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Explore remedies in EU public procurement, covering review processes, damages, public fines, and exclusions. Understand self-cleaning concepts and obligations to comply with environmental, social, and labor laws. Learn about exclusion criteria and the right to review procedures.
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Remedies in European public procurement Andrea Sundstrand, Faculty of Law, Stockholm University
Remedies in European public procurement • Review of a procurement procedure. • Review of a signed contract. • Claims for damages. • Public fines.
Also to be considered • Facultative/obligatory exclusions. • Self-cleaning. The concept of self-cleaning refers to the cleansing of a company to rid itself of all the influences and structures that led to the misconduct and to ensure that it is not repeated.
Exclusion – facultative, Art. 57 There is a violation of applicable obligations in Article 18(2), • where the economic operator is bankrupt or is the subject of insolvency or winding-up proceedings, • the economic operator is guilty of grave professional misconduct, which renders its integrity questionable; • where the economic operator has entered into agreements with other economic operators aimed at distorting competition; • where a conflict of interest cannot be effectively remedied by other less intrusive measures; • where the economic operator has shown significant or persistent deficiencies in the performance of a substantive requirement under a prior public contract, • where the economic operator has been guilty of serious misrepresentation in supplying the information required, or • where the economic operator has undertaken to unduly influence the decision-making process of the contracting authority.
Article 18.4 Directive 2014/24 Member States shall take appropriate measures to ensure that in the performance of public contracts economic operators comply with applicable obligations in the fields of environmental, social and labour law established by Union law, national law, collective agreements or by the international environmental, social and labour law provisions listed in Annex X.
Exclusion – obligatory, Art. 57 • Participation in a criminal organization, • corruption, • fraud, • terrorist offences or offences linked to terrorist activities, • money laundering or terrorist financing, • child labour and other forms of trafficking in humans, • the economic operator is in breach of its obligations relating to the payment of taxes or social security contributions. Also applies where the person convicted by final judgment is a member of the administrative, management or supervisory body of that economic operator or has powers of representation, decision or control therein.
Self-cleaning art. 57.6 The economic operator shall prove that • it has paid or undertaken to pay compensation in respect of any damage caused by the criminal offence or misconduct, • it has clarified the facts and circumstances in a comprehensive manner by actively collaborating with the investigating authorities and • that it has taken concrete technical, organizational and personnel measures that are appropriate to prevent further criminal offences or misconduct. The measures taken by the economic operators shall be evaluated taking into account the gravity and particular circumstances of the criminal offence or misconduct.
The Remedies Directives Directive 89/665/EEC for the classical sector. Directive 92/13/EEC for the utilities sectors. Directive 2007/66/EC amending both directives. The EU Commission has been looking into possible changes, but issued in late January 2017 a statement saying no changes were deemed necessary at that time.
Application The remedies directives are only applicable to procurement procedures covered by the procedural directives. They are not applicable to low value procurement or to any other excluded procurement procedures, like employment procedures, central banking services or house rentals.
The right to review I Any person having or having had an interest in obtaining a particular contract and who has been or risks being harmed by an alleged infringement. Member States may require that the person seeking the review must have previously notified the contracting authority of the alleged infringement and of his intention to seek review. Article 1.3 Directive 89/665/EEC
The right to review II “Person” refers both to individuals and to all kinds of organizations including all kinds of companies. Could also be a group of companies. Any person or organization has the right to participate on equal terms in a public procurement (at least in Sweden). Therefore the same persons or organizations have the same rights to use the applicable remedies.
The right to review III The complainant must prove: • having or having had an interest in obtaining a particular contract, • has been or risks being harmed, • by an alleged infringement.
Complaints against a procurement procedure I • This could only be made during an ongoing procurement procedure. • A public procurement procedure starts when the contracting authority has chosen what procedure to use for the specific procurement (Commission/France, C- 337/98, EU:C:2000:543). • The procurement procedure is finished when: • there is a signed contract between the parties, • the contracting authority decides to finish the procurement for any legitimate reason.
Complaints against a procurement procedure II • Standstill period (obligation) of ten days after the award decision is communicated. The communication must state the length of the standstill period. • If filed within the standstill period, there is an automatic suspension. • MS could choose whether to have automatic suspension for the whole trial or for a shorter period – Sweden chose for the whole trial. • MS could also choose to have a standstill period when appealing to appeal courts (in Sweden, interims measures).
Complaints against a procurement procedure III • Appeal against what? More or less anything that has anything to do with the suppliers’ possibility of winning the contract. • Not administrative decisions that do not affect anyone’s rights. • MS may adopt rules preventing suppliers from coming forward with complaints, if they were already known.
Complaints against a procurement procedure IV The court/complaints board can decide either that: • the whole procedure must start over, or • that the award decision is void and the contracting authority must make a new award decision.
Complaints against a procurement procedure V • In Sweden, a court decision is followed by a ten day period in which the contracting authority must not sign the contract, even if it has won the case. • This is to give the losing supplier the possibility to appeal to the Administrative Appeal Court. • The supplier must ask for interim measures, since there is no standstill period when appealing against the decision of the District Court, or when appealing against a decision from the Administrative Appeal Court to the High Administrative Court.
Complaints against a signed contract I Could be made only if the contract has been signed in violation of the principle of openness, i.e. not all violations of the procurement proceedings could lead to ineffectiveness. The situations covered are where: • no publication of a notice has been made, where there should have been a publication in TED (Tenders Electronic Daily), • a contract has been signed before the end of the standstill period or in violation to an interim measure together with some other violation of the procurement rules that has harmed the supplier, or • there has been a breach of the rules on frameworks or dynamic purchasing systems.
Complaints against a signed contract II Member States could choose between ex nunc and ex tunc. In cases of ex nunc there has to be a public fine due to the fact that some of the contract will still remain valid. The snow in Sweden… The court/review body contract could decide not to declare a contract ineffective due to an overriding reason of general interest. In that case there has to be a public fine.
Complaints against a signed contract III Member States can provide for an exemption from ineffectiveness in cases where a contracting authority considers that the direct award of a contract is permissible and has made a voluntary publication in TED and applied a minimum standstill period. The contracting authority still risks having to pay damages and/or any public fines, but the contract cannot be declared ineffective.
Complaints against a signed contract IV Complaints must be made within 6 months of signing of the contract. Exceptions: • within 30 days from a published award notice with a declaration of why an exception has been used or • within 30 days after all concerned suppliers has been informed about the award decision.
Damages • Member States shall ensure that the measures taken concerning review procedures include provision for the power to award damages to persons harmed by an infringement. • Article 2 in Directive 89/665/EEC. • How this is implementeg is however up to each Member State. • In Sweden the Public Procurement Act refers to the Swedish act on damages both regarding the court proceedings and the calculation of damages.
Public Fines • Obligatory when a Member States has choosen ex nunc in cases of ineffectiveness. • Obligatory when a contract is not declared ineffective due to overriding reasons of general interest. • Voluntary in all other cases. In Sweden such fines are available as a remedy against illegal direct procurements.
