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1 EU PUBLIC PROCUREMENT LAW The Public Sector Directive The Utilities Directive ND 2 Edition Sune Troels Poulsen Peter Stig Jakobsen Simon Evers Kalsmose-Hjelmborg DJØF PUBLISHING
2 EU Public Procurement Law The Public Sector Directive The Utilities Directive
3 Sune Troels Poulsen, Peter Stig Jakobsen & Simon Evers Kalsmose-Hjelmborg EU Public Procurement Law The Public Sector Directive The Utilities Directive DJØF Publishing
4 Authors: Sune Troels Poulsen, Peter Stig Jakobsen, Simon Evers Kalsmose-Hjelmborg EU Public Procurement Law 2. edition 2012 DJØF Publishing Jurist- og Økonomforbundets Forlag All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the Publisher. Cover: Bo Helsted Print: Narayana Press, Gylling Binding: Jysk Bogbind, Holstebro Printed in Denmark 2012 ISBN Published with support from Margot og Thorvald Dreyers Fond Sold and distributed in Scandinavia by: DJØF Publishing Copenhagen, Denmark forlag@djoef.dk Sold and distributed in North America by: International Specialized Book Services (ISBS) Portland, USA orders@isbs.com Sold in all other countries by: The Oxford Publicity Partnership Ltd Towcester, UK djof@oppuk.co.uk Distributed in all other countries by: Marston Book Services Abingdon, Oxon, UK trade.orders@marston.co.uk
5 Preface Preface This book presents an overall and sy stematic analysis of the EU procurement directives for the Public Sector and for the Utilities Sectors. As the rules of the Public Sector Directive and the Utilities Directive to a significant extent are identical the authors have found it useful to conduct an integrated analysis where we throughout the analysis refer to the Public Sector Directive and the Utilities Di rective. The rules on which subjects that are obliged by the Public Sector directive and the Utilities Directive respectively are set out separately in chapter two and three. The analyses are primarily based on judgments of the Court of Justice of the European Union and the extensive Danish case law. The book includes information published as of 1 July 2011, and selected subsequently published information. The rules of t he procurement directives are directly applicable to Danish law and the several hundred Danish cases on the procurem ent directives largely amplify the analyses of the indi vidual rules of the procurement directives. On this background the authors have found it relevant to translate the book into English in order to make our analyses and t he Danish case law available to a broader audience. Finally, our t hanks and ap preciation go to Margot & Thorvald Dreyers Fond, making this English release possible, Steven Harris, who has translated the manuscript, and our dev oted students, Josephine Toft-Jørgen sen, Anders Schulz and Asbjørn Andersen, who are responsible for the indexes.
6 6
7 Contents Contents Preface... 5 Chapter 1. Purposes and principles The purpose of the rules Public procurement and the performance of public tasks The public sector s needs fulfilled on a contractual basis Why are there special rules on the award of public contracts? The requirements of the procurement directives when awarding public contracts The aim of the procurement directives an internal market for public contracts The advantages associated with competition for public contracts Part aims: to open competition and ensure equal treatment Equal treatment is competition-oriented Part aim: to create transparency Part aim: financially-based procurement Independent directive with an independent purpose: Effective enforcement Prioritising the opening up of competition Prohibition of negotiation Wide-ranging requirement for predictability Time-consuming and expensive? Legislation and other sources of law The Public Sector Directive The Utilities Directive The remedies directives
8 2.4. Treaty on the Functioning of the European Union Laws and Executive Orders Case law of the CJ and the Danish courts Rulings of the Danish Complaints Board for Public Procurement Guidelines and opinions The WTO Agreement on Government Procurement The EU s Financial Regulation etc Fundamental legal principles The general application of the principles The principle of equal treatment The principle of equal treatment in administrative law The principle of equal treatment in public procurement law The scope of the principle of equal treatment The requirement for transparency The procedural requirements of the procurement directives The transparency principle The scope of the transparency principle Effectiveness and the principle of effectiveness Proportionality The application and interpretation of rules Purpose-based interpretation Weighing of considerations Principles of interpretation Procurement outside the scope of the procurement directives Authority to impose supplementary obligations on contracting authorities The public contracts covered, the effect on trade and objective circumstances The extent of the obligations Denmark the rules of The Danish Tender Act Chapter 2. Entities subject to the rules contracting authorities The basic problem The State s promotion of national interests Functional interpretation The date of determination
9 2. Contracting authorities The State, regional and local authorities Bodies governed by public law The first condition the purpose and character of the body The second condition the status of the body as a legal person The third condition the extent of public influence on the body First element publicly financed for the most part Second element subject to management supervision Third element appointing a majority of the management Associations of public authorities and bodies governed by public law Associated companies/bodies In house-services Application of the in-house rules The control criterion The nature of the control Individual or collective control Joint ventures Non-private participation The task-oriented criterion Decentralised entities Undertakings in the same corporate group The Utilities Directive affiliated undertakings and joint ventures Scope Affiliated undertakings Joint ventures Municipality-owned cooperatives Privatisation transitional arrangements Other possibilities for influence Concessionaires Recipients of subsidies Undertakings awarded special or exclusive rights Sale and lease-back arrangements Central purchasing bodies
10 Chapter 3. Entities subject to the rules the Utilities Directive The regulation of utility undertakings contracts The background to the Utilities Directive Significant differences between the Utilities Directive and the Public Sector Directive Overview of the chapter Contracting entities subject to the Utilities Directive Contracting authorities Public undertakings Other undertakings with special or exclusive rights Special or exclusive rights Not every publicly granted right the effect of the right Rights open to competition are not special or exclusive rights Activities covered by the Utilities Directive The general scope of the Utilities Directive The Utilities Directive only covers the specifically listed sectors Each legal entity must be assessed separately Establishing the activities covered by the Utilities Directive Activities exempted from the Utilities Directive subject to the rules in the Public Sector Directive? Situations regulated by Article 12 of the Public Sector Directive Circumstances not regulated by the Public Sector Directive Air and maritime transport Contracts with a value below the threshold Activities in a third country Energy The provision of gas, heating and electricity Supplying a network with gas, heat and electricity Economic operators energy production as a by-product falls outside the scope of the Utilities Directive Gas and heat Electricity
11 Contracts for the purchase of fuel for the production of energy are exempt The exploitation of a geographical area for the purpose of extracting oil etc Water The supply of drinking water Supplying drinking water to a network Supplying drinking water as a by-product falls outside the scope of the Utilities Directive Dealing with waste water and other water-related activities fall outside the scope of the Utilities Directive Agreements for the purchase of drinking water fall outside the scope of the Utilities Directive Transport services Transport services linked to a network Transport services outside the scope of the Utilities Directive Terminal facilities Postal services Postal services are concerned with the carriage of postal items Services other than postal services Contracts associated with activities covered by the Utilities Directive Definition of relevant activities covered by the Utilities Directive Delimiting activities covered by the Utilities Directive in relation to the Public Sector Directive Delimiting activities covered by the Utilities Directive in the absence of regulation Contracts for mixed activities Possibility for excepting certain activities in a Member State Chapter 4. Contract subject to tendering procedures The award of contracts Contracts for pecuniary interest Proposed or actual procurements Supply for consideration In-house services and own production
12 The in-house rule Inviting tenders and control bids Which contracts are covered? Individual kinds of contracts Public works contracts Supply contracts Public service contracts Combined contracts The main purpose of the contract The values of the individual elements of a contract Ownership and financing Carrying out works Purchase, lease, rental or hire purchase of products The provision of services The duration of contracts Thresholds The significance of the thresholds The individual thresholds The estimated value of contracts The timing of the calculation Contracts subsidised by more than 50 % The valuation of public contracts The overall assessment of the value of a contract Is there one overall or several independent purchases? The procurement directives principles for defining a single procurement Connection of the content of contracts Connection of the timing of contracts Elements of interpretation for defining a single purchase Contracts in separate lots Subsequent provision and contracts Expected supplies and contracts, including options Unforeseen supplies and contracts A contracting authority s scope for joining existing contracts A contracting authority s scope for changing the economic operator The valuation of special kinds of contracts Agreements for hiring or leasing goods
13 5.2. Successive contracts for the purchase of goods or services Framework agreements and dynamic purchasing systems Service contracts with special or undetermined consideration Excluded contracts Defence, confidentiality and security interests Specific exclusions Service concessions Exclusive rights Telecommunications Contracts awarded pursuant to international rules Reserved contracts Contracts within excluded sectors Chapter 5. The Procurement conditions The basis for an EU procurement The significance of the procurement conditions for the conduct of a procurement procedure Overview of the chapter General requirements for procurement conditions Transparency Objectivity In writing Clear, precise and sufficient description CPV the common glossary for public contracts The purchase and the procurement specification The purchase description of the subject-matter of the contract Considerable degree of freedom The purchase additional elements Union law requirements in addition to the procurement directives The role of fundamental Union law Further on the drafting of technical specifications General requirements Technical specifications or functional requirements Objective specification of requirements versus references to trade marks Standards Innovation
14 Certification, documentation and mutual recognition Quality control systems Commercial and financial elements The contract Variant tenders Environmental and social interests Contracting authorities and environmental and social interests The legal basis for including environmental and social interests The Union rules National rules Safeguarding financial and non-financial interests Procurements and non-financial considerations Three phases of a procurement: preparation, award and performance The subject-matter of the contract Specifications Eco-labels Terms and conditions for the performance of the contract Selection Environmental certification Non-financial interests and variant tenders The award of the contract The weighting of financial and non-financial criteria The award criteria must be linked to the subject-matter of the contract Objectivity not free discretion The criteria must be expressly stated in the procurement conditions The Treaty principles must be complied with The criteria must be appropriate for identifying the most economically advantageous tender Controlling the relative fulfilment of the award criteria Requirements for the manufacture of products Legal basis
15 Restrictions under procurement law Control of compliance with the requirements Small and medium-sized enterprises The framework for an SME policy The procurement conditions The content of the procurement dividing up the contracts Contracts for separate lots Consortiums Subcontractors Chapter 6. Procurement procedures Set procedures and an obligation to publish What procedures can be used? Why is there a requirement for prior publication? Overview of the chapter The individual procurement procedures Choice of procedure Choice of procedure under the Public Sector Directive Choice of procedures under the Utilities Directive When the procedure is to be selected Open procedures Restricted procedures Negotiated procedures Negotiated procedures in general The Utilities Directive negotiation can be freely used The Public Sector Directive negotiation only in special circumstances The Public Sector Directive negotiation with prior publication of a contract notice Irregular and unacceptable tenders Prior overall pricing is not possible The contract cannot be specified sufficiently precisely Public works contracts solely for the purposes of research Formal requirements
16 Direct contracting negotiation without prior publication of a contract notice No tender or no suitable tender Purchase with a view to research and development Only one particular economic operator Strict necessity for reasons of extreme urgency Supplementary deliveries Supplementary works and services Options for continuing a basic project Commodity markets Contracts awarded on the basis of a framework agreement Goods bought on specially favourable terms Special offers from liquidators or receivers Service contracts associated with a design contest Formal requirements How should negotiated procedures be conducted? What can be negotiated about Competitive dialogue Scope The dialogue phase The tendering phase Confidentiality Publication Contract notice Time limits associated with contract notices Time limits in general The specific time limits Accelerated procedure Supplementary information and information meetings Prior information notices Informing, giving notice of awards of contracts and reporting Informing Notice of award Reports Special forms of procurement Design contests Electronic auctions Dynamic purchasing systems Qualification systems
17 Advantages and disadvantages Considerations for competition and market access The procedure for establishing a qualification system Procedure for awarding a contract Periodic indicative notices The procedure for procurements based on a PIN Special forms of contracts Framework agreements Overriding considerations Formation of framework agreements The award of contracts on the basis of a framework agreement Framework agreement with one economic operator Framework agreements with three or more economic operators fixed terms Framework agreements with three or more economic operators open terms The Utilities Directive Concession contracts Public works concessions The award of public works concessions Concession contracts for the performance of services Public-private partnerships (PPPs) Reasons for entering into a partnership Public procurement law aspects of PPPs Procurement law aspects of institutional PPPs Chapter 7. Selection of participants qualification Establishing a group of suitable undertakings The underlying considerations The rules The procurement directives rules on exclusion and selection The Utilities Directive The principles Exclusion and selection criteria for certain kinds of procurement
18 1.5. Publication of grounds for exclusion and selection criteria The Public Sector Directive The Utilities Directive Exclusion on the grounds of formal or documentation defects Grounds for exclusion Mandatory and discretionary grounds for exclusion Mandatory grounds for exclusion Discretionary grounds for exclusion The individual grounds for exclusion The Danish law on debts to public bodies Evidence that grounds for exclusion do not exist Supplementary grounds for exclusion Self-cleaning Authorisation to carry on a professional activity Legal form The selection criteria in general The nature of selection criteria The Public Sector Directive contains an exhaustive list of selection criteria Minimum criteria Economic and financial standing Considerations behind the requirement for sufficient economic robustness Requirements for evidence of economic and financial standing Statements from banks or insurance companies Accounts Statement of an undertaking's overall turnover Specification of the required documentation Assessment of the evidence of economic and financial standing Fulfilment of documentation requirements other than in the manner stipulated Access to the economic and financial capacities of third parties Groups of candidates and tenderers Technical and professional ability Publication of the requirements for documentation Reference lists Professional ability
19 5.4. Technical facilities etc Complex goods or services Product samples etc Certificates that products comply with certain specifications or standards Quality assurance standards Environmental factors Information about subcontracting and subcontractors Access to the technical and professional capacities of third parties Requirements for professional skills, efficiency etc Assessment of the evidence received Disqualification Disqualification in connection with procurement The basis for the rules Disqualification arising from the arrangement of the procurement Disqualification of the contracting authority on the grounds of common interests Disqualification on the ground of consultancy relationship Prior consultancy Consultancy during the procurement process Dual consultancy Burden of proof for disqualification Principles for restricting the number of tenderers Scope The number of tenderers that must be invited Methods for restricting the number of selected candidates Other factors concerning selection Confidentiality Transferability Reservations Relationship to the award criteria Reasons for refusing selection Lists and certification of approved economic operators Chapter 8. The award of a contract The assessment for the award of a contract Competitive parameters Principles
20 1.3. The published documentation constitutes the basis for the procurement Award criteria Economic criteria A choice between two award criteria Exclusively the lowest price The most economically advantageous tender for the contracting authority Sub-criteria Part-criteria Weighting and prioritising of sub-criteria Weighting and grouping of sub-criteria and part-criteria Relationship between sub-criteria and part-criteria in relation to selection criteria Evaluation, evaluation models and points systems Price evaluation Evaluation of factors other than price Submitting and receiving tenders Submitting tenders methods of transmission and formalities The significance of the deadline for tendering and the date for opening tenders Confidentiality of tenders Eliminating tenders Abnormally low tenders Non-compliant tenders Reservations Variant tenders Information, correction and negotiation with tenderers Contact between tenderers and contracting authorities Changes to the procurement conditions Changes to submitted tenders after the deadline for submission The award and entry into the contract The award decision on the basis of the procurement procedure and the winning tender The standstill period a pause after the award decision Cancellation Only for proper reasons Non-compliant tenders Tenders at unacceptable prices
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