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The Purpose of the EU Procurement Directives: Ends, Means and the Implications for National Regulatory Space for Commercial and Horizontal Procurement Policies

  • Sue Arrowsmith

Abstract

There currently appears to be considerable confusion amongst regulators and stakeholders over the purpose of the EU’s directives on public procurement and lack of a clear vision of what the directives seek to achieve. Against this background this article has two objectives. First, it seeks to provide a framework for understanding the directives’ functions and their relationship with national policy. In this respect it identifies the ends and means that the directives do, or could, adopt and/or which have been ascribed to them, and considers the implications of each for national regulatory space. Secondly, for each of the ends and means it suggests a specific legal interpretation of its actual and potential role in the EU’s legal framework.

It is argued that the directives seek to promote the internal market and that they seek to do so solely by three means—prohibiting discrimination, implementing transparency, and removing barriers to access. It rejects, on the other hand, certain broader conceptions of the directives, including that they promote a single market by standardising procedures; that they replicate in the public market the competitive process of the private market; and that they seek value for taxpayers’ money. It is argued that rejection of these broader functions has important implications for the scope of national regulatory space, both as regards the ‘commercial’ aspects of public procurement—notably ensuring value for money and an efficient procurement process—and as regards ‘horizontal’ policies in the sense of policies that promote social and environmental objectives through public procurement.

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1 European Commission, ‘Evaluation Report: Impact and Effectiveness of EU Public Procurement Legislation’ (Commission Staff Working Paper) SEC (2011) 853 final, p i http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/evaluation-report_en.pdf.

2 On barriers to trade in public procurement in general see the review of the literature in Trionfetti, F, ‘Home-biased Government Procurement and International Trade: Descriptive Statistics, Theory and Empirical Evidence’ ch 12 in Arrowsmith, S and Trybus, M (eds), Public Procurement: The Continuing Revolution (The Hague, Kluwer Law International, 2003); Trionfetti, F, ‘Discriminatory Public Procurement and International Trade’ (2000) 23 World Economy 57, 64–69; and Evenett, S and Hoekman, B, ‘Government Procurement of Services and Multilateral Disciplines’, ch 6 in Sauvé, P and Stern, R (eds), GATS 2000: New Directions in Services Trade Liberalization (Washington DC, Brookings Institution Press, 2000) 143 (on foreign participation through a local presence, which is particularly importance for some services). For the analysis undertaken prior to the EU’s procurement reforms in the drive towards the 1992 completion of the single market see WS Atkins Management Consultants, The Cost of Non-Europe in Public Procurement (Brussels, Commission of the European Communities, 1988) (hereafter the Atkins study), vol 5A.

3 See further: Arrowsmith, S, The Law of Public and Utilities Procurement, 2nd edn (London, Sweet & Maxwell, 2005) ch 4; Trepte, P, Public Procurement in the EU: A Practitioner’s Guide (Oxford, Oxford University Press, 2007) 3–27; Drijber, BJ and Stergiou, HM, ‘Public Procurement Law and Internal Market Law’ (2009) 46 Common Market Law Review 805 . See also section VI below.

4 See generally: S Arrowsmith (ed), EU Public Procurement Law: An Introduction, available at www.nottingham.ac.uk; Arrowsmith, The Law of Public and Utilities Procurement (n 3); Trepte, Public Procurement in the EU (n 3). These coordination directives are supplemented by directives on remedies: Council Directive 89/665/EC on the coordination of the laws, regulations and administrative provisions relating to the application of review procedures to the award of public supply and public works contracts [1989] OJ L395/33 and Council Directive 92/13/EEC coordinating the laws, regulations and administrative provisions relating to the application of Community rules on the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors [1992] OJ L76/7 as amended by, in particular, by Directive 2007/66/EC of the European Parliament and of the Council of 11 December 2007 amending Council Directives 89/665/EEC and 92/13/EEC with regard to improving the effectiveness of review procedures concerning the award of public contracts [2007] OJ L335/31. See Treumer, S and Lichère, F (eds), Enforcement of the EU Public Procurement Rules (Copenhagen, DJØF Publishing, 2011).

5 For a general historical account up to 2004 see Arrowsmith, The Law of Public and Utilities Procurement (n 3) ch 3; and on the early directives Cox, A, The Single Market Rules and the Enforcement Regime after 1992 (Scunthorpe, Earlsgate, 1993); Weiss, F, Public Procurement in European Community Law (London, Athlone, 1993).

6 Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts [2004] OJ L134/114.

7 Also often referred to as the ‘Classic Sector’ or ‘Classical’ Directive.

8 Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors [2004] OJ L134/1.

9 Directive 2009/81/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of procedures for the award of certain works contracts, supply contracts and service contracts by contracting authorities or entities in the fields of defence and security, and amending Directives 2004/17/EC and 2004/18/EC 2009/81/EC [2009] OJ L216/76. See Heuninckx, B, ‘Lurking at the Boundaries: Applicability of EU Law to Defence and Security Procurement’ (2010) 19 Public Procurement Law Review 91 ; Heuninckx, B, ‘The EU Defence and Security Procurement Directive: Trick or Treat?’ (2010) 19 Public Procurement Law Review 9 .

10 See, in detail: Arrowsmith, The Law of Public and Utilities Procurement (n 3) ch 15.

11 European Commission, ‘Proposal for a Directive of the European Parliament and of the Council on Public Procurement’ COM (2011) 896 final; and ‘Proposal for a Directive of the European Parliament and of the Council on Procurement by Entities Operating in the Water, Energy, Transport and Postal Services Sectors’ COM (2011) 895 final.

12 See, eg, European Commission, ‘Proposal for a Directive on Public Procurement’ (n 11) Explanatory Memorandum, p 2. For an overview see Williams, R, ‘Commission Proposals to Modernise Public Procurement’ (2012) 21 Public Procurement Law Review NA 101 . These aims are, in the author’s view, belied by the detailed content of the proposals: see Arrowsmith, S, ‘Modernising the European Union’s Public Procurement Regime: A blueprint for real simplicity and flexibility’ (2012) 21 Public Procurement Law Review 71 .

13 European Commission, ‘Proposal for a Directive of the European Parliament and of the Commission on the Award of Concession Contracts’ COM (2011) 897 final.

14 Services concessions are totally excluded and work concessions regulated only by very limited provisions: see Arrowsmith, EU Public Procurement Law (n 4) ch 4 at 4.2.5.7.

15 Public Sector Directive, Art 2; Utilities Directive, Art 10; Defence and Security Directive, Art 4. That these provisions refer to, and emphasise, discrimination on grounds of nationality is clear from the fact that the same Articles also contain a more general equal treatment obligation: see section V below.

16 Eg Public Sector Directive, Art 44(1).

17 Eg in Public Sector Directive, Art 38.

18 Case C-412/04 Commission v Italy [2008] ECR I-619, para 66; and see also Case C-64/08 Ernst Engelmann, CJEU judgment of 9 September 2010, para 49.

19 Craig, P and de Búrca, G, EU Law: Text, Cases and Materials, 4th edn (Oxford, Oxford University Press, 2008) 606 .

20 Ibid.

21 Agreement on Government Procurement, Art III. A Protocol of Amendment for a revised text and annexes was adopted on 30 March 2012 and comes into force upon receipt of instruments of acceptance from two-thirds of the Parties: see Anderson, RD, ‘The Conclusion of the Renegotiation of the WTO Agreement on Government Procurement: What it Means for the Agreement and for the World Economy’ (2012) 21 Public Procurement Law Review 83 .

22 See Arrowsmith, S, ‘Transparency in Government Procurement: the Objectives of Regulation and the Boundaries of the World Trade Organization’ (2003) 37 Journal of World Trade 283 .

23 This was reflected in the General programmes on freedom of establishment and freedom to provide services of 1961 and the subsequent adoption prior to the transitional period (from which time the free movement provisions had direct effect) of ‘liberalisation’ directives on procurement prior to the coordination directives: see Arrowsmith, The Law of Public and Utilities Procurement (n 3); Weiss, Public Procurement in European Community Law (n 5) ch 3; Turpin, ‘Public Contracts in the EEC’ (1972) Common Market Law Review 411.

24 See Arrowsmith, The Law of Public and Utilities Procurement (n 3) ch 4.

25 Respectively Council Directive 71/305/EEC of 26 July 1971 concerning the coordination of procedures for the award of public works contracts [1971] OJ L185/5 and Council Directive 77/62/EEC of 21 December 1976 coordinating procedures for the award of public supply contracts OJ L13/1.

26 Council Directive 90/531/EEC of 17 September 1990 on the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors [1990] OJ L297/1, Art 4(2): ‘Contracting entities shall ensure that there is no discrimination between different suppliers or contractors’.

27 See, eg, Case C-376/98 Germany v Parliament and Council [2000] ECR I-8419.

28 Case C-324/98 Telaustria v Telekom Austria and Herold Business Data [2000] ECR I-10745; and see European Commission, Commission Communication on the Community law applicable to contract awards not or not fully subject to the provision of the Public Procurement Directives [2006] OJ C179/2. For recent analysis see: Brown, A, ‘EU Primary Law Requirements in Practice: Advertising, Procedures and Remedies for Public Contracts outside the Procurement Directives’ (2010) 19 Public Procurement Law Review 169 ; and for more recent case law limiting the scope of the transparency obligation Case C-226/09 Commission v Ireland, CJEU judgment of 18 November 2010 and Case C-95/10 Strong Segurança SA v Município de Sintra, CJEU judgment of 17 March 2011. In some subsequent cases the CJEU referred to transparency as supporting equal treatment rather than non-discrimination on grounds of nationality more specifically as in Telaustria itself. However, while (as we shall see below) a more general principle of equal treatment applies under the directives, the CJEU has now, in Strong Segurança, above, rightly rejected the application of such a general principle to procurement under the free movement rules (rejecting the argument that there was a violation of the Treaty, on the basis that the measure in question ‘cannot give rise to any discrimination, direct or indirect, on the basis of nationality or place of establishment’ (para 41 of the judgment)). Therefore the transparency principle as it applies under the Treaty itself cannot be seen as supporting such a broader principle.

29 Telaustria (n 28) paras 60–62.

30 European Commission, ‘Information Memorandum: Proposal for a Directive Coordinating Procedures for Concluding Public Supply Contracts’ March 1971.

31 A primary example of the leverage principle: Treumer, S and Werlauff, E, ‘The Leverage Principle: Secondary Law as a Lever for the Development of Primary Community Law’ (2003) 28 European Law Review 124 .

32 See the first recital in the pre-amble.

33 Council Directive 77/62/EEC of 21 December 1976 coordinating procedures for the award of public supply contracts [1977] OJ L13, second, third and fourth recital.

34 And see also Dir 77/62 fourth recital, stating that it is based on the same methods and principles as Dir 71/305.

35 European Commission, ‘Information Memorandum’ (n 30). The proposal for Dir 71/305, like its recitals, is briefer, referring simply to the existing of restrictions on trade due to national differences in procedures, and ‘hence’ the need for EU-wide publicity, prohibition of discriminatory technical specifications, and ‘objective’ criteria for judging the capacity of tenderers and the suitability of their tenderers: European Commission, ‘Information Memorandum, Award of Public Contracts’, July 1964. This is entirely consistent with the role of transparency as a monitoring tool as envisaged for the parallel rules in Dir 77/62. On the role of the specific rules on capacity and choice between tenders referred to here see section III. subsection C. heading iii. below.

36 See also: Council Directive 80/767/EEC of 22 July 1980 adapting and supplementing in respect of certain contracting authorities Directive 77/62/EEC coordinating procedures for the award of public supply contracts [1980] OJ L215/1, which first adjusted the EU regime in light of the ‘GATT’ Agreement on Government Procurement.

37 Council Directive 88/295/EEC of 22 March 1988 amending Directive 77/62/EEC relating to the coordination of procedures on the award of public supply contracts and repealing certain provisions of Directive 80/767/EEC [1988] OJ L127/1. On these directives see further: Weiss, Public Procurement (n 5) ch 5; Cox, The Single Market Rules and the Enforcement Regime after 1992 (n 5) chs 3–4.

38 Council Directive 89/440/EEC of 18 July 1989 amending Directive 71/305/EEC concerning coordination of procedures for the award of public works contracts [1989] OJ L210/1.

39 On the contents and history see Weiss, Public Procurement (n 5) ch 5; Cox, The Single Market Rules (n 5) chs 3–4.

40 As to which see Arrowsmith, S, Government Procurement in the WTO (The Hague, Kluwer Law International, 2003) 34–36 and the works cited there.

41 Council Directive 93/36/EEC of 14 June 1993 coordinating procedures for the award of public supply contracts [1993] OJ L199/1.

42 Council Directive 93/37/EEC of 14 June 1993 concerning the coordination of procedures for the award of public works contracts [1993] OJ L199/54.

43 Recital 1.

44 Dir 93/36, recital 1.

45 Ibid, recital 2.

46 Recital 4.

47 Recital 5.

48 Dir 93/37 is similar referring to the need for consolidation ‘for reasons of clarity and better understanding’ (recital 1) and coordination of procedures for attaining free movement.

49 These were also amended by European Parliament and Council Directive 97/52/EC of 13 October 1997 amending Directives 92/50/EEC, 93/36/EEC and 93/37/EEC concerning the coordination of procedures for the award of public service contracts, public supply contracts and public works contracts respectively [1997] OJ L328/1, to align the EU rules with the approach of the new Government Procurement Agreement adopted under the auspices of the WTO. The recitals merely refer, in recital 2, to the fact that the directives being amended coordinate procedures to introduce equal conditions of competition—and we have seen above that such ‘equal conditions of competition’ were earlier stated as being to ensure transparency and then address the reasons for specific amendments.

50 Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of public service contracts [1992] OJ L209/1.

51 Recitals 1–4.

52 Recital 19.

53 Recital 20.

54 Recital 21.

55 And see also recital 3 of Dir 89/665.

56 Council Directive 90/531/EEC of 17 September 1990 on the procurement procedures of entities operating in the water, energy, transport and telecommunications sectors [1990] OJ L297/1, recitals 1–7.

57 See Arrowsmith, The Law of Public and Utilities Procurement (n 3) ch 16.

58 Dir 71/305, recital 33.

59 See also recital 9 to the Utilities Directive and recital 15 to the Defence and Security Directive.

60 First introduced in Dir 89/440 and now used in all the directives.

61 See, in detail, Arrowsmith, The Law of Public and Utilities Procurement (n 3) ch 6.

62 C-44/96 Mannesmann Anlagenbau Austria AG v Strohal Rotationsdruck GesmbH [1998] ECR I-73, para 33. This statement has been cited in many subsequent judgments eg Case C-360/96 Gemeente Arnhem v BFI Holding [1998] ECR I-6821, para 42; Case C-380/98 R v HM Treasury ex parte University of Cambridge [2000] ECR I-8035, para 17; Case C-411/00 Felix Swoboda GmbH v österreichische Nationalbank [2002] ECR I-10567 para 45).

63 BFI Holding (n 62).

64 European Commission, ‘Public Procurement in the Excluded Sectors’, Bulletin of the European Communities Supplement 6/88, p 80, section 8.

65 Ibid, p 81, section 19.

66 Public Sector Directive, Art 2; Utilities Directive, Art 10; Defence and Security Directive, Art 4.

67 Case C-470/99 Universale-Bau v Entsorgungsbetriebe Simmering [2002] ECR I-11617.

68 On the current position see below.

69 Universale-Bau (n 67) para 91.

70 Arrowsmith, S, Linarelli, J and Wallace, D, Regulating Public Procurement: National and International Perspectives (The Hague, Kluwer Law International, 2000) 72–73.

71 Case C-250/07 Commission v Greece [2009] ECR I-4369, para 10 of the Opinion, stating that advertising ‘facilitates the review of procurement procedures’.

72 Eg for open procedures Dir 71/305, Art 16(L) and Dir 77/62, Art 13(L).

73 Dir 71/305, Art 29(2); Dir 77/62, Art 25(2).

74 Dir 71/305, Art 16; Dir 77/62, Art 13.

75 Art 44(2).

76 Art 44(3).

77 See recital 40.

78 Art 53(2).

79 Case 31/87 Gebroeders Beentjes BV v Netherlands (‘Beentjes’) [1988] ECR 4635; Universale-Bau (n 67).

80 Joined Cases C-226/04 and C-228/04 La Cascina v Ministero della Difesa and others [2006] ECR I-1347, para 32.

81 Case C-532/06 Emm G Lianakis v Dimos Alexandroupolis [2008] ECR I-251; Case C-331/04 ATI EAC Srl e Viaggi di Maio Snc v ACTV Venezia SpA [2005] ECR I-10109.

82 Davis, KC, Discretionary Justice, A Preliminary Enquiry (Baton Rouge, Louisiana State University Press, 1969); Jowell, J, Law and Bureaucracy, Administrative Discretion and the Limits of Legal Action (New York, Dunellen, 1975).

83 Case C-399/98 Ordine degli Architetti delle province de Milano e Lodi v Comune di Milano (‘La Scala’ ) [2001] ECR I-5409.

84 European Commission, ‘Information Memorandum: Award of Public Contracts’ (n 35).

85 Including that CJEU case law, including the rule mentioned below that award criteria must be linked to the subject matter of the contract, have been written into the directives.

86 As stated originally in Dir 71/305, Art 29(2).

87 Eg Public Sector Directive, Art 53(2).

88 Eg Beentjes (n 79); Universale-Bau (n 67). The disclosure of the type of condition in Beentjes is now expressly required eg Public Sector Directive, Art 26.

89 Art 44(3).

90 Universale-Bau (n 67) para 85. The effectiveness of the existing constraints in achieving their objectives is questionable but outside the scope of this article (see, in particular, de Boer, L, Linthorst, MM, Schotanus, F, Telgen, J, ‘An Analysis of Some Mistakes, Miracles and Myths in Supplier Selection’, Working Paper, 15th IPSERA Conference, San Diego, 6–8 April 2006 .

91 Case C-368/10 Commission v Netherlands CJEU judgment of 10 May 2012, para 109.

92 Eg in Public Sector Directive, Art 53(1).

93 Commission v Netherlands (n 91).

94 As well as because the criterion was not envisaged by the closed list of criteria in Art 48 by which technical and professional abilities may be assessed.

95 On its exhaustive character see La Cascina (n 80).

96 Eg Dir 71/305, ch 1.

97 Case C-360/89 Commission v Italy [1992] ECR I-3401.

98 Eg Dir 71/305, Art 29(1) and current Public Sector Directive, Art 53(1).

99 Case C-513/99 Concordia Bus Finland v Helsinki Kaupunki [2002] ECR I-7213.

100 Eg Public Sector Directive, Art 53(1).

101 As confirmed in Commission v Netherlands (n 91).

102 On these issues in procurement systems generally see Arrowsmith, S (ed), Public Procurement Regulation: An Introduction, available at www.nottingham.ac.uk, 3.7–3.9 .

103 Case C-243/89 Commission v Denmark (‘Storebaelt’) [1993] ECR I-3353.

104 Case C-87/94 Commission v Belgium (‘Walloon Buses’) [1996] ECR I-2043.

105 Walloon Buses (n 104) paras 53 and 54, with para 53 citing specifically recital 33 of Directive 90/531. The CJEU states that this is to ensure ‘equality of opportunity’ when formulating tenders.

106 Walloon Buses (n 104) para 54.

107 In Storebaelt (n 103) the Court merely refers to equal treatment: paras 37 and 40.

108 To some extent driven by provisions in the GPA.

109 Eg in Public Sector Directive, Arts 35(4), 41 and 75–76 respectively. They are enhanced also by new provisions in the remedies directives (n 4).

110 See n 4.

111 Case C-359/93 Commission v Netherlands (“UNIX”) [1995] ECR I-157; and see Case C-234/03 Contse and others v Ingesa [2005] ECR I-9315, and Case C-376/08 Serrantoni Srl v Comune di Milano [2009] ECR I-12169. On non-discriminatory measures in general see Barnard, C, The Substantive Law of the EU: the Four Freedoms (Oxford, Oxford University Press, 2010) ch 1.

112 Eg Dir 71/305, Art 21.

113 Eg Public Sector Directive Art 47(2)-(3).

114 Strong Segurança (n 28).

115 Eg Public Sector Directive Arts 26 (contract conditions), 53 (award criteria) and 48 (exclusions: see Commission v Netherlands (n 91)).

116 Dir 89/440/EEC, recital 9.

117 Dir 92/50/EEC, recital 19.

118 Case 120/78 Rewe-Zentral v Bundesmonopolverwaltung für Branntwein (‘Cassis de Dijon’ )[1979] ECR 649.

119 For the (recently revised) text see www.uncitral.org and on the objectives of the Model Law, Arrowsmith, S, ‘Public Procurement: an Appraisal of the UNCITRAL Model Law as a Global Standard’ (2004) 53 International and Comparative Law Quarterly 17 .

120 See: Karangizi, SR and Ndahiro, I, ‘Public Procurement Reforms and Development in the Eastern and Southern Africa Region’ in Hérnandez|Garcia, R (ed), International Public Procurement: A Guide to Best Practice (London, Globe Law and Business, 2009) 113 ; Nwogwugwu, E, ‘Towards the Harmonisation of International Procurement Policies and Practices’ (2005) 14 Public Procurement Law Review 131 .

121 See Arrowsmith, S and Treumer, S (eds), Competitive Dialogue in EU Procurement Law (Cambridge, Cambridge University Press, forthcoming).

122 Haagsma, A, ‘Information and Communication Technology Issues in International Public Procurement’, ch 9 in Arrowsmith, S and Davies, A (eds), Public Procurement: Global Revolution (The Hague, Kluwer Law International, 1998) 169–70. Only three procedures, open, restricted and negotiated, then existed.

123 European Commission, ‘Green Paper on the Modernisation of EU Public Procurement Policy: Towards a More Efficient European Procurement Market’ COM (2011) 15 final, para 13.

124 Eg European Commission, ‘Proposal for a Directive on Public Procurement’ (n 12), Explanatory Memorandum, p 6.

125 It is beyond the scope of this article to examine the legal relevance of this consideration in the context of the Commission’s argument on subsidiarity, above.

126 Germany v Parliament and Council (n 27) para 84.

127 Case C-380/03 Germany v Parliament and Council [2006] ECR I-11573, para 37.

128 Para 89 of the Opinion.

129 This view is also is perhaps envisaged by the Commission when it refers to the regime’s alleged concern with ‘the rational allocation of public money through the choice of the best offer presented’: European Commission, ‘Interpretative Communication on the Community law applicable to Public Procurement and the Possibilities for Integrating Environmental Considerations into Public Procurement’ COM (2001) 274 final, p 4.

130 Case C-247/02 Sintesi SpA v Autorità per la Vigilanza sui Lavori Pubblici [2004] ECR I-9215.

131 Sintesi (n 130) para 40.

132 Case C-295/89 Impresa Donà Alfonso di Donà Alfonso & Figli v Consorzio per lo sviluppo industriale del Comune di Monfalcone and Others [1991] ECR I-2967.

133 Case C-599/10 SAG ELV Slovensko judgment of 29 March 2012.

134 Graells, A Sanchez, ‘More Competition-Oriented Public Procurement to Foster Social Welfare’ in Thai, KV (ed), Towards New Horizons in Public Procurement (Florida, PRAcademics Press, 2010) 81, 105; and see also Graells, A Sanchez, Public Procurement and the EU Competition Rules (Oxford, Hart Publishing, 2010).

135 Sanchez Graells, ‘More Competition-Oriented Public Procurement’ (n 134) 96–97.

136 As summarised in Sanchez Graells, ‘More Competition-Oriented Public Procurement’ (n 134) 84–89. In fact, in the present author’s view, it is notable that the directives are constructed very much in disregard of their impact on the supply market—for example, without consideration of the potential for the limited selection criteria to adversely affect SMEs or to allow lots to be allocated with regard to preservation of market competition—but to explore this point in detail is outside the scope of this chapter.

137 Sanchez Graells, ‘More Competition-Oriented Public Procurement’ (n 134) 98–106.

138 As confirmed in the recitals, such as Public Sector Directive, recital 2. See Olykke, GS, ‘How does the Court of Justice of the European Union pursue Competition Concerns in a Public Procurement Context?’ (2011) 20 Public Procurement Law Review 179 .

139 In paras 34–40 she offers a threefold analysis of competition: it aims at relations between the candidates or tenderers, requiring parallel competition; the relationship between purchasers and the undertakings (in particular the conduct of those in a dominant position), and ‘to protect competition as an institution’. What exactly the last is seen to involve is far from clear.

140 Impresa Lombardini (n 132). Later in its judgment the Court also states the view that the directive aims at ‘the development of effective competition’.

141 See the cases cited in n 62 above.

142 See sections VII and VIII below.

143 Arrowsmith, S, ‘The National and International Perspectives on the Regulation of Public Procurement: Harmony or Conflict?’ in Olszewskiego, H and Popowskiej, B (eds), Gospodarka Administracja Samorzad (1997) 9–36; also published in Arrowsmith and Davies (eds), Public Procurement Global Revolution (n 122) 1.

144 This would not necessarily be so of removing restrictions on market access which are more limited than the alleged ‘competition’ function of the directive.

145 For an overview of the 2004 reforms see Allain, Y, ‘The New European Directives on Public Procurement: Change or Continuity?’ (2006) 35 Public Contracts Law Journal 517 ; Arrowsmith, S, ‘An Assessment of the New Legislative Package on Public Procurement’ (2004) 41 Common Market Law Review 1 ; Bovis, C, ‘The New Public Procurement Regime: A Different Perspective on the Integration of Public Markets of the European Union’ (2006) 12 European Public Law 1 .

146 Eg Public Sector Directive Art 1(7). This limit, however, is based on the need for a precise specification for an auction rather than the suitability of auctions for value for money reasons: for analysis see Arrowsmith, , The Law of Public and Utilities Procurement (n 3) 1190–91.

147 That is, competitive dialogue, and all types of negotiated procedures.

148 Further, even when the negotiated procedure is available because the ‘best’ offer cannot be found without a more flexible procedure, Member States and their entities are not compelled to use it: see Dir 2004/18, Art 30(1)(c).

149 Dir 90/531, Art 27(5). This wording was later carried through into Directive 92/50 (Art 37) and the other directives that were the direct predecessors to the current Public Sector Directive. This reference to requiring explanations only before rejecting a tender was not found in the provisions on abnormally low tenders in Directives 71/305 and 77/62 (in Arts 29(5) and 25(5) respectively—but the special concern with this issue was reflected in provisions requiring a report to the relevant EU-level Advisory Committee on any rejection of a tender as too low that followed such an examination when ‘lowest price’ was the basis of the award.

150 Commission (EC), ‘Public Procurement in the Excluded Sectors’ (n 64) p 94, s 103. The reference to competitive purchasing does not necessarily reflect a broad function of the directive as replicating a competitive market but can merely refer to competitive purchasing in the sense of purchasing that is not constrained by discrimination in favour of national industry.

151 On the rules governing grounds for rejection see Arrowsmith, (n 3) pp 534–37.

152 See, eg, Dir 2004/18, Art 2. Although the Commission has argued that such a principle of equal treatment applies under the Treaty and this was apparently endorsed in Case C-458/03 Parking Brixen GmbH v Gemeinde Brixen and Stadtwerke Brixen AG [2005] ECR I-8585, this view has more recently been rejected: Case C-95/10 Strong Segurança SA v Município de Sintra, judgment of 17 March 2011.

153 Joined Cases C-21/03 and C-34/03 Fabricom v Belgium (‘Fabricom’ ) [2005] ECR I-5559, para 27.

154 Fabricom (n 153) para 27.

155 Storebaelt (n 103) para 33.

156 A statement that entities must not ‘discriminate’ was included first in Dir 90/531 and later added to other directives, but the CJEU has never stated whether or not this explicit principle referred only to discrimination on grounds of nationality or was more general.

157 Walloon Buses (n 104) para 33.

158 Storebaelt (n 103) para 33.

159 Walloon Buses (n 104).

160 These, amongst others, are cited in this respect by Sanchez Graells, ‘More Competition Oriented Public Procurement’ (n 134).

161 Eg Public Sector Directive, Arts 32(2), 33(7) and 54(8). Auctions and dynamic purchasing systems were not regulated previously, and frameworks only for utilities.

162 See section VII below.

163 See section V.

164 See section VII below.

165 These are referred to by Sanchez-Graells, ‘More Competition-Oriented Public Procurement’ (n 134) 90–91.

166 Where effective Community-wide competition is mentioned in recital 14 in the list of recitals explaining specific amendments. The first directives on services, 92/50, and utilities, 90/531, refer only briefly to the need for coordination.

167 References to competition merely repeat recitals from earlier instruments: see, eg, recital 10 to Dir 93/37, on notices. Dir 93/8 also involves no reorientation of function, being adopted to expand the existing rules to services (recitals 6 and 10).

168 Parallel provisions are found in the Utilities Directive in recitals 1 and 2 and Defence and Security Directive, recital 15 (following recitals referring to specific security-related matters).

169 Taking account of case law interpreting these rules the recital specifically mentions proportionality and equal treatment as well as transparency as Treaty principles—although it now appears that equal treatment beyond non-discrimination on grounds of nationality is not an obligation under the Treaty free movement rules themselves: see n 28 above.

170 If opening to competition were in addition it would imply that this is something additional to guaranteeing the effects of the Treaty principles, which cannot be the case.

171 Eg Public Sector Directive, recitals 15, 29, 32 and 36 (the last reiterating past references to effective competition in relation to notices).

172 Case T-14/96 Bretagne Angleterre Irlande (BAI) v Commission (‘BAI’ ) [1999] ECR II-139; Dunleavy, N, Competition Law: A Practitioner’s Guide (Haywards Heath, Bloomsbury Professional, 2010) 783–89; Battista, J, ‘The respect of State Aid Rules in PPPs’ (2007) 2 European Public Private Partnership Law 70 ; Mehta, J, ‘State Aid and Procurement in PPPs: Two Faces of a Single Coin?’ (2007) 2 European Public Private Partnership Law 141 ; Doern, A, ‘The Interaction between EC Rules on Public Procurement and State Aid’ (2004) 13 Public Procurement Law Review 97 ; Bartosch, A, ‘The Relationship Between Public Procurement and State Aid Surveillance: The Toughest Standard Applies?’ (2002) 39 Common Market Law Review 551 ; Hillger, J, ‘The Award of a Public Contract as State Aid within the Meaning of Art 87(1) EC’ (2003) 12 Public Procurement Law Review 109 ; Baistrocchi, P Asbo, ‘Can the Award of a Public Contract Be Deemed to Constitute State Aid?’ (2003) 24 European Competition Law Review 510 .

173 See, eg, Case N264/2002 London Underground Public Private Partnership, European Commission, Decision of 2 October 2002, in particular, paras 113–21 and 122–25. (See [2002] OJ C309/14).

174 BAI (n 172).

175 Art 114 TFEU is a residual provision and Art 109 TFEU provides a specific (although rarely used) provision for Council regulations on state aid. It is beyond the scope of this article to consider the possibilities for measures directed at both state aid and other internal market matters in procurement but it seems unlikely that procurement procedures directed at the former as envisaged here could be adopted at all in a directive rather than regulation.

176 Eg Public Sector Directive, Art 55(3); GS Ølykke, ‘The Legal Basis Which Will (Probably) Never Be Used: Enforcement of State Aid Law in a Public Procurement Context’ (2011) European State Aid Law Quarterly 457.

177 See, eg, Heuninckx, B, ‘Defence Procurement: The Most Effective Way to Grant Illegal State Aid and Get Away with It ... Or Is It?’ (2009) 46 Common Market Law Review 191 .

178 See the works cited in n 172.

179 Commission (EC), Proposal for a Directive … on the Award of Concession Contracts’ (n 13) p 40, as discussed in section VII below.

180 Arrowsmith, Wallace and Linarelli, Regulating Public Procurement (n 70).

181 See Dekel, O, ‘The Legal Theory of Competitive Bidding for Government Contracts’ (2008) 37 Public Contracts Law Journal 237 ; Trepte, P, Regulating Procurement: Understanding the Ends and Means of Public Procurement Regulation (Oxford, Oxford University Press, 2004) 59 . However, note that Dekel includes within the objective of efficiency as one meaning of that concept not merely obtaining value for the goods, works or services acquired, but also the overall economic benefits to society of efficient allocation of resources (an objective of the internal market) and Trepte seems also to refer to this latter concept of efficiency. Trepte also incorporates the objective of ensuring cost-effective procedures into this single concept of efficiency.

182 Arrowsmith, Wallace and Linarelli, Regulating Public Procurement (n 70).

183 European Commission, ‘Green Paper’ (n 123) p 39.

184 In the context of qualification decisions eg limiting participation to SMEs, a prohibition might be concerned with value for money in a narrow sense in that it avoids unwise decisions arising from failure to measure and compare costs/benefits.

185 Case C-250/07 Commission v Greece [2009] ECR I-4369, paras 11–12 of the Opinion.

186 See, eg, European Commission, ‘Communication from the Commission: Europe 2020: A Strategy for Smart, Sustainable, Inclusive Growth’ COM (2010) 2020, p 26: ‘Public procurement policy must ensure the most efficient use of public funds and procurement markets must be kept open EU-wide’; European Commission, ‘Green Paper’ (n 123) p 3, interpreting this as meaning that ‘public procurement policy’ must ensure ‘efficient use of public funds’ and open procurement markets. In the recitals see, eg, Public Sector Directive, recital 13 on dynamic purchasing systems referring to such systems as allowing ‘optimum use of public funds through broad competition’.

187 Case C-376/98 Germany v Parliament and Council [2000] ECR I-8419.

188 Ibid, para 85 of the Opinion.

189 See Atkins study (n 2) vol 5A; and for evaluation of results, European Commission, ‘Commission Staff Working Paper, Evaluation Report: Impact and Effectiveness of EU Public Procurement Legislation’ SEC(2011) 853 final, available at http://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/evaluation-report_en.pdf.

190 Arrowsmith, S and Kunzlik, P, ‘Public Procurement and Horizontal Policies in EC Law: General Principles’, ch 1 in Arrowsmith, S and Kunzlik, P (eds), Social and Environmental Policies in EC Procurement Law: New Directives and New Directions (Cambridge, Cambridge University Press, 2009) 33 .

191 Case C-19/00 SIAC Construction v County Council of the County of Mayo [2001] ECR I-7725, para 33 of the Opinion. In Case C-450/06 Varec v Belgian State [2008] ECR I-581, para 33 of the Opinion of Advocate General Sharpston is cited to suggest that the directives themselves aim at value for money, but is quoted out of context in a way that suggests that statement was referring to the objectives of the EU directives rather than public procurement regulation ‘in general’.

192 On the potential conflict between transparency and value for money see, eg, Kelman, S, ‘Remaking Federal Procurement’ (2002) 31 Public Contract Law Journal 581 ; Kelman, S, Procurement and Public Management (Washington, AEI Press, 1990); Schooner, S, ‘Commercial Purchasing: the Chasm between the United States Government’s Evolving Policy and Practice’, ch 8 in Arrowsmith, S and Trybus, M (eds), Public Procurement: the Continuing Revolution (London, Kluwer Law International, 2002); Schooner, S, ‘Fear of Oversight: the Fundamental Failure of Businesslike Government’ (2001) 50 American University Law Review 627 ; Schwartz, J, ‘Regulation and Deregulation in Public Procurement Law Reform in the United States’, ch 8 in Piga, G and Thai, K (eds), Advancing Public Procurement: Practices, Innovation and Knowledge sharing (Boca Raton, PRAcademics Press, 2007); P Trepte, Transparency and Accountability as Tools for Promoting Integrity and Preventing Corruption in Public Procurement (2005) (paper to OECD Expert Group meeting on Integrity in Public Procurement).

193 See, eg, Bajari, S and Tadelis, S, ‘Incentives and award procedures: competitive tendering versus negotiations in procurement’, ch 5 in Dimitri, N, Piga, G and Spagnolo, G, Handbook of Procurement (Cambridge, Cambridge University Press, 2006); K Kruger, ‘The Scope for Post tender Negotiations in International Tendering Procedures’, ch 10 in Arrowsmith and Davies, Public Procurement: Global Revolution (n 122). On transparency v discretion in the context of errors and non-conforming tenders see Arrowsmith, (ed), Public Procurement Regulation: An Introduction (n 4) 3.7–3.9 .

194 For detailed analysis see S Arrowsmith and S Treumer, ‘Competitive Dialogue in EU Law: A Critical Review’, ch 1 in Arrowsmith and Treumer, Competitive Dialogue in EU Procurement Law (n 121).

195 Joined Cases 27–29/86 S.A. Construction et Entreprises Industrielles (CEI) and others v Société Coopérative Association Intercommunales pour les Autoroutes des Ardennes [1987] ECR 3347; Beentjes (n 79); La Cascina (n 80).

196 See generally: Arrowsmith (ed), Public Procurement Regulation: An Introduction (n 4) ch 1; Schooner, S, ‘Desiderata: Objectives for a System of Government Contract Law’ (2002) 11 Public Procurement Law Review 103 .

197 On this terminology see Arrowsmith and Kunzlik, ‘Public Procurement and Horizontal Policies in EC Law’ (n 90).

198 See Arrowsmith (ed), Public Procurement Regulation: An Introduction (n 4) ch 1.

199 This term is not used in any technical sense but for descriptive convenience—again on terminology see Arrowsmith and Kunzlik, ‘Public Procurement and Horizontal Policies in EC Law’ (n 90).

200 I am grateful to Abby Semple for pointing out this argument.

201 Arrowsmith, and Kunzlik, , ‘Public Procurement and Horizontal Policies in EC Law’ (n 90) 59–67 .

202 Transparency for reasons such as anti-corruption policy may provide a reason for use of lowest price as well as the importance of cost, as may eg absence of skills to evaluate non-price criteria.

203 Arrowsmith, S, ‘The Past and Future Evolution of EC Procurement Law: From Framework to Common Code?’ (2006) 35 Public Contract Law Journal 337 .

204 Eg Public Sector Directive, recital 3, reiterating recitals dating back to Directive 71/305.

205 See, eg, Arrowsmith, ‘The Past and Future Evolution of EC Procurement Law’ (n 202).

206 Fabricom (n 153). See also, eg, Case C-213/07 Michaniki AE v Ethniko Simvoulio Raidotileorasis and Ypourgos Epikrateias [2008] ECR I-9999; Case C-376/08 Serrantoni Srl and Consorzio stabile edili Scrl v Comune di Milano [2009] ECR I-12169.

207 This would apply also, of course, if the directives were to regulate to prevent state aid.

208 Which would provide a more rational basis for the decision than Art 55 itself.

209 Storebaelt (n 103); Council and Commission Statement concerning Article 7(4) of Public Works Directive 93/37 [1994] OJ L111/114; Arrowsmith, The Law of Public and Utilities Procurement (n 3).

210 Case C-454/06 pressetext Nachrichtenagentur v Austria [2008] ECR I-4401.

211 On the relevance of these issues to competition dialogue, for example, see Arrowsmith and Treumer ‘Competitive Dialogue in EU Law’ (n 194).

212 See, eg, Arrowsmith and Kunzlik (eds), ‘Social and Environmental Policies’ (n 190); McCrudden, C, Buying Social Justice: Equality, Government Procurement, & Legal Change (Oxford, Oxford University Press, 2007); Caranta, R and Trybus, M (eds), The Law of Green and Social Procurement in Europe (Copenhagen, DJØF Publishing, 2010).

213 See the works cited in n 211.

214 Eg Public Sector Directive Arts 26 (contract conditions), 53 (award criteria) and 48 (exclusions: see Commission v Netherlands (n 91).

215 See Arrowsmith, S, ‘Horizontal Policies in Public Procurement: A Taxonomy’ (2010) 10 Journal of Public Procurement 149 .

216 Case C-448/01 EVN AG and Wienstrom GmbH v Austria [2003] ECR I-14527.

217 Ibid, para 39.

218 EVN (n 216) paras 41–42.

219 Eg Art 45 of Directive 2004/18; Art 23(1) of Directive 2004/18 (accessibility); Art 23(1) Directive 2005/32/EC on Energy End-use and Energy Services (OJ 2005 No L191/29) obliging Member States to take account of energy efficiency in procurement; and Directive 2009/33/EC on promoting clean, energy-efficient road vehicles (OJ 2009, L120/5) which imposes certain obligations to take into account environmental matters when purchasing vehicles.

* The author is grateful to Peter Kunzlik for discussions on the issues in this chapter, particularly on the subject of state aid.

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