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EU Public Procurement Law: Lesson 8 - The procurement procedures Simon Evers Kalsmose-Hjelmborg

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1 EU Public Procurement Law: Lesson 8 - The procurement procedures Simon Evers Kalsmose-Hjelmborg (seh@bechbruun.com)

2 Chapters V - VI of the Directive - The procedures Chapters V - VI contain the following provisions on procedures in Articles 28 - 43: Article 28: Use of open, restricted and negotiated procedures and of competitive dialogue. Article 29: Competitive dialogue. Article 30: Cases justifying use of the negotiated procedure with prior publication of a contract notice. Article 31: Cases justifying use of the negotiated procedure without publication of a contract notice. 2

3 Chapters V - VI of the Directive - The procedures Chapters V - VI contain the following provisions on procedures in Articles 28 - 43: Article 32:Framework agreements. Article 33: Dynamic purchasing systems. Article 34: Public works contracts: particular rules on subsidised housing schemes. Article 35: Notices. Article 36:Form and manner of publication of notices. Article 37:Non-mandatory publication. 3

4 Chapters V - VI of the Directive - The procedures Chapters V - VI contain the following provisions on procedures in Articles 28 - 43: Article 38:Time-limits for receipt of requests to participate and for receipt of tenders. Article 39: Open procedures: Specifications, additional documents and information. Article 40: Invitations to submit a tender, participate in the dialogue or negotiate. Article 41:Informing candidates and tenderers. Article 42: Rules applicable to communication. Article 43:Content of reports. 4

5 Chapter V of the Directive - The procedures Main rule of Article 28: The following procedures may always be applied: Open procedure. Restricted procedure. The other types of procedure are exemption procedures presupposing the existence of specific (express) circumstances: Procedure by means of competitive dialogue. Negotiated procedure: with publication of contract notice. without publication of contract notice. 5

6 Chapter V of the Directive - The procedures Open procedure 6 Contract notice published in OJ Time-limit for tenders Award decision Conclusion of contract Report to the Comm. Art. 38(2) Min. 52 days Art. 35(2) Art. 43 Art. 41 Informing of tenderers Art. 39 Documents to be sent within 6 days + negotiations  negotiations

7 Chapter V of the Directive - The procedures Restricted procedure 7 Contract notice published in OJ Time-limit for requests Award decision Conclusion of contract Report to the Comm. Art. 38(3) Min. 37 days Art. 35(2) Art. 43 Art. 41 Informing of candidates/ tenderers Time-limit for tenders Art. 38(3) Min. 40 days Art. 40 Invitation to submit tenders - information requirements + negotiations  negotiations

8 Chapter V of the Directive - The procedures Framework agreements/contracts Article 32 of the Public Procurement Directive Article 1(5) of the Public Procurement Directive Introductory consideration of article 11 of the Public Procurement Directive Explanatory note – Framework Agreements – Classic Directive (January 2006) 8

9 Framework agreements Definition “A "framework agreement" is an agreement between one or more contracting authorities and one or more economic operators, the purpose of which is to establish the terms governing contracts to be awarded during a given period, in particular with regard to price and, where appropriate, the quantity envisaged”, cf. Art. 1(5). Framework contracts* Establish all the terms Framework agreements* Do not establish all the terms * The terms framework contract and framework agreement stricto sensu are used only for explanatory purposes. Please note that the use of this terminology is not obligatory for implementing the Directive. 9

10 Framework agreements General conditions: The procedures of the directives must be supervised in all phases until the award of the contract (open, restricted or negotiated procedures (restricted procedure)) Note that framework agreement(s) must be awarded to one or minimum 3 entity/entities The party/parties of the framework agreements is/are selected on the basis of the Directive’s award criteria The duration of framework agreements and contracts based on framework agreements is limited to 4 years unless exceptional cases exist 10

11 Framework agreements General conditions: The standard terms are not to be amended considerably when awarding the individual contract No other entity or authority can be involved when awarding the contract – a closed system Notice regarding award of the contract must be sent to the Commission no later than 48 days after the conclusion of the framework agreement But, there are no notice obligations regarding award of individual contracts 11

12 Framework agreements stricto sensu General conditions (framework agreements stricto sensu - all terms are not established): The Directive does not state which terms are not set out in the agreement and thus not which terms are to be established later In order to consider future development of the products, it is essential to establish the terms of the technical specifications It is essential to establish the products and the quantities These cannot be substantially amended during the term of the framework agreement It is positively recommended to list the established specifications and terms in a sub clause regarding “contract conditions” 12

13 Framework agreements Four types: Individual framework contract with one entity Individual framework agreement stricto sensu with one entity Parallel framework contracts with several entities Parallel framework agreements stricto sensu with several entities 13

14 Individual framework contract with one entity The supplier cannot be consulted in writing concerning completion when entering into the contract Simple placing of orders under the terms of the framework contract Contractual liability to deliver for the supplier 14 ÷ completion of offerTraditional tender procedure Entering into the framework agreement Entering into the contract

15 Individual framework agreement stricto sensu with one entity The supplier can be consulted in writing concerning completion when entering into the contract Entering into the contract is based on the terms of the framework agreement in combination of the terms offered by the supplier and which do not concern the terms of the framework agreement No contractual liability to deliver for the supplier 15 + completion of offerTraditional tender procedure Entering into the framework agreement Entering into the contract

16 Individual framework contract with several entities The supplier cannot be consulted in writing concerning completion when entering into the contract Simple placing of orders under the terms of the framework agreement Contractual liability to deliver for the selected supplier(s) Selection of supplier? Article 2: Non-discrimination, transparency 16 ÷ completion of offerTraditional tender procedure Entering into minimum 3 framework agreements Entering into the contract

17 Individual framework agreement stricto sensu with several entities New competition procedure when entering into the contract All relevant entities are contacted in writing A tender deadline is made The offers are made in writing/handled with confidence The contract is awarded on the basis of the award criterion determined in the general conditions of the framework agreement No contractual liability to submission of tender/deliver for the supplier 17 New competitionTraditional tender procedure Entering into framework agreements Entering into the contract

18 Chapter V of the Directive - The procedures Competitive dialogue 18 Contract notice published in OJ Time-limit for requests Award decision Conclusion of contract Report to the Comm. Art. 38(3) Min. 37 days Art. 35(2) Art. 43 Art. 41 Informing of candidates/ tenderers Time-limit for tenders Art. 38(3) Min. 40 days Art. 40 Invitation to submit tenders - information requirements + negotiations (Art. 29)  negotiations Art. 29 Negotiations

19 Chapter V of the Directive - The procedures Competitive dialogue – Art. 29 – conditions. "In the case of particularly complex contracts …". "Award criterion [is] the most economically advantageous tender". "Contracting authorities shall publish a contract notice setting out their needs and requirements". "During the dialogue, contracting authorities shall ensure equality of treatment among all tenderers. In particular, they shall not provide information in a discriminatory manner which may give some tenderers an advantage over others". Flexibility with respect to determining the procedure for the dialogue, but requirement of prior publication thereof in the contract notice. After submission of tenders, negotiations are prohibited (6)+(7). 19

20 Chapter V of the Directive - The procedures Negotiated procedure with prior publication of notice 20 Contract notice published in OJ Time-limit for requests Award decision Conclusion of contract Report to the Comm. Art. 38(3) Min. 37 days Art. 35(2) Art. 43 Art. 30 Negotiations Art. 41 Informing of candidates/ tenderers Time-limit for tenders Art. 38(3) Min. 40 days Art. 40 Invitation to submit tenders - information requirements + negotiations (Art. 30)  negotiations

21 Chapter V of the Directive - The procedures Negotiated procedure with publication of notice - Art. 30 This procedure may be applied in the following cases: In the event of irregular tenders or the submission of tenders which are unacceptable in response to an open or restricted procedure or a competitive dialogue, When the nature of the works, supplies, or services or the risks attaching thereto do not permit prior overall pricing, Where the services to be provided cannot be established with sufficient precision, and Public works contracts which are performed solely for purposes of research, testing or development and not with the aim of ensuring profitability or recovering research and development costs. 21

22 Chapter V of the Directive - The procedures Negotiated procedure without prior publication of notice 22 Contract notice published in OJ Time-limit for requests Award decision Conclusion of contract Report to the Comm. Art. 43Art. 31 Negotiations Time-limit for tenders No procedure requirements - or time-limits. NB! Telaustria…!! + negotiations (Art. 31)  negotiations

23 Chapter V of the Directive - The procedures Negotiated procedure without publication - Art. 31 This procedure may be applied for all contracts in the following cases (1): When no tenders or no suitable tenders or no applications have been submitted in response to an open procedure or a restricted procedure provided that the initial conditions of contract are not substantially altered, When for technical or artistic reasons or for reasons connected with the protection of exclusive rights, the contract may be awarded only to a particular economic operator, and When it is strictly necessary when for reasons of extreme urgency brought about by events unforeseeable by the contracting authorities, the time-limit for the open restricted or negotiated procedures cannot be complied with- must not in any event be attributable to the contracting authority. 23

24 Chapter V of the Directive - The procedures Negotiated procedure without publication – Art. 31 This procedure may be applied for public supply contracts in the following cases (2): When the products involved are manufactured purely for the purpose of research, experimentation, study or development, For additional deliveries by the original supplier which are intended either as a partial replacement of normal supplies or installations or as the extension of existing supplies or installations, For supplies quoted and purchased on a commodity market, and For the purchase of supplies on particularly advantageous terms from either a supplier which is definitively winding up its business activities or the receivers or liquidators etc. 24

25 Chapter V of the Directive - The procedures Negotiated procedure without publication – Art. 31 This procedure may be applied for public service contracts in the following cases (3): "When the contract concerned follows a design contest and must, under the applicable rules, be awarded to the successful candidate or to one of the successful candidates". 25

26 Chapter V of the Directive - The procedures Negotiated procedure without publication – Art. 31 This procedure may be applied for public works and service contracts in the following cases (4): Subject to the fulfilment of certain conditions "for additional works or services not included in the project initially considered or in the original contract but which have, through unforeseen circumstances, become necessary for the performance of the works or services described therein". Subject to the fulfilment of certain conditions "for new works or services consisting in the repetition of similar works or services entrusted to the economic operator to whom the same contracting authorities awarded an original contract". 26

27 Chapter V of the Directive - The procedures Dynamic purchasing system, art. 1 (6) and art. 52 In addition to the reviewed public procurement procedures, a “dynamic list” of known and potential suppliers can be established The contracting authority must publish a contract notice making it clear that a dynamic purchasing system is involved – the award criterion must be determined The contract documents must include: the nature of the purchase, necessary information on the system, technical information regarding connection, etc. The dynamic purchasing systems must be renewed every four years All tenderers who fulfil the selection criteria and have submitted a indicative tender in compliance with the contract documents must be admitted to the system through the entire period 27

28 Chapter V of the Directive - The procedures 28 Contract noticeEstablisment and maintenance of ”dynamic list” Simple procurement regarding specific purchase Invitation to all suppliers on the list Contract

29 Chapter V of the Directive - The procedures Specific purchases under the dynamic purchasing system The procedure of entering into specific contracts: 1.A simplified notice must be published in the Official Journal of the European Union with the request to all to give an indicative tender within 15 days (from the forwarding date) 2.All replies will be evaluated and the suppliers will be listed 3.All listed and newly listed suppliers are all requested to make a final tender within a reasonable time limit 4.The contract is awarded under the award criteria set out in the contract notice for the establishment of the dynamic purchasing system 29

30 Chapter V of the Directive - The procedures Electronic auction, art. 54 and art. 1 (7) The directive states that electronic auctions may be used in addition to the tender procedure (following the tender procedure) Conditions: Open, restricted or negotiated procedures (or parallel framework agreements or dynamic purchasing systems) The contract specifications can be established with precision The contract notice states that this type of auction is being used The action process must be described Only entities that have made acceptable tenders are invited to participate 30

31 Chapter V of the Directive - The procedures 31 Electronic auction(s) Traditional procurement procedure First tender evaluation Invitations to tenderers who have made acceptable tenders Contract

32 Chapter V of the Directive - The procedures Electronic auction The object of the auction (the competition): Price (the “lowest price”) Price and/or the new values of other features (the “economically advantageous tender”) Several auction phases can be made The auction must be electronic - a mathematical formula to determine automatic rerankings on the basis of the new prices and/or new values The contracting authority must instantaneously communicate to all the tenderers at least sufficient information to enable them to ascertain their relative rankings at any moment The contracting authority may at any time announce the number of the remaining participants but not the identity 32

33 Types of public procurement procedures - combinations 33 Open procedure Restricted procedure Certain Negotiated procedures Competitive dialogue procedure Framework agreement with competition Dynamic purchases Electronic auction

34 Chapter V of the Directive - The procedures Prior information notices (Art. 35). (May be) published for estimated value of purchases throughout the following year (12 months). Are not binding, but serves to "prepare" the market for contracts likely to be awarded. The time-limits may be shortened following publication of such notice. Non-mandatory publication (Art. 37). Only allows "contracting authorities" access to the system on a voluntary basis. 34

35 Chapter V of the Directive - The procedures Time-limits (arts 38+39). Time-limits are often shortened where the contract notices are published by electronic means etc. 35

36 Chapter V of the Directive - The procedures - Discontinuance of procedure Kauppatalo – C-244/02: Facts The Finnish town of Imatra invited tenders from 20 electricity companies for an electricity supply contract for the period 1 July 2000 - 30 June 2001. The "lowest price" was the award criterion. The tender submitted by Hansel was of the lowest price. Subsequently, Imatra realised that changing the supplier would give rise to additional costs which had not been taken into consideration and decided that the tender submitted by its supplier at that time, Imatran Seudun Sähkö Oy, was overall the most economically advantageous tender. 36

37 Chapter V of the Directive - The procedures - Discontinuance of procedure Kauppatalo – C-244/02: Facts In that light, the town of Imatra discontinued the award procedure initiated. The town of Imatra then published a new invitation to tender in which, following a more comprehensive assessment of the overall cost of the contract, the estimated amount of electricity required was now stated to be 25 GWh per year instead of the 16 GWh per year in order to ensure that the best tender was also overall the most economically advantageous. In the new procedure, the best tender was submitted by Lappeenrannan Energia Oy to which the contract was awarded. 37

38 Chapter V of the Directive - The procedures - Discontinuance of procedure Kauppatalo – C-244/02: Hansel – arguments Hansel lodged an appeal against the decision to discontinue the first procedure arguing: that the City of Imatra did not have any valid reason to reject a tender satisfying the required criteria and to discontinue the procedure for the award of the contract, that the organisation of a new procedure changing the award critierion was unlawful, and that the new procedure amounted to unlawful bargaining tactics. In its view, the City of Imatra had sought by way of the first invitation to tender to obtain information on prices and had, subsequently, commenced a new procedure in order to negotiate the price of the tenders submitted using the information which had become public during the first invitation to tender. 38

39 Chapter V of the Directive - The procedures - Discontinuance of procedure Kauppatalo - C-244/02: Question referred to the ECJ: Is Directive 93/36 to be interpreted "as meaning that a contracting authority which has commenced a procedure for the award of a contract on the basis of the lowest price may discontinue the procedure without awarding a contract when it discovers after examining and comparing the tenders that because of errors committed by itself in its preliminary assessment, the content of the invitation to tender makes it impossible for it to accept the most economically advantageous tender?" (p. 24). 39

40 Chapter V of the Directive - The procedures - Discontinuance of procedure Kauppatalo – C-244/02: Answer by the ECJ: "… the answer … must be that Directive 93/36 is to be interpreted as meaning that a contracting authority which has commenced a procedure for the award of a contract on the basis of the lowest price may discontinue the procedure, without awarding a contract, when it discovers after examining and comparing the tenders that, because of errors committed by itself in its preliminary assessment, the content of the invitation to tender makes it impossible for it to accept the most economically advantageous tender, provided that, when it adopts such a decision, it complies with the fundamental rules of Community law on public procurement such as the principle of equal treatment.” (p. 36) 40

41 Chapter V of the Directive - The procedures Commission vs. France – C-225/98: Facts Departement Pas-de Calais had commenced a tendering procedure (open procedure) for a public works contract relating to the construction of a school The Commission forwarded a formal notice listing a number of complaints: The time-limit for the receipt of tenders was less than 52 days, Discriminatory description of the lots, Discriminatory minimum standards, Criteria for the award which did not comply with the Directive, Improper award of the contract, and Failure to inform an eliminated tenderer of the reasons for rejection of its tender. 41

42 Chapter V of the Directive - The procedures Commission vs. France – C-225/98: Facts Meanwhile, the Nord-Pas-de-Calais Region had published a series of 14 identical contract notices (restricted procedure) relating to the completion of contracts of modernisation and maintenance works over a period of 10 years (known as the "Secondary School Plan"). The notices stated that the tenders would be assessed by taking account of various award criteria, including: The "quality/price ratio of the technical response and the services", The "time-limit for completion of the works of construction and renovation excluding maintenance", and An "additional criterion relating to employment". 42

43 Chapter V of the Directive - The procedures Commission vs. France – C-225/98: Facts Then, the Commission brought the matter before the ECJ based on eight complaints relating to: 1.The prior information procedure, 2.The additional criterion relating to employment, 3.The number of candidates selected, 4.The method known as "award by reference to the French Code of Public Procurement", 5.The mode of designating the lots, 6.The minimum standards for participation, 7.The procedure of information on contract awards, and 8.The failure to forward the written reports. 43

44 Chapter V of the Directive - The procedures Commission vs. France – C-225/98: ECJ – re 1 – prior information notice. "… the purpose of the rules on advertising laid down in Directive 93/37, including publication of the prior information notice, is to inform all potential tenderers at the Community level in good time about the main points of a contract in order that they may submit their tender within the time-limits" (p. 35). "… the time-limits for the receipt of tenders may not be less than 52 days from the date of dispatch of the contract notice in respect of open procedures and 40 days from the date of dispatch of the written invitation in respect of restricted procedures, but that they may be reduced, respectively, to 36 and 26 days only where the contracting authorities have published the prior information notice"(p. 32). 44

45 Chapter V of the Directive - The procedures Commission vs. France – C-225/98: ECJ – re 1 – prior information notice "… a prior information notice is compulsory only where the contracting authorities exercise their option to reduce the time-limits for the receipt of tenders" (p. 38). "… [as] it is clear … that the contracting authorities in question did not reduce the time-limits for the receipt of tenders in relation to the disputed contracts, it must be concluded that those contracting authorities were not in breach of their obligations under [the] Directives, as regards the prior information procedure" (p. 44). 45

46 Chapter V of the Directive - The procedures Commission vs. France – C-225/98: ECJ – re 2 – additional criterion relating to employment. Commission: "… in expressly setting forth as an award criterion in a number of contract notices a condition relating to employment linked to a local project to combat unemployment, the French authorities have infringed Article 30 of Directive 93/37" (p. 46). France: "… the award criterion … does not constitute a primary criterion, such as those referred to in Article 29 of Directive 71/305, the purpose of which is to make it possible to determine which is the most advantageous tender, but a secondary criterion which is not decisive" (p. 47). 46

47 Chapter V of the Directive - The procedures Commission vs. France – C-225/98: ECJ– re 2 – additional criterion relating to employment. "[Art. 30] does not preclude all possibility for the contracting authorities to use as a criterion a condition linked to the campaign against unemployment provided that that condition is consistent with all the fundamental principles of Community law, in particular the principle of non-discrimination" (p. 50). Seeing that the Commission "does not claim that the criterion linked to the campaign against unemployment is inconsistent with the fundamental principles of Community law, in particular the principle of non-discrimination, or that it was not advertised in the contract notice … the Commission's complaint relating to the additional award criterion linked to the campaign against unemployment must be rejected" (p. 53 - 54). 47

48 Chapter V of the Directive - The procedures Commission vs. France – C-225/98: ECJ – re 3 – the number of candidates selected. In the contract notices, it was stated that "the maximum number of candidates which may be invited to submit a tender is 5" (p. 62). This wording "implies that it is the maximum number of candidates invited to tender for the contracts in question which was fixed at five. It follows that, on the basis of the disputed contract notices, a number of candidates below five was regarded as acceptable" (p. 62). "… the French Republic has failed to fulfil its obligations under [the Directive]" (p. 63). 48

49 Chapter V of the Directive - The procedures Commission vs. France – C-225/98: ECJ – re 4 – award by reference to "the French Code on Public Procurement". Commission: "… to indicate the award criteria, to the method known as "award by reference to the French Code des Marchés Publics" which it claims is contrary to [the Directive]. By referring generally to various provisions of the French Code des Marchés Publics, the abovementioned contract notices do not satisfy the requirement as to advertising as stated in Beentjes" (p. 64). "… where the authorities awarding the contract do not take the lowest price as the sole criterion for awarding the contract but have regard to various criteria with a view to awarding the contract to the most economically advantageous tender, they are required to state these criteria in the contract notice or the contract documents. Consequently, a general reference to a provision of national legislation cannot satisfy the publicity requirement" (p. 73). 49

50 Chapter V of the Directive - The procedures Commission vs. France – C-225/98: ECJ – re 5 – the mode of designating the lots. Commission: "Many of the contract notices examined refer under the heading "Works. Designation of lots and qualifications to the classifications" of French professional organisations in particular the OPQCB and Qualibat - Qualifélec" (p. 76). ""Qualibat chauffage 5312" corresponds to a design office of approved technical expertise in environmental engineering with at least four years' practical experience and at Level 6 in the 'Convention Collective ETAM des Bâtiment et Travaux Publics". ECJ: "… the technical specifications selected are so specific and abstruse that, as a rule, only French candidates are able immediately to discern their relevance" (p. 81). [The specifications] directly discriminate and thus constitute a restriction for the freedom to provide services in accordance with the Treaty.” (p. 83) 50

51 Chapter V of the Directive - The procedures Commission vs. France – C-225/98: ECJ – re 6 – minimum standards for participation. "[under] the minimum standards for participation specified under heading 10 in a certain number of contract notices [it] states unambiguously "for the designer: proof of registration with the Ordre des Architectes". Consequently, the Département du Nord has failed to fulfil its obligations under Article 59 of the Treaty by imposing restrictions on Community architects' freedom to provide services" (p. 85). "… the French Republic has failed in its obligations under Article 59 of the Treaty and Article 26 of [the Directive]" (p. 90). 51

52 Chapter V of the Directive - The procedures Commission vs. France – C-225/98: ECJ – re 7+8 – procedure of information on contract awards + the failure to communicate the written reports. Commission: "… the Nord-Pas-de-Calais Region failed to fulfil the obligation to publish information on contract awards as provided for in Article 12(5) of Directive 71/305 and 11(5) of Directive 93/37" (p. 91). ECJ: "… the French Republic has failed in its obligations under [the Directive]" (p. 94). 52

53 Chapter V of the Directive - The procedures - exemptions Commission vs. Italy – C-385/02: Fact: Magistrato del Po de Parma entered into the following collateral contracts using negotiated procedure without prior publication of notice: Completion of the construction of an overflow basin for flood waters of the Parma watercourse in the Marano area (Parma commune) Development and completion of an overflow basin for flood waters of Enza Retention of flood waters of the Terdoppios watercourse south-west of Cerano The price of this work was app. ITL 37, 21 and 19.5 billion The original contracts regarding this work were concluded in 1982 (Enza) and 1988 (Parma and Terdoppio) 53

54 Chapter V of the Directive - The procedures - exemptions Commission vs. Italy – C-385/02: Arguments Italy claimed that the contracts could be made according to one of the following exemptions: 1.“When, for technical or artistic reasons, or for reasons connected with the protection of exclusive rights, the contract may be awarded only to a particular economic operator” (article 31(1)(b)) 2.“Insofar as is strictly necessary when, for reasons of extreme urgency brought about by events unforeseeable by the contracting authorities in question, the time limit for the open, restricted or negotiated procedures with publication of a contract notice as referred to in Article 30 cannot be complied with. The circumstances invoked to justify extreme urgency must not in any event be attributable to the contracting authority” (article 31(1)(c)) 54

55 Chapter V of the Directive - The procedures - exemptions Commission vs. Italy – C-385/02: Arguments Italy claimed that the contracts could be made according to one of the following exemptions: 3.“For new works or services consisting in the repetition of similar works or services entrusted to the economic operator to whom the same contracting authorities awarded an original contract, provided that such works or services are in conformity with a basic project for which the original contract was awarded according to the open or restricted procedure. As soon as the first project is put up for tender, the possible use of this procedure shall be disclosed and the total estimated cost of subsequent works or services shall be taken into consideration by the contracting authorities when they apply the provisions of Article 7. This procedure may be used only during the three years following the conclusion of the original contract.” (article 31(4)(b)) 55

56 Chapter V of the Directive - The procedures - exemptions Commission vs. Italy – C-385/02: ECJ: Re 1: Italy did not prove that technical reasons made an award of an additional contract necessary for the existing contractor Re 2: The planned division of the stages of the project did not make it strictly necessary to use the procurement procedure as this division of the procedure was actually planned Re 3: This exemption did not apply as the three years condition, which is calculated from the conclusion date of the contract, was not fulfilled Italy violated the directive by not providing the projects according to the main rules 56

57 Chapter V of the Directive - The procedures - exemptions Commission vs. Germany – C-20+28/01: Facts: The municipality Bockhorn in Niedersachsen had – on the basis of a negotiated procedure without prior notification in the Official Journal – concluded a contract with the company EWE regarding collection of its waste water for a 30-year period. The city of Braunschweig in Niedersachsen had - on the basis of a negotiated procedure without prior notification in the Official Journal – concluded a contract with the company BKB regarding residual waste disposal by thermal processing for a 30-year period. 57

58 Chapter V of the Directive - The procedures - exemptions Commission vs. Germany – C-20+28/01: Arguments: Commission: In the Bockhorn-Case (C-20/01), the Commission argues that the Directive applied to the contract concerned which should have been the subject of an invitation to tender in accordance with the provisions of the directive. In the Braunschweig-Case (C-28/01), the Commission submits that the contract in question also falls within the scope of the Directive. In its submission, the criteria allowing a negotiated procedure to be used without publication of a prior contract notice were not met. Neither the location of the undertaking selected, on account of its proximity to the place where the services were to be provided, nor the fact that award of the contract was urgent, provides a basis for the application of that provision in this instance. 58

59 Chapter V of the Directive - The procedures - exemptions Commission vs. Germany – C-20+28/01: Arguments: Germany (Bockhorn) – no material arguments. Germany (Braunschweig): The Directive applies, but Braunschweig relied on the derogation in Article 11(3) thereof which released them from their obligation to publish a contract notice and allowed them to award the contract by a negotiated procedure. "… the conditions on which Article 11(3)(b) of Directive 92/50 applied were met since for technical reasons thermal treatment of waste could be entrusted only to BKB. It had been an essential criterion of the award of the contract that the incineration facilities were close to the City of Braunschweig in order to avoid transport over longer distances". 59

60 Chapter V of the Directive - The procedures - exemptions Commission vs. Germany – C-20+28/01: Arguments: Germany (Braunschweig): "… only BKB was in a position to satisfy the quite lawfully selected criterion that the waste disposal facility should be close to the relevant region. The criterion was not automatically discriminatory since it was not impossible that undertakings established in other Member States would be able to meet the requirement". "In general, a contracting authority is entitled to take account of environmental criteria in its considerations relating to the award of a public contract when it determines which type of service it is proposing to acquire". 60

61 Chapter V of the Directive - The procedures - exemptions Commission vs. Germany – C-20+28/01: Arguments: Germany (Braunschweig): The exemption in article 31(1)(b) …”when, for technical or artistic reasons, or for reasons connected with the protection of exclusive rights, the contract may be awarded only to a particular economic operator” was used as BKB was the only operator having a thermal system in the region 61

62 Chapter V of the Directive - The procedures - exemptions Commission vs. Germany – C-20+28/01: ECJ: Therefore, it is not impossible that a technical reason relating to the protection of the environment may be taken into account in an assessment of whether the contract at issue may be awarded to a given supplier. However, the procedure used where there is a technical reason of that kind must comply with the fundamental principles of Community law […]. The risk of a breach of the principle of non-discrimination is particularly high where a contracting authority decides not to put a particular contract out to tender. 62

63 Chapter V of the Directive - The procedures - exemptions In this instance, the Court notes: First, that in the absence of any evidence to that effect the choice of thermal waste treatment cannot be regarded as a technical reason substantiating the claim that the contract could be awarded to only one particular supplier. Second, the German Government's submission that the proximity of the waste disposal facility is a necessary consequence of the City of Braunschweig's decision that residual waste should be treated thermally is not borne out by any evidence and cannot therefore be regarded as a technical reason of that kind. More specifically, the German Government has not shown that the transport of waste over a greater distance would necessarily constitute a danger to the environment or to public health. Third, the fact that a particular supplier is close to the local authority's area can likewise not amount, on its own, to a technical reason for the purpose of Article 11(3)(b) of Directive 92/50". It follows that Germany has violated its obligations under the Directive. 63


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