PUBLIC CONTRACTS (9138/06)
Letter from Rt Hon Ian McCartney MP, Minister
for Trade, Investment and Foreign Affairs, Department of Trade
and Industry/Foreign and Commonwealth Office to the Chairman
Thank you for your letter of 20 June 2006[40]
regarding Explanatory Memorandum 9138/06 on the Commission's proposals
to revise the remedies (public procurement) Directives (9138/06
COM (06) 195).
In your letter you commented that you were satisfied
the the Commission's proposal fitted broadly with the UK's own
policy objectives on securing fairer access to public procurement
across the EU, but that it would be important that the approach
taken on the introduction of the standstill period should be proportionate
to its objectives. You asked to be informed on the progress of
the negotiation in the Council and the Parliament and the following
provides an update.
Significant progress has been made under the
Finnish and German Presidencies. We are now at the stage where
Member States have agreed that the German Presidency should exchange
views with the European Parliament.
Under the Finnish Presidency four main issues
were identified where Member States were either seeking clarification
or questioned whether the approach in the Commission's proposal
was proportionate.
These concerned:
(i) the scope of application;
(ii) the treatment of direct awards, where these
were allowed under the public procurement directives (2004/17/EC
and 2004/18/EC);
(iii) the application of the standstill period
to call-off contracts under frameworks, and
(iv) when the penalty of ineffectiveness should
be applied.
On the scope of application, Member States have
sought clarification that remedies should only apply to contracts
covered by the underlying public procurement directives (2004/17/EC
and 2004/18/EC). In the latest German Presidency text, it has
been made clear, both in a recital and in Article 1, that the
remedies rules only apply to contracts falling within the scope
of the directives.
Questions have arisen in the negotiations about
whether the standstill period should apply to contracts where
a notice in the Official Journal of the European Union (OJEU)
is not required by the directives, such as those contracts requiring
extreme urgency or where only one supplier can perform the contract.
In such circumstances, there would be nothing to be gained by
requiring a standstill period. It has now been made clear in the
Presidency text that there is no requirement to apply the standstill
period where the underlying directives do not require publication
of a contract notice in the OJEU.
Member States have also questioned, on the grounds
of proportionality, whether there should be a standsill period
for call-offs contracts awarded under frameworks following further
competition. A standstill period will already have been applied
when the framework agreement was originally let. The view of most
Member States, including the UK, is that a second standstill period
is not necessary and would undermine the advantages of using framework
agreements, which were explicitly allowed for the first time in
the public sector directive (2004/18/EC), because they are an
effective procurement technique. It would be particularly disproportionate
to apply a mandatory standstill period to those contracts which
were below the threshold of the directives. A derogation for all
contracts let under framework agreements has been provided for
in the latest Presidency text.
Progress has also been made on clarifying the
use of sanctions where the rules have been breached. Member States
were concerned that ineffectiveness, which would make a contract
unenforceable, would have to be applied automatically and that
it would be applied for all breaches, without regard to how serious
they were. The Presidency text makes clear that ineffectiveness
is not automatically applied following a breach of the rules.
The consequences of a contract being ineffective are also a matter
for national law, which can provide for the cancellation of all
contractual obligations or limit the scope to those obligations
still to be performed.
Where ineffectiveness is not applied or where
there was a breach of the procedural rules of the remedies proposal,
proportionate alternative penalties, such as fines, would be applied.
These changes meet the concerns of the Member States.
It remains to be seen how discussions with the
EP will progress on these issues, but the dossier will be discussed
at the Competitiveness Council in May and there will be a first
reading vote in the EP in June.
21 April 2007
40 Correspondence with Ministers, 40th Report of Session
2006-07, HL Paper 187, p 123. Back
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