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PUBLIC PROCUREMENT

TRAINING FORIPA BENEFICIARIE

SIGMA is a joint initiative o the OECD and the EU,

principally fnanced by the EU.

www.sigmaweb.org


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In December 2007,an Expert Group set up by the Regional School or Public Administration and

SIGMA submitted a report presenting the situation o public procurement training in IPA countries,

and a possible initiative to improve that situation. According to the report, the weakest link in the

public procurement system o most o the regions countries/entities is national training capacity.

Existing educational materials are oten basic and mostly ocused on legal requirements, and they

largely neglect the economic and operational aspects o procurement processes.

To develop a strategy ostering sustainable training systems or public procurement, the report

proposed a 3-year action plan to:

n develop comprehensive training materials,

n localise the materials or each benefciary country,

n train and certiy a group o trainers rom the region,

n monitor and support the initial trainers activities in their countries.

The European Commission asked SIGMA to elaborate generic training materials that would frst beused to train uture trainers and then tailored to the specifc situation o each country.

The result presented is a semi-fnal product, based on EC legislation and practice, that will need

to be adapted to the local legislation and context o each benefciary country. The product is

designed or training purposes and it provides several tools (case studies, exercises, tests) to be

used in training classes. It intends to cover the totality o the public procurement process, rom

procurement planning and preparation to contract management and contract perormance

measurement, thereby going beyond the traditional ocus on public procurement legislation. It

ollows the chronology o the whole procurement process and is organised around the topics that

orm procurement ocers reality - it addresses questions that they ace in their daily practice. Italso contains a module or economic operators.

The training package is divided into two parts: the Students Pack and the Trainers Pack. The

ormer contains the main materials or training participants, and the latter oers additional resources

or trainers (answers to exercises and questions, handouts, slides, pedagogical instructions).

The product was prepared between January 2009 and February 2010.

The drating team was composed o Gian Luigi Albano (Italy), Mike Fogg (UK), Jacek Krolikowski

(Poland), Despina Pachnou (Greece), Elisabetta Piselli (Italy), Georey Smith (France), Susie Smith

(UK) and Peter Trepte (UK).

A review team was established to comment on the drats and was composed o Klodiana Cankja

and Reida Kashta (Albania), Dzinita Foo (Bosnia and Herzegovina), Tamara Obradovi-Mazal and

Maja Kust (Croatia), Peter Braun (Denmark), Mare Bogeva-Micevska and Aleksandar Agrirovski (the

ormer Yugoslav Republic o Macedonia), Gabriella Fribiczer (Hungary), Ilaz Duli (Kosovo/UNSCR

1244), Sandra katari-Krstovi (Montenegro), Predrag Jovanovi, Branislav Cvetkovic and Dragana

Radojicic (Serbia) and Kadir Akin Gzel (Turkey).

The OECDs Directorate or Public Governance and Territorial Development kindly allowed the

inclusion o two publications on integrity in public procurement.

The whole project was managed by a SIGMA team composed o Marian Lemke (lead manager),

Peter Bennett, Peder Blomberg (also a member o the drating and review teams) and Valrie Forges.


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SIGMA

The SIGMA Programme Support for Improvement in Governance and Management

is a joint initiative o the Organisation or Economic Co operation and Development (OECD) and the

European Union, principally fnanced by the EU.

Working in partnership with benefciary countries, SIGMA supports good governance by:

n Assessing reorm progress and identiying priorities or reorm against baselines set

by good European practice and existing EU legilsation

n Supporting institution-building and the setting-up o legal rameworks

n Facilitating assistance rom the EU and other donors by helping to design projects

and implement action plans.

In 2010, SIGMA is supporting the public administration reorm eorts in:

n EU candidate countries Croatia, the ormer Yugoslav Republic o Macedonia,

and Turkey

n Potential EU candidates Albania, Bosnia and Herzegovina, Montenegro, Serbia,

and Kosovo (under UNSCR 1244/99)

n European Neighbours and Partners Algeria, Armenia, Azerbaijan, Belarus, Egypt,

Georgia, Israel, Jordan, Lebanon, Libya, Moldova, Morocco, Occupied Palestinian

Territory, Syria, Tunisia and Ukraine, as well as Russia

SIGMA supports the reorm eorts o its partners in the ollowing areas:

n Civil service and administrative lawn Public integrity

n External audit

n Public internal fnancial control

n Public expenditure management

n Public procurement

n Policy-making and co-ordination

n Regulatory policy and capacities

For urther inormation on SIGMA, consult our website: http://www.sigmaweb.org

OECD - 2010

Application or permission to reproduce or public or commercial use, or translate all or part o

this material should be made to the Editorial and Rights Division o the OECDs Public Aairs

and Communications Directorate, OECD, 2 rue Andr Pascal, 75775 Paris Cedex 16, France

(mailto: [email protected]).


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A

Module

IntroductionandprinciplesA1 legislAtive frAMework

And bAsic principles 1

A2 institutionAl frAMework 24

A3 HistoricAl context 41

A4 tHe econoMics

of public procureMent 63

Public

Procurement

training for

iPa beneficiaries


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Ml

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Introduction and principles

Legislative frameworkand basic principles

pA

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Section 1: Introduction 2

Section 2: Narrative 4

Section 3: xercises 17

Section 4: he law 20

Section 5: Chater summary 22


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1.1 Objvs

he objectives of this chater are to exore, exain and understand:

nHow ubic rocurement is reguated within the uroean nion

n Which rovisions of the reaty ay

n Which other genera rues ay

nhe aication of secondary egisation (the irectives)

n How the uroean Court of Justice (CJ) gets invoved in the rocess

n How nationa rocurement aw has deveoed

n How various other nationa aws ay to the rocurement rocess

1.2 MpOAn ssus

he most imortant issues in this chater are understanding:

nhe eect of the dierent sources of the rues

nhe basic rincies that ay to ubic rocurement

n How nationa aw must be adated to the uroean rues [this resuoses

accession and must be adated to the oca situation]

It is therefore critica to understand fuy:

n he dierent eves of rues, where they come from, and how they interact to

rovide a comrehensive system of reguation

nhe roe of the uroean Court of Justice (CJ) in interreting the rues

nhe roe of the nationa aw in cometing the rues

1.3 Lnks

here is a articuary strong ink between this chater and the foowing modues or sections:

n Modue C part 4 on ubic rocurement rocedures and techniques

n Modue parts 1-6 on conducting rocurement rocedure, which requires

comiance with the basic rincies

Comiance with the reaty aw rincies and genera aw rincies which ay to ubic

rocurement in the context is a requirement that ows through the whoe rocurement

rocess, from the design of the technica secications through the choice of award

rocedure and seection of tenderers to the award of the contract. Faiure to resect these

fundamenta rincies can jeoardise the entire rocurement, and they ay indeendenty

of the uroean irectives or nationa rocurement aw [this ast hrase again resuoses

accession and must be adated to the oca situation].

sOn 1nODuOn


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1.4 LvAn

his information is imortant for a ersons imicated in the rocurement rocess but

wi be of articuar reevance to those rocurement rofessionas who are resonsibe for

rocurement anning, the design of technica secications and the rearation of tender

documentation incuding quaication criteria, and for those invoved in the evauation

rocess. hose resonsibe for contract administration wi aso need to ensure that the basic

rincies are resected during contract renegotiation (changing orders, rice variation etc.).

1.5 LgAL nfOMAOn hLpfuL O hAv O hAnD

In addition to ooking at some of the rovisions of the irectives and nationa aw,

consideration of the basic rincies that ay to ubic rocurement in an context aso

imies knowedge of the C reaty, as amended. In articuar, you wi need to be aware of

the foowing artices of the reaty:

nArticle 12 on the rohibition against discrimination on grounds of nationaity;

n Article 28 on the free movement of goods and the rohibition of quantitative

restrictions on imorts and exorts and measures having equivaent eect;

n Article 43 on the freedom of estabishment;

n Article 49 on the freedom to rovide services.

In irective 2004/18/C, you shoud consider in articuar ecita 2 and Artice 2.

In nationa aw, ease ook at:

o be adated to nationa aw


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2.1 nODuOn

In this narrative, we wi rst ook at the context of ubic rocurement in the uroeannion () in order to understand better how the rocurement irectives and nationa aws

that form the basis of this training rogramme ay in ractice. We are concerned here with

two issues: the ega framework and the basic rincies that ow from it. We wi then turn

to consider how these are transated into nationa aw.

2.2 u pubL pOuMn LgsLAv fAMOk

In the case of ubic rocurement, it is necessary to ook not ony at the rocurement

irectives themseves but aso at the context within which they were adoted. ven with

the irectives in ace, more genera rovisions contained in the reaty of ome wi ay, as

we as more genera rincies of aw, which wi guide the interretation of the irectives.

hese eements are referred to coectivey as the acquis throughout this manua.

2.2.1 e reat o ome

he reaty of ome 1957 (and subsequent treaties amending the reaty of ome) hereafter

referred to as the reaty does not incude any exicit rovisions reating to ubic

rocurement. hat does not mean, however, that it does not contain rovisions that aect

ubic rocurement within the . n the contrary, the reaty estabishes a number of

fundamenta rincies that underin the . hese rincies ay equay to the ed of

ubic rocurement. f these fundamenta rincies, the most reevant in terms of ubicrocurement are:

n Prohibition against discrimination on grounds o nationality(artice 12 of the reaty)

his rincie embodies a standard of nationa treatment that requires ersons

in a situation governed by Community aw to be aced on a cometey equa

footing with nationas of an member state, i.e. in a rocurement context, an

economic oerator from one member state must be treated in the same way as

an economic oerator from the contracting authoritys member state. his is not

the same as the rincie of equa treatment, which does not rey on the concet

of nationaity.

his artice aies ony to Community nationas, individuas and ega ersons

who are resident in any of the member states of the Community. Nationas from

third countries are excuded from the rotection aorded by artice 12 because

they are not within the scoe of aication of this reaty.

n Free movement o goods and prohibition o quantitative restrictions on imports and

exports and measures having equivalent efect(artice 28 et seq.)

his rincie seeks to revent a trading rues enacted by Member States

that are caabe of hindering, directy or indirecty, actuay or otentiay, intra-

Community trade. he objective is to revent member states, through their

contracting authorities, from buying ony nationa roducts (buy nationa

sOn 2nAAv


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camaigns). It aies to both distincty aicabe measures that are ceary

intended to discriminate against foreign goods (such as oca content causes)

and indistincty aicabe measures that ay equay to oca and foreign

goods but nevertheess discriminate indirecty against foreign goods in that their

eect is to make market access more dicut for imorted roducts than for

oca ones.

nder artice 23(2), the rovisions reating to the free movement of goods ay

to both roducts originating in member states and roducts coming from third

countries that are in free circuation in member states. products coming from

third countries are considered to be in free circuation in member states if the

imort formaities have been comied with and if any customs duties or charges

having equivaent eect that are ayabe have been evied in that member state.

n Freedom o establishment(artice 43 et seq.)

his rincie is designed to guarantee the rights of Community nationas to

estabish themseves or an agency, branch or subsidiary in the territories of other

member states. It aso acts to rotect the ursuit of activities of sef-emoyed

ersons. hus, an economic oerator from a member state wi be ermitted to

carry out a business in another member state through the estabishment of a

oca entity.

n Freedom to provide services (artice 49 et seq.)

his rincie rotects the rights of the nationas of member states who are

estabished in the Community to rovide commercia or rofessiona services in

the territories of other member states. his woud incude the right of temorary

estabishment in the territory of another member state for the uroses of

roviding a service in that member state. hus, an economic oerator based inone member state wi be entited to submit a tender in another member state

without the need to set u a oca entity or reresentative.

2.2.2 geeral ricile o law

In addition to these fundamenta rincies in the reaty, some genera rincies of aw

have emerged from the case aw of the uroean Court of Justice (CJ). As generalrincies,

these wi aso be aied in the context of ubic rocurement, and a number have, in fact,

been aied by the CJ in cases concerned with ubic rocurement disutes. hey are

imortant because they wi often be used by the CJ to in gas in the egisation and to

rovide soutions of rincie to situations that are often very comex.

he most imortant of these genera rincies of aw in the current context are the

foowing.

n Equality o treatment

his rincie requires that identica situations be treated in the same way or

that dierent situations not be treated in the same way. It does not deend on

nationaity (as with the rincie of non-discrimination) but is based on the idea

of fairness to individuas. hus treating two economic oerators from the same

country dierenty coud be unequa treatment but, since they are of the same

nationaity, there woud be no discrimination (on grounds of nationaity). he

anish Bridge case rovides a good exame of the dierence.


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e j: Dai bride cae

In this case, there were two aeged breaches of rocurement aw at issue. First, a cause that

required the use of oca goods and abour. Second, the way in which the emoyer had

given one of the tenderers the chance of utting forward a variation to the secications

contrary to the instructions set out in the tender documents. he rst breach was ceary

discriminatory and thus gave rise to unequa treatment between those tenderers who coud

fu the nationaity condition and those who coud not, even though they coud meet

the outut secications. he second breach was not discriminatory because it did not

distinguish between nationa and non-nationa tenderers. It merey treated one tenderer

dierenty from the others. his is unequa treatment but is not necessariy discriminatory. It

coud aso (coincidentay) be discriminatory if it were aied to dierent nationaities.

Case C-234/89 Commission v Denmark[1993] C I-3353

n Transparency

his rincie imoses an obigation of transarency on the contracting authority,

which consists of ensuring, for the benet of any otentia tenderer, a degree ofadvertising that is sucient to enabe the oening u of the services market to

cometition and the review of the imartiaity of rocurement rocedures.

e j: oame cae

Where the irectives do not ay to the contract in question (either because it is outside

the irectives or beow the threshods), the rincie of transarency wi ay, requiring

some form of advertising of the roosed contract. hat wi be the case whenever the

contract in question may be of interest to an undertaking ocated in another member

state. his is not required, however, where the ack of advertising can be justied by

objective or secia circumstances, such as where there is ony a very modest economic

interest at stake.

Case C-231/03 Consorzio Aziende Metano (Coname) v Padania Acque SpA (Coname) [2005] C I-7287

Guidance on how the transarency objective might be achieved can be found

in the Commissions Interretative Communication on the Community aw

aicabe to contract awards not or not fuy subject to the rovisions of the

ubic rocurement irectives (24.07.2006).

n Mutual recognition

According to this rincie, an member state must accet the roductsand services suied by economic oerators in other Community countries

if the roducts and services meet in ike manner the egitimate objectives of

the reciient member state. In ractice, this means that the member state in

which the service is rovided must accet the technica secications, checks,

diomas, certicates and quaications required in another member state if they

are recognised as equivaent to those required by the member state in which the

service is rovided.


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n Proportionality

he rincie of roortionaity requires that any measure chosen be both

necessary and aroriate in the ight of the objectives sought. In choosing the

measures to be taken, an member state must adot those that cause the

east ossibe disrution to the ursuit of an economic activity. As an exame,

excetions to the reaty rincies discussed above (based on the rotection

of egitimate interests, such as ubic heath or security) must be roortiona

to the objectives sought. In the case of contracting authorities, for instance,

it coud be said that when seecting candidates and tenderers, contracting

authorities shoud not imose technica, rofessiona or nancia conditions that

are excessive and disroortionate to the subject of the contract.

hese genera rincies of aw are enunciated, for the most art, by the CJ. It does so in

the exercise of its jurisdiction to ay and interret Community aw, where it uses these

genera rincies of aw to lacunae in Community aw. hese rincies are unwritten

rues, which are not contained in the reaty but are insired by those common genera

rincies of aw recognised in the nationa ega systems of member states.

note o eeral ricile:It is imortant to remember that these genera rincies ayindeendenty of the irectives so that, even if the irectives do not ay, the rincies

may sti ay. hus contracts beow the threshods, for exame, are not covered by the

irectives but are subject to the genera rincies.

2.2.3 e u Directie

Genera rincies of aw are dicut to ay in secic situations and tend to be negative

in substance, i.e. they tend to roscribe incomatibe behaviour but do not, at the same

time, rovide ositive guidance on their aication in the concrete situations to which they

ay. It is not reaistic to imose adherence to such broad rincies without at the same

time addressing the rues for the conduct of rocurement, which reviousy diered widey

in form throughout the membershi of the uroean conomic Community.

It was necessary therefore to introduce rocedura conformity to achieve non-discriminatory

access to ubic rocurement markets. o underin the reaty rincies in the ed of ubic

rocurement and to rovide the necessary guidance to member states, the Community

adoted a series of rocurement irectives. Based on rincies of non-discrimination and

cometitive rocurement, the irectives are to be seen as a secic aication of reatyrincies and comement them by setting out their aication in the secic context of

ubic rocurement.

2.2.3.1 e mai Directie

here have been a number of irectives. In the ubic sector, there have been three main

irectives covering works, suies and services, which have been amended many times.

hese irectives did not incude contracts awarded by entities oerating in the utiity sectors

of water, energy, transort or teecommunications, which have been covered since 1990 by a

dierent series of irectives secicay for the utiities sector.


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Since 2004, however, there has been a singe directive that aies to the ubic sector and

another that aies to the utiities sector:

n he ubic sector irective is Directie 2004/18/.

n he utiities sector irective is Directie 2004/17/.

hese irectives cover ony the rocedura rues. here are two other irectives, which ay

to comaints and review (i.e. to the enforcement of the irectives). hese are known as theemedies irectives.

n In the ubic sector, remedies are governed by Directie 89/665/.

n In the utiities sector, remedies are governed by Directie 92/13/.

he above two emedies irectives have both been signicanty amended by a new

irective: Directie 2007/66/, which was due to be imemented by the member states

by 20 ecember 2009.

In addition, and as discussed further in modue 4, there is now a new irective, which

aies a more exibe and condentia regime to the rocurement of miitary suies and

reated works and services: Directie 2009/81.

It shoud be added that the uroean Commission has suemented these rocedura and

remedia irectives with further egisation deaing with various asects of the rocurement

rocess. hese incude, in articuar:

n Directie 2001/78/ on the use of standard forms in the ubication of ubic

contract notices

n elatio 2151/2003 amending elatio 2195/2002 on the Common

procurement Vocabuary (CpV); udated CpV codes were adoted under

elatio 213/2008

n elatio 1564/2005 estabishing standard forms for the ubication of

notices in the framework of ubic rocurement rocedures, ursuant to

irectives 2004/17/C and 2004/18/C

2.2.3.2 scoe o te rocedral Directie

he irectives are intended to co-ordinate nationa contract award rocedures by introducing

a minimum body of common rocedura rues that reect the basic reaty rincies rather

than to achieve the harmonisation of a nationa rues on ubic rocurement. he irectives

do not seek to imose a new common reguatory regime on member states in the ed of

rocurement, and member states can continue to ay their nationa rocedures adapted

to the irectives. he irectives thus imit their scoe to those measures required for the

co-ordination exercise and ermit the member states to maintain or adot substantive

and rocedura rues to the extent that these are not in conict with the irectives or with

reaty rovisions.

As a resut, the member states remain free to reguate a number of issues, mainy ractica

matters. hus member states may rovide, for exame, for the aication of secic

standard form tender and contract documents; they may require adherence to secic tender

oening rocedures or tender submission rocedures; they may require the submission of

aroriate tender or erformance guarantees; and they may imose secic contractua

obigations on ubic contracts resuting from ubic rocurement.


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good ractice ote:For economic oerators seeking to tender for contracts in other member states, it wi be

imortant to kee in mind not ony the rovisions of the irectives themseves but aso

the aicabe nationa rues and ractices that remain unaected (other than by reason of

comatibiity) by the irectives. hese nationa rues and ractices wi often contain ractica

requirements that are not mentioned in the irectives.

locaisation: In XXX, for exame, the [procurement law] aies the foowing requirements:

n xxx

n xxx

In essence, the common rues of the irectives consist of aying the basic rincies

referred to above, notaby non-discrimination, equa treatment and transarency in the:

n ubicity of roosed rocurement contracts

n design of technica secications

n choice of rocurement rocedure n quaication and seection of candidates and tenderers

n award of contracts.

he irectives, however, ay ony to roosed rocurement contracts of a nancia

vaue above a given threshod. ather than seeking to reguate with recision a ubic

rocurement contracts within the , the Community egisator chose to reguate in the

irectives ony those contracts that were most ceary caabe of aecting trade between

member states. hose faing within this broad denition incude:

(i) contracts that are of a sucienty high vaue to attract economic oerators from

other member states (i.e. where the otentia benets of winning the contractoutweigh the extra costs of roviding the goods, works or services from a greater

distance); and/or

(ii) those contracts concerning objects that are amenabe to cross-border trade.

his may require ocaisation: his does not mean that such contracts are not subject to

cometition. hey are, in XXX, subject to the [procurement law] and, as indicated reviousy,

to the fundamenta rincies of the reaty and to genera rincies of aw.

2.2.3.3 strctre o te Directie

ne of the imrovements brought about by the consoidation of the various irectives in2004 was the simication and streamining of the irectives, which now evidence a greater

degree of rocedura ogic, for exame by starting with the genera denitions, deaing with

the scoe of aication (entity and activity coverage), and then essentiay seeking to foow

the sequentia stes of the rocurement rocess itsef. his is aso the genera aroach

taken in this training rogramme.

Broady, the structure (taken from the pubic Sector irective) is as foows:

n denitions and genera rincies

n rues on ubic contracts

n genera rovisions


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n Scoe: threshods and rovisions on secic situations, incuding excusions

and concessions

n Arrangements for ubic service contracts

n Secic rues governing secications and contract documents

n procedures

n ues on advertising and transarency n Conduct of the rocedure: quaication and award

n ues on ubic works concessions: award of ubic works concessions and

contracts awarded by concessionaires

n ues governing design contests

n Statistica obigations, executory owers and na rovisions

2.2.3.4 Leal eect o te Directie

Member states are bound to take a aroriate measures to ensure the fument of the

obigations arising out of the reaty or resuting from actions taken by the institutions of theCommunity. he rocurement irectives, ike a irectives, are by denition not directy

aicabe, i.e. they do not ay automaticay. In order to roduce their eects within

the member states, they need to be imemented or transosed into nationa aw. he

member states are, therefore, required to take the measures necessary to give fu eect

to the rovisions of the irectives in nationa aw and to ensure that no other nationa

rovisions undermine their aicabiity. his normay takes the form of a transosition of

the irectives into nationa aw and the abrogation of a contrary egisative rovisions.

he irectives are binding ony in terms of the resut to be achieved but eave to the nationa

authorities the choice of form and methods. hus, it is not necessary for member states

to roduce an exact coy of the irectives in their nationa egisation, athough some

member states have done recisey that, by reference to the irectives themseves. Incude

ocaisation where reevant: In XXX, the method chosen is to...

Faiure to imement the irectives correcty or on time does not mean, however, that the

irectives have no eect. Member states are not entited to derive the subjects of those

irectives (contracting authorities and economic oerators) of the rights they are intended

to enjoy under the irectives. In accordance with the CJs doctrine of direct eect,

individuas may enforce in nationa courts the rights conferred by the irectives wherever

the aroriate conditions are satised. his wi haen, for exame, if a member state

fais to imement/transose the irective into nationa aw by the due date (each irectiveincudes a date by which it must be transosed) or if it has transosed the irective on time

but done so incorrecty.

he conditions necessary to give rise to the direct eect of a articuar irective are as foows:

n the obigation imosed on member states is cear and recise;

n the obigation is unconditiona;

n in the event of imementing measures, the member states or Community

institutions are not given any margin of discretion.


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he CJ has stated that many of the rovisions of the irectives do have direct eect but

that each rovision wi be considered individuay. he CJ has found that the rovisions

reating to advertising, cometition, seection and award criteria have direct eect. n the

other hand, a number of the rovisions of the emedies irectives, which require additiona

choices and decisions to be taken by the member states, such as the choice of a review body,

cannot according to the third condition mentioned above be considered as directy

eective in their entirety. Nevertheess, some of the rovisions of the emedies irectives,

such as the rovisions reating to the avaiabe remedies (namey, artices 1(1) and 2(1)(b)), are

directy eective.

note o direct eect: It is imortant to remember that economic oerators may be abe to rey on the rovisions

of the rocurement irectives even if they have not been transosed into nationa aw,

rovided the conditions are met.

2.3 nAOnAL pubL pOuMn LgsLAv fAMOk

his requires extensive ocaisation and shoud cover the foowing:

2.3.1 primar lic rocremet law

n History

n Structure

n Scoe of reguation

2.3.2 secodar lic rocremet leilatio

2.3.3 Oter releat leilatio

n Administrative aw

n Contract aw

n Crimina aw

n Budget aw

n ther secia aws

2.4 bAs pnpLs Of pubL pOuMn

iscussion of the uroean and nationa egisative frameworks discoses the basic rincies

that ay to ubic rocurement.

From its origins, one of the main objectives of the has been to create a common market

that eiminates barriers to trade in goods and services between member states. Creating

a common rocurement market means removing any barriers to trade arising from the

rocurement context.

e j

he urose of coordinating at Community eve the rocedures for the award of ubic

service contracts is to eiminate barriers to the freedom to rovide services and therefore to

rotect the interests of economic oerators estabished in a Member State who wish to oergoods or services to contracting authorities in another Member State.

Case C-360/96 Gemeente Arnhem v BFI Holding BV[1998] C I-6821


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Barriers to trade can be erected by means of egisation or by the actions of contracting

authorities or economic oerators. legisation can create barriers by imosing buy nationa

requirements. Contracting authorities can imose barriers by making discriminatory award

decisions. conomic oerators can aso create barriers by couding together to rig tender

rices. A of these barriers have the eect of distorting cometition in the common

rocurement market, and one of the rimary uroses of ubic rocurement egisation is

to eiminate existing barriers and revent the erection of new barriers. It does so by aying

the basic rincies owing through the egisation.

Whie they are a inter-inked, these rincies can, for current uroses, be reduced to a

series of core rincies:

n Competition

From an economic ersective, cometition oerates as a discovery rocedure

by aowing dierent economic oerators to communicate the rices at which

goods and services are avaiabe on the market. hose rices act as guideosts

and reect the demand and suy conditions at any given moment. hey

aso reect the dierences in quaity and in terms and conditions of sae of the

dierent (non-homogenous) roducts avaiabe.

his is why the advertising rovisions discussed in modue 2 are so imortant, as

they guarantee the widest ossibe cometition, enabing economic oerators

from a over the Community to communicate their rices to a given contracting

entity, thus ensuring the greatest ossibe choice. his is aso one reason why

transarency is a core rincie, since it ensures the widest ossibe ubicity for

rocurement contracts.

Keeing cometition fair (or maintaining a eve aying ed) is a key concern

for achieving ecient and economic rocurement resuts. procurementegisation seeks to revent any distortions or restrictions of cometition within

the Community, and any attemt to revent economic oerators from being

abe to tender wi be rohibited. Such attemts can take many forms and can

aect the roducts or services or the economic oerator itsef. As a resut, the

egisation rohibits:

l barriers to the free movement of goods, e.g. imort restrictions,

customs duties, oca content rues, buy nationa oicies, nationa

technica secications or standards that revent the sae of

non-domestic roducts;

l barriers to the freedom to rovide services, e.g. attemts to restrict

foreign economic oerators from tendering through the use of oca

registration requirements, comiance with nationa rofessiona

standards or ossession of oca quaications.

protecting cometition is aso a question of maintaining equaity of treatment,

avoiding discrimination, aying mutua recognition rincies (of equivaent

roducts and quaications), and ensuring that any excetions are roortiona.


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n Equal treatment and non-discrimination

he concets of equa treatment and non-discrimination are not the same. In

genera terms, a rocurement egisation wi seek to maintain equaity between

economic oerators. In the uroean context, however, that equaity wi aso be

based on nationaity.

qua treatment is a concet that generay requires identica situations to be

treated in the same way or dierent situations not to be treated in the same way,

and it requires the identica treatment of identica eoe. In a sense, it imies

that contracting authorities wi not take into account the dierent abiities or

dicuties faced by individua economic oerators but wi judge them urey on

the resuts of their eorts, i.e. on the basis of the tenders they submit. It rovides

for an objective assessment of tender rices and tender quaities and ignores

any considerations that are not reevant to the discovery of the economicay

ecient tender.

In the uroean context, the concet of equa treatment requires yet another

denition since, in this context, the concet of equaity is, in addition, basedon nationaity or on the origin of goods, such that a economic oerators of

Community nationaity and a bids incuding goods of Community origin must

be treated equay (this is the rincie of non-discrimination). his is more than

simy an extension of the concet of equa treatment. It imies that any condi-

tion of eigibiity or origin (based on nationaity or oca rovenance) wi auto-

maticay give rise to unequa treatment, since those conditions wi, by denition,

discriminate against a certain grou of (foreign) economic oerators or favour

another. However, whie discrimination in a given context wi roduce unequa

treatment, unequa treatment does not aways give rise to discrimination.

his oint is convenienty iustrated by the Danish Bridge (Storebaelt) case(Case C-234/89 Commission v Denmark[1993] C I-3353) exained in 2.2.2 above.

n Transparency

ransarency has ony recenty emerged as a rincie in its own right,

athough it is robaby better to think of it as a too to be used to achieve other

objectives. For exame, ubication and accessibiity of the egisation rovides

carity and certainty for a stakehoders and enabes contracting authorities

and economic oerators to be aware of the rues of the game. he irectives

ay requirements of advertising that guarantee transarency in the discovery

rocess, i.e. guaranteeing the widest ossibe cometition. pubicising in

advance the technica secications and the seection and award criteria ermits

stakehoders to check that these are fair and non-discriminatory. ecording and

reorting requirements ensure that the actions of the contracting authorities

may be veried where aroriate. he atter objectives are aso a fundamenta

asect of accountabiity, i.e. hoding rocurement ocers accountabe for

their decisions and actions. Accountabiity is aso often an exicit objective

of nationa rocurement systems, and the transarency rovisions reinforce

this accountabiity.


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he imortance of the rincie of transarency in the context, however, is

that it aies indeendenty of the egisation. So, if a articuar rocurement

contracts fas beow the threshod vaues of the egisation (or nationa

egisation) or if a rocurement is excuded from the scoe of the irectives,

e.g. ubic services concessions or the rocurement of certain non-riority

services, then it is ossibe that the rincie of transarency wi continue to

ay so as to imose advertising requirements.

he CJ has consistenty stated that even if certain contracts are excuded from

the scoe of irectives, the contracting entities concuding them are nonetheess

bound to comy with the fundamenta rues of the reaty in genera and with

the rincie of non-discrimination on the grounds of nationaity in articuar.

his imies an obigation of transarency in order to enabe the contracting

authority to satisfy itsef that the rincie has been comied with.

hat obigation of transarency consists in ensuring, for the benet of any

otentia tenderer, a degree of advertising sucient to enabe the oening

u of the services market to cometition and the review of the imartiaity ofrocurement rocedures.

he degree of advertising required wi often deend on the member

state in question, eseciay where there are rovisions reguating ow-vaue

contracts. locaise as aroriate: In XXX, the [procurement law] aies

hese rocedures are discussed further in modues C4 and 2.

he rincie of transarency wi ay whenever the contract in question may

be of interest to an undertaking ocated in another member state. hat woud

not be the osition, however, where the ack of advertising can be justied by

objective or secia circumstances. Such secia circumstances wi exist, at

east where there is ony a very modest economic interest at stake.

Some of the above rincies are articuated dierenty or combined in nationa egisation.

You might, for exame, nd rincies stated in egisation, such as:

n Economy and eciency

his is a rincie that is often used to describe the technica eciency of the

rocedure itsef, i.e. whether the anning has been aroriate and carried out on

time; whether the various resonsibiities have been engaged; whether sucient

time has been given to economic oerators to reare suitabe tenders; whether

the rocurement is made in a timey manner. At a more economic eve, therincie can aso be used to identify whether the correct or best contracting

strategies (see modue A4) have been used to minimise waste and benet from

economies of scae. At a oicy eve, the rincie may be used to anayse the

aocative eciency of transactions and of the system as a whoe to determine

whether this can be otimised further.

n Value-or-money

Vaue-for-money is a oosey dened term used redominanty in Ango-Saxon

countries. o some extent, it overas with the concets of economy and

eciency so that the rocurement rocedure is carried out with the east waste

(in terms of cost and time) and as much benet as ossibe. It comes into its own,

however, when deaing with the setting of requirements and evauation.


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he basic remise is that the government shoud ony buy what is actuay

needed: eather-covered chairs shoud not be bought where astic chairs wi do

(e.g. in a waiting room). In other cases, eather-covered chairs may be referred

(e.g. in the boardroom). Whie it is for the contracting authority to decide what

to buy, the oint is that the secications must match the rea needs of the

contracting authority.

he rincie of vaue-for-money aso recognises that goods and services are

not homogenous, i.e. that they dier in quaity, durabiity, ongevity, avaiabiity

and other terms of sae. he oint of seeking vaue-for-money is that contracting

authorities shoud urchase the otimum combination of features that satisfy

their needs. herefore the dierent quaities, intrinsic costs, ongevity, durabiity,

etc. of the various roducts on oer wi be measured against their cost. It may

be referabe to ay more for a roduct that has ow maintenance costs than a

cheaer roduct with a higher maintenance cost.

xamle: prcae o riter

here are three aser jet rinters on oer, a of which rovide the same technica outut in

terms of ages er minute:

printer A: Cost of 500, cost of toner 175, ife of toner 8 000 ages

printer B: Cost of 600, cost of toner 190, ife of toner 10 000 ages

printer C: Cost of 800, cost of toner 50, ife of toner 8 000 ages

printer A is the owest rice, but does it oer vaue-for-money?

hat deends on use.

For an oce sending out occasiona etters and rearing occasiona reorts with an outut

in terms of ages that is reativey ow, the dierence in toner rices and ongevity is mosty

irreevant. n the assumtion that the oce roduces about 10 000 ages every six months,

the rea cost of the rinters over a 24-month eriod is:

printer A: 500 + 875 (5 x 175) = 1 375

printer B: 600 + 760 (4 x 90) = 1 360

printer C: 750 + 700 (5 x 140) = 1 450

printer B robaby oers the best vaue-for-money.

However, assume that the oce in question is resonsibe for generating weeky reorts of

activities and has an outut of coser to 30 000 ages every six months.

he rea cost of the same rinters for that 24-month eriod woud be:

A: 500 + 2 625 (15 x 175) = 3 125B: 600 + 2 280 (12 x 90) = 2 880

C: 750 + 2 100 (15 x 140) = 2 850

For this oce, printer C, with the highest initia cost, is beginning to ook ike the best

vaue-for-money.

If these rinters are in use for many years and if the oces urchase severa rinters, then the

savings to be made from buying the more exensive rinters become signicant.

In this sense, vaue-for-money broady equates, in terms, to the award criterion

of the most economically advantageous tender, which aows factors other than onyrice to be taken into account during the evauation. See further in modue 5.


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n Probity or integrity

procurement egisation wi aso serve to reduce the oortunities for corrut

ractices. It does this by imosing accountabiity and transarency requirements

so that the activities of rocurement ocers can be checked and veried, thereby

reducing the ossibiity that such ocers wi act in their own sef-interest. he

rocurement ocers must ceary set out in a ubic manner the requirements that

they intend to rocure as we as the seection and award criteria to be aied.

heir decisions wi be recorded and can ater be veried either by the government

(interna or externa audit) or by aggrieved economic oerators.

Some nationa aws make robity and integrity an exicit objective and they often

incude in the rocurement egisation additiona causes of a ractica nature

seeking to enforce robity (e.g. conicts of interest rovisions or the comusory

aication of integrity acts), together with consequentia rovisions addressing

the actions to be taken where corrut ractices have been found to exist. As

discussed in modue 3, revious convictions for corrut ractices can aso ead to

automatic disquaication from a rocurement rocedure.

locaisation required: In XXX, for exame, the [procurement law] is exicity based on the

foowing rincies:


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s 1

You work for a oca hosita and your boss, the new head of rocurement, has some questions.

She knows the aicabe egisative rovisions and understands the rocurement rocess, but

she is trying to understand how the basic rincies aect the rocurement function within

the hosita.

1. oes the fact that ow-vaue urchases fa beow the threshods of the aw mean that she

can carry out the urchases however she ikes?

2. She asks whether the rincie of transarency means simy that she needs to advertise

according to the aw.

3. She wonders whether there is anything in the reaty rincies that woud obige her to

emoy sta from overseas because she is not sure that they are as we quaied as

[ocaise] sta.

4. here have been questions about the quaity of sutures coming from certain uroean

countries does she have to buy the cheaest one regardess of quaity?

5. here has been much tak of the new generation of keyhoe surgery cameras. hey are

more exensive than existing modes and she asks you to he rovide a business case for

urchasing the new cameras. What issues woud you raise?

6. A oca V ceebrity chef has been comaining that the hosita sources foodstus from

abroad and the atients have been comaining of being forced to eat foreign food.

Can she make it a condition that food roducts shoud aways be ocay sourced?

7. loca environmenta grous have been comaining about the astic waste of the hosita

which comes mainy from drink ackaging. he astic bottes that are the basis of the

comaint are roduced by foreign comanies, and she has discovered that most nationa

comanies suy gass bottes that are recycabe. She thinks she can avoid the robem by

making it a requirement that ony gass bottes may be suied for environmenta reasons.

Is she right?

sOn 3ss


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FRee MoveMeNT

equAl TReATMeNT

NoN-dISCRIMINATIoN

TRANSPAReNCy

MuTuAl ReCogNITIoN

PRoPoRTIoNAlITy

pnpL pOnAL bAh

Aowing ony tenderers registered in the

member state of the contracting authority

Aowing ony tenderers with a

rofessiona quaication from the

member state of the contracting authority

xcuding a roducts not conforming to

nationa environmenta standards

Aowing ony roducts conforming to

nationa technica standards

equiring the use of oca goods and abour

Changing the secications to match a

referred tender

emaining sient on the seection criteria to

be aied

Imosing a buy nationa oicy

s 2

pOnAL bAh Of bAs pnpLs

Match the potential breach on the right to the principle(s) on the let

Cue: there coud be more than one connection er rincie


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gOup DsussOn On AnspAny

Sit into grous of no more than 6 each for a debate on the aication of the rincie of

transarency to beow-threshod rocurement.

Haf of the grous wi take the osition that the imosition of such a rincie is ositive.

he other haf wi take the osition that the imosition of such a rincie is negative.

Issues to be addressed incude (but are not imited to):

n whether transarency is required at a eves for reasons of accountabiity

and robity

n whether economy and eciency require a cut-o oint beow which the transarency

rincie does not ay

n the ace of a cost/benet anaysis in the debate (cost of transarency/consequentia

benet to contracting authority)

n whether the rincie of roortionaity has any roe to ay

n how such a rincie is to be imemented and enforced

ach grou is to resent their arguments and concusions in turn. A vote is to be taken at the end.


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As fOM Dv 2004/18/

ecital 2: Principles deriving thererom, such as the principle o equal treatment, the principle o

non-discrimination, the principle o mutual recognition, the principle o proportionality and the

principle o transparency. However, or public contracts above a certain value, it is advisable to draw up

provisions o Community coordination o national procedures or the award o such contracts which

are based on these principles so as to ensure the efects o them and to guarantee the opening-up o

public procurement to competition. These coordinating provisions should thereore be interpreted in

accordance with both the aorementioned rules and principles and other rules o the Treaty.

Article 2: pricile o awardi cotract

Contracting authorities shall treat economic operators equally and non-discriminatorily and shall act

in a transparent way.

locaisation: xtracts from nationa aw:

As fOM h Ay Of OM, As AMnDD:

Article 12 o te roiitio aait dicrimiatio o rod o atioalit:

Within the scope o application o this Treaty, and without prejudice to any special provisions contained

therein, any discrimination on grounds o nationality shall be prohibited.

The Council, acting in accordance with the procedure reerred to in Article 251, may adopt rules designed

to prohibit such discrimination.

Article 28 o te ree moemet o ood ad te roiitio o qatitatie

retrictio o imort ad exort ad meare ai eqialet eect

Quantitative restrictions on imports and all measures having equivalent efect shall be prohibited

between Member States.

Article 30 o ermitted excetio to te ree moemet o ood ad te

roiitio o qatitatie retrictio o imort ad exort ad meare

ai eqialet eect:

The provisions o Articles 28 and 29 shall not preclude prohibitions or restrictions on imports, exports or

goods in transit justied on grounds o public morality, public policy or public security; the protection

o health and lie o humans, animals or plants; the protection o national treasures possessing

artistic, historic or archaeological value; or the protection o industrial and commercial property.

Such prohibitions or restrictions shall not, however, constitute a means o arbitrary discrimination or a

disguised restriction on trade between Member States.

sOn 4h LA


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Article 43 o te reedom o etalimet:

Within the ramework o the provisions set out below, restrictions on the reedom o establishment

o nationals o a Member State in the territory o another Member State shall be prohibited. Such

prohibition shall also apply to restrictions on the setting-up o agencies, branches or subsidiaries by

nationals o any Member State established in the territory o any Member State.

Freedom o establishment shall include the right to take up and pursue activities as sel-employedpersons and to set up and manage undertakings, in particular companies or rms within the meaning

o the second paragraph o Article 48, under the conditions laid down or its own nationals by the law

o the country where such establishment is efected, subject to the provisions o the chapter relating

to capital.

Article 49 o te reedom to roide erice:

Within the ramework o the provisions set out below, restrictions on reedom to provide services within

the Community shall be prohibited in respect o nationals o Member States who are established in a

State o the Community other than that o the person or whom the services are intended.

Article 50 o te deitio o erice:

Services shall be considered to be services within the meaning o this Treaty where they are

normally provided or remuneration, in so ar as they are not governed by the provisions relating

to reedom o movement or goods, capital and persons.

Services shall in particular include:

(a) activities o an industrial character;

(b) activities o a commercial character;

(c) activities o cratsmen;

(d) activities o the proessions.

Without prejudice to the provisions o the chapter relating to the right o establishment, the person

providing a service may, in order to do so, temporarily pursue his activity in the State where the service is

provided, under the same conditions as are imposed by that State on its own nationals.


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sLfs usOns

1. oes the reaty of ome, as amended, itsef reguate rocurement in the ?

2. escribe the reaty rincies that ay to rocurement.

3. What is the dierence between the freedom of estabishment and the freedom to rovide

services? How does each freedom assist tenderers from dierent member states?

4. Name the core genera rincies of aw that ay to rocurement.

5. Where do these genera rincies of aw come from?

6. What is the dierence between the rincie of equaity of treatment and

non-discrimination?

7. escribe the rincie of transarency.

8. When does the rincie of transarency ay?

9. If the uroean directives have not been transosed into nationa aw, do the reaty

rincies or genera rincies of aw matter? Why?

10. Identify the main rocedura directives.

11. Are there any other directives that are imortant?

12. o the directives rovide a comete rocurement code for the member states?

13. What, if anything, remains within the jurisdiction of the member states?14. o the directives ay to a contracts? Which contracts are not covered?

15. What distinguishes the coverage of the directives from the coverage of the

nationa rues?

16. Set out the essentia rues of the directives.

17. What haens if the directives are not transosed into nationa aw by the deadine?

18. What haens if the member states transose a directive incorrecty?

19. What is the main urose of the uroean directives?

20. Identify four barriers to trade that coud be erected by dierent ayers in the

rocurement market.

21. What is cometition, and why is it imortant?

22. Why is advertising imortant to cometition?

23. xain the concet of non-homogenous roducts and services.

24. What eect do these have on cometition?

25. se the anish Bridge case to exain the concet of equa treatment.

26. xain the concet of vaue-for-money.

27. In your oinion, shoud rice be the ony award criterion? Why?

sOn 5hAp suMMAy


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Chapter summary

fuh ADng

he various texts that make u the egisative framework, aong with a range of other usefu

documents and inks, can be found on the G Market website at:

http://c.rpa./intrna_markt/pbicprcrmnt/isatin_n.htm

his incudes the Commission interretative communication on the Community aw aicabe

to contract awards not or not fuy subject to the rovisions of the pubic procurement

irectives (24.07.2006).

he XXX ega framework can be found at: XXXXXXXXXXXXXXX (ocaisation required)

he reaty texts can be found at: http://www.rtratis.cm/rtxts.htm


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Section 1: Introduction 25

Section 2: Narrative 27

Section 3: xercises 31

Section 4: Finding and using

the cases of the uroean

Court of Justice 36

Section 5: Chater summary 40


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1.1 Objecves

he objectives of this chater are to exore, exain and understand:

n he institutions that are invoved at uroean eve

n he institutions that are invoved at nationa eve

n he roe of the contracting authorities

n he way in which these actors reate to each other

1.2 pOrA sses

he most imortant issues in this chater are understanding:

n he egisative and reguatory functions of the various bodies

n he duties and obigations of the contracting authorities

n he imortance of imementation and enforcement

n It is therefore critica to understand fuy:

n he division of abour between these institutions

n he key functions and sources of authority of these institutions

n he imitations of each of these institutions vis--vis the others

1.3 Lks

here is a articuary strong ink between this chater and the foowing modues or sections: n Modue A1 on the basic rincies of ubic rocurement and the

egisative framework

n Modue B on the duties of the contracting authorities

n Modue F on review and remedies

n Modue G on contract management

1.4 reLevAce

his information is imortant for a ersons imicated in the rocurement rocess

because it rovides a background to the institutions invoved. It is of articuar reevance torocurement ocers who wi need to communicate and iaise with the nationa institutions

for information, guidance and assistance through the rocurement rocess, and those that

are imicated in review rocedures.

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1.5 LegAL fOrAO heLpfL O hAve O hAD

[locaisation required: It wi be usefu to refer to [xxxxx aw/reguation] which contains a

descrition of the duties and functions of the reevant nationa bodies, namey XXXX

and XXXX]

In addition, it may be usefu to refer to the foowing paers reared by C/SIGMA,

which consider the institutiona framework of a number of Member States in resect ofubic rocurement.

SIGMA paer No. 40:

CentralPublicProcurementStructuresandCapacityinMemberStates

oftheuropeannion

SIGMA paer No. 41:

PublicProcurementReviewandRemediesSystemsintheuropeannion


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2.1 rODcO

he institutiona framework oerates at two eves: the uroean eve and the nationa eve.

Contracting authorities, which may aso be considered as institutions, are bound by the

rovisions of the irectives and the nationa rovisions that transose them. hey are

answerabe both to the uroean Commission as emanations of an Member State and

to individua economic oerators, which may rey on the emedies irective to chaenge

infringements by them in the nationa bodies.

2.2 erOpeA sOAL frAewOrk

A number of dierent organisations are imicated in rocurement at the uroean eve.

hese organisations are the foowing:

2.2.1 community Lilato

Athough the reaty (reaty of ome 1957 and treaties amending the reaty of ome) uses

dierent terminoogy, the Community legisator is, in eect, the Counci of the uroean

Communities, acting either aone or in co-oeration with the uroean pariament. A recent

rocurement irectives were adoted by these two institutions acting together, using the

co-decision rocedure.

he Counci has been assigned the roe of ensuring co-ordination of the genera economic

oicies of the member states, and conferred the ower both to take decisions and to in turn

confer on the Commission, in the acts that it adots, owers to imement the rues aid

down by the Counci.

Cruciay, however, the Counci does not have the right of initiative. hus, it does not have the

ower to enact egisation that has not been roosed by the Commission.

2.2.2 rol o e mm tat

For the uroses of the , the member states are bound to take a aroriate measures

to ensure the fument of the obigations arising out of the reaty or resuting from actions

taken by the institutions of the Community. hey are required to faciitate the achievement of

the Communitys tasks and must abstain from any measure that coud jeoardise attainment

of the objectives of the reaty.

In terms of the irectives, the member states are (therefore) required to take the measures

necessary to give fu eect to their rovisions in nationa aw and to ensure that no

other nationa rovisions undermine their aicabiity. his normay takes the form of a

transosition of the irectives into nationa aw and the abrogation of a contrary egisative

rovisions.

It is imortant to note that athough the irectives are directy eective (where secic

conditions are met see modue A1) in that they can convey rights even if not imemented,

they are not directy aicabe, i.e. they need to be transosed into nationa aw.

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Moreover, they are binding ony in terms of the resut to be achieved, but eave to the nationa

authorities the choice of form and methods. hus it is not necessary for the member states

to roduce an exact coy of the irectives in their nationa egisation. his is aso discussed

in modue A1.

provided they achieve the same resuts, nationa authorities can reroduce the rovisions

of the irectives in identica fashion by amending existing egisation or by creating new

egisation or codes, etc.

locaisation required: In XXX, the reevant rovisions of the irectives are, for exame,

transosed by the [XXX] (where that is the rocess chosen).

2.2.3 rol o t euoan commiion

In addition to acting as the rooser of egisation, the uroean Commission has aso been

given by the reaty the roe of its guardian. It is given the exicit task of ensuring that the

rovisions of the reaty and the measures taken by the institutions ursuant to it are aied.

hus, in addition to having acted as the rimary oicy maker in the ed of rocurement,the Commission is aso resonsibe for the aication and genera enforcement of the

irectives. In the case of rocurement, the resonsibe directorate-genera is G-Markt.

Imementation measures taken by G-Markt incude the adotion of secondary egisation

to rovide, for exame, for the use of standard forms, the Common procurement Vocabuary

(CpV), interretative guideines and communications, and genera guideines.

Whie enforcement in nationa courts/review bodies against contracting entities in breach

of their obigations is at the suit of interested economic oerators, infringements by those

ubic authorities, as emanations of the member state, wi simutaneousy amount to a

faiure of the member state to fu its obigations under the reaty.

Such a faiure may be chaenged directy by the Commission before the uroean Court of

Justice (CJ) through infringement roceedings brought under artice 226 of the reaty. his

rocess is described in detai in modue F1.

2.2.4 rol o t euoan cout o juti

here are two Community-eve courts, each with its own jurisdiction: the Court of First

Instance (CFI) and the uroean Court of Justice (CJ). In most cases reated to rocurement,

it is the CJ that is of most interest.

he CJ ensures observance of the aw in the interretation and aication of the reaty

and its imementing rues. o this end, a number of owers have been exressy conferred

on the CJ. hese owers are mainy intended to enabe the CJ to judge the acts and

omissions of the institutions and the member states in accordance with Community aw and

to ensure uniformity in the interretation of Community aw and in the aication of this

aw by the nationa courts.


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here are three areas of the CJs work that are imortant in the case of rocurement.

n Dispute resolution

nder artice 226 of the reaty, the CJ has jurisdiction to hear disutes between

the Commission, acting as guardian of the reaty, and member states in resect

of a member states faiure to fu its obigations under the reaty. hese are

often referred to as the Commissions infringement roceedings.

hus, the Commission wi bring infringement cases against member states before

the CJ. Such actions may resut from a faiure to transose the irectives correcty

into nationa aw or from a faiure of a contracting authority to roery ay

the irectives, the nationa rovisions transosing them, or other enforceabe

Community aw, such as the reaty itsef.

n Preliminary rulings

A critica ower conferred on the CJ is the ower, granted by artice 234 of the

reaty, to ronounce, by means of a reiminary ruing, on the interpretation of the

reaty and on the validityand interpretation of acts of institutions of the Community

if a question on this subject is raised before a nationa court or tribuna.

hus in disutes between member states and rivate ersons, or between rivate

ersons themseves, questions reating to the interretation, aication and vaidity

of Community aw that arise in the context of nationa roceedings may be referred

to the CJ. Where such questions arise in the context of a rocurement disute that

has been brought in a nationa court/review body under the emedies irective,

for exame, the nationa courts may refer them for interretation to the CJ. nder

this rocedure, the nationa court/review body wi estabish the facts of the case

and formuate questions of interretation for the CJ, the answers to which are

necessary for the resoution of the case. n General principles of law

In the exercise of its jurisdiction, the CJ has cause to ay and interret Community

aw and, in so doing, has often sought to acunae in Community aw by reference

to genera rincies of aw. hese are unwritten rues, not contained in the reaty

but insired by those common genera rincies of aw recognised in the nationa

ega systems of member states.

Where decisions by the Commission imact on economic oerators, they may

brought before the Court of First Instance (CFI).

Section 4 beow contains a ractica note exaining how to nd and use CJ cases.


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2.3 AOAL sOAL frAewOrk

Imementation and enforcement of rocurement rues take ace mosty at nationa eve.

In the case ofXXX, the foowing institutions have been set u to carry out these tasks.

locaisation required:

2.3.1 puli poumnt O/Any

2.3.2 poumnt ri body

2.3.3 Oaniation at ll o ontatin autoiti and ontatin ntiti

oumnt datmnt/unit; (tid) oumnt o.

Provide link to module B.

2.3.4 cntalid oumnt - ntal uain any

Provide link to module A4


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exercse 1

erOpeA cOssO As gArDA Of he reA

Comare and contrast artice 226 of the reaty and artice 8 of irective 89/665, as amended

by irective 2007/66.

Consider the foowing questions:

1. Are these both the same rocedure?

2. If not, what are the dierences?

3. Is one better than the other (faster, more ecient, more eective)?

4. What conditions ay to each?

5. What benets does the Commission accrue in using one or the other?

Relevant/useful texts for Exercise 1:

1. Artice 226 of the reaty

If the Commission considers that a member state has faied to fu an obigation under this

reaty, it sha deiver a reasoned oinion on the matter after giving the State concerned the

oortunity to submit its observations.

If the State concerned does not comy with the oinion within the eriod aid down by

the Commission, the atter may bring the matter before the CJ.

2. irective 89/665, as amended by irective 2007/66:

Atil 8: coti manim

1. he Commission may invoke the rocedure rovided for in aragrahs 2 to 5 when, rior

to a contract being concuded, it considers that a serious infringement of Community

aw in the ed of rocurement has been committed during a contract award rocedure

faing within the scoe of irective 2004/17/C, or in reation to Artice 27(a) of that

irective in the case of contracting entities to which that rovision aies.

2. he Commission sha notify the member state concerned of the reasons which have

ed it to concude that a serious infringement has been committed and request its

correction by aroriate means.3. Within 21 caendar days of receit of the notication referred to in aragrah 2, the

member state concerned sha communicate to the Commission:

(a) its conrmation that the infringement has been corrected;

(b) a reasoned submission as to why no correction has been made; or

(c) a notice to the eect that the contract award rocedure has been susended

either by the contracting entity on its own initiative or on the basis of the

owers secied in Artice 2(1)(a).

4. A reasoned submission communicated ursuant to aragrah 3(b) may rey among

other matters on the fact that the aeged infringement is aready the subject of judicia

review roceedings or of a review as referred to in Artice 2(9). In such a case, themember state sha inform the Commission of the resut of those roceedings as soon

as it becomes known.

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5. Where notice has been given that a contract award rocedure has been susended

in accordance with aragrah 3(c), the member state concerned sha notify the

Commission when the susension is ifted or another contract rocedure reating

in whoe or in art to the same subject matter is begun. hat new notication sha

conrm that the aeged infringement has been corrected or incude a reasoned

submission as to why no correction has been made.

3. xtract from p. rete, Public Procurement in the EU(p, 2006)

(2) podu und Atil 226 (b)

9.123 nce the comaint has been deivered, the case is out of the comainants

hands. he Commission services may request further information from the

comainant but the conduct of the case from this stage on is entirey the

resonsibiity of the Commission. he comainant may not force the Commission

to roceed and withdrawing the comaint, at this stage, wi not necessariy

hat the rocedure. his is, of course, a tactica weaon in the hands of otentia

comainants. Where there has been a comaint, the Commission services wi

investigate the comaint to estabish the existence or not of any breaches of

Community aw. he Commission may nevertheess foow the same rocedure ex

ocio where it has discovered a otentia breach by other means.

9.124 If the Commission decides that, in its view, there are no breaches there is

itte the comainant can do and an individua may not force the Commission to

act.1 If he is informed of this concusion, he may attemt more ersuasion but, if

the comaint was originay carefuy drafted and roery documented, there is

not much chance of success. quay, if the comaint did not contain sucient

information or evidence the imact of the comaint may have been ost and the

tactica set-back wi be dicut to overcome. If the Commission decides that there

are breaches of Community aw, it wi take forma stes to correct the situation. It

wi normay use the rocedure rovided for in Artice 226 of the reaty. 2

(a) Contacting the member state authorities (C)

9.125 he Commission wi contact the member state authorities concerned,

raising the aeged infringements and requesting the member state to

submit its observations. It wi do this by way of forma notice (lettre de mise en

demeure).here is no time imit for this art of the rocedure and much wi

deend on the imortance given to the infringement by the Commission

services. In ractice, this administrative stage is often beset by a good dea

of revarication on the art of the member states. If the Commission fees

that it is a riority matter, this rocedure wi have a seedy journey through

the bureaucracys machinery. If not, the comainant wi have to be atient.

In Sankt Plten3, for exame, in view of the erceived urgency of the case, the

Commission rovided ony a week for Austria to rey.

9.126 he member state wi usuay rey to the Commissions objections. It

may be that the member state concerned wi amend its nationa rovisions

bringing to an end the aeged infringement. Aternativey, it may defend

its osition and caim that there is no infringement either in fact or in aw.

1 Case 48/65 Ltticke v EC Commission [1966] C 19.2here is aso a searate rocedure under Art 228 where a member state reies on the rovisions ofArt 296 or 297 in resect of miitary equiment or war and other exemtions.

3 Case C-328/96 Sankt Plten.


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If the comainant is fortunate enough to be informed of the dierent ositions

(and there is no right to this information), he may wish to make further comments.

he ikey situation, however, is that the comainant must hoe to have suied

the Commission with sucient facts and evidence to rebut the defence.

(b) Reasoned opinion from the Commission (C)

9.127 If the Commission is not satised with the member states resonse, it wi

issue a reasoned oinion. his wi incude a fu statement of the facts and a

forma statement of the infringements of Community aw aeged to have taken

ace. he reasoned oinion wi require the infringements to be brought to an

end but wi not normay suggest the measures to be taken. here is no set time

imit between the revious stage and the issue of reasoned oinion but there

wi be a time imit within which the member state is required to comy. his

woud usuay be set at two months but can be shorter where urgency requires.

Again, in the Sankt Plten4 case, Austria was given a mere 14 days to resond to

the reasoned oinion but, as the CJ made cear in that case, such short time

imits woud need to be justied.

(c) Court of Justice (C)

9.128 If the member state does not comy within the time imit set, the matter

wi be brought before the CJ in luxembourg. ue to the ressures on the CJ , it

is unikey that a judgment woud be forthcoming before about 18 to 24 months.

here is an exedited rocedure before the CJ5, but the CJ has aarenty

indicated6, in the context of the exedited rocedure for reiminary ruings, that

that ossibe deay to an individua rocurement does not satisfy the requisite

condition of urgency to bring the exedited rocedure into ay.7 If the na resut

is a judgment against the member state, the atter wi be obiged to bring the

infringement(s) to an end. he comainant does not have any standing in the

CJ rocedure, may not be reresented and may make no comments even as anobserver. Contributions from the comainant wi be imited to the contents of

the comaint.

9.129 As wi be surmised from the above, the vaue of the comaint ies argey

in the initia stages. First, the threat of a comaint, where that can be made, may

encourage the oending authority to comy with Community aw. Secondy,

the initia reaction of the Commission in the form of a etter to the member state

concerned may we achieve the same eect. hirdy, the threat or the issue of a

reasoned oinion may aso ead to comiance.8 If the case goes to luxembourg,

the immediate vaue is ost because such an action coud take about a minimum

of two and a haf years from the date the comaint is sent. If the CJ agrees thatthere has been an infringement, that infringement must be brought to an end

and the comaint wi have been successfu in ega terms. Faiure to comy with

the judgment can ead to the imosition of nes.9he commercia and nancia

success of the comaint for the comainant is a more dicut cacuation to make.

4 ibid.5 Introduced by the Amendments to the ues of procedure of the Court of Justice of the uroeanCommunities (J 2000 l322).

6 See S. Arrowsmith (above) at 1451.7he exedited rocedure has, however, been used by the CFI against rocurement conducted by theCommunity institutions: case -211/02 Tideland Signal v Commission [2002] C II-3781.

8he Danish Bridge case setted at the end of the summary hearing.9 Art 228(2); see aso case C-304/02 Commission of the European v French Republic.


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exercse 2

cAse seArch

sing the Internet, nd the case known as Beentjes and rovide:

n its fu case reference, incuding reorting detais

n the name of the Advocate Genera

n detais of any cases referred to in that case

n a short summary of the ndings of the CJ, and

n an exanation of the roe ayed by the CJ in that decision (i.e. which of the roes

discussed in section 2.2.4 was imortant)


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AOAL exApLe

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he jurisdiction of the uroean Court of Justice (the CJ) is described in section 2.2.4.

As stated in that section, the decisions of the Court of First Instance (CFI) are of ess concern

in the case of rocurement, athough might occur in the event of a chaenge against a

decision of the Commission aecting rocurement. ne such case was the unsuccessfu

chaenge of the Commissions decision to reject the suiers tender under a pHA

rogramme rocurement:

Case -185/94 Geotronics v Commission (Geotronics) [1995] C II-2795.

here is no aea from the decisions of the CJ. An aea ies to the CJ from the

decisions of the CFI. For exame, the judgment of the CFI in Geotronics was aeaed

to the CJ:

Case C-395/95 Geotronics v Commission [1997] C I-2271.

4.1 cAse refereces

he case referred to above serves to demonstrate the method of referring to cases.

he rst item is the case number. he etter indicates a case brought before the CFI. he

etter C indicates a case brought before the CJ. his is foowed by a ro number (i.e. the

rst case introduced in any one year woud be 1, the second 2, etc) and the year in which

the case is ed. Before the estabishment of the CFI in 1989, the etters C and were not

used in case references, since there was ony one court.

his is foowed by the case name. hese are the names of the arties. Where the case is

made on a reiminary reference from a nationa court, the case wi retain the name of the

origina arties. In a direct action, the rst name wi be the name of the entity bringing

the case, the second the name of the defendant. Where the case is the resut of an action

brought by the uroean Commission under artice 226 of the reaty, the rst name wi be

that of the Commission and the second the name of the member state against which the

case has been brought. In the case of an aea, the rst name wi be that of the entity

bringing the aea.

seciay in the case of Commission actions against member states, this often raises some

confusion because there wi be a arge number of cases brought against any given member

state reating to numerous rovisions of the reaty and secondary egisation. ften, therefore,commentators wi give signicant cases an abbreviated name (sometimes receded by the

latin sub nom.), either reating to one of the arties or, in the case of rocurement, referring to

the object of the rocurement. hus, an eary case b

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