lecture 9 Flashcards
(25 cards)
legal framework of public procurement law
scope
directive 2014/24/EU
art 1 par 1
Government percurment is a regular way in purchasing goods, services, etc
The scope is determined by which entities are govered by this regulation (who is active). Then we must know what is regulated (not everything is). Thirdly, not everything should be covered (think of small contracts which aren’t covered)
““This Directive establishes rules on the procedures for procurement by contracting authorities with respect to public contracts as well as design contests, whose value is estimated to be not less than the thresholds laid down in Article 4.”
WWW-questions
Public Procurement Law
- WHO -> ‘contracting authorities’ (Art. 2 para. 1.1)
- WHEN -> ‘public contracts’ (Art. 2 para. 1.5) and public concessions
- WORTH -> below/above the threshold (Art. 4)
- Which procedure?
WHO-question
Public Procurement Law
Art. 2 para. 1.1directive 2014/24/EU
“the State, regional or local authorities, bodies governed by public law or associations formed by one or more such authorities or one or more such bodies governed by public law”
Concept ‘Body Governed by Public Law
WHO-question in Public Procurement Law
art 2 par 4 directive
Three cumulative conditions - Mannesmann, par 21
1. Established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character
2. Having legal personality
3. General dependency on a contracting authority
Established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character
Concept ‘Body Governed by Public Law (Who-question)
Needs in the general interest ➞ housing corporations or hospitals for e.g
- Korhonen case, par. 40: a company established under private law to atrackt foreign investments to attracks employment in Finland. Although having real estate and to act on the commercial market, it was still deemed to work in the general interest because it was about foreign investments
Not having an industrial or commercial character ➞ this is can be a problem. When the company has commercial character on the one hand, but also for the general interst ➞ in such cases, the court ruled in mannesmann, there is a obligation to purchase all its needs through the public procurement process ➞ so still a body goverened by public law
- Contagion-theory ➞ if the entity is partly a contracting authority, then
it should source entirely through public procurement procedures
Having legal personality
Concept ‘Body Governed by Public Law (Who-question)
- Goverened by national law ➞ so look at the national law whether the entitiy has this or not. If it doesn’t, it might be that the shareholders are accountable
- Associations of contracting authorities? ➞ they might be a body goverened by public law, because if it is owned by public entities then more likely. Assosiations of public authorites are already defined as a body govered by public law
- If this second condition fails, you can’t just stop there. Look further and assess if the stakeholders are still responsible (or that you can attribute the duty to proccure on the public procurement rules)
Having legal personality
* Municipality establishes a company without legal personality to develop a former industrial site bought by the municipqality to attrackt R&D in the field of the chemical industry and housing for middle incomes (no competition with the social housing company).
* Partners are a local social housing company and a construction company
* Both will hold 24% of the capital; 52% is held by the municipality
* The board consists of 2 members and the municipalty appoints one member
Is this company under the obligation to tender public works contracts?
- first condition? Yes it serves the need of the general interest, so yes. Also look at the overall aim of the body and whether the commercial character prevails the social element. Since the majority of the capital is in public hands, and it is to attrackt research and development, you can assume that there is more emphasis on the general needs than on the commercial character
- Second condition (legal personality)? No, because it doesn’t have legal personality. But is there still a duty to procurement? = yes, because housing corporation and the municipallity hold 76% together, so such an entity is still bound by public procurement rules
General dependency on a contracting authority
Concept ‘Body Governed by Public Law (Who-question)
Three alternative ways of close depenency
1. Financial: for the major part it should depend on more than 50% on the public sector
- What payments are to be seen as ‘public financing’?
- Should the entity be directly financed by a contracting authority?
- Which part should be financed by a contracting authority?
- What happens if financing of an entity changes over time?
- Also indirectly?
2. Supervisory: see Social housing case, par 51-58
3. Managerial: if the public sector has the right to appoint the board of such a company, then it is deemed under influence - Korhonen case par 6
Supervisory - contracting authority
under the general dependency - WHO
When looking at the Italian football case (Federazione italiana guioco clacio), you saw a strong influence by the olympic commitee (ministry of sports) and legislator. First argument was raised, saying it wasn’t a BGPL because they acted under private law
- The court said that the BGPL can either be goverened by public OR private law ➞ the reason for this ruling is that all 27 MS have own systems especially on entities linked to the public sector, so in some states there are more bodies goverened by private law, so EU law is neutral because it should be harmonize
- Second argument was that it was just an association, and therefore couldn’t be goverened by public law ➞ this is wrong. Doesnt matter which form it takes
- Argument on self financing ➞ this also doesn’t matter
WHEN-question
Public Procurement Law
Art 2. par 1.5
Four elements - public contract
1. Contract for pecuniary interest
2. Written
3. Between economic operator and contracting authority
4. Having as its object works (see annex II), supplies or services
- Case Falk Pharma
- Tirkkonen case
Elements - public concession
Difference is the right to exploit works or services ➞ not a supply
What is crucial: there should be an economic risk with the economic operator
1. Contract for pecuniary interest
2. In writing
3. Contracting authorities or entities
4. Works or services
5. Economic operator
6. Right to exploit work or services
7. Together with payment
- Promoimpresa case
Case Falk Pharma
WHEN-question, public contract
The case was about that the krankenkasses was not interested to procure their pharmaceuticals on tender basis
Was this definition a public contract? ➞ court said no, even though it fit within the four elements
Why? ➞ because there was no award for a contract. Everyone who fulfilled the criteria to supply the pharmaceuticals, was admitted as a supplyer. And since there was no selection or exclutivity or favoring, the court held that there was no public contract.
Tirkkonen case
WHEN-question, public contract
This case was a bit more straightforward. It was in the agricultural sector and there was a complaint by someone who said the public procurement rules were violated.
The ministry organized a system which had consultants in the agricultural field. On the other side next to the ministy you had the farmers, also linked to the consultants.
The ministry concluded a contract with the consultant for services for the farmers.
Question was if that contract needed to be procured under the rules
- all elements are present when looking at the when question
- However, it was not a public contract since the court held that there was no risk of preference. Everyone could apply for this
- Is there an award of contract? = no, there was no competition for price or quality
Promoimpresa case
WHEN-question, public concession
there was a ‘consession’ under Italian law, but this consession was actually a permit allowing you to operate on the beach
Question = was there actually a concession?
Difference between a permit and concession?: when there is a duty to operate or organize, because otherwise you have the possibility.
Concession or permit?
- Lotteries and gaming ➞ permit
- Extension of concessions (motorways eg) ➞ concession, you have to have it done by a certain time
- Extension of lottery concession ➞ sometimes they are concessions, but this one depends.
If there is an obligaiton, then a permit is a concession, regardless the wording
WORTH-question
Public Procurement Law
You need to look at the turnover of the concession ➞ art 4 directive
Works and all concessions, 5.5 mil
- Why is the threshold for concessions higher, because you need to look at the turnover. You have to count the subsidies + all the ticket sales madee. If you calculate, you have to look the duration as well
Public contracts (central, sub-central, and social and other specific services listed in annex XIV)
- For public contracts, the only payer to the public operator is the contracting authority. So there is a different dynamic within the contract. Here you only look at the estimated future payments to this ecomomic operator.
- Central authority: then threshold of 143.000
- Sub-central (everything which isn’t cnetral: 221.000
- Destinquish between ordanary services and those listen in annex 14 of directive, because if it is listed, there is a threshold of 750.000,-
Rules:
Estimated value
worth-question
Estimated value has two imporrtant calculation rules.
1. Contract for certain duration = look at 48 months (4 years)
2. When looking at extensions in the contract and all options of a contract, then you need to take 3 years into account. Even if the extention of another year is uncertain
Art 6: revision of the thresholds every two years, so the amounts differ
The thresholds don’t necessarily go up every year, so it can fluctuate.
So if it is above the threshold, then the directives are applicable
Concequences for falling within the scope of directive 2014/24/EU
Public contracts within the scope of Dir
Art 26: you have to make a choice between one of the procedures laid down in the directive.
There are two main procedures to remember:
1. Open tender: when the tender is published in the official journal of the EU, and you get a minimum of 35 days and you have to make a bid which is assessed ➞ then the contract is or isnt awarded
2. Procedure with prior selection - 2 phases
a. Select a certain number of economic operators which you seem suitable to operate the contract
b. The parties on the short-list are invited to submit their bid for the contract ➞ so this takes a bit more time then the first option
All these are in the official journal.
You assess two points: a) the suitability and b) the bid (do they meet the expectations laid down)
These procedures ensure that the general principles are applied. This is the general rule, but in practice the question is how you can escape from the public procurement rules…
Exceptions to being bound by the public procurement rules
directive 2014/24/EU not applicable
- When there is other legislation
- Internal transfer of power
- Specific exclusion, e.g. rent of real estate
- Exclusive rights
- Quasi in-house exemption (when the public entity in house does so)
- Public-public cooperation exemption
➞ these need to be interpreted.
General remarks on the exceptions on public procurement
- Strict interpretation of the exceptions, whereas the scope of directive 2014/24 is defined broadly
- Influenced by the goals of the EU procurment law (not national interpretation)
- The proportionality principel as a balancing instrument
- The exceptions are it, there is not another categorie of exception ➞ exhaustive
- Burden of proof ➞ for the contracting authority to prove that the conditions for the exceptions are fulfilled
Exceptions of public procurement law: Other legislation
- Article 1(3): Article 346 TFEU
- Article 7: water, energy, transport, postal services ➞ Directive 2014/25/EU (networks) (C 393/06 Aigner)
- Article 8: electronic communications ➞ Communication networks (E.g. mobile network, internet, …)
- Article 9: contracts under international law
- Articles 15-17: Directive 2009/81/EU Defence and national security
procurement
Exceptions: Defence procurement
On the basis of art 1(3): reference to 346 TFEU
Reference to 346 TFEU, procurement isn’t applicable, there is still a strict interpretation. A certain number of conditions
➞ art 346 TFEU (national security). Concerns trade in arms, munitions and war material
- The execption must be necessary for the protection of the essential interest of the security of the MS ➞ the MS must prove that essential interests are at stake
- There is still a general assessment, and the measures must not adversely affect competition regarding products not specifically intended for (military) purposes
Exceptions: Defence procurement
Articles 15 – 17
Articles 15 – 17: Procurement with Defence or security aspects (Directive
2009/81)
Adapted procedures for :
* Arms, munition and war material for defence purposes
* Sensitive services, supplies or works for security purposes
Over the next years to come, defence spending will be increased. So more procurement procedures, which either come within the scope of 346 or the defence and security directive (2009/81)
Legal framework: the fundamental TFEU-rules
within public procurement law
Are there procedures where procurement doesn’t apply, still goverened by EU rules? = yes
Telaustria case
- It used to be that when it wasn’t caught by the directive, then no public procurement
- But since this case, even below the thresholds, you still need to be in line with the treaty (non-discrimination and equal treatment eg)
Legal framework: the fundamental TFEU-rules
What does that mean in practice? To act in accordance with the transparency principle..?
within public procurement law
Telaustria case
Transparancy in public procurement means that you need to be open and make the publication of the contract 1) the publication of the contract, 2) on the way you announce the requirements to the economic operators, 3) the award of the contract should be done transparantly (know how your bid will be assessed), and 4) if the contract is awarded, this must be done in a public way
- A contract notice in the official journal. There also needs to be a degree of advertising sufficient to open the market up to competition (says case) ➞ so don’t need to publish in the official journal, but there needs to be a sufficient degree. What this sufficient degree is, was further explained in the Coname-case 2005.
