CMS Public Procurement Expert Guide

Introduction

Public procurement is a powerful tool for governments trying to create dynamic, innovative and sustainable markets, economies and societies. According to the European Commission, “every year, over 250,000 public authorities in the EU spend around 14% of GDP on the purchase of services, works and supplies” and EU countries are not the only ones to recognise this. Knowing the importance of having a reliable system to handle this spending, countries set out minimum harmonised public procurement rules. The CMS Public Procurement Group offers you a comprehensive guide to the most relevant procurement issues in 17 jurisdictions.

In this new CMS guide to public procurement we set out the key rules, thresholds, and procedures for contracting authorities and suppliers; indicate whether it is mandatory or voluntary to use e-procurement or e-signatures; and detail the extent to which procurement contracts can be amended after being awarded.

Our public procurement specialists cover the key questions concerning access to and the conduct of public procurement competitions. They also highlight the key similarities and important differences between the national regimes in 20 countries: Austria, Bulgaria, China, Colombia, Croatia, Czech Republic, France, Germany, Hungary, Italy, Montenegro, the Netherlands, Peru, Poland, Portugal, Serbia, Slovak, Republic, Spain, Switzerland and Turkey. We expect updates from other jurisdictions where we have public procurement expertise in the coming months.

If you have any questions regarding public procurement or if you need advice regarding any of these jurisdictions, please feel free to contact the local experts who authored the relevant chapters or any of the CMS public procurement experts included on the CMS Public Procurement Contact Card.

EU Directives

In December 2011, the European Commission adopted its proposals on public procurement as part of a far-reaching programme aimed at comprehensively modernizing public procurement in the European Union. The programme included revising Directive 2004/17/EC (procurement in the water, energy, transport and postal services sectors – "sector area", Directive 2014/25/EU) and 2004/18/EC (public works, supply and service contracts, Directive 2014/24/EU). Further, it adopted a new directive on concessions (Directive 2014/23/EU), which had previously only been partially regulated at the European level. The directives entered into force on 17 April, 20 days following its publication in the Official Journal of the European Union on 28 March 2014, and have since been amended slightly. Member States had 24 months to implement the provisions of the new rules into national law; the implementation period expired on 18 April 2016.

1. Where can one find public procurement notifications for the EU/EEA?

  • TED (Tenders Electronic Daily), the online version of the "Supplement to the Official Journal of the European Union"; TED contains public procurement notices and can be accessed via www.ted.europa.eu.
  • SIMAP, the European system of information on public procurement (www.simap.europa.eu/index_en.htm) provides information both for buyers and suppliers, including standard forms and links to the relevant legislation.
  • The EU institutions also publish tender notices.
  • eNotices is an online tool for the preparation and publication of public procurement notices.

2. What are the relevant thresholds for the applicability of the Directives?

Awarded by

Supply contracts

Service contracts

 Works contracts

 Service contracts for social and other specific services

All amounts are expressed in EUR

Sub-central authorities

221,000

221,000 

Central government authorities

144,000

144,000

Central government authorities operating in the field of defence concerning products other than Annex III

144,000

Central government authorities operating in the field of defence concerning products pursuant to Annex III

144,000

Any public contractor 

221,000

221,000

5,548,000

750,000 (Annex XIV)

Utility Services Sector
(Water, energy, transport and postal services)

443,000

443,000

5,548,000

1,000,000 (Annex XVII)

Awarded by

Concession contracts

All amounts are expressed in EUR

Any public contractor 

5,548,000

3. Under what circumstances can one use the (i) open procedure, (ii) restricted procedure, (iii) negotiated procedure, (iv) competitive dialogue?

  • Contracting authorities may apply open or restricted procedures (Art 26 (2) Dir 2014/24).
  • Contracting authorities may apply a competitive procedure with negotiation or a competitive dialogue in the following situations:
    • for works, supplies or services fulfilling one or more of the following criteria (Art 26 (4) Dir 2014/24):
      • the needs of the contracting authority cannot be met without adapting readily available solutions;
      • they include design or innovative solutions;
      • the contract cannot be awarded without prior negotiations because of specific circumstances related to the nature, complexity or legal and financial make-up of the contract or the risks attached to them;
      • the technical specifications cannot be established with sufficient precision by the contracting authority with reference to a standard, European Technical Assessment, common technical specification or technical reference within the meaning of points 2 to 5 of Annex VII;
    • for works, supplies or services where, in response to an open or a restricted procedure, only irregular or unacceptable tenders are submitted. In such situations, contracting authorities need not publish a contract notice where they include in the procedure all of, and only, the tenderers that satisfy the criteria for qualitative selection and that, during the prior open or restricted procedure, submitted tenders in accordance with the formal requirements of the procurement procedure (Art 26 (4) (b) Dir 2014/24).
  • In the utility services sector the use of the negotiated procedure with prior call for competition is always possible (Art 44 (2) Dir 2014/25).
  • In the specific cases and circumstances mentioned below, Member States may provide that contracting authorities may award public contracts by a negotiated procedure without prior publication.
    The negotiated procedure without prior publication may be used for public works contracts, public supply contracts and public service contracts in any of the following cases (Art 32 (2) Dir 2014/24):
    • where no (suitable) tenders or no (suitable) requests to participate have been submitted in response to an open procedure or a restricted procedure, provided that the initial conditions of the contract are not substantially altered and that a report is sent to the Commission, when it so requests;
    • where the works, supplies or services can be supplied only by a particular economic operator for any of the following reasons, when no reasonable alternative or substitute exists, and the absence of competition is not the result of an artificial narrowing down of the parameters of the procurement:
      • the aim of the procurement is the creation or acquisition of a unique work of art or artistic performance;
      • competition is absent for technical reasons;
      • the protection of exclusive rights, including intellectual property rights;
    • if it is strictly necessary when, for reasons of extreme urgency brought about by events unforeseeable by the contracting authority, the authority cannot comply with the time limits for the open or restricted procedures or competitive procedures with negotiation. The circumstances invoked to justify extreme urgency must not, in any event, be attributable to the contracting authority.
  • The negotiated procedure without prior publication may be used for public supply contracts (Art 32 (3) Dir 2014/24):
    • when the products involved are manufactured purely for the purpose of research, experimentation, study or development; however, contracts awarded pursuant to this point must not include quantity production to establish commercial viability or to recover research and development costs;
    • for additional deliveries by the original supplier that are intended either as a partial replacement of supplies or installations or as the extension of existing supplies or installations, when a change of supplier would oblige the contracting authority to acquire supplies with different technical characteristics that would result in incompatibility or disproportionate technical difficulties in operation and maintenance; the duration of such contracts as well as that of recurrent contracts must not, as a general rule, exceed three years;
    • for supplies quoted and purchased on a commodity market;
    • for the purchase of supplies or services on particularly advantageous terms from either a supplier that is definitively winding up its business activities, or the liquidator in an insolvency procedure, an arrangement with creditors, or a similar procedure under national laws or regulations.
  • The negotiated procedure without prior publication may be used for public service contracts, where the contract concerned follows a design contest and is to be awarded, under the rules provided for in the design contest, to the winner or one of the winners of the design contest; in the latter case, all winners must be invited to participate in the negotiations.
    • In the sector area there are certain modifications and additions to this (Art 50 Dir 2014/25).
    • Contracting authorities may apply “innovation partnerships” as a new procurement process for the procurement of innovative products, services or products that cannot be met by conventional solutions on the market (Art 26 (3) and Art 31 (1) Dir 2014/24; Art 44 (3) and Art 49 (1) Dir 2014/25).
    • Dir 2014/23 on the award of concession contracts applies to the award of works or service concessions (as defined in Art 5 (1) Dir 2014/23) to economic operators (Art 1 (2) Dir 2014/23)

4. Which decisions of a contracting authority can be appealed?

  • An appeal is possible against unlawful contract award decisions and discriminatory technical, economic or financial specifications in the invitation to tender, the contract documents or any other document related to the contract award procedure (Art 2 (1) (b) Dir 89/665/EEC and Art 2 (1) (b) Dir 92/13/EEC).

5. What are the time limits for appeals? Are further appeals precluded after the expiry of these limits?

  • The period for applying for review must amount to a minimum of ten days with effect from the day following the date on which the contracting authority’s decision is sent to the tenderer or candidate by fax or electronic means.
  • The period for applying for review must amount to a minimum of 15 calendar days if other means of communication have been used.
  • For reviews concerning the setting aside of decisions, the contracting authority’s decision is to be accompanied by a summary of the relevant reasons. The period must amount to a minimum of ten days following the date of the publication of the decision concerned (Art 2c Dir 89/665/EEC and Art 2c Dir 92/13/EEC).

6. How long is the standstill period?

  • There is a standstill period of at least ten calendar days with effect from the day following the date on which the contract award decision is sent to the tenderers and candidates concerned (if fax or electronic means have been used).
  • It lasts for at least 15 calendar days if other means of communications have been used.
  • It must amount to a minimum of ten calendar days from the day following the date of the receipt of the contract award decision (Art 2a Dir 89/665/EEC and Art 2a of Dir 92/13/EEC).

7. Which review bodies exist?

  • Review bodies have to be established by the Member States. Powers may be conferred on separate bodies responsible for different aspects of the review procedure. These bodies must be entitled to grant interim measures, set aside decisions and award damages.
  • Member States may require that the person concerned first seek review with the contracting authority.
  • If the review body is not a court, it must still provide written reasons for its decision, with the possibility to appeal to a court according to Art 234 TFEU (Art 2 (9) Dir 89/655/EEC and Art 2 (9) Dir 92/13/EEC).

8. Are there any filing fees for an appeal?

  • Filing fees, if any, are regulated by national laws.

9. Does an appeal have a suspensive effect or is it necessary to apply for interim measures?

  • If Member States require that the bidder concerned first seeks review with the contracting authority, the submission of such an application for review must result in the immediate suspension of the possibility of concluding the contract (Art 1 (5) Dir 89/665/EEC and Art 1 (5) Dir 92/13/EEC). If a body of first instance, independent of the contracting entity, reviews a contract award decision, Member States must ensure that the contracting entity cannot conclude the contract before the review body has made a decision on the application (Art 2 (3) of Directive 89/665 EEC and Art 2 (3) of Directive 92/13/EEC).
  • Otherwise, review procedures do not necessarily have an automatic suspensive effect (Art 2 (4) Dir 89/665/EEC and Art 2 (3a) Dir 92/13 EEC).
  • Member States must ensure the availability of interim measures for suspending the award of a public contract (Art 2 (1) a Dir 89/665/EEC and Art 2 (1) a Dir 92/13/EEC).

10. Ineffectiveness and alternative penalties according to Dir 66/2007/EC

  • Member States provide for the ineffectiveness of a contract if (i) the contract has been awarded without prior publication of the contract notice, (ii) if certain infringements have deprived a tenderer applying for review, (iii) in case of derogation from the standstill period, for contracts based on a framework agreement or a dynamic purchasing system (Art 2d (1) Dir 89/655 EEC and Art 2d (1) Dir 92/13/EEC as amended by Directive 66/2007/EC).
  • Member States may provide that the review body independent of the contracting authority is to decide, after having assessed all relevant aspects, whether the contract should be considered ineffective or whether alternative penalties should be imposed. 
  • Alternative penalties must be effective, proportionate and dissuasive. They comprise the imposition of fines on the contracting authority or the shortening the duration of the contract (Art 2e (2) Dir 89/655/EEC and Art 2e (2) Dir 92/13/EEC as amended by Dir 66/2007/EC).
  • According to Art 2 (1) (c) Dir 89/665/EEC and Art 2 (1) (d) Dir 91/13/EEC as amended by Dir 66/2007/EC, Member States must ensure that the measures taken concerning the review procedures, include provisions for powers to award damages to persons harmed by an infringement.

11. To which extent can procurement contracts be amended after awarding?

  • Substantial modifications to the initial contract are not possible (Art 43 Dir 2014/23, Art 72 2014/24, Art 89 2014/25). A modification is considered substantial when it renders the contract materially different in character from the one initially concluded.
  • Substantial modifications are especially:
    • Any modification that introduces conditions that, had they been part of the initial procurement procedure, would have allowed for the admission of other candidates than those initially selected or for the acceptance of a tender other than that originally accepted or would have attracted additional participants in the procurement procedure; 
    • Any modification that changes the economic balance of the contract in favour of the contractor in a manner which was not provided for in the initial contract; 
    • Any modification that considerably extends or reduces the scope of the contract;
    • A new contractor replacing the contractor initially awarded the contract by the contracting authority except in certain cases of reorganization (Par 1 point d) Art 43 Dir 2014/23, Art 72 Dir 2014/24, Art 89 Dir 2014/25).
  • Possible modifications are:
    • Modifications provided for in the initial procurement documents in clear, precise and unequivocal review clauses, or options, as long as they do not provide for modifications that would alter the overall nature of the contract;
    • Additional works, services or supplies by the original contractor, irrespective of their value, that have become necessary and were not included in the initial procurement, where a change of contractor (i) cannot be made for economic or technical reasons such as requirements of interchangeability or interoperability with existing equipment, software, services or installations procured under the initial procurement, and (ii) would cause significant inconvenience or substantial duplication of costs for the contracting authority, and (iii) any increase in value does not exceed 50% of the value of the original contract (this does not apply in the sector area). Such modifications have to be published in TED;
    • Where the need for modification has been brought about by circumstances that a diligent contracting entity could not foresee, the modification does not alter the overall nature of the contract, and any increase in value does not exceed 50% of the value of the original contract (this does not apply in sector area). Such modifications have to be published in TED;
    • Where a new contractor replaces the one initially awarded the contract by the contracting authority as a consequence of: 
      • either an unequivocal review clause or option; 
      • universal or partial succession into the position of the initial contractor, following corporate restructuring, including takeover, merger, acquisition or insolvency, by another economic operator that fulfils the criteria for qualitative selection initially established and provided that this does not entail other substantial modifications to the contract and is not aimed at circumventing the application of the Directive; 
      • the contracting entity itself assuming the main contractor’s obligations towards its subcontractors, when this possibility is provided for under national legislation;
    • If the value of the modification is below both of the following values: the thresholds according to question 2 and 10% of the initial contract value for service and supply contracts and below 15% of the initial contract value for works contracts.

12. Is it mandatory or voluntary to use e-procurement or e-signatures?

  • Central purchasing bodies as well as contracting authorities must use e-procurement from 18 October 2018 at the latest;
  • E-procurement is not compulsory if (i) due to the specialised nature of the procurement, the use of electronic means of communication would require specific tools, devices or file formats that are not generally available or supported by generally available applications; (ii) the file formats most suitable for describing the tender applications cannot be handled by any other open or generally available applications or are under a proprietary licensing scheme and cannot be made available for downloading or remote use by the contracting authority; (iii) using electronic communication would require specialised office equipment that is not generally available to contracting authorities; (iv) the procurement application requires submitting physical or scale models that cannot be transmitted using electronic means; or (v) using non-electronic communicative means is necessary either because preventing a breach of electronic communication security or providing the high level of protection necessary for particularly sensitive information cannot be properly ensured with electronic tools and devices that are either generally available to economic operators or can be made available to them by alternative means of access.
  • Member States must specify the level of security required for the electronic means of communication in the various stages of the specific procurement procedure; that level shall be proportionate to the risks attached and may include an advanced e-signature.

Authors

Picture of Bernt Elsner
Bernt Elsner
Head of the CMS Public Procurement Group
Picture of Ruth Bittner
Ruth Bittner