Public Procurement Law
European Union Law binds member states and public authorities. Such authorities and bodies are significant purchasers of goods and services. The common market for goods and services in the European Union requires transparent, non-discriminatory procurement by public authorities. The EU Legislation lay down EU wide rules and principles in relation to procurement.
The procurement rules apply to governmental bodies and bodies governed by public law. These are bodies which are established for purposes of a general public interest nature. They do not include industrial or commercial businesses. They will generally be financed by the government and be under the control and supervision of the government.
EU Legislation promotes the principle that member states should have a central purchasing and tendering body.
EU Legislation allows for a system of certification of organisations for the purpose of providing evidence of financial, economic and technical capacity in a public procurement context. The systems must be mutually recognised in all EU States. The EU States decide the criteria for registration.
Publicity
The procurement rules require transparency in the process of tendering and procurement. There must be EU wide advertisement of contracts over certain thresholds in value. All EU businesses can participate without discrimination.
Prepublication is required in the European Union Official Journal. This includes contract notices and periodic indicative notices by which contracting authorities notify their requirements for procurement for the coming year.
Public authorities have obligations to report and maintain certain records. In particular, they must draw up reports in relation to contracts award. They must maintain statistics of awards made during the year.
Procurement Process
Invitations to tender must be published for contracts above certain thresholds. The notice must set out the award procedures and criteria applicable.
The notification of the award to the successful tender together with the price and reasons for selection must be published.. The notices are published in full in the original language. They are summarized in other official community languages. The EU bears the cost.
After advertisement and publicity, the procurement process moves to selection and qualification. The process must determine the candidates according to objectively defined criteria. They must not discriminate or act arbitrarily. The authorities must follow the specified selection criteria.
Authorities may require evidence of goods standing. This would include compliance with the relevant licensing or regulatory authority requirements and tax compliance. It may require evidence of the technical ability to perform the contract. This may be shown by way of experience and or qualification. References may be required. Details of recent work, technical abilities and sample work may be required.
Evidence of quality assurance compliance where relevant may be required. Evidence of financial standing and the ability to perform may be required. This may require bank statements, accounts, management accounts and turnover figures.
There may be requirements in relation to the legal form of the tenderer. For example consortia or joint venture may or may not be allowed.
Award Criteria
Awards should generally be based at the lowest price or the most economically advantageous offer. The lowest price offer should still be subject to the requirements in relation to quality standing etcetera.
The economically advantageous basis considers qualitative and other factors beyond price. This may include efficiency, merits, aesthetic, functional characteristics after-sale service, technical assessments, commitments, maintenance costs and security of supplies. In the case of the most advantageous economically advantageous offer, there would normally be a formal weighting of the relevant factors in the evaluation process.
The most economically advantageous criteria balance a number of factors. This will include price cost-effectiveness, technical merit, quality aesthetic and functional features, maintenance cost, security of supplies, spare part, commitments. This is an indicative list only and many other features may be relevant.
It is a fundamental principle that awards must be must not discriminate on the basis of nationality within the EU.
Public authorities may provide conditions in the award of a contract which may include provisions for
- occasional training
- employment of persons with difficulty in achieving integration,
- combating unemployment or
- environmental protection.
Such conditions must not be directly or indirectly discriminatory.
Candidates who have been the subject of conviction of certain crimes, of which the awarding authority is aware, be excluded. These include participation in a criminal organisation, corruption, money laundering, fraud.
Financial Thresholds
The following financial thresholds apply so that the directives apply only to contracts above these levels. The thresholds (exclusive of VAT) applicable from 1 January 2018 are
Works Contract Notice
€5,548,000 Threshold applies to Government Departments and Offices, Local and Regional Authorities and public bodies
Supplies and Services Contract Notice
€144,000 Threshold applies to Government Departments and Offices
Contract Notice €221,000 Threshold applies to Local and Regional Authorities and public bodies outside the Utilities sector
Utilities Works Contracts /
Prior Indicative Notice
€5,548,000
For entities in utilities sector covered by GPA
Supplies and Services €443,000
For entities in utilities sector covered by GPA The relevant thresholds are changed by the Commission every two years.
Contracting authorities must not divide works in order to avoid the threshold. The thresholds apply to the full price including options and renewals. In relation to supply contracts involving leasing or hiring, the value is based as follows
- fixed term contracts for less than 12 months, the total estimated value of the contract
- fixed contracts for more than 12 months the total value including the estimated residual value.
Where the term is not fixed for a service or supply contract which is renewable and regular, the value is based on the total aggregate value of contracts of the same type during the 12 months period preceding.
Exceptions
The general public sector procurement legislation applies to most public contracts. Excluded are water, energy, transport and postal services contracts, which are covered by separate similar legislation.
The directive does not apply to secret contracts requiring special security measures or when the protection of the essential interests of an EU State so require. Contracts subject to international other international rules are also excluded.
Special considerations apply to defence contracts and certain telecommunication contracts.
The directive does not apply to
- acquisition or leasing of land
- acquisition development production of materials for broadcasting by broadcasters
- arbitration and conciliation
- financial services in connection with the issue of shares, securities, and other instruments including transactions to raise capital money or central bank services
- employment contracts
- research and Development Services other than where the benefits accrue exclusively to the contracting authority for use in its own affairs.
The directive does not apply to service contracts or concessions or service contracts on the basis of an exclusive right enjoyed pursuant to domestic legislation compatible with the treaty They are subject to other similar EU legislation.
Redress
Contractors may obtain redress in domestic courts or appeal to the European Commission based on infringements of procurement legislation. If the Commission decides that there has been an infringement, it may require the state or body to comply.
State enforcement mechanisms are available. Challenges can be made by aggrieved tenderers in the High Court. Damages can be awarded for breach.
Contact McMahon Legal