Putting principles into practice

07 September, 2006
More legal news

07 September 2006

Guidance on EU law can often complicate, rather than clarify, matters. But the recent 'interpretive communication' on applying EC principles is an exception, says David Allen Green

One important quality for a public procurement lawyer is a good imagination. For even when a contract is above threshold and for a Part A purpose - so you are following the regulations to the letter - you still have to apply the hallowed principles of European Community law: equality, transparency, non-discrimination, and mutual recognition. And when a contract is below threshold, or not for a Part A purpose, these principles are sometimes all you have to work with.

However broad your imagination, applying these principles in real procurement situations is no parlour game. Getting it right or wrong matters. To advise that an exercise is being conducted in breach of the principles of EC law is never to be done lightly.

Such is the respect for legality in the public sector that this advice can often bring a procurement to a sudden, if temporary, halt. For the suppliers, any sense that the procurement exercise is potentially unlawful will create nervousness and commercial risk.

On the other hand, it is not open for a public procurement lawyer to give the rubber stamp to any procurement exercise when there are doubts that the contract was properly advertised, or that an incumbent has had an inherent advantage, or that in a similar situation two tenders were treated in markedly different ways. The internal pressure for such a contract to be awarded can be immense, and to say there is a problem will prompt the familiar response that all was well "until the lawyers got involved". And unless a lawyer can point to a concrete provision, rather than a breach of a principle, these situations can be awkward.

A welcome contribution It is because of this predicament that lawyers and practitioners should welcome the recent EC "interpretive communication" on the application of EU law to contracts not (or not fully) subject to the provisions of the public procurement directives.

The guidance should be read by anyone who has to conduct a procurement exercise. It does not have the force of law in itself, and it is focused on the European level, but it provides helpful guidance on how the EC principles should be applied and what constitutes a breach of those principles. In particular, it articulates a number of "basic standards".

The European Court of Justice (ECJ) has repeatedly stated in its recent case law that contracts outside the public procurement directives are subject to the internal market rules of the EU treaty. The key case here is the Telaustria decision. This has led to some degree of uncertainty in many member states as to how these rules and the principles set out in the ECJ's case law should be applied to these contracts. And it is this that has prompted the Commission to produce this document.

Transparency and equal treatment On transparency, the interpretive communication gives guidance on where adverts should be placed, going further than the knee-jerk practice of sending everything to the Official Journal of the European Union.

The basic standard here is that there needs to be a degree of advertising sufficient to enable the market to be opened up to competition. Adequate means of publication also include using the internet. An advert can be on the contracting authority's own website or on portal websites specifically created for contract advertisements.

In general, the greater the interest of the contract to potential bidders from other member states, the wider the coverage should be. Local newspapers, municipal announcements journals or notice boards may be sufficient for small contracts involving only a local market. The advertisement does not have to contain a formal invitation to tender, but must include a short description of the essential details of the contract to be awarded and the award method, along with an invitation to contact the contracting entity.

Interpreting impartiality The interpretive communication provides constructive guides on the tricky points of what is equality and non-discrimination in a practical situation. The basic standard is that there must be "impartiality of procedures".

The guidance confirms that in general the description of the characteristics required of a product or service should be impartial, and so not refer to a specific make or source, or a particular process, or to trademarks, patents, types or a specific origin or production unless the reference is justified by the subject matter of the contract and accompanied by the words "or equivalent".

Deadlines must be appropriate to make a meaningful assessment and prepare the offer. All shortlisted tenderers should receive the same information during the procedure. All applicants must know the applicable rules in advance and they must apply to everyone in the same way. One concern here is that if a tenderer is excluded solely on one ground, it is not appropriate to give the nod to another, perhaps stronger supplier, who also does not meet that requirement.

In respect of mutual recognition, no condition causing direct or indirect discrimination shall be imposed. For example, there can be no requirement that the firm interested in the contract must be established in the same member state. Similarly, diplomas, certificates and other formal qualifications from other member states offering an equivalent level of guarantee have to be recognised.

As well as imagination, another useful quality for a public procurement lawyer is endurance. There is an endless list of guidelines on "best practice" and not everything out of the EU is readily comprehensible or makes the lives of procurement officials, suppliers and legal advisers easier. This Interpretative Communication is an exception. Reference to it should now be a key aspect in advising on the legality of any procurement exercise.

David Allen Green, a former legal adviser to the Office of Government Commerce, practices in public sector and IT law at Taylor Wessing (d.green@taylorwessing.com)

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