  for  relatively  small 
purchases  of  readily  available,  "off-the-shelf  products.  Such  purchases  often  remain 
below  the threshold  values laid down  in the Directives. 

-22-

The Commission will seek a commitment from the Member States to ensure 
mutual compatibility and interoperability  of electronic procurement systems 
which  they  set  up  for  below  threshold  purchases.  To  facilitate  such 
compatibility  it  will  publish  any  necessary  specifications  on  the  SIMAP 
homepage. 

Pilot projects  will be identified  which use electronic mail, electronic data interchange  and 
Internet  technology  to  conduct  procurement  activities.  These  projects  will,  of  course, 
need  to  respect  the  principles  of  non-discrimination  and  transparency.  Specific  attention 
will  be  given  to  the  use  of  electronic  catalogues,  virtual  procurement  networks  and  the 
promotion  of best practice through procurement  clubs. 

The  Commission  will  come  forward  with  recommendations  for  further 
measures to  be taken  in modifying  the  legal regime, developing  standards 
or specifications  or  establishing  a regulatory  framework.  The  Commission 
will ensure that the  requirements  of electronic  procurement  are taken  into 
account in any proposals for standards or legislation on digital signatures. 

The  Commission  recognises  that  electronic  procurement  needs  to  be  seen  in  the  context 
of  globalisation. 
It  will  increasingly  play  an  important  role  in  opening-up  markets 
outside the EU  (see also  point  4.4).  Bilateral  contacts  have  already  started  with  some  of 
our major  trading partners. 

The Commission will seek agreement with its international partners in the WTO 
in order to simplify and harmonise the exchange of information on both public 
procurement opportunities and statistics in the electronic procurement context. 

3.2.3  Measures  proposed 

The  majority  of  comments  received  highlighted  the  need  to  allow  the  widespread  use  of 
Information  and  Communication  Technologies  (ICT).  Recent  amendments  to  the 
Directives  already  allow  the  use  of  electronic  mail  in  some  procurement  procedures. 
Further  changes  are  needed,  however,  to  allow  its  use  e-mail  for  all  exchanges  of 
information  specified  in the Directives (see also point 2.1.2). 

The  Commission  will  propose  amendments  to  the  Directives  to  put  electronic 
means of exchanging information on an equal footing with other means. 

The  hardly  predictable  development  of  electronic  procurement  makes  it  difficult  to 
modify  the  Directives  to  reflect  the  latest  state  of  the  art.  The  Commission  intends  to 
encourage  electronic  procurement  through  pilot projects, before  proposing  major  changes 

-23-

to  the  regime.  These  pilots  may  need  waivers  from  certain  provisions  in  the  Directives 
for  the  duration  of  a pilot.  Where  pilots  demonstrate  their  value,  formal  changes  of  the 
Directives  can  be  contemplated  to  allow  for  their  general  and  more  permanent 
application.  Obviously  the  underlying  principles  (non-discrimination/equal  treatment, 
transparency  etc.)  should  not  be jeopardised  by  such  waivers  and  should  at  all  times  be 
guaranteed. 

The  Commission  will  allow  as  soon  as  possible  the  running  of  pilot  projects  in 
order  to  test  specific  electronic  procurement  procedures.  To  this  effect  it  will 
also take the  necessary  legislative  initiatives to allow such  projects to take  place 
as  soon  as  possible  while  respecting  the  principles  of  the  public  procurement 
regime.  The  details  of these  initiatives will  be determined  after  discussions  with 
all interested  parties, including  in particular the  Member  States who should  allow 
similar  projects  to  take  place  for  below-th res hold  purchases.  The  Commission 
will  continue  to  take  an  active  part  in  related  discussions  which  are  currently 
taking  place  in the WTO  committees  on  modifying  the  Government  Procurement 
Agreement (see point 4.6.2). 

4  COMPLEMENTING  AND ACHIEVING SYNERGY  WITH 

OTHER COMMUNITY  POLICIES 

4.1  Objective 

The  Communities'  public  procurement  policy  integrates  Member  States'  procurement 
markets  into the  single market  putting  in place a market  economy  with  free  competition. 
The decision  in favour  of "best value for  money" principle  is more and more heard  in the 
area of defence  procurement.  Budgetary  pressure  and the need for  a serious  restructuring 
of the supply  side in this sector have fostered  a debate on how to extend the principles  of 
competitive procurement to defence  procurement. 

The  best  value  for  money  objective  in  public  procurement  does  not  exclude  taking 
environmental,  social  and  consumer  protection  considerations  into  account.  Nor  does  it 
require  changing  the present  rules. It is, however,  necessary  to lay down  clear  guidelines 
to  purchasers  on  how  they  how  environmental  and  social  criteria  can  be  taken  into 
account  in  their  contract  award  procedures,  while  complying  with  Community  law, 
particularly  as  regards  transparency  and  non-discrimination  and  the  public  procurement 
rules.  Such  guidelines  are  necessary  if  European  suppliers  are to  be  placed  on  an  equal 
footing. 

Public  procurement  contracts  in  third  countries  are  of  significant  interest  for  European 
firms,  especially  when  it  comes  to  infrastructure  projects.  Opening  these  market 
opportunities for our European  suppliers is therefore  an integral part of the Communities' 
public  procurement  policy.  In  order  to  allow  European  firms  to  win  procurement 
contracts  outside  the  Union  and  the  European  Economic  Area,  the  same  objectives  as 
followed  for inside the Union need to be pursued vis à vis our trading partners. 

4.2  Defence 

In  its recent  communication  to the Council, the European  Parliament,  the  Economic  and 
Social  Committee  and  the  Committee  of  the  Regions  entitled  Implementing  European 
Union Strategy  on Defence-related  Industries™, the Commission  announced  measures  in 
defence  procurement,  following  the appropriate procedures  in accordance with Article  M 
of the Treaty  on European  Union, to  lay down binding principles, rules  and  mechanisms 
for  transparency  and  non-discrimination  in  procurement,  taking  the  current  Community 
public procurement rules as a model. 

The  rules  that  will  apply  to  procurement  of  defence  equipment  will  contribute 
substantially  to the creation of a competitive defence  technological  and industrial base. 

COM(97) 583 final,  4.12.1997. 

-25-

The framework  should make provision for competitive tendering whenever  feasible. 

Furthermore,  it  must  favour  the  maintenance  and  development  of  the  fundamental 
industrial  capabilities  and  key technologies  at European  level. In addition,  the rules  must 
guarantee  security  of supply, while enabling a progressive elimination of  over-capacity. 

To  this  end,  taking  into  account  the  need  to  build  broad  support  in  this 
matter, it is necessary to establish an appropriate set of principles, rules and 
mechanisms  on  procurement  by  the  defence  sector.  In  order  to  take  into 
account the specificity  of the defence sector, and  in particular  the  need for 
confidentiality  and  security  of  supplies,  an  appropriate  level  of  flexibility 
should be envisaged where necessary. 

For this purpose, materials for the defence  sector could be divided  into three categories: 

•  Products  intended  for  the  armed  forces  but  not  for  military  use, and therefore  covered 
neither  by  Article  223  EC  nor  by  Article  2 of  Directive  93/36/EEC  (markets  declared 
secret,  protection  of  vital  interests,  national  security,  etc.).  As  these  products  are 
already  subject  to  the  Community  public  procurement  rules,  the  Commission  will 
specify,  where  appropriate  and  in  the  most  suitable  form,  the  conditions  for  the 
application of these rules; 

•  Products  intended  for  the  armed  forces  and  for  military  use,  but  not  constituting 
"highly  sensitive  defence  equipment".  The  Commission  could  work  out  a  fairly 
flexible  set  of  rules,  while  respecting  the  principles  of  transparency  and  non 
discrimination,  inspired by the existing Community public procurement rules; 

•  Highly  sensitive  equipment  covered  by  the  scope  of  Article  223  EC.  These  products 
could  be  exempted  from  the  rules  referred  to  above,  when  safety  or  the  protection  of 
in  question  so  requires.  A  notification 
vital  national  interests  of  the  country 
mechanism  for  this purpose  should  be provided  in order to ensure  a degree  of  control 
and  transparency. 

4.3  Protection of the environment 

The  environment  is  becoming  an  increasingly  important  component  of  any  modern 
economic  policy.  The  Amsterdam  Treaty  fully  recognises  this  by  raising  environmental 
objectives  to  one  of  the  Union's  priorities.  As  confirmed  by  the  contributions  received, 
more  and  more  public  purchasers  wish  to  buy  products  and  services,  which  are 
environmentally  friendly.  Several  Member  States  are  already  pursuing  an  active  policy. 
OECD  has  adopted  a recommendation  on "Greening  Public  Procurement"19.  For  its  part, 
its 
the  Commission 
administration,  and, in particular, it's purchasing. 

for  environmental  protection 

implementing  a  plan 

in 

is 

19  Recommendation  of  the  Council  on  Improving  the  Environmental  Performance  of  Governments, 

adopted  20.2.1996. 

-26-

The  Commission  re-emphasises  that  Community  law,  and  the  public  procurement 
directives  in  particular,  offer  many  possibilities  of  taking  environmental  protection  into 
account  in public purchasing. The Commission recalls the existing possibilities  below. 

• 

In general, any  administration  which  so wishes can, in defining  the goods or  services 
which  it intends to purchase, choose the products  and  services  which  correspond  with 
its pre-occupations  for the protection of the environment.  The measures taken  must, of 
course,  comply  with  the  rules  and  principles  of  the  Treaty,  particularly  that  of  non 
discrimination. 

•  The  rules  of  the  public  procurement  directives  allow,  in  certain  instances,  the 

exclusion of candidates who are in breach of national environmental  legislation. 

•  Purchasing  organisations  can  draw  up  technical  specifications  concerning 

the 
characteristics  of  works,  supplies  and  services,  which  are  the  object  of  public 
procurement,  which  take  account  of  environmental  values.  They  can  from  now  on 
encourage  the  development  of  a positive  approach  by  companies  to  the  environment, 
in  accepting  tenders  offering  products,  which  meet  the  requirements,  defined  in  the 
specifications. 

•  The directives allow the inclusion  of the objective  of protection  of the environment  in 
the  criteria  of  selection  of  candidates  in  so  far  as  these  criteria  are  aimed  at  testing 
their economic, financial  and technical  capacity. 

•  As  regards  the  award  of  contracts,  environmental  elements  can  serve  to  identify  "the 
most  economically  advantageous  offer",  in  cases  where  these  elements  imply  an 
economic  advantage  for  the  purchasing  entity,  attributable  to  the  product  or  service 
which  is  the  object  of  the  procurement.  In  evaluating  tenders,  a  purchasing 
organisation  can,  for  example,  take  account  of  costs  of  maintenance,  treatment  of 
waste or re-cycling. 

•  A  contracting  authority  can  require  the  supplier,  whose  tender  has  been  accepted,  that 
the  deliverable,  which  is  the  object  of  the  contract,  be  provided  with  due  regard  to 
certain  constraints  aimed  at  safeguarding  the  environment.  These  conditions  of 
execution must be known in advance by all the tenderers. 

In  general,  the  Commission  reiterates  that  the  object  of  public  procurement  remains 
essentially  economic  and  that  it  is  of  the  utmost  importance  to  determine,  for  each 
procurement,  the  environmental  factors  linked  to the  goods  and  services  required,  which 
can, in consequence, be taken into consideration in a contract award procedure. 

The  possibilities  offered  by  the  existing  regime,  which  have  just  been 
spelled  out  above,  will  be  developed  and  clarified 
in  a  specific 
interpretative  document  in  order  to  enable  the  optimum  consideration  of 
environmental  protection  in  public  procurement  (see  point  2.1.3).  in  this 
exercise, the  Commission  will,  in  particular  examine  how far  it  is  possible 
to  refer  in  technical  specifications  to  the  European  eco-label  or  even  to 
national  eco-labels.  In  the  same  way,  it  will  analyse  the  question  of 
whether  purchasing  entities  can  require  suppliers  to  have  an  eco-audit 
system, such as EMAS or ISO standard  14001. 

-27-

The  Commission  cannot,  however,  propose  solutions  in  an  interpretative  document, 
which  go  beyond  the  existing  public  procurement  regime.  These  would  require 
amendments to the  legislation. 

In order to promote those practices which give the best results and respect 
the  principles  stated  above  concerning  the  integration  of  environmental 
aspects in public  procurement, the Commission  undertakes, with interested 
Member  States  and  the  private  sector  to  develop  initiatives  which  would 
make it easier to define environmental concerns in the tender documents in a 
balanced manner. 

4.4  Public  procurement and social  aspects 

Social  policy  is of the  greatest  importance  for  the  European  Union.  It aims, among  other 
things, at  promoting  a high  level  of  employment  and  social  protection.  Furthermore,  the 
Amsterdam  Treaty  lays  down  as  a  priority  the  elimination  of  inequality  and  the 
promotion  of  equality  between  men  and  women  in  all  the  policies  and  activities  of  the 
European Union and requires it to combat every type of discrimination. 

The  Commission  has  already  indicated  in  its  Green  Paper  the  conditions  under  which 
social  criteria can play  a role  in contract  award  procedures, particularly  the possibility  of 
including the obligation to comply with existing social  legislation, especially  Community 
social  legislation  and,  where  appropriate,  that  emerging  from  the  International  Labour 
Organisation  (ILO). 

There  is  a  range  of  possibilities  for  public  administration  to  take  the  pursuit  of  social 
objectives  into consideration in their purchasing: 

• 

The rules of the public procurement directives allow the exclusion  of candidates  who 
breach  national  social  legislation,  including  those  relevant  to  the  promotion  of 
equality of opportunities. 

•  A  second  possibility  is to  lay  down  as  a condition  of  execution  of  public  contracts, 
compliance  with  obligations  of  a  social  character,  aimed  for  example  at  promoting 
the  employment  of  women  or  encouraging  the  protection  of  certain  disadvantaged 
groups.  Of  course,  only  those  conditions  of  execution  are  authorised  which  do  not 
discriminate,  directly  or  indirectly,  against  tenderers  from  other  Member  States. 
Moreover,  indicating  these  conditions  in the  tender  notice  or  the  specification  must 
ensure sufficient  transparency. 

Contracting  authorities and entities can therefore  be called upon to implement the various 
aspects of social  policy  in awarding  contracts, public purchases  in practice  constituting  a 
significant  means of influencing  the behaviour of economic operators. One can cite, as an 
example  of  this  situation,  legal  obligations  to  protect  employment  and  working 
conditions,  which  must  be  enforced  on  the  site  where  a  public  works  contract  is  being 
carried out. Yet again, there are the so-called "positive actions", that is the use of a public 
contract as a means of achieving the objective  sought, for  example, establishing  a captive 

-28-

market  for  a sheltered  workshop, which  could  not reasonably  be expected  to  stand  up to 
competition  from  classic commercial companies with a normal level of productivity. 

As  in the  case  of  the  environment,  the  Commission  intends  to  clarify  the 
principles,  which  can  be  applied  to  allow  social  factors  to  be  taken  into 
account. 

It re-iterates that public contracts can be a means of influencing the actions 
of economic operators, providing the limits laid down by Community law are 
respected. In this context the Commission encourages the Member States to 
use  their  procurement  powers  to  pursue  the  social  objectives  mentioned 
above. The Commission will act similarly in its own procurement activity. 

4.5  Consumer protection 

The  improvement  of  market  access  and  transparency  through  the  implementation  of  an 
effective  procurement  policy  will  bring  significant  benefit  to consumers,  including  better 
quality  and  more  economically  efficient  services  and  infrastructures.  It  is  therefore 
necessary  to take  greater  account  of consumer policy  in the Union's  procurement  policy, 
especially  with  regard  to  the  promotion  of  transparency  and  dialogue  with  consumer 
organisations. 

4.6 

International aspects 

4.6.1  Opening  up  third-country  public  procurement  markets  for  European 

companies 

The  Government  Procurement  Agreement  (GPA), which was  last amended  in  1994,  lays 
down  disciplines  between  a  limited  number  of  countries  including  the  world's  major 
trading  blocks.  These  disciplines  cover  the  traditional  national  treatment  and  most 
favoured  nation  principles  but  also  contain  precise  requirements  with  regard  to 
procurement  procedures,  akin  to  those  in  the  Directives.  Thus  the  GPA  affects  the 
regulatory  regimes of the adhering countries, including the EU, in a far-reaching  manner. 

The  Commission  will  continue  to  take  all  steps  necessary  to  ensure  that  the  legal 
instruments creating opportunities for EU companies are effectively  complied  with. 

On the multilateral  front,  it will seek to further  open up third  country  public  procurement 
world  wide,  with  a  view  to  eliminating  those  barriers  to  trade,  which  are  harmful  to 
European interests.  The EU's final objective  is to obtain multilateral  adherence to a code 
on  procurement  though  its  inclusion  in  the  WTO  single  undertaking.  The  work 
undertaken  in  the  WTO,  such  as  the  review  of  the  GPA,  the  negotiations  on  public 
procurement of services within the GATS and the working group on transparency  rules in 
government  procurement,  should  help  to  achieve  this  objective.  In  addition,  there  are 
ongoing processes in other fora,  such as the OECD or Uncitral. 

-29-

On  the  bilateral  front,  the  Commission  will  continue  its  efforts  -o open-up  third  country 
markets  by  concluding  bilateral  agreements  as  an  alternative  or  as  a  complement  to  its 
multilateral  policy. 

Electronic procurement  is becoming  increasingly  widespread  and will be one of the main 
aspects of our external policy  in procurement.  It is already  one of the key aspects, which 
are  being  discussed  at  multilateral  level,  in  particular  in  the  WTO's  GPA  and 
Transparency  Groups.  The  use  of  ICTs  can  indeed  play  a  major  role  in  achieving  real 
and  meaningful  transparency  of  procurement  world-wide.  But  the  Commission  sees  its 
task  at  the  multilateral  level  first  and  foremost  as  ensuring  that  the  EU's  international 
commitments  are consistent  with its internal  policy on electronic procurement  so that  the 
development  of  the  latter  is  not  hindered.  In  addition,  it  will,  as  indicated  in  point  32 
above, pursue these matters bilaterally with its major trading partners. 

The  Commission  intends  to  actively  participate  in these fora  in  order  to 
create  the  right  conditions  to  allow  European  Industry  to  enhance 
competitiveness and maximise commercial opportunities. 

It is also the Commission's intention to ensure that rules and practices at 
international level with respect to the use of information technology in the 
field of public  procurement are consistent with its own internal policy on 
the matter. 

4.6.2  Integrating  neighbouring  economies  into  the  Union's  public 

procurement policy 

In some situations our relations in the field of public procurement  with third countries  go 
beyond  the trade and even the regulatory  aspects. This relates  in particular to the  Central 
and  Eastern  European  Countries  (involved  in  the  pre-accession  process)  and  the 
Mediterranean  Countries.  Market  opening  is  not  the  main  objective  in  this  context,  but 
rather  a  tool  to  improve  the  economic  situation  of  these  countries.  With  regard  to  the 
CEECs,  the  adoption  of  the  acquis  communautaire  is  also  part  of  the  AEU's  current 
policy.  Asymmetric  liberalisation  and  the  development  of  comprehensive  technical 
assistance programmes should remain the basis of the AEU's future  policy in this area, in 
particular with respect to the Mediterranean countries. 

The  Commission  is  preparing  "Road  Maps"  adapted  to  the  specific 
situation  of  each  of  the  candidates  for  accession  which  will  set  out 
priorities and actions in order to help them in their efforts to take over the 
acquis.  The  Commission  will  address  this  issue  in  a communication  on 
the  single  market  and  the  Mediterranean  area  further  to  the  Barcelona 
Declaration, which aims at establishing a Free Trade Area. 

4.6.3  Ensuring efficiency in  the award of  contracts financed by  the EU 

within the context of external aid 

The  Commission 
in  the 
management of the Community's  financial  resources. In this respect, the responsibility  of 

is  concerned  about  achieving  economy  and  efficiency 

-30-

the Commission  includes not only contracts awarded  by the Commission  itself (see  point 
2.2.6 above), but also contracts financed  by EU funds  in the context of external aid. 

On the one hand, it is justified  in insisting on ensuring a certain European visibility  when 
awarding  contracts  financed  by  the  EU  funds  in the  context  of  the  external  aid.  On  the 
other  hand,  the  Commission  believes  that  countries  receiving  EU  funds  need  to  achieve 
economy  and  efficiency  in  their  public  sector  operations,  and  should  also  respect  the 
principles of transparency  and accountability  in public  administration. 

To  achieve  these  objectives,  it  is necessary  to  apply  best  practice  and  best  management 
principles based on competitive  procurement  in the award procedures. Economic  benefits 
for the recipient  countries arise from  the use of sound  procurement  policies and  practices 
(such  as  value  for  money,  improved  competitiveness  of  local  industry,  increased 
efficiency  in public administration, more foreign  investment etc.). 

Joining the WTO Agreement  on Government  Procurement,  which forms  a legal  basis  for 
open and competitive  public procurement  on an international  basis, would  be a  desirable 
objective  in  this  respect.  The  Commission  is  nevertheless  aware  that  it  will  be  difficult 
for  most  of  the  countries  receiving  EU  funds  to  join  this  agreement  or  even  adopt 
national  procurement  rules  based  on  competitive  tendering  at  this  stage,  since  these 
countries  may  be  economies  in  transition,  developing  countries  or  even  least  developed 
countries. 

As  a  result,  the  Commission  will  continue  to  see  to  it  that  contracts 
financed from Community  resources in the framework  of external aid are 
awarded in a competitive manner by the recipient countries by respecting 
the relevant EU rules governing this matter, as well as those established 
within the framework of bilateral or regional agreements concluded by the 
European  Union.  In this  regard, the  Commission  has already  presented 
proposals  in  order  to  harmonise  the  different  rules  and  procedures 
presently  used  for  awarding  certain  contracts  financed  by  the  EU 
resources. 

In  order  to  improve  the  protection  of  the  financial  interests  of  the  Community,  the 
Commission  has  improved  the  legal  framework  regarding  Structural  Funds  by  adopting 
Regulation  no.  2064/9720,  which  will  also  enable  better  control  of  public  procurement 
contracts  awarded  by  national  authorities  but  co-financed  on  the  Communities'  budget, 
which will help in fighting  corruption and avoiding  irregularities. 

20 

JOL  No.290of23.10.1997. 

-3*-

ANNEX 

STATUS OF IMPLEMENTATION OF THE PUBLIC PROCUREMENT 
DIRECTIVES 

DIRECTIVES 

DK 

89/440/EEC 
Works  (18.7.1989) 
In  force  since  19.7.1990 
GR,  E,  P :  1.3.1992 
AT,  FF, S E:  1.1.1994 
replaced  by  93/37/EEC 
88/295/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,  FF. 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,  FF. 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,  FÎ,  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 

-32-

ANNEX 2 

TIME TABLE 

PRINCIPAL  MEASURES  TO BE  ADOPTED 

Legislative package making some adjustments  to the 
legal framework  as regards Directive 93/38/EEC, 
competitive  dialogue procedure, framework  contracts, 
concessions. (See point 2.1.2.) 

ADOPTION  BY  THE 
COMMISSION 

1998 

Implementation  of Article  8 of Directive  93/38/EEC 

Immediately 

Communications  and interpretative documents  (2.1.3.) 

Communication 
associated  with 
(2.1.2.4.) 

concessions 

on 
trans-european  networks 

and 

problems 
(TENs) 

2. semester  1998 to 2. 
semester  1999 

2. quarter  1998 

Reflection  and discussion  on questions connected  with 
various forms  of public-private partnership  (2.1.2.4.) 

Consolidation  of the classic directives  (2.1.3.) 

2001 

Improvement  of procedures of supervision at 
Community  level  (2.2.2.) 

Launching  of measures to encourage the setting up or 
designation of independent authorities  (2.2.3.) 

Improvement  of the Commission's  contracting 
procedures (not requiring legal changes) (2.2.7.) 

Immediately 

Immediately 

Immediately 

Developing a policy for public procurement  training 
(3.1.3.) 

2. semester  1998 

Communication  on SMEs and public  procurement 
(3.1.4.) 

2. semester  1998 

Support for pilot operations on electronic  tendering 
(3.2.2.) 

2. semester  1998 

Establishment  of an appropriate  set of principles, rules 
and mechanisms  on procurement by the defence  sector 
(4.2) 

1998 

-33-

ISSN 0254-1475 

COM(98) 143 final 

DOCUMENTS 

EN 

10  09  08  02 

Catalogue  number  :  CB-CO-98-162-EN-C 

ISBN  92-78-32054-4 

Office  for  Official  Publications of the European  Communities 

L-2985  Luxembourg 

3"1