Opinion of the Committee of the Regions on:the Proposal for a Directive of the European Parliament and of the Council on the coordination of procedures for the award of public supply contracts, public service contracts and public works contracts, andthe Proposal for a Directive of the European Parliament and of the Council coordinating the procurement procedures of entities operating in the water, energy and transport sectors
Date: 2001-05-16
Institutions: European Committee of the Regions
Subjects: award of contract, electronic mail, provision of services, public contract, works contract

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Opinion of the Committee of the Regions on:

— the ‘Proposal for a Directive of the European Parliament and of the Council on the
coordination of procedures for the award of public supply contracts, public service contracts
and public works contracts’, and

— the ‘Proposal for a Directive of the European Parliament and of the Council coordinating the
procurement procedures of entities operating in the water, energy and transport sectors’

(2001/C 144/08)

THE COMMITTEE OF THE REGIONS,

having regard to Proposal for a Directive of the European Parliament and of the Council on the
coordination of procedures for the award of public supply contracts, public service contracts and public
works contracts and the Proposal for a Directive of the European Parliament and of the Council
coordinating the procurement procedures of entities operating in the water, energy and transport sectors
[COM(2000) 275 final — 2000/0115 (COD) and COM(2000) 276 final — 2000/0117 (COD)];

having regard to the decision of the Council on 8 September 2000, under the first paragraph of
Article 265 of the Treaty establishing the European Community, to consult it on this matter;

having regard to the decision taken by its Bureau on 2 June 1999, to draw up an opinion on this matter
and to instruct Commission 6 for Employment, Economic Policy, Single Market, Industry and SMEs to
undertake the preparatory work;

having regard to the Commission’s Communication on Public Procurement in the European Union
(COM(98) 143 final);

having regard to its opinion on the Commission’s Communication on Public Procurement in the
European Union (CdR 108/1998 fin) (1);

having regard to the Commission’s Green Paper on Public Procurement in the European Union: Exploring
the Way Forward (COM(96) 583 final);

having regard to its opinion on the Green Paper on public procurement in the European Union: Exploring
the way forward (CdR 81/1997 fin) (2);

having regard to the decision of its President of 26 October 2000 to appoint Ms Segersten-Larsson as
rapporteur general to draw up an opinion on this subject, in accordance with Rule 40.2 of the Rules of
Procedure of the Committee of the Regions;

having regard to a number of relevant European Court of Justice rulings, such as the judgment of the
Court of Justice of 26 September 2000 in case C-225/98, the Commission versus France, for failure to
fulfil its obligations under Council Directive 71/305/EEC of 26 July 1971, as amended by Council
Directive 89/440/EEC of 18 July 1989 and Council Directive 93/37/EEC of 14 June 1993, concerning
various procedures for the award of public works contracts for the construction and maintenance of
school buildings;

having regard to the draft opinion (CdR 312/2000 rev. 1), drawn up by the general rapporteur
Ms Segersten-Larsson, S-EPP,

adopted the following opinion at its 36th plenary session, held on 13 and 14 December 2000 (meeting
of 13 December).

(1) OJ C 373, 2.12.1998, p. 13.
(2) OJ C 244, 11.8.1997, p. 28.

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1. Views of the Committee of the Regions

1.1.
The Committee of the Regions (COR) welcomes the
fact that the Commission has taken on board the criticism of
the unnecessarily bureaucratic nature and application of
the procurement rules, and the Commission’s intentions to
emphasise increased flexibility, modernisation and simplifi-
cation.

The COR endorses the idea of merging the three
1.2.
standard directives into a single directive. The readability of
the Directive has been simplified considerably by introducing
contents pages and intermediate headings in the texts. This is
a positive development.

limits there are areas in which the COR wishes to see the
directive go further. The Committee feels that it is particularly
important to address all aspects of electronic procurement as
this is a fast changing field and the situation in 2002 when the
directive is implemented will be very different to today.

Specifically,

2.1.2.
the COR urges the Commission to
include provisions explaining how the placing of orders
through electronic catalogues (online ‘marketplaces’ or ‘shop-
ping malls’) should be treated under the directive. This should
be closely linked to the provisions on framework agreements,
which should be revised in accordance with the COR’s
suggestions below.

1.3.
It is also positive that the proposal would increase
opportunities for electronic trade, and this is entirely in line
with what the COR has proposed in the past.

2.2. New rules on particularly complex procurement contracts

It quite rightly includes measures to discourage organ-

1.4.
ised crime in public procurement.

The COR also welcomes the fact that the telecommuni-

1.5.
cations sector is exempted from the Utilities Directive.

2.2.1.
The COR earlier warmly welcomed the Commission’s
proposal to introduce more flexible forms of procurement,
particularly procurement of complicated equipment and simi-
lar contracts. In its Opinion on the Green Paper (point 2.2.13)
the COR said that
‘provisions on negotiated procedures
similar to those of those of the Utilities Directive should be
incorporated into other directives’.

1.6.
However, the COR feels that the Commission has
sometimes lost its way in its proposals and that, as presented,
they lack certain elements. Unfortunately, the COR also thinks
that some of the proposals would be counter-productive.

1.7.
The COR considers that the Commission’s plans to
address a number of important topics including environmental
and social considerations in procurement
in non-binding
interpretative documents are not appropriate and wishes to
see these important topics properly addressed in the directives.

1.8.
The COR considers that the proposed Directive must
state explicitly that it is possible for contracting bodies to use
social or environmental considerations as award criteria, and
that these must be mentioned expressly in the invitation to
tender. Purely economic criteria should not be the only ones
to determine the best and most advantageous tender.

The COR understands that the new procedure meets
2.2.2.
the specific requirements of some Member States whose
contracting authorities are engaged in public-private partner-
ships (PPP) projects on a large scale. However the COR takes
the view that the Commission’s proposals are not sufficiently
far reaching because the procedure is neither sufficiently
flexible nor generally accessible. Procurement of services is a
field which generally requires much contact between buyers
and sellers throughout the procurement process. This is not
an exceptional requirement, and the present rules are far too
rigid in this area.

The term ‘objectively’ in the grounds for using the
2.2.3.
procedure needs to be explained, and an additional ground
needs to be added to reflect the reality of PPPs, namely: ‘Cannot
effectively allocate risks and rewards under the contract
without negotiation with economic operators.’

2.

The Committee of the Regions’ recommendations on
the proposed directive

2.1. Electronic procurement

2.1.1. While the COR generally welcomes the new pro-
visions on electronic procurement and the reduction in time

2.2.4.
The COR is particularly concerned about the pro-
vision concerning ‘outline solutions’. Economic operators will
consider that they have intellectual property rights in any such
outline solutions and may demand payment for such solutions
whether or not they are used. As local authorities will have no
budget to pay for outline solutions this will effectively prevent
them using the new procedure. As an alternative the COR
proposes that the term ‘outline solution’ is substituted. This

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would not represent a technical solution but describe the
economic operators’ approach to carrying out the contract
and would help the contracting authority to better define its
requirements in the specifications which form the basis of the
subsequent negotiations.

In its Opinion on the Green Paper, the COR said that
2.2.5.
‘it cannot be considered necessary to suspend the procurement
procedure because the price offered is higher than the con-
tracting entity can afford, when negotiation could have
produced a lower price acceptable to both purchaser and
seller’. This problem is not solved by the current proposals.

The COR urges the Commission to amend the
2.2.6.
directive so that the contracting entity has the possibility to
use a negotiated procedure characterised by great flexibility,
and to make it possible to hold a wide-ranging dialogue with
suppliers before, during and after the procurement process.
The Commission ought here to take the provisions of the
Utilities Directive as a model.

2.3. Framework agreements

In its earlier opinion, the COR expressed the view
2.3.1.
that framework agreements ought to be expressly permitted in
all the directives, and it is to be welcomed that the Commission
proposes the regulation of framework agreements. However,
the COR takes the view that the proposed regulations are
unsatisfactory and do not provide the necessary flexibility.

2.3.2.
In its explanatory statement, the Commission disting-
uishes between framework contracts and framework agree-
ments. Framework agreements are not regarded as contracts
within the meaning of the directive, since they do not include
all the necessary elements for them to be used as the basis for
a delivery.

2.3.3.
However, framework contracts are covered by the
directive’s definition of public contracts. The explanatory
statement gives a contract with an order form as an example
of such a contract.
In some Member States ‘framework
contracts’ of this kind are considered non-binding and hence
referred to as ‘framework arrangements’ or ‘framework agree-
ments’ in those Member States. By using the term ‘framework
agreement’ in the directive to describe what is essentially a new
procedure, the Commission is adding to the confusion rather
than bringing clarity.

arrangements or agreements) that these are to be treated in the
same way as any other public contracts and not as framework
agreements in the special sense of the draft directive.

2.3.5.
The COR sets great store by this, so that doubts will
not arise later as to whether agreements now regarded as
framework contracts are covered by the new rules or not. For
example, this covers the customer choice models used in a
number of member countries, where a contracting authority
enters into a contract with a number of suppliers, and the
individual citizen later chooses the supplier, along with the
municipal or regional contracting authority’s contract.

2.3.6.
Nor is the procedure which would apply to a
framework agreement sufficiently flexible. This particularly
applies to the fact that competition has to be reopened every
time the agreement is used, which generates more work for
the contracting entity and defeats the purpose of a framework
agreement. It also applies to the requirement for at least three
suppliers and the time-limit on the duration of the agreement.
This procedure may have a use but it is so different from the
normal way in which framework agreements are used in some
Member States that it really should be called by another name.

2.3.7.
The Commission seems to have assumed above all
that the provisions of the framework agreements will be used
mainly for procurement of computer equipment and similar
procurement contracts. However, procurement under the
framework agreements is also used for other types of procure-
ment in order to satisfy an individual requirement, for example
facilities for the handicapped: in that respect the proposed
method is not realistic.

2.3.8.
If the Commission is intent on expressly covering
framework agreements in the classical directive, the COR takes
the view that the text proposed for the Utilities Directive
describes much better the wide range of different techniques
which Member States regard as framework agreements and
provides the necessary flexibility.

2.4. Modifications to threshold values

2.3.4.
The Commission’s proposals cover only framework
agreements in the special sense accorded to this term in the
directive, but in the COR’s view this is not stated with sufficient
clarity. The definition must be clearer. In particular, it should
be clear to those Member States who regularly award non-
framework
binding framework contracts (which they call

The Commission proposes that

the number of
2.4.1.
threshold values be reduced and that they be given in euro. It
is good in itself for the number of threshold values to be
reduced, but expressing them in euro must not mean in
practice that any value is reduced from its present level.
However, the proposal does in practice mean a reduction in
most cases — something which the COR cannot accept.

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2.4.2.
The COR has stated in earlier opinions that the
threshold values are set far too low and ought to be raised.
The COR holds to this view and calls upon the Commission
to take steps to renegotiate the Government Procurement
Agreement (GPA) on this point.

The low threshold values are particularly problematic
2.4.3.
in the procurement of services, since transaction costs are
often relatively high in relation to the value of the contract, as
the COR has already pointed out at an earlier stage. Part of the
problem with the low threshold values could therefore be
solved if a provision were included in the directive to the effect
that negotiated procurement with prior announcement would
always be permitted for minor service procurement contracts,
e.g. for contracts below a value of EUR 400 000. This should
enhance flexibility.

comply with national social sector regulations in the Member
State concerned. A contracting entity should not have to
accept suppliers which, for instance, violate rules on job
protection, the working environment, minimum pay or child
labour. Such requirements should be clearly stated in the
invitation to tender, and not be discriminatory. These key
aspects are dealt with by the European Court of Justice in the
‘Beentjes’ case (31/87) and, most recently, in case C-225/98.
The COR feels that it is essential for the principles established
in case law to be spelt out clearly in the directive.

2.5.5.
The COR feels strongly that contracting authorities
should be able to ask for additional categories of information
at the qualitative selection stage. Specifically, authorities should
be permitted to seek information, e.g. on economic operators’
policy regarding environmental management.

2.5. Criteria for quality selection

2.5.1.
The COR welcomes the fact that the Commission
proposes some tightening up with regard to breaches of law
by suppliers. It is the COR’s view that dishonest suppliers
should not be allowed to take part in public procurement.

2.6. Contract award criteria

2.5.2.
However, the COR takes the view that the Com-
mission must clarify which situations are covered by
Article 46 (1) which states that an economic operator shall be
excluded from a procurement contract if he has been convicted
of corruption in the previous five years. In countries where a
legal person cannot be convicted of corruption, would the
provision apply to all the supplier’s employees? In the affirm-
ative, are penalties to be imposed — and if so, which penalties
introduced
— if the economic operator has, for example,
appropriate preventive measures in his enterprise or has
dismissed without notice the manager who committed the
criminal offences without the knowledge of the economic
operator? What would then happen if such an employee were
to move to another employer or start a new firm? What
happens in a case where only a supplier who has been
convicted of corruption can deliver certain goods, or where it
would be very costly to change supplier? The COR thinks that
these questions must be discussed further. It should also be
borne in mind here that the penalties would be imposed in
accordance with national practice since there is, as yet, no
European criminal law.

2.5.3.
The proposed wording would most definitely cause
problems for the contracting entities and for citizens in the
area of pharmaceutical procurement,
in cases involving a
unique, life-sustaining drug which cannot be obtained from
any other supplier. The Commission must consider a different
wording for this very special and unusual case.

2.6.1.
The Commission proposes that the criteria for award-
ing contracts, where it is not just a matter of the lowest price,
should be directly linked with the nature of the contract:
this is a new departure. The consequence of this is that
environmental requirements cannot be imposed on production
processes. The COR, in its Opinion on the Communication on
public procurement (point 3.1.2), stated: ‘The COR considers
it crucial in public procurement to be able, in addition to
laying down certain conditions with regard to a product’s
properties (e.g. the PVC content of plastic), to impose objective
requirements concerning the overall environmental impact of
a product and of a company, including the production process’.
The COR reaffirms that view.

that

However,

the COR welcomes the fact

2.6.2.
the
environment is mentioned among the criteria to be taken
into account in awarding contracts. Although this is not a
substantive change — since the adjustment is only by way of
example — it is an important signal and a reminder to
contracting entities that it is right to consider environmental
impact in public procurement. However, the COR takes the
view that the word ‘environmental impact’ should be used in
the text of the directive instead of ‘environmental character-
istics’, since the latter wording reduces the scope to impose
environmental requirements than exist at present.

2.5.4.
The COR regards it as most important that the
contracting entities should be able to require suppliers to

2.6.3.
The Commission also proposes that the contracting
authority should specify the relative weighting which it
gives to each of the criteria chosen to determine the most
economically advantageous tender.

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2.6.4.
The Commission’s intention is to ensure greater
openness in procurement procedures and equal treatment for
suppliers. The COR does not think that the rule is likely to
have this effect. The rule is based on an unrealistic idea that
the value of each of the criteria can be determined when the
procurement procedure begins. However, this presupposes
that the contracting authorities have complete information at
their disposal in advance; this would probably only apply in
exceptional cases.

2.6.5.
The Commission proposal implies that the scheme
would be set up when various parameters have been estab-
lished and that, with the help of the weighting, it could later
be established with mathematical exactitude which tender is
economically most advantageous. In practice this is an almost
impossible task and, if it also involves ‘soft’ parameters such as
aesthetic profile, it becomes meaningless.

2.6.6.
It would be completely impossible to weight the
criteria in procurement contracts where a large number of
different articles are bought in one and the same contract, e.g.
foodstuffs, medical equipment or medicines. In procurement
of medicines for hospital use, a county council in Sweden
normally buys all the various medicines it needs in one
procurement contract. If the criteria were to be weighted, a
different weighting would be needed for each group of
products. The criteria of ‘taste’ naturally carries more weight
when the medicines are for small children than when they are
for adults. This means that the procurement contracts would
have to be divided up so that the same weighting applied
within each group; this would lead to a situation where a large
procurement contract exceeding the threshold value would
have to be divided up into many small procurement contracts,
many of which would certainly fall below the threshold value.

2.6.7.
Professional buyers who have seen the proposal do
not think it will work in practice. The COR does not think that
impracticable rules should be included in the directive. There
is also a high risk that the rule might lead to a large number of
unnecessary court cases relating to the weighting.

performance of the contract should not prejudice the con-
tracting authorities’ right to decide themselves on what shall
be procured; for example, this applies to the possibility of
imposing environmental requirements on production process-
es, and to social requirements which must of course be non-
discriminatory so that the requirement can be met by suppliers
of all Member States.

2.8. The common procurement vocabulary (CPV)

2.8.1.
The COR thinks there is a clear advantage in
employing only one system. The problem is that the existing
CPV nomenclature gives rise to many problems because of its
heterogeneous structure and its ambiguity in many areas.

2.8.2.
The practitioners in this field point out that it is
difficult to find one’s way in the CPV (for example, parking
meters are listed with medical apparatus and pharmaceutical
products), that it is difficult to know which number is relevant
is a given implant surgical or
in an individual case (e.g.
orthopaedic?);
in addition, certain headings are missing in
some groups (in the health and nursing services group, urban
cleansing services are listed while child health care is missing).
The deficiencies in the nomenclature also cause problems for
suppliers. They say that it is difficult to find relevant notices
and that they lack basic data on procurement contracts because
the nomenclature has misled them to think that the contract
concerned a certain product or service, whereas in reality
something quite different is involved. These problems also
constitute an obstacle to the extension of electronic commerce.

The COR therefore urges the Commission to improve
2.8.3.
the CPV nomenclature as soon as possible so as to make it an
effective instrument for the future.

2.6.8.
The contracting authorities should be able to include
objective social criteria which are not discriminatory and
which guarantee equality of treatment and free competition.

2.8.4.
An improved CPV could also be a tool enabling the
Commission to obtain correct procurement statistics directly
from the Tenders Electronic Daily (TED), thereby reducing the
administrative burden on contracting entities.

2.7. Special contract provisions

2.7.1.
The Commission proposes a new rule on the possi-
bility of imposing special requirements on the execution of the
contract, the aim of which is to codify existing law on the
subject. However, the wording is restrictive in relation to the
case law which it is intended to codify, since it introduces a
requirement for the condition to be related to the performance
of the contract.

2.7.2.
The COR thinks it important that the wording which
provides the possibility of imposing special conditions on

2.9. Exclusive rights

2.9.1.
The proposal on exclusive rights granted to a body
other than a contracting authority (in Article 55) is unclear.
The wording is far too broad, as it could perhaps be interpreted
as covering all the contracting authority’s contracts with
private suppliers: from a strictly logical viewpoint, any contract
can be said to contain an element of exclusive right. It ought
to be made clear, too, that the provision concerns only
contracts related to the exclusive right itself.

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2.10. Deadlines in negotiated procurement

2.10.1.
The Commission proposes a tightening of the rules
on deadlines in negotiated procurement: a time-limit of 40 days
for receipt of a tender is proposed, whereas in the existing
directive no deadline is laid down for this.

that the transfer of tasks from e.g. a municipality to an
inter-municipal cooperative enterprise (e.g. a waste disposal
consortium) will not be covered by the directive.

3.2.3.
These problems have also been dealt with by the
Court of Justice in the Teckal case (Case C-107/98) and in the
Arnhem case (Case C-360/96) and by national courts.

2.10.2.
flexibility, and that
introduced.

The COR thinks that the proposal would mean less
the proposed change should not be

3.2.4.
questions in the procurement directive.

The COR calls upon the Commission to clarify these

3.

The Committee of the Regions’ recommendations on
questions not covered in the draft directives

3.3. Privatisation

3.1. Procurement compatible with the environment

3.1.1.
In its earlier opinions, the COR devoted special
attention to the possibility of imposing environmental require-
ments on procurement contracts. The current proposals for
directives are unsatisfactory on this point, since some of the
proposals apparently tighten the rules. The COR takes the
view that it is essential for regional and local authorities to
have the right to decide for themselves what is to be procured.
The procurement directive should simply ensure openness and
equal treatment in the procurement process. For example, a
contracting entity which wishes to buy organic vegetables, or
hormone-free meat, should have the right to do so and to refer
to relevant environmental markings and certification systems.
These requirements are to be set out in the specifications.

Since the Commission, in its draft explanatory com-
3.1.2.
munication on environment-friendly procurement, and by
tightening up the draft directives, appears to some extent to
question this right to buy what one wishes, the COR feels it
important for the Commission to include in the directive
provisions making it possible to impose requirements for
environmental marking and certification on production pro-
cesses and delivery of services.

3.2.

Inter-municipal cooperation

In its opinions on the Green Paper and on the
3.2.1.
Communication on public procurement, the COR referred to
the problems which the procurement directive raises for inter-
municipal cooperation.

3.2.2.
In the opinion on the Green Paper (point 2.4.3), the
COR stated that ‘it must be established that procurement by
regional and local authorities from their own independent
legal entities does not fall within the scope of the directives
and must be regarded as production carried out under their
own management’. The Commission was also urged to clarify

The COR has also drawn the Commission’s attention
3.3.1.
in the past
to the problems which can arise with the
privatisation of public enterprises and in cases where
employees are given the opportunity to set up their own
business which, under contract, takes over tasks from local
and regional authorities.

3.3.2.
The COR takes the view that the rules on service
procurement should not hinder these processes. On the
contrary, it should be possible, as a transitional solution and
for a limited period, to purchase without a procurement
procedure; this means that the competition would increase in
the long run.

3.4. Definition of service contract and the division into ‘A’ and

‘B’ services

3.4.1.
The Commission should consider moving certain
services from the ‘A’ to the ‘B’ category. Certain financial
services, for example, are not suitable for procurement under
the very formal rules in category ‘A’, since, among other things,
the provisions on time-limits make it difficult to act in a
businesslike manner.

Public service contracts are defined in the proposal
3.4.2.
as mutually binding agreements between one or more service
providers and a contracting authority, which exclusively or
principally should cover the services listed in Annex 1. There
has been some confusion as to the meaning of ‘exclusively or
principally’, and the phrase ought to be replaced.

3.5. Qualification systems

3.5.1.
The COR urges the Commission to include pro-
visions concerning ‘qualification systems’ in the classic direc-
tive which parallel those in the new Utilities Directive. Such
arrangements are used in several Member States and their use

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is now severely constrained by the procurement directives.
The Committee does not see why the use of systems by
the utilities concerned is considered to be consistent with
Community law while other contracting authorities are pre-
vented from using them.

3.6. Representation of local and regional authorities

3.6.1.
The COR wishes to draw the Commission’s attention
once again to the fact that, despite the central role played by

local and regional authorities in the application of procurement
rules, they are represented only to a very limited extent in the
bodies which the Commission regularly consults.

The COR therefore urges the Commission to ensure
3.6.2.
that the local and regional
levels are represented in these
bodies; this would enable the Commission to make better use
of the experience accumulated by the local and regional
contracting authorities.

Brussels, 13 December 2000.

The President

of the Committee of the Regions

Jos CHABERT