European Business Law, the fourth volume in our series, shows how the European authorities simultaneously abolish all restrictions on access to and exercise of economic activities and support the growth of domestic markets, through the harmonization the internal legislation or the enactment of genuinely unified regulations.

European Business Law

According to the Commission, public procurement in the European Union  represented almost 20% of the Union GDP or EUR 1,000 billion in 2012 . The Treaty contains no provision explicitly mentioning public procurement. The awarding of procurement contracts is governed by the general principles of the Treaty, particularly the principles of free movement of goods, freedom of establishment and freedom  …

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According to the Commission, public procurement in the European Union  represented almost 20% of the Union GDP or EUR 1,000 billion in 2012 . The Treaty contains no provision explicitly mentioning public procurement. The awarding of procurement contracts is governed by the general principles of the Treaty, particularly the principles of free movement of goods, freedom of establishment and freedom to provide services, as well as those arising from those freedoms such as equal treatment, non-discrimination, mutual recognition, proportionality and transparency. Disparity between the national laws and the fact that there is no obligation to open procurement contracts to European competition has however favored protectionism and, therefore, a strong tendency to favor national suppliers or providers. Thus, the European authorities have found it indispensable to draft provisions that coordinate the procedures for national public procurement exceeding a certain amount. 

A first wave of directives came between 1971 and 1976 to fight those practices. Directive No 71/305 of 26 July 1971 concerning the coordination of procedures for the award of public works contracts  and Directive No 77/62 of 21 December 1976 coordinating procedures for the award of public supply contracts , were aimed at ensuring transparency by the establishment of equal conditions of participation in those contracts in all the Member states, in order to better control compliance with the ban on-discrimination set forth in the Treaty. To do so, the provisions imposed on the authorities awarding contracts a disclosure obligation within the Union for procurement contracts exceeding certain thresholds, a ban on technical specifications likely to be discriminatory, as well as the obligation to apply objective criteria of participation and selection of candidates. However, they failed to reach the expected results in terms of the opening up of contracts: due to lack of guarantees, they came up against a lack of proactivity in the Member States which widely ignored the disclosure obligations or artificially divided contracts to avoid reaching the thresholds set.

A second wave of directives, between 1988 and 1992, asserted the Union's will to remedy these deficiencies and to promote a true opening up of procurement contracts to competition. Directive No 88/295 of 22 March 1988  amending Directive No 77/62 on public supply contracts and Directive No 89/440 of 18 July 1989  amending Directive No 71/305 on public works contracts, have thus improved the provision of information to candidates, limited the possible recourse to restrictive or negotiated procedures, and increased sanctions by requiring Member States to adjust their judicial procedures in order to ensure rapid and efficient remedies. Directive No 90/531 of 17 September 1990  on the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors, referred to as the “network” Directive, has been adopted to govern for the first time sectors which used to be excluded from competition. Lastly, the Services Directive No 92/50 of 18 June 1992  perfects the rules on public procurement contracts. To guarantee the efficiency of the system, two directives make it possible to challenge the award procedure or the award decision before the national courts: the General Remedies Directive No 89/665 of 21 December 1989  and the Utilities Remedies Directive No 92/13 of 25 February 1992 .

Many changes have been made to these provisions making it necessary to codify them by three directives adopted on 14 June 1993: the Directive on supply No 93/36 , the Directive on public works contracts No 93/37  and the Directive on special sectors No 93/38 . These directives did not manage to achieve the aims fixed by the European legislator any more than the previous directives. In accordance with the findings of its Green Paper on public procurement in the European Union of 1996 , the Commission engaged in a process of finetuning directives which led, on 31 March 2004, to adopt Directive No 2004/18 which merged and amended the directives on public works contracts, supply and services  and Directive No 2004/17 on special sectors . These two new instruments  simplified and modernized European law in the field by taking account of the solutions found by European case law. They have been repealed and replaced by Directive No 2014/24 and 2014/25 of 26 February 2014  and supplemented by Directive No 2014/23 which governs, for the first time at the European level, service and public works concessions. This “public purchasing” package aimed at modernizing public procurement in the traditional and special sectors, came into force on 17 April 2014. The Member States had 24 months to enact the provisions into their national legislation. These new directives are part of an overall EU policy set out in the Communication of 3 March 2010 to make public procurement one of the market instruments to be used to achieve “smart, sustainable and inclusive growth” while ensuring the most efficient use of public funds. 

 Like substantial directives, remedies directives are subject to tidying up in order to improve the efficiency of national remedies procedures. Directive No 2007/66 of 11 December 2007  thus amends Directives No 89/665 and 92/13 by instituting, in particular, a standstill period before the awarding of the contract and the sanction of depriving of effects any contract unlawfully awarded.

The Commission includes in public procurement contracts for supplies, services and works by the public sector.

Source: http://ec.europa.eu-internal_market-publicprocurement-index_en.htm

Directive No 2004/18 of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, OJ L 134 of 30 April 2004, 114. This Directive substitutes for the specific Council Directives No 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of public service contracts, OJ L 209 of 24 July 1992, 1; No 93/36/EEC of 14 June 1993 coordinating procedures for the award of public supply contracts, OJ L 199 of 9 August 1993, 1; and No 93/37/EEC of 14 June 1993 concerning the coordination of procedures for the award of public works contracts, OJ L 199 of 9 August 1993, 54.

Similar rules exist - which we will not detail - for contracts awarded by the European institutions: Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial regulation applicable to the general budget of the European Communities, OJ L 248 of 16 September 2002, 1.

The 2014 public procurement directives, like the 2004 directives, seek to simplify public procurement to improve access for SMEs and to promote wider use of green and innovative public purchasing. The bringing together of the Public Works, Supply and Services directives is involved in the achievement of that objective. The structure of the directive follows the logical order of any public procurement procedure as a guide to users. 

Directive No 2014/24 goes further than Directive No 2004/18 in taking account of the economic and technological developments in society by highlighting that electronic means of communication and information should become the standard means of communication and information exchange in procurement procedures, as they greatly enhance the possibilities of economic operators to participate in procurement procedures across the internal market. Thus, made mandatory are “the  transmission of notices in electronic form, electronic availability of the procurement documents and – after a transition period of 30 months – fully electronic communication, meaning communication by electronic means at all stages of the procedure, including the transmission of requests for participation and, in particular, the transmission of the tenders (electronic submission)” . To facilitate access by SMEs, the directive encourages  contracting authorities to make use of the Code of Best Practices set out in the Commission Staff Working Document of 25 June 2008 entitled “European Code of Best Practices Facilitating Access by SMEs to Public Procurement Contracts” providing guidance on how they may apply the public procurement framework. The new objectives of the European Union have not been neglected as recital 91 of the directive clarifies “how the contracting authorities can contribute to the protection of the environment and the promotion of sustainable development, whilst ensuring that they can obtain the best value for money for their contracts” especially through the obtention of multi-national eco-labels. 

European Business Law

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