16 Remedies in the field of public procurement
| (27485)
9138/06
+ ADD 1
COM(06) 195
| Draft Directive amending Council Directives 89/665/EEC and 92/13/EEC CEE with regard to improving the effectiveness of review procedures concerning the award of public contracts
|
| Legal base | Article 95 EC; co-decision; QMV
|
| Document originated | 4 May 2006
|
| Deposited in Parliament | 12 May 2006
|
| Department | Trade and Industry
|
| Basis of consideration | EM of 6 June 2006
|
| Previous Committee Report | None
|
| To be discussed in Council | No date set
|
| Committee's assessment | Legally and politically important
|
| Committee's decision | Cleared
|
Background
16.1 The award of contracts by public authorities has been subject
for a considerable time to a regime adopted at EC level. The procurement
procedures of utilities (i.e. those entities operating in the
water, energy, transport and postal services sectors) were subject
to their own particular regime, and the relevant Directives have
now been consolidated by Council Directive 2004/17/EC.[53]
For contracts awarded by the generality of public authorities
separate Directives were adopted in relation to supplies, works
and services, but these have now been consolidated by Council
Directive 2004/18/EC on the award of public works contracts, public
supply contracts and public service contracts.[54]
16.2 The procurement regime is supported by two Directives
providing remedies in the event of failures to observe the prescribed
procedures. Council Directive 89/665/EEC of 21 December 1989 provides
for remedies relating to procedures for the award of public supply
and public works contracts[55]
and Council Directive 92/13/EEC of 25 February 1992 makes similar
provision for remedies relating to procedures for the award of
contracts by entities operating in the water, energy, transport
and telecommunications sectors.[56]
16.3 Following a consultation of interested parties,
the Commission has identified various weaknesses in the current
working of the system of remedies, in particular, the difficulty
of ensuring that a decision to award a contract may be set aside
before the contract itself comes into force. In this regard, the
Commission notes the lack of any co-ordinated rules on the time
limits which govern the ability to challenge the award of a contract
before it is concluded. The Commission notes that the result of
signing the contract in question is almost always to make irreversible
the effects of a disputed decision to award the contract. The
existing remedies for reviewing the award of a contract after
it has been concluded are generally limited to the award of damages,
but such a remedy does not allow the claimants to ensure that
the contract is re-tendered. The Commission also considers that
the possibility of an award of damages does not have much deterrent
effect on public authorities because of the burden on the claimant
to show that he would have had a serious chance of being awarded
the contract.
16.4 The Commission refers to Case C-81/98 Alcatel
Austria and others v. Bundesministerium für Wissenschaft
und Verkehr (judgment of 28 October 1999) in which the ECJ
decided that the provisions of 89/665/EEC meant that Member States
must ensure that a contracting authority's decision to award a
contract to a particular bidder "is in all cases open to
review in a procedure whereby an applicant may have that decision
set aside … notwithstanding the possibility, once the contract
has been concluded, of obtaining an award of damages". The
Commission notes that there are inconsistencies in which the case
law of the ECJ is applied, and that it is not taken into account
in all Member States and even where it is, most countries do not
having provisions creating a fully effective "standstill"
period (i.e. a period within which the award of the contract may
be challenged) for the award of all contracts falling within the
EC public procurement regime.
The draft Directive
16.5 The proposal would amend Council Directives
89/665/EEC and 92/13/EEC so as to require an awarding authority
to suspend the conclusion of a contract following an award procedure
for a minimum period of ten calendar days from the date when bidders
are given a reasoned notification of the award decision. In cases
where the awarding authority awards a contract directly (i.e.
with no prior advertisement or tender procedure) and the value
of the contract is above the relevant thresholds in Directives
2004/17/EC and 2004/18/EC the conclusion of the contract must
be suspended for a period of ten calendar days from publication
of a simplified award notice.
16.6 To counter any attempt to circumvent the suspension
period, amendments are proposed which would require the conclusion
of a contract within the period to be "considered invalid".
However, the amendments also permit Member States to provide that
a contract which has been concluded in these circumstances may
have certain effects between the parties, or in relation to third
parties for a maximum period of six months. The same six-month
period of limitation may also be applied in respect of any reference
to a review body of the award of a contract.
The Government's view
16.7 In his Explanatory Memorandum of 6 June 2006
the Minister for Trade at the Department of Trade and Industry
(Mr Ian McCartney) states that the Government agrees with the
Commission's aim of providing effective remedies where the public
procurement rules have been breached, that this supports the UK
policy of achieving value for money through competition and that
this will help UK suppliers have confidence in bidding for contracts
in the European Union.
16.8 The Minister informs us that the Commission
has discarded the option of providing for the setting up an independent
authority in each Member State to tackle the problems it had highlighted,
and that the Government agrees with the Commission's analysis
that the resources which would be required make this a less attractive
option than providing for a standstill period.
16.9 The Minister also explains that, following the
ruling of the ECJ in the Alcatel case, the UK has already
introduced a 10-day standstill period in its domestic regulations
giving effect to Directives 2004/17/EC and 2004/18/EC. The Minister
adds that the Government supports the Commission's aim of introducing
a harmonised approach across Member States, because of the increased
confidence this will give to economic operators in the system
for remedies, but that the Government will wish to make sure that
the approach set out in the amendments for the standstill period
is proportionate to meeting the objective.
Conclusion
16.10 We thank the Minister for his helpful Explanatory
Memorandum and we agree with the comments he has made. The proposal
appears to us to have been carefully considered by the Commission
and is timely and appropriate, and largely reflects existing UK
practice. We therefore clear the document.
53 OJ No. L 134, 30.04.2004, p.1. Back
54
OJ No. L 134, 30.04.2004, p.114. Back
55
OJ No. L 395, 30.12.1989, p.33. The Directive has been amended
by Council Directive 92/50/EEC of 18 June 1992 to extend its scope
to cover public service contracts. Back
56
OJ No. L 76, 23.03.1992, p. 14. Back
| 
