Brussels, 30 September 2010
Public procurement: Commission refers Greece to Court over award procedures for urban planning contracts
The European Commission has decided to refer Greece to the Court of Justice over the direct award of public service contracts for cadastral mapping and planning services by the municipalities of Vasilika, Kassandra, Egnatia and Arethousa. The Commission considers that Greece has failed to fulfil its obligations under EU public procurement rules. The aim of these rules is to ensure fair and transparent competition for public contracts in Europe, thereby creating opportunities for European companies while ensuring best value for public money. The Commission sent a reasoned opinion – the second stage of the infringement procedure - to Greece in November 2009 asking it to comply with EU law (see IP/09/1751). Despite reassurances by the Greek authorities that the infringement would be remedied, no compliance measures have been taken so far. The Commission has now decided to take the case to the Court.
What is the aim of the EU rules in question?
Public procurement is about how public authorities spend public money. It covers works, services and supplies. Total public procurement in the EU is estimated at about 17% of the Union’s GDP. The open and transparent tendering procedures required under EU public procurement rules mean more competition, stronger safeguards against corruption and better service and value for money for taxpayers.
How is Greece not respecting these rules?
The municipalities of Vassilika, Kassandra, Egnatia and Arethousa directly awarded six public service contracts for cadastral mapping and urban planning purposes to one and the same company. After some time, the scope of these contracts was re-negotiated, which ultimately led to the company providing more services for the municipalities than were foreseen under the original contracts. As a result, the total value of the contracts increased significantly. For example, one of the initial contracts awarded by the municipality of Vassilika in 2004 was worth approximately € 1.7 million, but following re-negotiations increased to € 3.7 million – an increase of more than 100%. Another contract that was awarded by the municipality of Egnatia in 2002 was worth € 440 000, but after re-negotiations shot up to € 1.3 million – an increase of more than 200%. Value increases of contracts by up to 300% were not uncommon.
In the Commission's view, the contracts were so substantially modified that the authorities should have awarded new contracts following an open or restricted procedure - which is the standard under EU public procurement rules. As this did not happen, and no prior publication of a contract notice was published, the Commission consider the Greek authorities in breach of EU rules and the conclusion of these contracts unlawful.
How are EU citizens and/or businesses suffering as a result?
As the contracts were directly awarded to the same company, no contract notices were published or transparent procedures were launched. This meant that other interested companies, be they Greek or elsewhere from the EU, were precluded from participating. By re-negotiating the contract while substantially modifying it, the authorities did not only disrespect the principles of transparency and equal treatment that are enshrined in the EU public procurement rules, but also may have lead to a waste of taxpayers' money.
Latest information on infringement proceedings concerning all Member States
For more information on infringement procedures, see MEMO/10/457.