Public works contracts, public supply contracts and public service contracts
Public procurement plays an important role in the overall economic performance of the European Union. European public authorities spend around 18 % of GDP on purchasing supplies, works and services. The current directives on public procurement, specifically Directive 2004/17/EC and 2004/18/EC are the products of a long process which began in 1971 with the adoption of Directive 71/305/EEC. By ensuring transparent, non-discriminatory procedures, these Directives aimed principally to ensure that economic operators could fully enjoy fundamental freedoms in the competition for public procurement contracts.
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 [See amending acts].
This Directive (called the “Classic Directive”) applies to public contracts * concluded by a contracting authority in sectors other than the water, energy, transport and postal services sectors for:
which are not exceptionally excluded by this Directive, nor are works concessions *.
The "traditional" directive applies to public works contracts, public supply contracts and public service contracts which have a value excluding VAT estimated to be no less than the pre-established thresholds.
The thresholds are recalculated by the Commission every two years. The calculation of the value of these thresholds shall be based on the average daily value of the euro, expressed in Special Drawing Rights (SDRs). This average is calculated over the 24 months terminating on 31 August for the revision with effect from 1 January.
The value of the thresholds is the following:
- EUR 130 000 for public supply and service contracts awarded by central government authorities (ministries, national public establishments);
- EUR 200 000 for public supply and service contracts: awarded by contracting authorities * which are not central government authorities; covering certain products in the field of defence awarded by the central government authorities; concerning certain services in the fields of research and development (RTD), telecommunications, hotels and catering, transport by rail and waterway, provision of personnel, vocational training, investigation and security, certain legal, social and sanitary, recreational, cultural and sporting services;
- EUR 5 000 000 in the case of works contracts.
For those Member States which have not adopted the single currency, the value of these thresholds is calculated and published by the European Commission in the Official Journal once the re-calculated thresholds in Euros are published.
Certain contracts are excluded or reserved
The following public contracts are excluded from the scope of the directive:
- contracts covered by the "special sectors" directive and contracts awarded with the purpose of providing or exploiting public telecommunications networks;
- contracts which are declared to be secret or affect the essential interests of a Member State;
- contracts concluded pursuant to international agreements;
- contracts concerning the following services: the acquisition or rental of existing buildings; the acquisition, development, (co)production of broadcasting programmes; arbitration and conciliation services; the purchase, sale or transfer of financial instruments; central bank services; employment contracts; RTD services which do not belong exclusively to the contracting authority or which are not wholly financed by it;
- service contracts awarded on the basis of an exclusive right;
- service concessions;
- certain public contracts awarded in the field of defence and security covered by Directive 2009/81/EC.
Member States my reserve participation in certain public contracts to sheltered workshops or provide for such contracts to be performed in the context of sheltered employment programmes where most of the employees concerned are handicapped persons.
Rules applicable to all public contracts
Contract award criteria
The criteria used by the contracting authorities in awarding their public contracts are:
- either the lowest price only;
- or, where the contract is awarded to the most economically advantageous tender, various criteria linked to the subject-matter of the contract in question (quality, price, technical merit, aesthetic and functional characteristics, environmental characteristics, etc.). The contracting authority should specify the relative weighting it gives to each of the criteria.
Rules on publication and transparency
Throughout the procedure, public contracts whose value exceeds the thresholds in the Directive are subject to obligations regarding information and transparency. This takes the form of publishing information notices drawn up in accordance with standard Commission forms. There are several types:
- the prior information notice (not compulsory);
- after having sent the notice of the publication of a prior information notice, the contracting authority publishes this notice on its buyer profile itself or sends it to the Office for Official Publications of the European Communities (Publications Office).
This publication is compulsory when the contracting authority wishes to reduce the time limits for the receipt of tenders;
- the notice of the publication of a prior information notice (not compulsory), if the prior information notice is only published on the website (‘buyer profile’) of the contracting authority;
- the contract notice or notice of a design contest (compulsory);
- the contracting authority may publish this notice itself nationally and should send it to the Publications Office. Publication by the Publications Office is free. The notice is published in full in an official language of the Community, and a summary is translated into the other languages;
- the contract award notice and notice of the results of a design contest (compulsory).
The notices sent by the contracting authorities to the Commission can be transmitted by traditional or electronic means. Standard forms and details on transmission procedures are accessible on the information system for public procurement (SIMAP).
Each contracting authority shall provide information, as soon as possible, on the decisions reached concerning the award of a contract, including grounds for not awarding it. It shall draw up a written report for all contracts. It shall, as soon as possible, inform:
- the decisions taken, including decisions not to award a contract.
On the request of the economic operator concerned:
- any unsuccessful candidate of the reasons for rejecting them;
- any tenderer who has made an admissible tender of the relative advantages of the tender selected, as well as the name of the economic operator * chosen.
The exchange and storage of information involving the various parties to the contract ensure the integrity of the data and confidentiality. The contracting authority only examines the content of the tenders after the time limit set for submitting them has expired. Use of electronic means is non-discriminatory and helps to speed up the procedures. Devices for the electronic receipt of tenders permit the use of electronic signatures, guarantee the authenticity, integrity and confidentiality of the data and are capable of detecting possible fraud.
The technical specifications define the characteristics required of a material, supply or service such that they fulfil the use for which they are intended. They are out in the contract documentation (contract notices, contract documents or additional documents) without creating unjustified obstacles to competition. These characteristics may include environmental performance, design, conformity assessment, performance, safety, dimensions, quality assurance, and production methods, on the condition that they relate to the subject of the contract. For public works contracts, they also cover test, inspection and acceptance conditions, as well as construction techniques.
When drawing up its technical specifications, a contracting entity refers to national standards transposing European standards, European technical approvals, and international standards. It can also determine performance and functional requirements, particularly in the environmental domain (e.g. European eco-labels). The tenderer's tender is valid if he/she manages to prove that it meets the requirements defined by the technical specifications in an equivalent fashion. An appropriate means may be constituted by the submission of a technical dossier or a test report from a recognised body (laboratory, certification and inspection body).
In principle, technical specifications do not mention a specific make or process nor do they refer to trade marks, patents or a specific production.
Economic operators’ capabilities and combating fraud and corruption
European public procurement legislation provides conditions which may be required for the purposes of participation in public procurement. These conditions aim to check the suitability of economic operators tendering for contracts on the basis of criteria relating to their economic and financial capacity, and their technical and professional knowledge or abilities.
The conditions for participation also aim to effectively combat fraud and corruption.
Exclusion from public procurement contracts of any economic operators who have been found guilty of participating in a criminal organisation or of corruption, fraud or money laundering is obligatory. A contracting authority may ask tenderers for any document testifying to their professional conduct and/or economic situation. To obtain this information, it may turn to the competent national authorities or those of another Member State.
Any economic operator may be excluded from participation in a public contract where that economic operator:
- is bankrupt (or the subject of proceedings for a declaration of bankruptcy), is being wound up, has suspended business activities or his/her affairs are being administered by the court;
- has been convicted of any offence concerning his/her professional conduct;
- has been guilty of grave professional misconduct;
- has not paid social security contributions or taxes;
- has made a false declaration to the contracting authority.
Traditional and electronic means of communication are on equal footing
With regard to the exchange of information, the new directive places traditional and electronic means of communication on equal footing. It leaves market operators free to choose which means of communication to use for the procedures. If electronic means are used, the contracting authority is able to reduce the time limits as follows:
- the electronic publication of a prior information notice makes it possible to reduce by seven days the time limit for the receipt of tenders in open and restricted procedures. The same applies for the receipt of requests to participate in negotiated procedures and the competitive dialogue;
- on top of the previous reduction, time limits in open and restricted procedures may be further reduced by five days where the contract documents are available on the Internet.
A new purchasing technique has entered the scene: the dynamic purchasing system. It is exclusively based on electronic means of communication.
A contracting entity may hold an electronic auction to award a contract, except for certain works and service contracts such as the design of works which relate to intellectual performances. The electronic auction shall be based:
- either on prices when the contract is awarded to the lowest price,
- or on prices and/or the values of the features of the tenders, when the contract is awarded to the most economically advantageous tender.
The specifications shall contain the following details:
- the quantifiable features (figures or percentages) whose values are the subject of the electronic auction and the minimum differences when bidding;
- the electronic auction process and the technical specifications for connection.
Before proceeding with the electronic auction, the contracting authority shall make a full initial evaluation of the tenders. All tenderers who have submitted admissible tenders shall be invited to take part simultaneously by electronic means. The invitation shall state the date and time of the start of the auction and, if appropriate, the number of phases. It shall also state the mathematical formula to be used to determine automatic re-rankings, incorporating the weighting of all the award criteria. Throughout each phase, the participants shall know their relative rankings compared to the other participants, but without knowing their identity.
The electronic auction shall close: at a date and time fixed in advance, when a certain amount of time has elapsed after receipt of the last submission, or when the number of phases in the auction has been completed.
Public procurement procedures
There are different public procurement procedures: the open procedure, the restricted procedure, the negotiated procedure, and the competitive dialogue.
The open procedure
In an open procedure, any interested economic operator may submit a tender. The minimum time limit for the receipt of tenders is 52 days from the date on which the contract notice was published. If a prior information notice has been published, this time limit can be cut to 36 days. In no case may the time limit for the receipt of tenders be less than 22 days.
The restricted procedure
In the case of restricted procedures, any economic operator may request to participate and only candidates invited to do so may submit a tender.
The time limit for the receipt of requests to participate is 37 days from the date of the contract notice. The contracting authority then, simultaneously and in writing, invites the selected candidates to submit their tenders. There should be a minimum of five candidates, except if there are not enough with the required capabilities. The minimum time limit for the receipt of tenders shall be 40 days from the date on which the invitation is sent. If a prior information notice has been published, this may be shortened to 36 days. The minimum time limit for the receipt of tenders may not be less than 22 days. Exceptionally and when urgency requires, the contracting authority may set a minimum time limit of 15 days (10 days if the notice is sent electronically) for requests to participate and of 10 days for the receipt of tenders.
The negotiated procedure
In a negotiated procedure, the contracting authority consults the economic operators of its choice and negotiates the terms of the contract with them.
The following cases justify the use of the negotiated procedure with prior publication of a contract notice:
- following another procedure which revealed the presence of irregular tenders, insofar as this new procedure does not substantially alter the original terms of the contract;
- in exceptional cases, when the nature of the contracts or the risks attaching thereto prevent prior pricing;
- in the field of services, for intellectual services which do not permit the use of an open or restricted procedure;
- for works which are performed solely for purposes of research or testing.
The following cases justify the use of the negotiated procedure without prior publication of a contract notice:
- for all types of contract: when no tenders have been submitted in response to an open procedure or a restricted procedure;
- when, for technical or artistic reasons, or for reasons connected with the protection of exclusive rights, the contract may be executed only by a particular economic operator; in cases of extreme urgency brought about by unforeseeable events;
- for supply contracts: when the products involved are manufactured purely for the purposes of RTD;
- for additional deliveries over a maximum period of three years where a change of supplier would oblige the contracting authority to acquire material having different technical characteristics; for supplies quoted and purchased on a commodity market;
- for purchases of supplies under particularly advantageous conditions from an economic operator definitively winding up his business activities or in receivership;
- for public service contracts, when the contract should, according to the rules of the contest, be awarded to the successful candidate in the design contest;
- for works and service contracts: up to 50 % of the amount of the original contract, for additional works or services which are not included in the initial project and have become necessary through unforeseen circumstances;
- for new works or services consisting in the repetition of similar works or services entrusted to the initial economic operator for a maximum of three years.
In negotiated procedures with prior publication of a contract notice, the minimum time limit for receipt of requests to participate is 37 days from the date of the contract notice. In cases of extreme urgency, the contracting authority may set a minimum time limit of 15 days (10 days if the notice is sent electronically). The contracting authority, simultaneously and in writing, invites the selected candidates (a minimum of three) to negotiate. The invitation comprises all the contract documents, the deadline for the receipt of the tenders, the address to which the tenders must be sent and the language or languages in which the tenders must be drawn up. The relative weighting of criteria for the award of the contract is also included.
The competitive dialogue
30 A contracting authority may make use of the competitive dialogue for complex contracts if it is not able to define by itself the technical solutions to satisfy its needs or is not able to specify the legal and/or financial make-up of a project. Large infrastructure projects would seem to lend themselves to this type of dialogue.
The contracting authority publishes a contract notice that includes the award criteria. The minimum time limit for receipt of requests to participate is 37 days. The contracting authority then, simultaneously and in writing, invites the selected candidates (a minimum of three) to conduct a dialogue. The discussion commences, may take place in stages and continues until the (technical and/or economic and legal) solutions have been defined. The contracting authority ensures equal treatment of all tenderers and protects the confidentiality of the information. At the end of the dialogue, the candidates submit their final tenders. These tenders may be specified, but without changing the basic features of the contract. The contracting authority awards the contract in accordance with the award criteria set and on the basis of the most economically advantageous tender.
Public works concessions
Public works concessions of a value in excess of EUR 5 000 000 are subject to specific rules. These rules do not apply to:
- public works contracts concerning the provision or exploitation of public telecommunications networks;
- public contracts which are secret or are awarded pursuant to international rules;
- public works contracts covered by the "special sectors" directive.
The contracting authority publishes an information notice. The time limit for the presentation of applications is 52 days from the date of the notice, minus seven days if it is transmitted by electronic means.
The concessionaire must apply the advertising rules for contracts awarded to third parties, except in the case of a negotiated procedure without prior publication of an information notice. If the concessionaire is a contracting authority, all the rules provided for public works contracts apply.
Groups of enterprises that have been formed to obtain the concession and enterprises related to them are not considered third parties. An enterprise is related to a concessionaire when the relationship between the two is, directly or indirectly, that of a dominant influence. Ownership, financial participation, and operating rules determine this dominant influence.
Service design contests
Admission to design contests may not be limited to the territory (or part of the territory) of a Member State or by the legal nature of the participants. Design contests in the field of services and design contests with prizes for participants may be organised by:
- central government authorities starting from a threshold of EUR 130 000;
- other contracting authorities starting from a threshold of EUR 200 000;
- all contracting authorities starting from a threshold of EUR 200 000 where the contests concern certain services in the fields of RTD, telecommunications, hotels and catering, transport by rail and waterway, provision of personnel, vocational training, investigation and security, certain legal, social and sanitary, recreational, cultural and sporting services.
The contracting authority publishes a contest notice drawn up in accordance with the rules for public procurement procedures. The exchange and storage of information ensures the integrity and the confidentiality of data. The contracting authority examines the projects only after the time limit set for submitting them has expired.
The assessment criteria are clear and non-discriminatory, ensuring genuine competition. The jury shall be composed exclusively of independent natural persons. Where a professional qualification is required of participants in a contest, at least a third of the jury members shall have this qualification. The jury is autonomous in its decisions and examines the plans on the basis of the selection criteria. Anonymity must be observed until the jury has reached its final decision.
The awarding of contracts concluded in the Member States must comply with the principles of the free movement of goods, the right of establishment and the freedom to provide services. However, when public contracts exceed a certain amount, Community coordination of the national procedures for awarding these contracts is necessary in order to ensure maximum competition and full benefit to be made of the internal market.
|Act||Entry into force||Deadline for transposition in the Member States||Official Journal|
OJ L 134 of 30.4.2004
|Amending act(s)||Entry into force||Deadline for transposition in the Member States||Official Journal|
OJ L 323 of 9.12.2005
Regulation (EC) No 2083/2005
OJ L 333 of 20.12.2005
OJ L 363 of 20.12.2006
Regulation (EC) No 1422/2007
OJ L 317 of 5.12.2007
OJ L 216 of 20.8.2009
Regulation (EC) No 1177/2009
OJ L 314 of 1.12.2009
Regulation (EU) No 1251/2011
OJ L 319 of 2.12.2011
Successive amendments and corrections to Directive2004/18/EC have been incorporated in the basic text. This consolidated version is for reference purpose only.