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Brussels, 28 October 2010

Public procurement: Commission refers the Czech Republic to the EU Court of Justice for not complying with EU rules in the purchase of military transport aircraft

The European Commission has today acted to ensure fair access to public contracts by referring the Czech Republic to the Court of Justice for not complying with its obligation to award public supply contracts on the basis of public tenders. The Commission is concerned that the Czech Republic has breached EU public procurement rules by not opening up a public contract for four military tactical transport aircraft to EU-wide competition. EU public procurement rules are designed to ensure fair competition for public contracts in Europe, thereby creating opportunities for European companies while ensuring best value for public money. If the rules are not respected, there is a risk of a closed market and waste of public money. The Commission sent a reasoned opinion – the second stage of the infringement procedure - to the Czech Republic in May 2009 (IP/10/501) asking it to comply with the EU law. As no satisfactory reply was received, the Commission has decided to take the case to the Court.

What is the aim of the EU rule in question?

Public procurement is about how public authorities spend public money. It covers purchases of everything from coffee to computer systems, waste water plants, ship building or consulting services. 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 the Czech Republic not respecting these rules and why are citizens and business suffering as a result?

According to the European public procurement Directive 2004/18/EC, public contracts above certain values must be awarded on the basis of an EU-wide tender procedure. However, the Directive provides for an exemption from this obligation in cases where the contracting authority buys specific military material. A public tender would then put the essential security interests of the relevant Member State at risk.

In April 2008, the Czech Ministry of Defence directly awarded a public supply contract worth €132 million for four military tactical transport aircraft of the type CASA-295M without organising a tendering procedure. The Czech authorities considered that no public tendering procedure would be necessary as the aircraft would be used mainly for Czech Republic military missions, i.e. for the protection of essential security interests of the State.

However, a Member State cannot automatically deviate from standard public procurement rules when procuring military equipment. It has to demonstrate that the tendering procedure as such would present a risk for its essential security interests. In the Commission's view, the Czech Republic has so far failed to demonstrate why a public tender for unarmed transport aircraft would pose a risk for its essential security interests. By awarding the contract without a proper tender procedure, the Commission considers the Czech Republic to have prevented competition on the European market and may have wasted taxpayer's money.

More information

Public procurement:

Latest information on infringement proceedings concerning all Member States:

For more information on EU infringement procedures, see MEMO/10/530.

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