Commission interpretative communication on the Community law applicable to contract awards not or not fully subject to the provisions of the Public Procurement Directives

CourtComisión Europea
Official Gazette PublicationDiario Oficial de la Unión Europea, C 179, 01 de agosto de 2006
C_2006179EN.01000201.xml
1.8.2006 EN Official Journal of the European Union C 179/2

COMMISSION INTERPRETATIVE COMMUNICATION

on the Community law applicable to contract awards not or not fully subject to the provisions of the Public Procurement Directives

(2006/C 179/02)

INTRODUCTION

The European Community has recently adopted new directives for the award of public works, supplies and services contracts (1). They set up detailed rules on EU-wide competitive tendering procedures.

However, the Public Procurement Directives do not apply to all public contracts. There remains a wide range of contracts that are not or only partially covered by them, such as

Contracts below the thresholds for application of the Public Procurement Directives (2);
Contracts for services listed in Annex II B to Directive 2004/18/EC and in Annex XVII B to Directive 2004/17/EC that exceed the thresholds for application of these Directives.

These contracts present significant opportunities for businesses in the Internal Market, particularly for SMEs and start-up companies. At the same time, open and competitive award methods help the public administrations to attract a broader range of potential bidders for such contracts and to gain from better-value offers. Ensuring the most efficient use of public money is of particular importance in view of the budgetary problems encountered in many Member States. One should also not forget that transparent contract awarding practices are a proved safeguard against corruption and favouritism.

Yet, such contracts are still in many instances directly awarded to local providers without any competition. The European Court of Justice (ECJ) has confirmed in its case-law that the Internal Market rules of the EC Treaty apply also to contracts outside the scope of the Public Procurement Directives. On various occasions, Member States and stakeholders have asked the Commission for guidance on how they should apply the basic principles deriving from this case-law.

This interpretative communication addresses the two above mentioned groups of contracts not or only partially covered by the Public Procurement Directives (3). The Commission sheds light on its understanding of the ECJ case-law and suggests best practices in order to help the Member States to reap the full benefit of the Internal Market. This communication does not create any new legislative rules. It should be noted that, in any event, interpretation of Community law is ultimately the role of the ECJ.

1. LEGAL BACKGROUND

1.1. Rules and principles of the EC Treaty

Contracting entities (4) from Member States have to comply with the rules and principles of the EC Treaty whenever they conclude public contracts falling into the scope of that Treaty. These principles include the free movement of goods (Article 28 of the EC Treaty), the right of establishment (Article 43), the freedom to provide services (Article 49), non-discrimination and equal treatment, transparency, proportionality and mutual recognition.

1.2. Basic standards for the award of contracts

The ECJ has developed a set of basic standards for the award of public contracts which are derived directly from the rules and principles of the EC Treaty. The principles of equal treatment and non-discrimination on grounds of nationality imply an obligation of transparency which, according to the ECJ case-law (5), ‘consists in ensuring, for the benefit of any potential tenderer, a degree of advertising sufficient to enable the services market to be opened up to competition and the impartiality of the procedures to be reviewed’ (6).

These standards apply to the award of services concessions, to contracts below the thresholds (7) and to contracts for services listed in Annex II B to Directive 2004/18/EC and in Annex XVII B to Directive 2004/17/EC in respect of issues not dealt with by these Directives (8). The ECJ stated explicitly that although certain contracts are excluded from the scope of the Community directives in the field of public procurement, the contracting authorities which conclude them are nevertheless bound to comply with the fundamental rules of the Treaty (9).

1.3. Relevance to the Internal Market

The standards derived from the EC Treaty apply only to contract awards having a sufficient connection with the functioning of the Internal Market. In this regard, the ECJ considered that in individual cases, ‘because of special circumstances, such as a very modest economic interest at stake’ , a contract award would be of no interest to economic operators located in other Member States. In such a case, ‘the effects on the fundamental freedoms are … to be regarded as too uncertain and indirect’ to warrant the application of standards derived from primary Community law (10).

It is the responsibility of the individual contracting entities to decide whether an intended contract award might potentially be of interest to economic operators located in other Member States. In the view of the Commission, this decision has to be based on an evaluation of the individual circumstances of the case, such as the subject-matter of the contract, its estimated value, the specifics of the sector concerned (size and structure of the market, commercial practices, etc.) and the geographic location of the place of performance.

If the contracting entity comes to the conclusion that the contract in question is relevant to the Internal Market, it has to award it in conformity with the basic standards derived from Community law.

When the Commission becomes aware of a potential violation of the basic standards for the award of public contracts not covered by the Public Procurement Directives, it will assess the Internal Market relevance of the contract in question in the light of the individual circumstances of each case. Infringement proceedings under Article 226 EC Treaty will be opened only in cases where this appears appropriate in view of the gravity of the infringement and its impact on the Internal Market.

2. BASIC STANDARDS FOR THE AWARD OF CONTRACTS RELEVANT TO THE INTERNAL MARKET

2.1. Advertising

2.1.1. Obligation to ensure adequate advertising

According to the ECJ (11), the principles of equal treatment and of non-discrimination imply an obligation of transparency which consists in ensuring, for the benefit of any potential tenderer, a degree of advertising sufficient to enable the market to be opened up to competition.

The obligation of transparency requires that an undertaking located in another Member State has access to appropriate information regarding the contract before it is awarded, so that, if it so wishes, it would be in a position to express its interest in obtaining that contract (12).

The Commission is of the view that the practice of contacting a number of potential tenderers would not be sufficient in this respect, even if the contracting entity includes undertakings from other Member States or attempts to reach all potential suppliers. Such a selective approach cannot exclude discrimination against potential tenderers from other Member States, in particular new entrants to the market. The same applies to all forms of ‘passive’ publicity where a contracting entity abstains from active advertising but replies to requests for information from applicants who found out by their own means about the intended contract award. A simple reference to media reports, parliamentary or political debates or events such as congresses for information would likewise not constitute adequate advertising.

Therefore, the only way that the requirements laid down by the ECJ can be met is by publication of a sufficiently accessible advertisement prior to the award of the contract...

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