Brussels, 11/05/2006 (Agence Europe) - At the beginning of May the European Commission adopted a draft directive for amending existing European legislation on rejected bidders having the opportunity to appeal after failing to be awarded a contract (directives 89/655/EEC for traditional public procurement contracts and 92/13/ECC for special public procurement contracts). It is proposing to introduce a “standstill period” of at least 10 days before concluding a public contract following the announcement of its award. The aim is to improve transparency in public tenders by attacking the public contracts by mutual consent, namely, contracts being awarded to a single bidder. The proposal also aims to encourage cross-border public markets, which are still quite underdeveloped, by improving the trust of companies in the current appeals procedure.
The European Commission's Head of Unit at DG Public Procurement, Mathias Petschke informed the press that bidders wanted to win contracts rather than obtain reparations. The Commission was therefore proposing to “prevent in real time, the signing of contracts whose award is being opposed”. This will involve the improvement of pre-contract appeals procedures provided to a company if it believes it has not been fairly considered for a contract. The Commission is, above all, planning to introduce a “standstill period” before notification of the award and the signing of the contract. This measure also applies to those awarded by mutual consent and where the amounts paid out are above the thresholds in the European directives. Mr Petschke said that the proposal was a balanced one, insofar as the standstill period constitutes a minimum and is sufficiently long for sending out important information. He also believed that it would allow for greater transparency in contacts awarded by mutual consent, which did not, he claimed exist at the present time.
In what cases are public contracts awarded by mutual consent? Petschke indicated cases of “exclusivity” where only one bidder could provide a service for the market in question. He also referred to contracts awarded as part of the “in house” system, whereby the adjudicator exercises on the company that gets the contract, similar control to that it has on its own services.
In practice, the standstill period will apply to all markets covered by the new public procurement directives (2004/18/EC and 2004/17/EC) except in emergencies arising from unexpected events. In certain cases this deadline could be reduced to seven days. Three examples: 1) if no company opposes the award of the contract, the public authority benefits from legal security to conclude the contract; 2) if the public authority does not respect the moratorium and concludes a public contract, this contract is considered null and void. It is then up to the competent authority to reach a decision on whether the contract is illegal before the allocation of the market in the ten day period, according to the national procedures in force. Generally, this will apply to competent national courts but could sometimes be decided on by the adjudicator, as is the case in Greece. If the body responsible for appeal proceedings observes an irregularity, it could impose sanctions and the paying back of money already paid out, as well as challenging the contract.
The proposal to set up a standstill period is not a novelty at a European level. Some Member States have already applied such measures. Germany and Austria already have a 14 day standstill period in their national legislation, explained Mr Petschke. In the Netherlands this period is longer than a fortnight and in France it is ten days.
The proposal also intends to include additional amendments in directive 92/13/ECC. This will introduce a corrective mechanism which the Commission could use before the award of a contract if it believes that a blatant violation of European rules has been committed. This mechanism will now focus on the most serious breaches to Community law. The Commission will also propose that two mechanisms that are not often used in this practice are got rid of - the attestation and conciliation mechanisms. The first allows the public authorities to attest to the compliance of their procedures with the award of the contract. The second sets up a procedure for settling disputes amicably.
Mr Petsche spoke of two rulings from the European Court of Justice (ECJ) which were behind the Commission's proposal. In its “Alcatel” ruling in 1999, the Court had already specified the requirement for a “reasonable period” between notification of the award and the signing of a procurement contract. In its “Stadt Halle” ruling, it considered that Member States should guarantee the possibility of redress even in cases of direct awards and called illegal conclusion of contracts by mutual agreement the most important violation of Community law on public procurement (see EUROPE 8872).
Prior to launching this proposal, the Commission consulted Member States within the framework of the advisory committee on public procurement, as well as the business world and public authorities (see EUROPE 8573). In its proposal, the Commission notes the virtual consensus among interested parties on the need to improve the effectiveness of pre-contractual appeals by providing for a standstill period, and on the seriousness of the illegal practices of awarding contracts by mutual consent by some adjudicating authorities.