The new public procurement law and several ECJ judgements impose inflexible procurement rules on an increasing number of contracts and wreak havoc with in-house awards
The Public Procurement Act 2006 (BVergG 2006), which amends the BVergG 2002, covers the substantive provisions of procurement law (call for tenders, selection of bids, award of contracts) for all contracting authorities of the public sector and certain utility-sector bodies as well as the legal protection of central government bodies.
The legal protection of regional and local contracting authorities and the relevant legal entities is covered by the procurement laws of the federal provinces. The BVergG 2006 implements the following into national law:
Directive 2004/17/EC (coordinating the procurement procedures of certain utility-sector entities) and Directive 2004/18/EC (coordinating the procurement procedures of the “classical” public-sector entities),
current European Court of Justice (ECJ) case law,
and the new announcement provisions at European level. These changes do not make the award of contracts any easier; they rather increase the legal bureaucracy in Austrian procurement and definitely “widen the playing field for lawyers”. The main problem in fact is that 95 – 99 % of the contracts awarded are below the relevant EC thresholds, so that lower-value contracts now fall within the scope of (nearly) the same rigid rules as larger contracts. This is bound to result in a number of legal disputes. The new Public Procurement Directives 2004/17/EC and 2004/18/EC comprise two predominant elements:
E-procurement: this covers the electronic announcement of tendering procedures, the electronic transfer of tendering documents, the electronic submission of tenders and their opening.
New procurement procedures: they comprise the (not entirely new) framework agreement, the dynamic purchasing system, the competitive dialogue, and the electronic auction (merely a single step that needs to be preceded by a conventional procurement procedure). All these procedures have come to be discredited as they involve various steps which are now permissible yet were either prohibited or, as in the case of the negotiated procedure, at least disapproved in the past procurement regime; they are in stark contrast to the growingly inflexible traditional tender procedures. Current ECJ case law refers to three important procurement items:
The contracting entity’s decision to exclude a tender must be appealable in the review procedure. Yet the BVergG 2006 does not contain any provisions as to when the bidder is to be notified. Fairness dictates that the affected bidder be notified in due course; this contrasts with the common practice of review procedures to include all tendering documents, irrespective of their relevance.
The intended revocation of the procurement procedure must be appealable. This may be a viable and understandable step if taken after a tender opening procedure, but tends to cause serious problems prior to a tender opening procedure. In the case of a compulsory revocation (e.g. essential items of the tender documentation need to be modified), the intended revocation must be communicated to the bidders, which results in an unnecessary loss of time. This raises the question: Can the contracting authority be compelled to adhere to a tendering procedure that is objectively false?
In-house awards are only feasible if the contracting authority exercises full control over the respective legal entity. Moreover, the latter must carry out the “essential part of its activities” with the controlling entity. With this judgement, the ECJ insidiously subverts the popular political practice of awarding in-house contracts to partially privatised subsidiaries. In Austria, these new procedures will assumedly affect hundreds of companies in the public utilities sector. (Source: aqua press Int. 1/2006, MR Mag. Franz Pachner)
Contact & Information:
BM für Wirtschaft und Arbeit MR Mag. Franz Pachner Stubenring 1, A-1010 Wien
