Source: https://iclg.com/practice-areas/public-procurement-laws-and-regulations/eu-public-procurement-rules
Timestamp: 2019-04-23 12:30:30+00:00

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1.1 Public procurement is about how public authorities spend public money. The total expenditure of government, the public sector and utilities on works, goods and services currently represents an estimated 14% of the EU’s GDP, i.e. approximately €2,015 billion [see Endnote 1]. Nearly 173,000 contracts were advertised EU-wide in 2015 [see Endnote 2].
1.2 However, for all its laudable aims of opening up national markets to EU-wide competitive tendering, most EU procurement markets remain substantially “national” in scope. The European Commission (“Commission”) estimates that the total value of invitations to tender for contracts subject to the EU rules in 2015 was approximately €450 billion, i.e. 3.1% of the EU’s GDP [see Endnote 3]. Direct cross-border procurement (i.e. public contracts awarded to operators from other EU Member States) accounts for 3.5% of the total value of awards between 2009 and 2015. Indirect cross-border procurement, via corporate affiliates or partners situated in the Member State of the contracting authority, is more frequent (more than 20% of awards by value between 2009 and 2015) [see Endnote 4].
2.1 EU public procurement law is based upon certain general principles derived from the Treaty on the Functioning of the European Union (“TFEU”) [see Endnote 5], and is aimed at ensuring equal access for all operators within the EU internal market to procurement opportunities in other EU Member States, as well as fair competition for public contracts.
2.2 The first EU public procurement directive was adopted in July 1971 and covered public works contracts. Supply and service contracts were added in separate 1976 and 1992 directives, with a 1990 directive covering entities operating in the water, energy, transport and telecommunications sectors. The remedies directives, covering the procedures for challenging the award of contracts under these various directives, date from 1989 (public sector) and 1992 (for utilities) (respectively, the Public Sector Remedies Directive (89/665) and the Utilities Remedies Directive (92/13)).
(a) Directive 2004/18 which applied to service, supply or works contracts entered into by public bodies other than utilities in relation to a utility activity (the “2004 Public Sector Directive”).
(b) Directive 2004/17 which applied to service, supply or works contracts entered into by utilities (i.e. public and certain private bodies operating in the water, energy, transport and postal services sectors) which relate to a utility activity (the “2004 Utilities Directive”).
Together, these are known as the “2004 Directives”.
(a) The Directive on public procurement (2014/24) (the “2014 Classic Directive”), which repeals the 2004 Public Sector Directive.
(b) The Directive on procurement by entities operating in the water, energy, transport and postal services sectors (2014/25) (the “2014 Utilities Directive”), which repeals the 2004 Utilities Directive.
(c) The Directive on the award of concession contracts (2014/23) (the “2014 Concessions Directive”), which sets out new rules for the award of concession contracts.
Together, these are known as the “2014 Directives”.
2.5 The 2014 Directives set out the rules on the award of contracts but do not provide a complete public procurement law or code covering all elements of procurement. Member States have some scope for policy choices in national implementing legislation. There is much that is not clear, and the Court of Justice of the EU (“CJEU”) delivers regular judgments in procurement cases, which are binding on the EU Member States.
2.6 As explained in more detail below, in January 2008, a new directive dealing with remedies under the public procurement rules (2007/66) came into force (the “2008 Remedies Directive”). The 2008 Remedies Directive applies to awards made under the 2014 Directives, and amends both the Public Sector Remedies Directive and the Utilities Remedies Directive, which were criticised for not providing an adequate level of protection of contractors’ rights; in particular, in the areas of injunctive relief and remedies post-contract award (it being recognised that damages could not, as a rule, match the commercial benefits of winning a contract).
3.1 Public sector contracting authorities are subject to certain general principles derived from the TFEU (“EU General Principles”), even if a particular procurement falls outside the 2014 Directives; for example, because: (i) the value of the contract to be awarded is below the relevant financial threshold; or (ii) the contract relates to one of the defined categories of services which are subject to a lighter regime (see Section 7 below) and there is a potential “cross-border interest” (i.e. a procurement in relation to which it is reasonably foreseeable that there might be interest from non-national contractors). In many respects this is unwelcome, since it is not always easy to be certain of complying with the EU General Principles without engaging in a full public procurement legal regime process. In practice, contracting authorities frequently elect to discharge their obligations by submitting voluntarily to the full public procurement legal regime process as if the 2014 Directives (as implemented in national law) applied. Where an authority engages in such a “voluntary” application of the 2014 Directives, the view is that it must then comply with the rules fully (i.e. it cannot “mix and match”). Thus, the application of the EU General Principles can, in practice, significantly extend the scope of coverage of the public procurement regime.
3.2 The main EU General Principles at issue are non-discrimination and equal treatment, transparency, proportionality, mutual recognition, free movement of goods, right of establishment and freedom to provide services. The Commission has published guidance on how these principles will apply throughout all of the stages of an award procedure [see Endnote 6]. Therefore, with regard to public sector procurements which fall outside of the strict application of the 2014 Directives, the principles of transparency and equal treatment generally will require potential bidders to have access to suitable information about the intent of a contracting authority to award a procurement. This means that there generally needs to be some form of advertising at the outset of the essential details of the contract to be awarded and of the award method to ensure that the opportunity is opened up to competition.
4.1 There are several “international” (i.e. extra-EU) elements to the public procurement rules as they apply in the EU and to EU entities. The revised WTO Agreement on Government Procurement (“GPA”), which entered into force on 6 April 2014, has the widest scope. It is a plurilateral treaty between a limited number of WTO Members (Armenia, Aruba, Canada, the EU (for its 28 Member States), Hong Kong (China), Iceland, Israel, Japan, Republic of Korea, Liechtenstein, Republic of Moldova, Montenegro, New Zealand, Norway, Singapore, Switzerland (pending), Chinese Taipei, Ukraine, and the United States of America). The GPA is intended to make laws, regulations, procedures and practices regarding government procurement more transparent, and to prevent the protection of domestic products or suppliers, or the discrimination against foreign products or suppliers. The GPA has two elements: (i) general rules and obligations; and (ii) schedules listing the national entities in each WTO Member State that are covered by the GPA.
4.2 In addition, the EU rules apply to Norway, Iceland and Liechtenstein directly by virtue of the European Economic Area (“EEA”) Agreement. Furthermore, the EU has entered into several free trade agreements which cover aspects of public procurement (namely, with Central America, Chile, Colombia, Iraq, Korea, Mexico and Peru). The EU is currently engaged in negotiations with respect to opening up procurement markets with a number of countries and regions, including Armenia, Canada, Georgia, India, Malaysia, Mercosur, Moldova, Morocco, Singapore, Ukraine and Vietnam.
(c) where the third country does not cooperate with the Commission or the consultations do not lead to satisfactory results, the Commission may take appropriate measures restricting access of goods and/or services from the relevant third country to EU public procurement markets, such as applying price adjustment measures on those goods and/or services until the country concerned takes satisfactory remedial or corrective actions.
4.4 Finally, there are at present five candidate countries seeking to join the EU: Albania; the Former Yugoslav Republic of Macedonia; Montenegro; Serbia; and Turkey. Countries which apply for EU membership become fully subject to EU law, including EU public procurement law.
5.1 The Commission is one of the four main institutions of the EU, the others being the European Parliament (comprising elected representatives from the Member States of the EU), the Council of the EU (representing national governments, also known as the EU Council) and the Court of Justice of the EU in Luxembourg (“CJEU”) (made up of the Court of Justice, the General Court and the Civil Service Tribunal).
5.2 In terms of public procurement law, the Commission has four main roles. Firstly, it proposes legislation and engages in related consultations. Secondly, it provides guidance on EU law through, for example, publishing explanatory notes or communications. Thirdly, it enforces EU law using its legal powers under the TFEU. Fourthly, it negotiates international agreements.
5.3 The Commission’s enforcement powers in this area are directed against Member States and it regularly makes use of these powers to investigate potential infringements of the EU public procurement rules (following complaints or at its own-initiative). The powers it uses are contained in Article 258 of the TFEU, and the procedure is referred to as the “infringement procedure”. That procedure provides the Commission with powers to take enforcement action before the CJEU against Member States that fail to comply with EU law. The CJEU may in parallel grant an injunction to suspend execution of a contract pending judgment on the merits of the case (even after it has been awarded), but in practice this is unlikely unless the infringement is blatant and the matter comes before the court quickly.
5.4 Member States are, in theory, obliged to comply with CJEU judgments by taking “necessary measures” pursuant to Article 260 of the TFEU. However, if the Member State fails to do so, the Commission has the power to take further action before the CJEU. This action takes the form of a request to the CJEU to impose fines on the Member State for non-compliance with the CJEU’s judgment.
6.1 The 2014 Classic Directive applies to “the State, regional or local authorities, bodies governed by public law, associations formed by one or several of such authorities or one of several of such bodies governed by public law”, unless the body in question is engaged in a utility activity (see below). Annex I of the 2014 Classic Directive provides an “indicative” list of central government authorities. In essence, all public bodies that spend public money are covered.
6.3 The 2014 Utilities Directive applies to the same list of public bodies operating in the water, energy, transport, and postal services sectors, but to this is added “public undertakings” (separate legal entities owned or controlled by a public body) and entities which “operate on the basis of special or exclusive rights granted by a competent authority of a Member State”. In all cases, the entity or public body must be active in relation to one of the utility activities covered by the 2014 Utilities Directive.
6.4 Under the 2014 Utilities Directive, “special or exclusive rights” are defined as the rights granted by a Member State by way of any legislative, regulatory or administrative provision, the effect of which is to limit the exercise of utility activities to one or more entities, and which substantially affects the ability of other entities to carry out such activity. However, entities which enjoy rights based on objective criteria and obtained pursuant to a competitive tender process will not be said to hold “special and exclusive rights” – meaning that such entities will not be caught by the procurement regime.
6.5 The “special or exclusive rights” provision is broadly intended to cover private entities which act as utilities. The Commission’s guidance states that the existence of such rights must be considered on a case-by-case basis. This analysis will include, in particular: (i) how the rights have been obtained; (ii) on what basis the selection was made; (iii) what the rights allow for; and (iv) how the rights restrict the activities of third parties and the ability of others to obtain the same rights in the future. The list of relevant entities is not closed and will change over time in any particular Member State.
7.1 The 2014 Classic Directive applies to “public contracts”, which have to be for “pecuniary interest” and “in writing” between a public body (or bodies) and a provider (or providers) and relate to the execution of works, the supply of products or the provision of services.
7.2 These three types of contract (works, supplies, services) are mutually exclusive; a contract can be only one type even if it includes a combination of elements. In order to determine the appropriate classification, it is first necessary to determine whether the contract is a works contract, which requires a consideration of whether the main object of the contract is the works to be carried out. If the contract is not a works contract, it may be a supply or service contract, and in this case, the classification is expressly based on the element which has the greater value. The classification is important for various reasons, including the threshold value to be applied to it (see the table below), the designation of the contract in the public notices which are required to be published and, if the contract is a concession, in which case the 2014 Concessions Directive will be relevant (see further at Section 14 below). The position under the 2014 Utilities Directive is essentially the same.
7.3 As regards services contracts, a further level of categorisation is necessary. This is on the basis that (a) the 2014 Directives provide for a “lighter touch” regime in respect of “social and other specific services” (listed in Annex XIV of the 2014 Classic Directive and Annex XVII of the 2014 Utilities Directive), and (b) certain types of services have been excluded altogether from the scope of the 2014 Directives (see further at Section 8 below).
7.4 The 2014 Directives only apply to contracts with a value above certain financial thresholds, which differ according to the classification of the procurement. The value of a contract for the purposes of the thresholds is its estimated value net of value added tax, at the time at which the contract notice is sent or, in circumstances where such a notice is not required, at the moment when the contracting authority commences the contract award procedure. The calculation of the estimated value must take account of the expected total value of the consideration (including, for example, options, renewals, insurance or banking payments and the value of any supplies made available to the contractor) even though this may be difficult to determine. It is, therefore, necessary to make a reasonable and genuine estimate, based upon the information that is currently available.
7.5 The financial thresholds function as a filter to identify those contracts which, in principle, are capable of having an impact on competition and affecting trade between EU Member States, as such contracts are more likely to attract bidders from other Member States. The EU’s policy is to keep the financial thresholds in line with those set in the WTO GPA. The Commission revises the EU thresholds accordingly from time to time, with the current thresholds becoming applicable on 1 January 2018. In addition, non-eurozone EU Member States receive a revision of the financial thresholds every two years converted into their national currencies, based on the exchange rate published in the OJEU. The current contract value thresholds denominated in Euros are set out in the table below.
7.7 Although value estimates are, in principle, confined to the value of each single procurement, the 2014 Directives contain an express “splitting” prohibition, which requires the aggregation of the values of a number of similar procurements in certain circumstances. The aim is to prevent the artificial splitting-up of procurements into lower-value procurements, which would fall below the relevant thresholds and, thus, outside the scope of the 2014 Directives. In practice, this means that in circumstances in which a contracting authority/utility intends to award more than one procurement for a single overall requirement (for example, in phased construction projects), the value of these procurements must be added together. The aggregate figure will determine whether or not the relevant threshold has been met.
7.8 Although the 2014 Directives do not apply to low-value contracts below the thresholds, the EU General Principles will apply if the procurement has a potential cross-border interest (see above at Section 3).
8.1 Certain procurements may be excluded from the scope of the 2014 Directives on the grounds of secrecy and security. For instance, this exclusion can be used in the context of procurements relating to military security or anti-terrorist measures. In principle, derogations from the general rules must be narrowly interpreted. However, contracting authorities have a margin of discretion in determining whether the exclusion is necessary in the light of the extent of any potential security and secrecy concerns.
8.2 Procurements of defence equipment (and services related to such equipment) can also be excluded based upon the general exemption set out in Article 346 of the TFEU. A specific directive, Directive 2009/81/EC on defence and sensitive security procurement (the “Defence Directive”), which entered into force on 21 August 2009 and was due to be transposed by Member States by 21 August 2011, sets out specific rules for the procurement of arms, munitions and war material (plus related works and services) for defence purposes, as well as for the procurement of sensitive supplies, works and services for non-military security purposes. The Defence Directive is in force alongside the 2014 Directives.
(d) excludes certain contracts altogether from the new regime (for example, contracts related to intelligence activities).
8.4 The applicable financial thresholds are €443,000 for supply/services procurements and €5,548,000 for works procurements. The Defence Directive is complementary to the European Defence Agency’s Code of Conduct on Defence Procurement, launched in July 2006.
8.5 The acquisition or rental of land, existing buildings or interests therein are also, in principle, excluded from the 2014 Classic Directive. Nevertheless, despite this exclusion, some land development agreements (such as, for example, where a developer erects a building to a contracting authority’s requirements on the developer’s own land, and then transfers the land (plus building) to the authority) are still subject to the 2014 Classic Directive upon the basis that they amount to public works contracts. The CJEU rendered two significant judgments relating to land developments in 2007 and 2010. The first case, Auroux v. Commune de Roanne [see Endnote 11], concerned the construction of a leisure centre and related facilities around a railway station. The contracting authority engaged a semi-public development company to acquire the land, obtain funding, carry out studies, organise an engineering competition, undertake the construction works, coordinate the projects and liaise with the authority. The authority itself was not intending to become the owner of the various facilities, apart from elements such as the public spaces and the car park. The CJEU held that the project was a public works contract, which fulfilled an economic function and corresponded to the requirements of the contracting authority, and was therefore, regardless of whether the contracting authority would own or even use the completed works, subject to the public procurement rules. The second, more recent judgment, Helmut Müller GmbH v. Bundesanstalt für Immobilienaufgaben [see Endnote 12], concerned the sale to a private party by a German federal agency of land which had been used formerly as a barracks. The sale contract did not contain any reference to the land’s future use. The CJEU ruled that the sale contract did not qualify as a public works contract because there was no “direct economic benefit” to the local authority, and, further, the mere fact that the local authority, in the exercise of its urban-planning powers, had examined certain building plans presented to it did not mean that the local authority had specified requirements attached to the redevelopment works. The two judgments have added legal clarity on the dividing line between land transactions falling outside the public procurement rules and the procurement of works subject to the public procurement regime, and confirmed that the CJEU will take a broad purposive approach.
8.6 The procurement by a utility of water, energy or fuel for the production of energy is also excluded. Furthermore, a procurement awarded by a utility to an affiliated undertaking or by a joint venture utility to one of its members or an affiliated undertaking of those members may be excluded, provided the undertaking in question essentially exists to provide services/supplies/works to that group and not to the open market. Finally, Member States may apply for a general sector exemption (pursuant to Article 34 of the 2014 Utilities Directive) where the market has been liberalised and opened up to competition. The Commission will consider whether the required competitive market conditions are met in that particular Member State and confirm whether the exemption applies by way of a formal decision. Even if an exemption is in place, public utilities (but not private utilities) will still have to observe the EU General Principles in undertaking procurements. The existing national exemptions pursuant to the current Article 30 of the 2004 Utilities Directive remain in place under the 2014 Utilities Directive.
8.7 Certain types of services have been excluded altogether from the scope of the 2014 Directives, such as certain audio-visual and radio media services, legal services designated by a court or tribunal, financial instruments and public passenger transport services by rail or metro (such services being covered by sector-specific legislation, namely Regulation 1370/2007). Moreover, the exploration of oil and gas has been added to the existing exclusions from the utilities regime (namely, contracts awarded by certain contracting entities for the purchase of water and for the supply of energy or of fuels for the production of energy).
9.1 In its judgment in Teckal [see Endnote 13], the CJEU recognised that, in some situations, a contracting authority may directly award a contract to a legally distinct third party who, in practice, is not an independent body, without a competitive tendering process. The applicable test is twofold. Firstly, the “control test” requires that the authority exercise over the third party awarded the contract “a control which is similar to that which it exercises over its own departments”. Secondly, the “function test” requires that the third party “carries out the essential part of its activities” for the authority (the controlling entity). When these two conditions are met, the contract will be treated as an “in-house” administrative arrangement which falls outside the scope of the 2014 Directives. The CJEU has also held that these principles apply to contracts subject only to the EU General Principles (Parking Brixen [see Endnote 14]).
9.2 This exemption is strictly interpreted, and in a national court, it would usually be for the contracting authority to establish its application to a particular procurement. For the first condition (control) to apply, there must be a power of decisive influence over both the strategic objectives and significant decisions of the body awarded the contract. It is not enough that a contracting authority, together with other contracting authorities, owns all of the share capital in a company awarded a contract: all of the relevant legislative provisions and surrounding circumstances will be taken into account. However, even a minority interest in the third party held by a private entity rules out the Teckal exemption. The second condition has been interpreted as essentially requiring that the activities of the third party are devoted principally to the contracting authority, and that any other activities are only marginal. The Commission Staff Working Paper on public-public cooperation [see Endnote 15] offers useful guidance on the application of the in-house Teckal test.
9.3 The 2014 Directives essentially codify the Teckal test, and provide that a contract awarded by a contracting authority to another legal person governed by private or public law will fall outside the procurement regime if the following cumulative conditions are met: (a) the contracting authority exercises over the legal person concerned a control which is similar to that which it exercises over its own departments; (b) more than 80% of the activities of that legal person are carried out in the performance of tasks entrusted to it by the controlling contracting authority or by other legal persons controlled by that contracting authority; and (c) there is no direct private capital participation in the controlled legal person.
10.1 The fundamental principle underlying the EU public procurement rules is that a qualifying contract must be opened up to an EU-wide competitive tender. As a result, in most circumstances, a contract notice must be published in the Official Journal of the EU (the “OJEU”) in the standard form [see Endnote 16] at the outset of a tender process. In some situations, set out in the 2014 Directives, a contract, although falling subject to the rules, does not have to be advertised and can be negotiated directly with a chosen provider. For instance, where, “for technical or artistic reasons, or for reasons connected with the protection of exclusive rights”, there is only one possible provider.
10.2 Contracting authorities are obliged to follow one of five types of tender procedure (which will be identified in the contract notice). The first type of procedure is the “open procedure”, under which the procurement is advertised and all interested providers tender a single, fully priced offer. The second type of procedure is the “restricted procedure”, which requires interested bidders to “pre-qualify” before being invited to submit a fully priced tender. The third type of procedure under the 2014 Classic Directive is the “competitive procedure with negotiation”, while the 2014 Utilities Directive provides for the “competitive negotiated procedure”. While there are differences between the competitive procedure with negotiation and the competitive negotiated procedure, each involves a pre-qualification stage and then a negotiation stage with the pre-qualified group of tenderers (although contracting authorities may award a contract without negotiations, provided they have reserved the right to do so). The fourth type of procedure is known as the “competitive dialogue”, which allows a dialogue to be conducted in successive stages, with the aim of reducing the number of bidders. The fifth type of procedure is the innovation partnership, which allows tenderers to submit a request to participate in response to a contract notice with a view to establishing a structured partnership for the development of an innovative product, service or works and the subsequent purchase of the resulting supplies, services or works. The partnership is structured in successive stages following the research and innovation process, and the contract will be awarded in accordance with the rules of a competitive procedure with negotiation.
10.3 There are also various important explicit and implied obligations concerning the conduct of the selection process following publication of the contract notice, including in particular the minimum timescales with which authorities must comply. These are essentially designed to ensure that at all stages (specification of requirements, selection stage and award stage) the contract award process is run fairly and transparently.
11.1 Under the EU procurement regime, there are discretionary grounds and mandatory grounds for the disqualification of bidders. Contracting authorities may derogate from the mandatory grounds only on an exceptional basis for “overriding reasons relating to the public interest”, or where an exclusion would be “clearly disproportionate”. The 2014 Directives clarify that the power to exclude bidders can apply throughout the procurement process (not only during the pre-qualification stage) and may also extend to sub-contractors and consortia members.
11.2 The 2014 Directives require contracts to be awarded to the tenderer which supplies the “most economically advantageous tender” (“MEAT”), which must be based on “price or cost”, and may include the best price-quality ratio. Where costs are taken into account, the 2014 Directives specify that a “cost-effectiveness” approach should be used, based upon an evaluation of certain costs over the life cycle of a product, service or works, such as: (i) costs relating to acquisition; (ii) use (e.g. consumption of energy); (iii) maintenance; (iv) end of life (e.g. collection and recycling); and (v) environmental externalities which can be valued (e.g. emissions of greenhouse gases or other pollutants).
11.3 The 2014 Directives specify that contracting authorities may take into account, as part of the MEAT criteria, the characteristics of the production process of the works, goods or services to be purchased, such as working conditions and staff health protection. The 2014 Directives expressly allow contracting authorities to take into account the organisation, qualification and experience of staff assigned to performing the contract as an award criterion, recognising that this may affect the quality of the contract performance.
11.4 As regards the assessments of the best price-quality ratio, the 2014 Directives provide that any qualitative, environmental or social criteria must be linked to the subject matter of the contract, which controls the ability of contracting authorities to take account of wider social, political and environmental considerations.
12.1 The 2014 Directives include express provisions regulating the circumstances in which contracts may be modified during their term without triggering an obligation to carry out a new tender procedure – an issue that has given rise to much debate and litigation. The 2014 Directives define a “substantial” modification, requiring a new award process, as one that renders the contract substantially different from the one initially concluded, i.e. one which would: (i) result in the selection of other operators, or the award of the contract to another tenderer; (ii) change the economic balance of the contract in favour of the contractor; or (iii) include supplies, services or works which were not covered by the original OJEU process.
12.2 As well as codifying relevant case law, the 2014 Directives provide for a “safe harbour” within which a minor modification would not require a new award process. The safe harbour is set at a low level and applies where the value of the change: (i) does not exceed the value of the relevant threshold for the application of the procurement regime; and (ii) is below 10% of the initial contract value (15% for public works contracts).
12.3 More helpfully, the 2014 Directives provide that contract modifications will not be considered to be substantial where they have been provided for in the procurement documents in clear, precise and unequivocal review clauses or options. Such clauses or options must state the scope and nature of possible modifications, as well as the conditions under which they may be exercised, and may not alter the overall nature of the contract.
12.4 The 2014 Directives also allow modifications in circumstances in which, despite reasonably diligent preparation of the initial award by the contracting authority, the modifications are required as a result of unforeseen circumstances. In such cases, a new procurement procedure will not be required so long as the modification(s) do not alter the overall nature of the contract, and any resulting increase in price is not greater than 50% of the value of the original contract.
12.5 In addition, the 2014 Directives clarify that a new award procedure will not be required in the event that additional works, services or supplies up to 50% of the value of the original contract are necessary, and where a change of contractor cannot be made for technical or economic reasons and would cause significant inconvenience or duplication of costs.
12.6 It is also helpful that the 2014 Directives expressly provide that a successful tenderer may undergo structural changes during the performance of the contract, such as internal reorganisations, mergers and acquisitions or insolvency, without giving rise to a requirement to conduct a new award process.
13.1 An aggrieved operator can either make a complaint to the Commission or bring proceedings before a national court for infringement of the national implementing legislation and/or the EU General Principles.
13.2 A complaint to the Commission is the cheapest and most straightforward option. However, it will usually be slow; therefore in many cases, it may not be very effective. There is always a risk that the Commission does not consider that the case is worthy of investigation at the EU level (the Commission will not and cannot pursue all complaints). Moreover, there is no effective mechanism for injunctive relief (interim measures at the EU level are very difficult to obtain). There is no fixed timescale for the procedure, and generally the process will be slow and certainly outside the control of the complainant, who will have limited visibility over the conduct and progress of the case.
13.3 If successful, a complaint may ultimately lead to the Commission taking action before the CJEU under Article 258 of the TFEU against a Member State for infringement of the relevant directive (see the description of the procedure above at paragraph 5.3). In its judgment under Article 258 proceedings, the CJEU cannot order a Member State to act or to refrain from acting in a particular way. However, the Member State would, under Article 260(1), “be required to take the necessary measures to comply”. The CJEU’s judgment in Commission v. Germany [see Endnote 17] clarifies what those “necessary measures” may involve in circumstances in which a contract has been concluded unlawfully. The CJEU held that Germany was under an obligation to remedy the infringement in question by taking all appropriate measures, which might include the rescission of a contract which had already been concluded, irrespective of whether German national law provided for this possibility.
13.4 The Public Sector Remedies Directive and the Utilities Remedies Directive require Member States to make certain minimum remedies available before national courts. In particular, contracting authorities are required to provide an automatic debrief to all tenderers and there is a mandatory “standstill” period between the award of a contract and its signature. There is an automatic suspension of the contract award if proceedings are brought against the contracting authority’s award decision, shifting the burden onto the contracting authority to apply to court to lift the injunction. The minimum remedies include “ineffectiveness”, i.e. contract nullity (the prospective cancellation of all unperformed obligations) coupled with a fine on the contracting authority. This remedy is available on limited grounds after a contract has been entered into in breach of the applicable directive. Alternative penalties (contract shortening, fines, or both) are also available instead of ineffectiveness, in situations where ineffectiveness is inappropriate.
13.5 A likely outcome of any challenge is for the court to declare that a public contract has to be re-tendered to the market as a whole – particularly in cases where a public contract is amended in a way which is materially different in character from the original contract. Material changes and changes in scope can result in a procurement being qualified as a new procurement requiring a new tender process. In Wall [see Endnote 18], the CJEU held that the replacement of a specified sub-contractor may require a new award procedure to restore transparency. The CJEU affirmed that an essential change had taken place requiring a new award procedure to ensure compliance with the principle of transparency.
14.1 Under the 2004 Directives, the award of service concessions was excluded from the public procurement regime, and the award of works concessions was subject only to a narrow set of specific rules.
(e) acceptable modifications to concessions contracts during their term, in particular where changes are required as a result of unforeseen circumstances.
14.3 The 2014 Concessions Directive seeks to clarify the concept of a “concession” itself, based on EU case law. The rules specify that the main feature of a concession, the right to exploit the works or services, always implies the transfer to the concessionaire of an economic risk involving the possibility that it will not recoup all the investments made and the costs incurred in operating the works or services covered by the award. However, this does not exclude the award of concessions in sectors, such as those with regulated tariffs, to the extent that an operating risk, however limited, can still be transferred to the concessionaire.
15.1 The TFEU includes specific provisions (Articles 107–109) restricting the ability of Member States to grant aid (of whatever form) which “distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods ... insofar as it affects trade between Member States”. Broadly, the provisions are intended to stop Member States from unfairly supporting their own companies to the detriment of competing companies from other Member States.
15.2 In the context of public procurement, aid can arise where the terms of a contract for works, services or supplies are not aligned with normal market-based commercial terms, as to price or other matters, or where the contract does not reflect a genuine need. The advantage must come directly or indirectly from the resources of the State, and the measure providing for this must be imputable to the State.
15.3 The basic test is whether the purchaser acted as a “market purchaser” would have done. If it did, aid is not involved. If it did not, aid is involved – the aid being the difference between the actual value of the contract and the value of a contract that a market purchaser would have entered into (with the difference being repayable). If the purchaser has run an open, transparent and non-discriminatory procurement procedure (for example, one in accordance with the public procurement rules) and the contract price is established through that procedure, then there is generally accepted to be a presumption that State aid is not involved.
15.4 If the purchaser has properly used the open procedure, the contract should be at market value and not involve aid. The position is less clear for cases in which the restricted, negotiated or competitive dialogue procedures are used. However, the Commission has been flexible and has generally not sought to challenge public bodies in relation to purchase contracts. In several cases, it has accepted that a negotiated procedure used in PPP transactions has delivered a market result. The Commission explained the above principles in a November 2007 document titled “Frequently Asked Questions Concerning the Application of Public Procurement Rules to Social Services of General Interest” [see Endnote 19] as follows: “... a tender procedure guaranteeing full competition can be taken as an important indicator that the [contract is at] market price and that there is no State aid. Complying with procurement rules will in these cases therefore also help in ensuring respect of the State aid provisions”.
1. Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Making Public Procurement work in and for Europe, COM(2017), 572 final, 3 October 2017.
2. Public Procurement Indicators 2015 – DG GROW G4-Innovative and e-Procurement, 19 December 2016.
5. Except where otherwise stated, references in this chapter are to Articles in the TFEU.
6. ‘European Commission Interpretative Communication on the Community Law Applicable to Contract Awards Not or Not Fully Subject to the Provisions of the Public Procurement Directives’, 23 June 2006.
7. ‘Proposal for a Regulation on the Access of Third-country Goods and Services to the Union’s Internal Market in Public Procurement and Procedures Supporting Negotiations on Access of Union Goods and Services to the Public Procurement Markets of Third Countries’, COM (2012), 124 final, 21 March 2012.
8. Amended proposal for a Regulation of the European Parliament and of the Council on the access of third-country goods and services to the Union’s internal market in public procurement and procedures supporting negotiations on access of Union goods and services to the public procurement markets of third countries, COM(2016), 34 final, 29 January 2016.
9. Essentially, governments and government departments.
10. For example, local authorities.
11. Jean Auroux and Others v. Commune de Roanne, Case C-220/05, judgment of 18 January 2007.
12. Helmut Müller GmbH v. Bundesanstalt für Immobilienauf-gaben, Case C-451/08, judgment of 25 March 2010.
13. Teckal Srl v. Comune de Viano and Azienda Gas-Acqua Consorziale (AGAC) di Reggio Emilia, Case C-107/98, judgment of 18 November 1999.
14. Parking Brixen GmbH. v. Gemeinde Brixen and Stadtwerke Brixen AG, Case C-458/03, judgment of 13 October 2005.
15. Commission Staff Working Paper concerning the application of EU public procurement law to relations between contracting authorities (“public-public cooperation”), SEC (2011), 1169 final, 4 October 2011.
16. The standard forms are contained in Commission Implementing Regulation (EU) 2015/1986 of 11 November 2015.
17. Commission of the European Communities v. Federal Republic of Germany, Case C-503/04, judgment of 18 July 2007.
18. Wall AG v. La ville de Francfort-sur-le-Main and Frankfurter Entsorgungs-und Service (FES) GmbH, Case C-91/08, judgment of 13 April 2010.
19. Commission Staff Working Document concerning frequently asked questions concerning the application of public procurement rules to social services of general interest; Accompanying Document to the Communication on “Services of General Interest, including Social Services of General Interest: A New European Commitment”, 20 November 2007, SEC (2007), 1514.

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