compendium of eu public procurement...

HARMONISATION OF PUBLIC PROCUREMENT SYSTEM IN UKRAINE WITH EU STANDARDS

COMPENDIUM OF EU PUBLIC PROCUREMENT DIRECTIVES

(With Introductory remarks from Steen Bruun-Nielsen and Dr Eugene Stuart)

January 2015

A Project funded by the European Union and implemented by a Consortium led by Crown Agents Ltd


2

The contents of this Compendium are the sole responsibility of Crown Agents Ltd. and its Consortium partners and the opinions expressed in this document are not to be understood as in any way reflecting an official opinion of EUROPEAID, the European Union or any of its constituent

or connected organisations.


3

TABLE OF CONTENTS

Page

Preface to the Compendium of EU Public Procurement Directives Dr Eugene Stuart

4

1. INTRODUCTION TO THE EU PUBLIC PROCUREMENT DIRECTIVES Steen Bruun-Nielsen

7

2. THE PUBLIC SECTOR DIRECTIVE Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC.

23

3. UTILITIES PROCUREMENT DIRECTIVE Directive 2014/25/EU of the European Parliament and of the Council of 26 February 2014 on procurement by entities operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC.

239

4. REMEDIES DIRECTIVES Council Directive 89/665/EEC of 21 December 1989 on the coordination of the

laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts.

Council Directive 92/13/EEC of 25 February 1992 coordinating the laws, regulations and administrative provisions relating to the application of Community rules on the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors.

396

5. DEFENCE PROCUREMENT DIRECTIVE Directive 2009/81/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of procedures for the award of certain works contracts, supply contracts and service contracts by contracting authorities or entities in the fields of defence and security, and amending Directives 2004/17/EC and 2004/18/EC.

412

6. CONCESSIONS CONTRACTS DIRECTIVE Directive 2014/23/EU of the European Parliament and of the Council of 26 February 2014 on the award of concession contracts.

498

7. ELECTRONIC INVOICING DIRECTIVE Directive 2014/55/EU of the European Parliament and of the Council of 16 April 2014 on electronic invoicing in public procurement.

578


4

PREFACE TO THE COMPENDIUM OF EU PUBLIC PROCUREMENT DIRECTIVES

The EU funded Project: Harmonisation of Public Procurement System in Ukraine with EU Standards commenced work in Kiev on 11 November 2013. The Project, which is managed and implemented by an international Consortium headed by CROWN AGENTS Ltd, will operate until November 2016. The Project is focused on public procuremenmt reforms in Ukraine together with the development of the Ukrainian State aid regulatory system. More specifically, the Projects remit is to contribute to the development of a solid and consistent public finance management through the establishment of a comprehensive and transparent regulatory framework for public procurement, an efficient public procurement institutional infrastructure, the accountability and integrity of public authorities in regard to public procurement and the development of the Ukrainian state aid system. In both field of operation (public procurement reform and State aid regulation), the focus is on reforms and system building in line with the relevant EU standards (both in legal terms and in the context of best practices).

The main beneficiary of the Project is the Ministry of Economic Development and Trade on account of that organisations primary responsibility for the public procurement system of Ukraine. In parallel, the Anti-Monopoly Committee of Ukraine is also a main beneficiary on account of its responsibilities for the appeals system in public procurement and for the development of the Ukrainian State aid supervision system. At the same time, the Project is also working with a wider range of stakeholders including the Cabinet of Ministers, the Parliament (Verkhovna Rada), the Ministry of Finance, the Ministry of Justice, the Accounting Chamber, the State Financial Inspection, the numerous Contracting Authorities and Utility companies involved in public procurement, central, regional and local authorities which are relevant to the planned state aid system, the Media and Civil Society. Project support activities are primarily focused on expert advice on policies, legislation and institutional structures and operations together with a range of training activities and awareness raising and public outreach activities and initiatives.

The publication of this Compendium of EU Public Procurement Directives, in both Ukrainian and English languages, primarily seeks to address the fact that no translations of the core EU legal requirements is otherwise available to stakeholders in public procurement reforms and those tasked in Ukraine with approximating the Ukrainian public procurement system to EU standards under the terms of the EU-Ukraine Association Agreement. At this point, there is an increasing interest in EU public


5

procurement legislation as a natural consequence of Ukraines status as an EU associated country. Accordingly, it is generally desirable that the Ukrainian authorities and other stakeholders become progressively more knowledgeable about the detailed rules in the directives and this Compendium aims to facilitate this. The Compendium covers seven Directives:

1. Directive 2014/24/EU of 26 February 2014 (the new Public Sector Directive);

2. Directive 2014/25/EU of 26 February 2014 (the new Utilities Procurement Directive);

3. Directive 89/665/EEC of 21 December 1989 (the Remedies Directive applying to general public sector procurement) as amended in 2007 by Directive 2007/66/EU;

4. Directive 92/13/EEC of 25 February 1992 (the Remedies Directive related to utilities procurement in the water, energy, transport and telecommunications sectors) as amended in 2007 by Directive 2007/66/EU;

5. Directive 2009/81/EC of 13 July 2009 (Defence procurement);

6. Directive 2014/23/EU of 26 February 2014 (on the award of Concession contracts);

7. Directive 2014/55/EU of 16 April 2014 (on electronic invoicing in public procurement).

Four of these are very new, having been adopted in the course of 2014. This partly reflects the completion of a public procurement reform in the EU which resulted in the adoption of the new Public Sector Directive (Directive 2014/24/EU) and the new Utilities Procurement Directive (Directive 2014/25/EU). These will become fully operational across the EU from 2016. In addition, there is now for the first time an EU Directive on Concession Contracts (Directive 2014/23/EU). And finally, the Directive on Electronic Invoicing (Directive 2014/55/EU) is a new contribution to the increased use of electronic communications in public procurement across in the European Union. From the Ukrainian standpoint, the Association Agreement sets out a transitional period of up to eight years for the full approximation of the Ukrainian public procurement system with EU law and policy. This is reflected primarily in a timetable for the implementation of the current EU Directives but it also pre-supposes their credible and effective enforcement. While the Agreement does not specify the four new Directives, the underlying approach of the Agreement is to make its provisions living instruments; thus implying that new developments in EU law and policy (including landmark judgments from the European Courts) need to be followed by Ukraine. For that reason, it would make little sense for Ukraine to structure and apply its approximation efforts from this point onwards based on the current EU law on the various subjects covered or not covered by the four new Directives. Also, for the same reason, this Compendium of EU Public Procurement Directives excludes the 2004 Directives to be fully replaced by the 2014 Directives in 2016 and adds the Concession Contracts Directive and the Electronic Invoicing Directive.


6

It can also be noted that the completion of the recent EU reforms of the main directives creates a significant stability in EU standards from the Ukrainian point of view and, with the approach outlined above, this Compendium offers full accessibility by all interested parties to the core EU public procurement legislation in this new stable environment. Finally, while every effort has been made to ensure linguistic quality as regards the Ukrainian translation of the Directives, the Directives as presented in the Ukrainian edition of this Compendium should be regarded as an unofficial translation. In the event that a reader of the Compendium encounters a significant difficulty with some part of the Ukrainian text, we recommend cross-checking the point with the authentic English language edition. Both language texts are available on www.eupublicprocurement.org.ua. We would also welcome direct communication to the website in relation to any such problems as this will allow us to incorporate any necessary language refinements in the Ukrainian edition.

Dr EUGENE STUART TEAM LEADER January 2015

http://www.eupublicprocurement.org.ua/


7

1. INTRODUCTION TO THE EU PUBLIC PROCUREMENT DIRECTIVES

THE ORIGINS AND DEVELOPMENT OF EU PUBLIC PROCUREMENT LAW AND POLICY The original EC Treaties and the latest EU Treaty (Treaty on the Functioning of the European Union TFEU) make no specific mention of public procurement. However, the Treaty provided (from the earliest Treaty versions of the 1950s) for basic principles applicable to public procurement systems the free movement of goods and services and the related ban on quantitative restrictions on imports and exports and all measures having equivalent effect to such quantitative restrictions. This applies, moreover, to goods both originating in the EU and to goods from non-member countries that are put into free circulation in the Member States. These economic freedoms imply obligations on EU Member States not to create or maintain barriers to trade within the EU. The case law of the Court of Justice of the EU (CJEU) 1 has established a very wide understanding of these obligations to include also cases where discrimination is not overt or even intentional. Thus, any decision or actual behaviour that actually creates restrictions for some enterprises can, on the basis of these Treaty rules and principles, be challenged as being barriers to trade. A notable example in the field of public contracting is the use technical specifications that would put foreign enterprises at a disadvantage. However, the creation of a common market for public-sector procurement and construction contracts was unlikely to come about entirely as a result of the obligations Member States had undertaken in the Treaties to remove restrictions on foreign goods, services and businesses. It was still likely to be frustrated by differences in national regulations. For this reason, Community legislation was necessary to make sure that government contracts were open to all nationalities on equal terms and to make tendering procedures more transparent so that compliance with the principles laid down in the Treaties could be monitored and enforced. Therefore, to reinforce the prohibition on import restrictions resulting from discriminatory public purchasing and to make it easier for national and foreign firms to compete for public-sector contracts, the Council issued directives to coordinate procurement procedures in all public-sector procurement subject to the Treaties. 1 The case law of the Court as regards trade barriers is considerable and has developed over many years,

starting with famous leading cases, such as Cassis de Dijon case (C-120/78) concerning bans on marketing of a certain type of liquor and the Reyners case (C-2/74) on access to professions. Special cases concerning trade barriers in public procurement include in the early stages C-21/88, Du Pont de Nemours which concerned a preferential scheme in public procurement and which illustrates the relation between the procurement directives and the EU Treaty.


8

The public procurement directives had, and continue to have, a particular focus on:

The fullest EU-wide advertising of contracts; so that firms in all Member States are given an opportunity of bidding for them.

The banning of technical specifications liable to discriminate against potential foreign bidders.

The application of objective criteria in tendering and award procedures. More than forty years ago when the economic integration strategies of the then European Economic Communities (EEC) were not as yet developed, the regulation of public procurement started out quite modestly. Directive 70/32/EEC2 on procurement supplies basically reiterated the already existing trade barrier ban of the Treaty and included examples of provisions that would constitute unlawful barriers to trade. These include any exclusion of foreign products, preferential schemes, technical specifications that are unnecessarily restrictive or any other provision placing foreign products at a disadvantage. The Directive did no provide any actual harmonisation of procurement procedures; but the first step in this direction was taken by means of Directive 71/305/EEC3 and Directive 77/62/EEC4 concerning works and supplies respectively. These directives are virtually identical and were limited to require EUwide advertising of contracts and the use of objective criteria for participation. No harmonisation of tender procedures was made other than a listing of cases where the use of procedures other than open procedures was allowed. The effect was that procurement in these cases fell outside the directives. This phase of legal development concluded with amending Directive 80/767/EEC5 to reflect and incorporate the 1979 GATT Agreement on Government Procurement (AGP) which obliged the EU to grant market access to suppliers from other GATT members on the basis of reciprocity. Since then, the EU public procurement directives have widened in scope and developed further in several phases of legislative reforms from 1985 to 2014 as summarised in the Box below. 2 Commission Directive 70/32/EEC of 17 December 1969 on provision of goods to the State, to local

authorities and other official bodies, OJ L 13 of 19 January 1970. 3 Council Directive 71/305/EEC of 26 July 1971 concerning the co-ordination of procedures for the award of

public works contracts, OJ L 185/1 of 1971. 4 Council Directive 77/62/EEC of 21 December 1976 coordinating procedures for the award of public supply

contracts, OJ L 13 of 15 January 1977. 5 Directive 80/767/EEC, OJ No L 215 of 18 August 1980.


9

The development of the EU Public Procurement Directives 1985 to 2014

Phase Period Main emphasis Legislation adopted

1 1985-1992

Tightening the rules, and extending them to utilities and regulating remedies. By 1985, when the EU was looking to the completion of the Internal Market, serious and urgent problems in regard to the supplies and works directives were identified. These included failure to advertise contracts in the EU Official Journal, ignorance of EU rules by contracting authorities, splitting up contracts, use of national standards to discriminate, unlawful disqualification of bidders and discriminatory award criteria. In order to address the deficiencies of the original rules, new directives were adopted.

Council Directive 88/295/EEC

6 amended

Directives 77/62/EEC and 80/767/EEC (as regards public supplies) and Council Directive 89/440/EEC

7 amended

Directive 71/305/ EEC on public works. Directive 90/531

8 became the first

Utilities Directive. These directives substantially improved definitions and the scope of EU rules on public supplies and public works contracts, introduced the use of EU technical standards as basis for technical specifications policy and required the publication of award notices. Directive 89/440/EEC explicitly recognised consortia in public works contracts, extended the scope of the rules to include concessions

9 and

excluded works contracts in the utilities and defence sectors. Directive 90/531 (the

6 Council Directive 88/295/EEC of 22 March 1988 amending Directive 77/62/EEC relating to the

coordination of procedures on the award of public supply contracts and repealing certain provisions of Directive 80/767/EEC, OJ L 127 of 20 May 1988. 7 Council Directive EU 89/440/EEC of 18 July 1989 amending Directive 71/ 305/EEC concerning coordination

of procedures for the award of public works contracts, OJ No L 210, 21. 7. 1989. 8 Council Directive 90/531/EEC of 17 September 1990 on the procurement procedures of entities operating

in the water, energy, transport and telecommunications sectors, OJ L 297 of 29 October 1990. 9 Concessions may have several meanings, including a business operated under a contract or licence e.g.

concession shops or kiosks at sporting arenas, parks etc. Large modern Department stores also typically contain concessions operated by retailers other than the main retailer. In the case of a public service concession, a private company enters into an agreement with the government to have the exclusive right to operate, maintain and carry out an investment in a public utility (such as a water supply system, mining or exploration rights or roads) for a given number of years. In all cases, the owner of the concession the concessionaire pays either a fixed sum or a percentage of revenue to the entity with the ability to assign exclusive rights for an area or facility.


10

first Utilities Directive) applied a flexible regime to the water, energy, transport and telecommunications sectors. Review procedures (Remedies) in the case of a breach of the EU legislation became an integral part of EU law and policy on public procurement with the adoption of Directive 89/665/EEC in this period

10.

2 1992-1995

Inclusion of public service contracts, consolidation and the WTO GPA. While the ancillary supply of services was covered by the existing Directives on public procurement, services contracts per se were generally not regulated by EU law. Directive 92/50/EEC (Services Directive)

11 addressed this

situation in 1992. The Directive followed the same structure as the Works and the Supplies Directives but also contained special innovative provisions on the conduct of design contests. Remedies in Utility procurement were also separately regulated and the possibility of awarding damages was first introduced. All EU Member States became parties to the WTO Government Procurement Agreement (GPA) which came into force in 1996

Directive 92/50/EEC (Services Directive) - The consolidation of previous public procurement Directives was achieved in 1993 in regard to supplies, works and utilities. This involved some amendments of the earlier directives, mostly to update procedural issues and alignment with international obligations. The directives on works were consolidated in Council Directive 93/37/EEC

12 and the

directives on supplies were consolidated in Council Directive 93/36/EEC

13. The

consolidation of legislation on public works, supplies and services contracts in the Utilities (water, energy, transport and telecommunications) sectors was carried out

10

Council Directive 89/665/EEC of 21 December 1989 on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts, OJ L 395 of 30 December 1989. 11

Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of publicservice contracts, OJ L 209 of 24 July 1992. 12

Council Directive 93/37/EEC (the Works Directive) of 14 June 1993, OJ L199 of 9 August 1993. 13

Council Directive 93/36/EEC (the Supplies Directive) of 14 June 1993, OJ L 199 of 9 August 1993.


11

in a separate Directive 93/38/EEC

14.

On remedies, Directive 92/13/EEC

15127

regulated the existence of effective and fast review procedures in the awarding of public contracts for water, energy, transport and telecommunications sectors.

3 1996-2006

New Public Sector Directive, new Utilities Directive. Following a 1996 Green Paper on Public Procurement

16 and a 1998

Communication17

, and reflecting the Lisbon Agendas approach to economic reform within the EU Internal market and the European Commissions desire to simplify and modernise the regulation of public procurement, the first reforms of the public procurement legislation took place.

The new Public Sector Directive 2004/18/EC

18and the

new Utilities Directive 2004/17/EC

19 were

adopted in 2004 and came into effect on 31 January 2006. The Directives added new procedures for the first time. Competitive Dialogue was introduced for large, highly complex projects requiring supplier input into defining the needs of the buyer. And in anticipation of the age of electronic commerce, the Directives permitted communication by email, online delivery of documentation, and completely electronic

14

Council Directive 93/38/EEC of 14 June 1993 coordinating the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors, OJ L 82 of 25 March 1994. 15

Council Directive 92/13/EEC with regard to improving the effectiveness of review procedures concerning the award of public contracts, OJ L 76 of 23 March 1992. 16

European Commission: Public Procurement in the European Union Exploring the Way Forward, 27 November 1996. 17

European Commission Communication: Public Procurement in the European Union, COM (1998) 143 Final of 11 March 1998. 18

Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, OJ L 134 of 30 April 2004. 19

Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors, OJ L 134 of 30 April 2004.


12

procedures in the form of dynamic purchasing systems and electronic auctions. The latter were introduced by the EU Directives 18 and 17 of 2004 because it was recognised that electronic purchasing can increase competition and streamline public purchasing, particularly in terms of the savings in time and money.

4 2007-2010

Amending the Remedies Directives and a new Defence Procurement Directive. In 2007, a new Remedies Directive was adopted which came into force on 20 December 2009

20. Then in 2009,

the EU adopted its first legislation to deal with procurement in the Defence Sector. The Defence Procurement Directive

21, described

as tailor-made to such procurement and capable of application to the vast majority of defence and security procurement contracts without putting essential security interests at risk, establishes harmonised rules for the procurement of arms, munitions and war material (plus related works and services) for defence purposes, but also for the procurement of sensitive supplies, works and services for non-military security purposes.

The Remedies Directive of 2007 is an amending instrument, but replaced almost entirely the material provisions of the previous directives from 1989 and 1992. The Directive codified the concept of standstill period between the award decision and the conclusion of the subsequent contract. (This had previously been a requirement introduced by the European Court of Justice in its ruling in the 1999 Alcatel Case

22) The

Directive formulates a minimum 10 day standstill period during which contracting authorities would have to inform bidders of the proposed award decision

20

Directive 2007/66/EC of the European Parliament and of the Council of 11 December 2007 amending Council Directives 89/665/EEC and 92/13/EEC with regard to improving the effectiveness of review procedures concerning the award of public contracts, OJ L 335 of 20 December 2007. 21

Directive 2009/81/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of procedures for the award of certain works contracts, supply contracts and service contracts by contracting authorities or entities in the fields of defence and security, and amending Directives 2004/17/EC and 2004/18/EC , OJ L 216 of 20 August 2009. 22

Case C-81/98: Alcatel Austria AG v Bundesministerium fur Wissenschaft und Verkehr, (1999) ECR I-07671).


13

and provide certain information regarding that decision. In principle this offers bidders sufficient time in which to seek an injunction during the standstill period, before the contract is entered into.

5 2011-2014

Review and improvement of the main 2004 Directives, new directives on concession contracts and electronic invoicing. The changes to the Public Sector and Utilities Directives were made for various reasons linked to the European Unions Europe 2020 strategy. They include facilitating SME access to public procurements, promoting innovation in public procurement and other EU policies via public procurement such as environmental and social protection.

The two new public procurement directives (Directive 2014/24/EU

23

-the new Public Sector Directive and Directive 2014/25/EU

24 - the new

Utilities Procurement Directive) include a considerable number of changes e.g. addressing the use of e-communications, the use of self-declarations to simplify procedures, division of contracts into lots to facilitate SME participation. The new directives also include amended rules on sub-contracting; which extend the present rules to regulate the relationship between a bidder and sub-contractors. The Concessions Directive

25

applies to contracts over 5 million with flexible procedures and specific concession rules e.g. on the duration of concession contracts.

23

Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC, OJ L 94 of 28 March 2014. 24

Directive 2014/25/EU of the European Parliament and of the Council of 26 February 2014 on procurement by entities operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC, OJ L 94 of 28 March 2014. 25

Directive 2014/23/EU of the European Parliament and of the Council of 26 February 2014 on the award of concession contracts, OJ L 94 of 28 March 2014.


14

The Electronic Invoicing Directive

26 is a

contribution to a larger e-communications policy and aims to remove trade barriers resulting from different rules and technical requirements for e-invoicing in EU Member States.

Broadly speaking, the EU public procurement directives are aimed at all public authorities and entities and certain private utilities with specific privileges; laying down an obligation for public sector entities to award larger contracts by means of competitive and transparent procedures based on objective and verifiable criteria set in advance. For this purpose, the directives include rules on: publication requirements, various competitive procedures suitable for different types of contracts and requirements concerning types of criteria and specifications to be used during the public procurement procedures. Furthermore, the directives require institutions and procedures to ensure that award of contracts can be effectively reviewed. Public procurement procedures are considered necessary because the public sector cannot be presumed to behave as a normal customer in a market. A normal customer can be trusted to choose best quality at lowest price. The public sector, however, can be motivated by factors other than price and quality. Thus, for political reasons a local authority may prefer to award a contract to a local enterprise rather than a cheaper and better competitor from outside. Public procurement rules are therefore necessary to rectify this type of public sector behaviour. The directives also assume that increased competition will produce best quality at lowest price and thereby efficiency/effectiveness gains for the public sector. Because of fiscal constraints in many countries, the efficient and effective performance of public administration in delivering public services to society is becoming more and more important. Related to this, the use of procurement procedures is also seen as a guarantee in relation to financial control and the use of transparent procedures is also often considered a means for preventing fraud, corruption and malpractice. The detailed rules of the directives generally apply at and above specific (and generally high) thresholds. Below these thresholds national rules apply typically to smaller contracts and each EU Member State has a public procurement system combining its own rules with the requirements of the directives. The EU thresholds are intended to reflect public procurements of interest to cross-border or Internal market trade and the application of the free movement Treaty principles. At the same time EU law has established that, even below the thresholds of the directives, the legal principles of non- 26

Directive 2014/55/EU of the European Parliament and of the Council of 16 April 2014 on electronic invoicing in public procurement, OJ L 133 of 6 May 2014.


15

discrimination, equal treatment, transparency and proportionality must apply. Against this background, it is useful to look more closely at the logic and content of the different elements of the overall directive package contained in this Compendium of EU Public Procurement Directives. This begins with some remarks concerning the Public Sector and the Utilities Directives, both in their current form (from 2004) and in the revised form of the 2014 directives, which take effect in the EU in 2016.

THE PUBLIC SECTOR AND UTILITIES PROCUREMENT DIRECTIVES

The present directives (Public Sector Directive 2004/18/EC and Utilities Procurement Directive 2004/17/EC) As seen earlier, the current EU directives on public procurement date from 2004. The reform at that time resulted in the consolidation of the directives into two directives; one for the public sector generally and the second for utilities sectors. The changes introduced via the 2004 directives included the following:

The directives clarified the situation as regards framework contracts by providing explicit rules on the types of framework agreements to use and specific rules concerning procedures. Rules were also elaborated for centralised procurement schemes - where framework agreements are often the tool being used. It was left to EU Member States whether to introduce the possibility for framework agreements and centralised procurement in their legislation. This was also the case for the entirely new competitive dialogue procedure, which allows a structured negotiation process for the use in complex contracts.

Requirements concerning the integrity and transparency of means and devices for electronic communication were included to enable the development and application of e-procurement. Specific electronic procedures were introduced - dynamic purchasing systems and e-auctions, the latter to complement normal procedures and to allow a fine-tuning of price.

In case of certain serious crime (organised crime, corruption, certain cases of fraud, money laundering) exclusion from a tender procedure became mandatory. Moving from pre-qualification criteria to award criteria, an important change was the explicit inclusion of environmental considerations as a type of sub-criterion to reflect CJEU case law concerning so-called non-economic sub-criteria. Another important change was the requirement to indicate the relative weighting of each sub-criterion in the contract notice or tender documents.

The rules on technical specifications were further tightened for the benefit of bidders so that procuring entities, as a matter of priority, must use European or international standards in their tender dossier; but at the same time allowing bidders to use alternative, equivalent standards in their bids. The use of functional and performance requirements is allowed as an alternative to specifications requiring a certain technical approach. Furthermore, as part of the general emphasis on the use of environmental and social requirements, the directive also


16

explicitly allowed the inclusion of environmental and social characteristics of relevance.

The 2004 Directives also included a number of technical amendments reflecting the case-law of the CJEU that had occurred since the last reforms. The different approach of the Utilities Procurement Directive As regards the approach to regulation of the Utilities Sectors, the Utilities Directive essentially extends the scope of application of public procurement to include not just public authorities and other entities but also public enterprises as well as certain privileged private ones. Moreover, it allows more flexibility than the Public Sector Directive. This more flexible approach can partly be explained by the variation of ownership arrangements in utility sectors existing across the EU. In some countries the operators in, for example, the water sector may be private enterprises that benefit from special/exclusive rights. At the same time, they are considered part of the public sector due to their dependency vis--vis the public grantor of these rights; while it is equally recognised that they are private enterprises and should be given the necessary market flexibility to act as such. Another reason for the flexible approach is that the utilities operators have in common an obligation to ensure continuity and safety in the supply of water, energy, transport services etc. to the population. The Utilities Directive specifically covers so called relevant activities within the sectors of water, energy, transport etc. The relevant activities are precisely defined and typically focus on the management of public networks. This is because these are precisely the activities that are normally considered as public tasks to be ensured by utility operators. The Utilities Directive includes a mechanism for future exclusion of sectors where competition, as a result of EU liberalisation, increases to such a degree that the procurement policies of entities within the sector cannot be influenced by any public dependency or privilege. This mechanism has been applied in the case of the telecommunication and postal sectors and most recently on oil and gas exploration. The flexibilities allowed by the Directive are numerous and of differing importance. The main ones are: the possibility for higher thresholds, the possibility for using negotiated procedure alongside open and restricted procedure, the possibility for by-passing pre-qualification by using a qualification system, the possibility for replacing a contract notice by a periodic indicative notice, the wider discretion in respect of time limits and the slightly wider scope for using the negotiated procedure without prior publication.

The EU Public Procurement Reform 0f 2014 (Public Sector Directive 2014/24/EU and Utilities Procurement Directive 2014/25/EU)


17

The two new public procurement Public Sector and Utilities Procurement directives include a considerable number of changes. These changes are made for various reasons linked to the European Unions Europe 2020 strategy. They include facilitating SME access to public procurements, promoting innovation in public procurement and other EU policies via public procurement such as environmental and social protection. The main changes include the following:

The use of e-communication means and devices in procurements will after a transitional period and as a main rule become mandatory. This is considered feasible in view of the stage of the development of the general e-environment within the EU.

A right for bidders to use self-declarations during the qualification phase is introduced. This means that participants in a tender do not need to provide detailed documentation in advance. Especially for smaller enterprises, this will make it possible to react more quickly when tender opportunities come up. Only the winner will be required to provide documentation for fulfilment of the qualification requirements.

The possibility for basing a contract award on lowest price only is essentially abolished. Price can still be used as a sub-criterion; but will need to be supplemented with qualitative sub-criteria as well. The use of award criteria covering the entire life cycle of a product is facilitated by laying down rules for the calculation of e.g. the waste management costs in connection with disposal of the product.

Possibilities are introduced for more flexible procedures, for example shorter time limits in the case of procuring entities on a regional level.

Certain health, social and other local services are excluded as not being relevant for cross-border economic activity within the EU. However, very large contracts will still be covered but may be subject to simplified procedures.

Introduction of a new procedure for complex contracts, namely the so-called innovation partnership. This is a procedure comprising not just the procurement of innovative supplies, services or works but the entire preceding process of conceptualisation, development, design etc. The procedure is aimed especially at projects under EU research and development programmes.

For the purpose of allowing better access for smaller enterprises there is also now an obligation to divide contracts into lots whenever possible. Essentially, contracting entities are obliged to justify their position whenever contracts are not divided into lots. In addition, there is an option for national law to require that certain types of contracts must be divided into lots.

The directives did not previously deal with procedural measures to ensure transparency and equal treatment. Thus, the EU directives never regulated the bid opening procedure and chose to leave this to the EU Member States. However, contrary to this trend, the directives now lay down obligations for contracting entities to take measures preventing, identifying and remedying cases of conflict of interest. The choice of measures is left for the EU Member States to decide; but the directive requires such measures to be taken.

The directives regulate as something new the possibilities for amending contracts after they have been signed and following the procurement process. The intention is to clarify cases where amendment does not change the subject matter of the contract to the extent that a new tender process is required. For example, the new provisions allow minor changes in terms of the scope or value and require in terms of balance, in


18

certain cases, the public notification of such changes. There are also rules setting out cases where contracts may be terminated for reasons linked to the procurement process.

Other changes are intended to make the directives easier to read and as in previous reforms - to clarify various parts in the light of the ever-evolving CJEU case law. One example of the latter kind is the new provision on contracts between contracting entities, which is based on the case-law concerning so called in-house contracts. The new directives also include areas of contract law normally not dealt with in EU law. A notable example concerns the amended rules on sub-contracting which extend the present rules to regulate the relationship between a bidder and sub-contractors. In most of these cases, the directives leave sufficient options to ensure coherence with existing national private law, including contract law.

THE REMEDIES DIRECTIVES (Directives 89/665/EEC and 92/13/EC with amendments, notably under the terms of Directive 2007/66/EU) The remedies directives cover public sector procurement and separately lay down specific remedies rules for the utilities sectors. Over time, the differences between the two directives have become minimal to the point that they are now virtually identical. Both directives require that there is broad possibility for anyone with a legal interest to complain about decisions, actions or omissions of procuring entities in public procurement procedures. There are no significant structural requirements as to the complaints body; provided that there is always final access to judicial review. To ensure effective access to complaints procedures, the directives require a minimum time limit to elapse between the award and signature of the contract the standstill period. As regards procedures, the directives include quite basic requirements concerning swiftness, transparency and simplicity and highlight specifically the right to be heard. Various aspects of these basic requirements have been elaborated as concrete requirements in the case law of the CJEU. The remedies directives also provide for the type of sanctions that the complaints body must be able to use; including interim measures (preliminary suspension of on-going procurement procedures), setting aside of decisions and the possibility for declaring a contract ineffective (notably in the extreme case where the procuring entity awarded the contract without any procedure at all).

THE DEFENCE PROCUREMENT DIRECTIVE (Directive 2009/81/EC) The Public Sector Directive has a fundamental emphasis on free movement principles and the removal of trade barriers. The Directive applies, in principle, to all supplies, works and


19

services. However, as mentioned earlier, the TFEU allows such barriers to be maintained in justified cases, including defence and security interests of EU Member States. This is relevant, for example, to contracts concerning military equipment and to sensitive contracts involving so-called classified information. Nonetheless, the case-law of the CJEU demonstrates how this possibility has been abused over the years to exempt all types of contracts in the defence sector, including normal supplies of for example stationary and office equipment. The Defence Procurement Directive was issued largely in response to this problem and in order to optimise competition in the field of defence and security. The Directive allows various procedural safeguards to narrow down the need to invoke the TFEU for reasons of security interests in public procurement and clarifies the justification for so doing. The Directive broadly follows the approach of the Utilities Directive in two respects: (1) by defining a higher threshold than the Public Sector Directive and (2) by giving more flexibility as regards the choice of procedure to allow increased dialogue with interested participants. The Directive also allows contracting entities to require various specific commitments and documentation e.g. concerning ability to protect confidential information and ensure security of supply. Such documentation in the form of certificates etc. can be required as regards sub-contractors and all other parts of the supply chain.

CONCESSION CONTRACTS (Directive 2014/23/EU) Traditionally, the public procurement directives have only applied in a limited way to concession contracts. In the context of public procurement, concession contracts refer to contracts where the private party does not receive payment but rather a right to commercial exploitation. To illustrate the difference: In the case of road construction, a normal public procurement contract may include payment for the construction and a fixed regular fee for maintaining the road. Alternatively, and as part of a concession, the private party takes on the task of construction and maintenance in return for the right to charge motorists a fee (toll) for using the road and recover his costs and profit in this way. Concessions are playing an increasingly important role in large infrastructure projects in the public interest, especially in fields such as transport, energy supply and certain utilities. One of the reasons, and another key difference, is that concession contracts typically do not involve public expenditure; whereas, of course, public procurement contracts do. The award of concessions is, as with all public contracts, subject to the requirements flowing from the principles and the economic freedom provisions of the TFEU. Concessions are often used as the main legal vehicle in public-private partnership projects which have also become increasingly important in recent years. These are among the reasons why it was considered important to lay down more specific requirements for concession contracts in parallel with the other public procurement directives. The Concession Contracts Directive applies to contracts of 5 million and above. Certain types of contracts (e.g some utilities areas) are exempted. The procedural requirements


20

are more general than in the other public procurement directives and therefore leave more discretion as regards such matters as the setting of time limits, the formulation of selection and award criteria and the design of the procedure as such (including as regards the degree of dialogue with bidding participants). This allows account to be taken of the varying complexity of concession contracts where, for example, one may be quite straightforward (e.g. the building of a road), while another can be far more complex (e.g. concerning the design, financing, construction and operation of a holiday resort as part of a regional development project). In addition to the competitive procedure, the Directive also lays down requirements concerning the allowed duration of concession contracts as well as the conditions for amending the concession contract (similar to those that have been introduced for public contracts in general).

ELECTRONIC INVOICING (Directive 2014/55/EU) To facilitate the development of e-procurement generally and with a specific focus on the invoicing following the award and signing of the contract, a new directive on e-invoicing was adopted in the spring of 2014. The Directive aims at removing trade barriers resulting from different rules and technical requirements for e-invoicing in EU Member States. In particular, the Electronic Invoicing Directive establishes a set of core requirements regarding the content of e-invoices. Essentially, these concern basic payment terms and the clear identification of creditor and debtor. More importantly, and in line with the normal approach to trade barriers, the Directive puts an obligation on contracting entities to accept invoices compliant with an EU (EN) standard on e-invoices to be developed by the European Standardisation Organisation - CEN. For this purpose, the Directive also includes a mandate for the European Commission to have such a standard developed. It is assumed that the standard will be developed over the coming years to enable the Directive to enter into force towards the end of 2018.

USING THIS COMPENDIUM When reading the directives, it is important to keep in mind that they are addressed to EU Member States and, therefore, may prove initially difficult to understand fully, in some respects, from the perspective of an associated country, like Ukraine. The following points will hopefully facilitate the reading and analysis of the directives:

Many provisions in the directives, especially the new ones, include obligations of an administrative nature involving EU Member States and typically the European Commission. These obligations may concern various regular statistical and other reporting on the application of the directives that EU Member States are obliged to fulfil. Other provisions of this type concern various arrangements for the regular revision of the directives that has been delegated to an administrative level. A similar issue arises when the directives refer to the Official Journal of the EU as the place for


21

publication of the various notices in the course of a procurement procedure. In the Ukrainian national context, such references must be understood as referring to appropriate media: in the case of Ukraine, the Official Public Procurement Web-Portal.

A directive consists of a binding legal text (the Articles) preceded by a Preamble; where the purpose of the directive and its individual provisions are explained. The Preamble constitutes a source of interpretation for the binding Articles in the directive. One example here is the concept of special and exclusive rights in the Utilities Directive, where the Preamble explains the reasons behind the concept that would not otherwise be evident. The CJEU has in many cases referred to the Preamble - even though, in principle, the text of the Preamble is not binding as a matter of law. Whenever it is difficult to understand a provision in the Articles, it is invariably useful to check whether the Preamble says something about the rationale for the provision in question.

The public procurement directives must be read and understood in the context of the Treaty and on the basis of the case law of the CJEU. Fortunately, there is easy access to this case law in several language versions, see http://curia.europa.eu/ which is the CJEU website with search facilities enabling quick retrieval of relevant cases.

The case law is particularly important in areas where the directives set more general requirements. A good example is the Remedies Directives; where the differences in judicial structures mean that very detailed common solutions are not possible. The case law has nevertheless established very specific rights and obligations of relevance in concrete cases. Thus, it has been held that the general approach chosen in these directives pre-supposes a common legal environment characterised by certain basic constitutional and other legal guarantees to ensure, in particular, the integrity of individuals in relation to the public sector.

The directives will frequently make reference to other directives in other EU policy areas concerning e.g. environmental issues, electronic communications or other policy areas not specifically linked to public procurement. Those directives each include their own specific principles and approaches and it may be necessary, in some cases, to consult relevant EU websites and other sources to fully understand the implications of such references.

It will become apparent when studying the directives that they do not cover everything that normal procurement legislation should regulate. Thus, the directives focus on issues of relevance to the competitive phase - including not only the mechanics of the various procedures but also restrictions as regards technical specifications and the selection/award criteria to use. The directives do not regulate the planning phase or for that matter the bid-opening procedure. The reason is that these topics are not considered necessary to be covered by common EU rules because they are not liable to create trade barriers. Such rules are nevertheless necessary elements in public procurement regulation and a fully functioning public procurement

http://curia.europa.eu/


22

system. When the directives are silent on points such as these, there is relatively more freedom to lay down specifically tailored (and even very innovative) national arrangements on these matters.

More generally, it is significant that the directives set out in this Compendium constitute the core of EU standards in the field of public procurement. For that reason, they are the primary source of reference for Ukraine in advancing its approximation under the EU-Ukraine Association Agreement and (allowing for the usual disclaimers concerning any initial translations) this full resource, for the first time, is also presented here in the Ukrainian language.

Steen Bruun-Nielsen

& Dr Eugene Stuart

January 2015


23

2. THE PUBLIC SECTOR DIRECTIVE

Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC27. 27

OJ L 94 of 28 March 2014


24

DIRECTIVE 2014/24/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 26 February 2014 on public procurement and repealing Directive 2004/18/EC

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 53(1), Article 62 and Article 114 thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the European Economic and Social Committee (1),

Having regard to the opinion of the Committee of the Regions (2),

Acting in accordance with the ordinary legislative procedure (3),

Whereas:

(1) The award of public contracts by or on behalf of Member States authorities has to comply with the principles of the Treaty on the Functioning of the European Union (TFEU), and in particular the free movement of goods, freedom of establishment and the freedom to provide services, as well as the principles deriving therefrom, such as equal treatment, non-discrimination, mutual recognition, proportionality and transparency. However, for public contracts above a certain value, provisions should be drawn up coordinating national procurement procedures so as to ensure that those principles are given practical effect and public procurement is opened up to competition.

(2) Public procurement plays a key role in the Europe 2020 strategy, set out in the Commission Communication of 3 March 2010 entitled Europe 2020, a strategy for smart, sustainable and inclusive growth (Europe 2020 strategy for smart, sustainable and inclusive growth), as one of the market-based instruments to be used to achieve smart, sustainable and inclusive growth while ensuring the most efficient use of public funds. For that purpose, the public procurement rules adopted pursuant to Directive 2004/17/EC of the European Parliament and of the Council (4) and Directive 2004/18/EC of the European Parliament and of the Council (5) should be revised and modernised in order to increase the efficiency of public spending, facilitating in particular the participation of small and medium-sized enterprises (SMEs) in public procurement, and to enable procurers to make better use of public procurement in support of common societal goals. There is also a need to clarify basic notions and concepts to ensure legal certainty and to incorporate certain aspects of related well-established case-law of the Court of Justice of the European Union.

(3) When implementing this Directive, the United Nations Convention on the Rights of Persons with Disabilities (6) should be taken into account, in particular in connection with the choice of means of communications, technical specifications, award criteria and contract performance conditions.

(4) The increasingly diverse forms of public action have made it necessary to define more clearly the notion of procurement itself; that clarification should not however broaden the scope of

http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32014L0024&from=EN#ntr1-L_2014094EN.01006501-E0001http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32014L0024&from=EN#ntr2-L_2014094EN.01006501-E0002http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32014L0024&from=EN#ntr3-L_2014094EN.01006501-E0003http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32014L0024&from=EN#ntr4-L_2014094EN.01006501-E0004http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32014L0024&from=EN#ntr5-L_2014094EN.01006501-E0005http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32014L0024&from=EN#ntr6-L_2014094EN.01006501-E0006


25

this Directive compared to that of Directive 2004/18/EC. The Union rules on public procurement are not intended to cover all forms of disbursement of public funds, but only those aimed at the acquisition of works, supplies or services for consideration by means of a public contract. It should be clarified that such acquisitions of works, supplies or services should be subject to this Directive whether they are implemented through purchase, leasing or other contractual forms.

The notion of acquisition should be understood broadly in the sense of obtaining the benefits of the works, supplies or services in question, not necessarily requiring a transfer of ownership to the contracting authorities. Furthermore, the mere financing, in particular through grants, of an activity, which is frequently linked to the obligation to reimburse the amounts received where they are not used for the purposes intended, does not usually fall within the scope of the public procurement rules. Similarly, situations where all operators fulfilling certain conditions are entitled to perform a given task, without any selectivity, such as customer choice and service voucher systems, should not be understood as being procurement but simple authorisation schemes (for instance licences for medicines or medical services).

(5) It should be recalled that nothing in this Directive obliges Member States to contract out or externalise the provision of services that they wish to provide themselves or to organise by means other than public contracts within the meaning of this Directive. The provision of services based on laws, regulations or employment contracts should not be covered. In some Member States, this might for example be the case for certain administrative and government services such as executive and legislative services or the provision of certain services to the community, such as foreign affairs services or justice services or compulsory social security services.

(6) It is also appropriate to recall that this Directive should not affect the social security legislation of the Member States. Nor should it deal with the liberalisation of services of general economic interest, reserved to public or private entities, or with the privatisation of public entities providing services.

It should equally be recalled that Member States are free to organise the provision of compulsory social services or of other services such as postal services either as services of general economic interest or as non-economic services of general interest or as a mixture thereof. It is appropriate to clarify that non-economic services of general interest should not fall within the scope of this Directive.

(7) It should finally be recalled that this Directive is without prejudice to the freedom of national, regional and local authorities to define, in conformity with Union law, services of general economic interest, their scope and the characteristics of the service to be provided, including any conditions regarding the quality of the service, in order to pursue their public policy objectives. This Directive should also be without prejudice to the power of national, regional and local authorities to provide, commission and finance services of general economic interest in accordance with Article 14 TFEU and Protocol No 26 on Services of General Interest annexed to the TFEU and to the Treaty on European Union (TEU). In addition, this Directive does not deal with the funding of services of general economic interest or with systems of aid granted by Member States, in particular in the social field, in accordance with Union rules on competition.

(8) A contract should be deemed to be a public works contract only if its subject-matter


26

specifically covers the execution of activities listed in Annex II, even if the contract covers the provision of other services necessary for the execution of such activities. Public service contracts, in particular in the sphere of property management services, may, in certain circumstances, include works. However, in so far as such works are incidental to the principal subject-matter of the contract, and are a possible consequence thereof or a complement thereto, the fact that such works are included in the contract does not justify the qualification of the public service contract as a public works contract.

However, in view of the diversity of public works contracts, contracting authorities should be able to make provision for contracts for the design and execution of work to be awarded either separately or jointly. This Directive is not intended to prescribe either joint or separate contract awards.

(9) The realisation of a work corresponding to the requirements specified by a contracting authority requires that the authority in question must have taken measures to define the type of the work or, at the very least, have had a decisive influence on its design. Whether the contractor realises all or part of the work by his own means or ensures their realisation by other means should not change the classification of the contract as a works contract, as long as the contractor assumes a direct or indirect obligation that is legally enforceable to ensure that the works will be realised.

(10) The notion of contracting authorities and in particular that of bodies governed by public law have been examined repeatedly in the case-law of the Court of Justice of the European Union. To clarify that the scope of this Directive ratione personae should remain unaltered, it is appropriate to maintain the definitions on which the Court based itself and to incorporate a certain number of clarifications given by that case-law as a key to the understanding of the definitions themselves, without the intention of altering the understanding of the concepts as elaborated by the case-law. For that purpose, it should be clarified that a body which operates in normal market conditions, aims to make a profit, and bears the losses resulting from the exercise of its activity should not be considered as being a body governed by public law since the needs in the general interest, that it has been set up to meet or been given the task of meeting, can be deemed to have an industrial or commercial character.

Similarly, the condition relating to the origin of the funding of the body considered, has also been examined in the case-law, which has clarified inter alia that being financed for the most part means for more than half, and that such financing may include payments from users which are imposed, calculated and collected in accordance with rules of public law.

(11) In the case of mixed contracts, the applicable rules should be determined with respect to the main subject of the contract where the different parts which constitute the contract are objectively not separable. It should therefore be clarified how contracting authorities should determine whether the different parts are separable or not. Such clarification should be based on the relevant case-law of the Court of Justice of the European Union.

The determination should be carried out on a case-by-case basis, in which the expressed or presumed intentions of the contracting authority to regard the various aspects making up a mixed contract as indivisible should not be sufficient, but should be supported by objective evidence capable of justifying them and of establishing the need to conclude a single contract. Such a justified need to conclude a single contract could for instance be present in the case of the construction of one single building, a part of which is to be used directly by


27

the contracting authority concerned and another part to be operated on a concessions basis, for instance to provide parking facilities to the public. It should be clarified that the need to conclude a single contract may be due to reasons both of a technical nature and of an economic nature.

(12) In the case of mixed contracts which can be separated, contracting authorities are always free to award separate contracts for the separate parts of the mixed contract, in which case the provisions applicable to each separate part should be determined exclusively with respect to the characteristics of that specific contract. On the other hand, where contracting authorities choose to include other elements in the procurement, whatever their value and whatever the legal regime the added elements would otherwise have been subject to, the main principle should be that, where a contract should be awarded pursuant to the provisions of this Directive, if awarded on its own, then this Directive should continue to apply to the entire mixed contract.

(13) However, special provision should be made for mixed contracts involving defence or security aspects or parts not falling within the scope of the TFEU. In such cases, non-application of this Directive should be possible provided that the award of a single contract is justified for objective reasons and that the decision to award a single contract is not taken for the purpose of excluding contracts from the application of this Directive or of Directive 2009/81/EC of the European Parliament and of the Council (7). It should be clarified that contracting authorities should not be prevented from choosing to apply this Directive to certain mixed contracts instead of applying Directive 2009/81/EC.

(14) It should be clarified that the notion of economic operators should be interpreted in a broad manner so as to include any persons and/or entities which offer the execution of works, the supply of products or the provision of services on the market, irrespective of the legal form under which they have chosen to operate. Thus, firms, branches, subsidiaries, partnerships, cooperative societies, limited companies, universities, public or private, and other forms of entities than natural persons should all fall within the notion of economic operator, whether or not they are legal persons in all circumstances.

(15) It should be clarified that groups of economic operators, including where they have come together in the form of a temporary association, may participate in award procedures without it being necessary for them to take on a specific legal form. To the extent this is necessary, for instance where joint and several liability is required, a specific form may be required when such groups are awarded the contract.

It should also be clarified that contracting authorities should be able to set out explicitly how groups of economic operators are to meet the requirements concerning economic and financial standing as set out in this Directive, or the criteria relating to technical and professional ability, which are required of economic operators participating on their own.

The performance of contracts by groups of economic operators may necessitate setting conditions which are not imposed on individual participants. Such conditions, which should be justified by objective reasons and be proportionate, could for instance include requiring the appointment of a joint representation or a lead partner for the purposes of the procurement procedure or requiring information on their constitution.

(16) Contracting authorities should make use of all possible means at their disposal under national law in order to prevent distortions in public procurement procedures stemming

http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32014L0024&from=EN#ntr7-L_2014094EN.01006501-E0007


28

from conflicts of interest. This could include procedures to identify, prevent and remedy conflicts of interests.

(17) Council Decision 94/800/EC (8) approved in particular the World Trade Organisation Agreement on Government Procurement (the GPA). The aim of the GPA is to establish a multilateral framework of balanced rights and obligations relating to public contracts with a view to achieving the liberalisation and expansion of world trade. For contracts covered by Annexes 1, 2, 4 and 5 and the General Notes to the European Unions Appendix I to the GPA, as well as by other relevant international agreements by which the Union is bound, contracting authorities should fulfil the obligations under those agreements by applying this Directive to economic operators of third countries that are signatories to the agreements.

(18) The GPA applies to contracts above certain thresholds, set in the GPA and expressed as special drawing rights. The thresholds laid down by this Directive should be aligned to ensure that they correspond to the euro equivalents of the thresholds of the GPA. Provision should also be made for periodic reviews of the thresholds expressed in euros so as to adjust them, by means of a purely mathematical operation, to possible variations in the value of the euro in relation to those special drawing rights. Apart from those periodic mathematical adjustments, an increase in the thresholds set in the GPA should be explored during the next round of negotiations thereof.

(19) It should be clarified that, for the estimation of the value of a contract, all revenues have to be taken into account, whether received from the contracting authority or from third parties. It should also be clarified that, for the purpose of estimating the thresholds, the notion of similar supplies should be understood as products which are intended for identical or similar uses, such as supplies of a range of foods or of various items of office furniture. Typically, an economic operator active in the field concerned would be likely to carry such supplies as part of his normal product range.

(20) For the purposes of estimating the value of a given procurement, it should be clarified that it should be allowed to base the estimation of the value on a subdivision of the procurement only where justified by objective reasons. For instance, it could be justified to estimate contract values at the level of a separate operational unit of the contracting authority, such as for instance schools or kindergartens, provided that the unit in question is independently responsible for its procurement. This can be assumed where the separate operational unit independently runs the procurement procedures and makes the buying decisions, has a separate budget line at its disposal for the procurements concerned, concludes the contract independently and finances it from a budget which it has at its disposal. A subdivision is not justified where the contracting authority merely organises a procurement in a decentralised way.

(21) Public contracts that are awarded by contracting authorities operating in the water, energy, transport and postal services sectors and that fall within the scope of those activities are covered by Directive 2014/25/EU of the European Parliament and of the Council (9). However, contracts awarded by contracting authorities in the context of their operation of maritime, coastal or river transport services fall within the scope of this Directive.

(22) Being addressed to Member States, this Directive does not apply to procurement carried out by international organisations on their own behalf and for their own account. There is, however, a need to clarify to what extent this Directive should be applied to procurement governed by specific international rules.

http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32014L0024&from=EN#ntr8-L_2014094EN.01006501-E0008http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32014L0024&from=EN#ntr9-L_2014094EN.01006501-E0009


29

(23) The awarding of public contracts for certain audiovisual and radio media services by media providers should allow aspects of cultural or social significance to be taken into account, which renders the application of procurement rules inappropriate. For those reasons, an exception should therefore be made for public service contracts, awarded by the media service providers themselves, for the purchase, development, production or co-production of off-the-shelf programmes and other preparatory services, such as those relating to scripts or artistic performances necessary for the production of the programme. It should also be clarified that that exclusion should apply equally to broadcast media services and on-demand services (non-linear services). However, that exclusion should not apply to the supply of technical equipment necessary for the production, co-production and broadcasting of such programmes.

(24) It should be recalled that arbitration and conciliation services and other similar forms of alternative dispute resolution are usually provided by bodies or individuals which are agreed on, or selected, in a manner which cannot be governed by procurement rules. It should be clarified that this Directive does not apply to service contracts for the provision of such services, whatever their denomination under national law.

(25) A certain number of legal services are rendered by service providers that are designated by a court or tribunal of a Member State, involve representation of clients in judicial proceedings by lawyers, must be provided by notaries or are connected with the exercise of official authority. Such legal services are usually provided by bodies or individuals designated or selected in a manner which cannot be governed by procurement rules, such as for instance the designation of State Attorneys in certain Member States. Those legal services should therefore be excluded from the scope of this Directive.

(26) It is appropriate to specify that the notion of financial instruments as referred to in this Directive is given the same meaning as in other internal market legislation and, in view of the recent creation of the European Financial Stability Facility and the European Stability Mechanism, it should be stipulated that operations conducted with that Facility and that Mechanism should be excluded from the scope of this Directive. It should finally be clarified that loans, whether or not they are in connection with the issuing of securities or other financial instruments or other operations therewith, should be excluded from the scope of this Directive.

(27) It should be recalled that Article 5(1) of Regulation (EC) No 1370/2007 of the European Parliament and of the Council (10) explicitly provides that Directives 2004/17/EC and 2004/18/EC apply, respectively, to service contracts and public service contracts for public passenger transport services by bus or tramway, whereas Regulation (EC) No 1370/2007 applies to service concessions for public passenger transport by bus or tramway. It should furthermore be recalled that that Regulation continues to apply to public service contracts as well as to service concessions for public passenger transport by rail or metro. To clarify the relationship between this Directive and Regulation (EC) No 1370/2007, it should be provided explicitly that this Directive should not be applicable to public service contracts for the provision of public passenger transport services by rail or metro, the award of which should continue to be subject to that Regulation. In so far as Regulation (EC) No 1370/2007 leaves it to national law to depart from the rules laid down in that Regulation, Member States should be able to continue to provide in their national law that public service contracts for public passenger transport services by rail or metro are to be awarded by a

http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32014L0024&from=EN#ntr10-L_2014094EN.01006501-E0010


30

contract award procedure following their general public procurement rules.

(28) This Directive should not apply to certain emergency services where they are performed by non-profit organisations or associations, since the particular nature of those organisations would be difficult to preserve if the service providers had to be chosen in accordance with the procedures set out in this Directive. However, the exclusion should not be extended beyond that strictly necessary. It should therefore be set out explicitly that patient transport ambulance services should not be excluded. In that context it is furthermore necessary to clarify that CPV Group 601 Land Transport Services does not cover ambulance services, to be found in CPV class 8514. It should therefore be clarified that services, which are covered by CPV code 85143000-3, consisting exclusively of patient transport ambulance services should be subject to the special regime set out for social and other specific services (the light regime). Consequently, mixed contracts for the provision of ambulance services in general would also be subject to the light regime if the value of the patient transport ambulance services were greater than the value of other ambulance services.

(29) It is appropriate to recall that this Directive applies only to contracting authorities of Member States. Consequently, political parties in general, not being contracting authorities, are not subject to its provisions. However, political parties in some Member States might fall within the notion of bodies governed by public law.

However, certain services (such as propaganda film and video-tape production) are so inextricably connected to the political views of the service provider when provided in the context of an election campaign, that the service providers are normally selected in a manner which cannot be governed by procurement rules.

Finally, it should be recalled that the statute and funding of European political parties and European political foundations are subject to rules other than those laid down in this Directive.

(30) In certain cases, a contracting authority or an association of contracting authorities may be the sole source for a particular service, in respect of the provision of which it enjoys an exclusive right pursuant to laws, regulations or published administrative provisions which are compatible with the TFEU. It should be clarified that this Directive need not apply to the award of public service contracts to that contracting authority or association.

(31) There is considerable legal uncertainty as to how far contracts concluded between entities in the public sector should be covered by public procurement rules. The relevant case-law of the Court of Justice of the European Union is interpreted differently between Member States and even between contracting authorities. It is therefore necessary to clarify in which cases contracts concluded within the public sector are not subject to the application of public procurement rules.

Such clarification should be guided by the principles set out in the relevant case-law of the Court of Justice of the European Union. The sole fact that both parties to an agreement are themselves public authorities does not as such rule out the application of procurement rules. However, the application of public procurement rules should not interfere with the freedom of public authorities to perform the public service tasks conferred on them by using their own resources, which includes the possibility of cooperation with other public authorities.


31

It should be ensured that any exempted public-public cooperation does not result in a distortion of competition in relation to private economic operators in so far as it places a private provider of services in a position of advantage vis--vis its competitors.

(32) Public contracts awarded to controlled legal persons should not be subject to the application of the procedures provided for by this Directive if the contracting authority exercises a control over the legal person concerned which is similar to that which it exercises over its own departments, provided that the controlled legal person carries out more than 80 % of its activities in the performance of tasks entrusted to it by the controlling contracting authority or by other legal persons controlled by that contracting authority, regardless of the beneficiary of the contract performance.

The exemption should not extend to situations where there is direct participation by a private economic operator in the capital of the controlled legal person since, in such circumstances, the award of a public contract without a competitive procedure would provide the private economic operator with a capital participation in the controlled legal person an undue advantage over its competitors. However, in view of the particular characteristics of public bodies with compulsory membership, such as organisations responsible for the management or exercise of certain public services, this should not apply in cases where the participation of specific private economic operators in the capital of the controlled legal person is made compulsory by a national legislative provision in conformity with the Treaties, provided that such participation is non-controlling and non-blocking and does not confer a decisive influence on the decisions of the controlled legal person. It should further be clarified that the decisive element is only the direct private participation in the controlled legal person. Therefore, where there is private capital participation in the controlling contracting authority or in the controlling contracting authorities, this does not preclude the award of public contracts to the controlled legal person, without applying the procedures provided for by this Directive as such participations do not adversely affect competition between private economic operators.

It should also be clarified that contracting authorities such as bodies governed by public law, that may have private capital participation, should be in a position to avail themselves of the exemption for horizontal cooperation. Consequently, where all other conditions in relation to horizontal cooperation are met, the horizontal cooperation exemption should extend to such contracting authorities where the contract is concluded exclusively between contracting authorities.

(33) Contracting authorities should be able to choose to provide jointly their public services by way of cooperation without being obliged to use any particular legal form. Such cooperation might cover all types of activities related to the performance of services and responsibilities assigned to or assumed by the participating authorities, such as mandatory or voluntary tasks of local or regional authorities or services conferred upon specific bodies by public law. The services provided by the various participating authorities need not necessarily be identical; they might also be complementary.

Contracts for the joint provision of public services should not be subject to the application of the rules set out in this Directive provided that they are concluded exclusively between contracting authorities, that the implementation of that cooperation is governed solely by considerations relating to the public interest and that no private service provider is placed in a position of advantage vis--vis its competitors.


32

In order to fulfil those conditions, the cooperation should be based on a cooperative concept. Such cooperation does not require all participating authorities to assume the performance of main contractual obligations, as long as there are commitments to contribute towards the cooperative performance of the public service in question. In addition, the implementation of the cooperation, including any financial transfers between the participating contracting authorities, should be governed solely by considerations relating to the public interest.

(34) Certain cases exist where a legal entity acts, under the relevant provisions of national law, as an instrument or technical service to determined contracting authorities, is obliged to carry out orders given to it by those contracting authorities and has no influence on the remuneration for its performance. In view of its non-contractual nature, such a purely administrative relationship should not fall within the scope of public procurement procedures.

(35) The co-financing of research and development (R&D) programmes by industry sources should be encouraged. It should consequently be clarified that this Directive applies only where there is no such co-financing and where the outcome of the R&D activities go to the contracting authority concerned. This should not exclude the possibility that the service provider, having carried out those activities, could publish an account thereof as long as the contracting authority retains the exclusive right to use the outcome of the R&D in the conduct of its own affairs. However fictitio

compendium of eu public procurement...

Documents