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Brussels, 18 March 2010

Public procurement: Commission requests Austria and Germany to review award of contracts for food supply to Upper Austrian hospitals and for waste disposal in Wesermarsch (Lower Saxony)

The European Commission has acted to ensure that EU rules on public procurement – the spending of public money by public authorities – are respected in Austria and Germany. Austria will receive a formal request to review contracts for the supply of fresh food to Upper Austrian hospitals. Germany will receive a formal request concerning the award of services for the disposal and recovery of waste by the Administrative District (Landkreis) of Wesermarsch. The breaches of EU public procurement rules in question mean that the bidder offering the best value for money is potentially being denied access to these contracts. These two formal requests take the form of 'reasoned opinions', the second stage of the infringement procedure under Article 258 of the EU Treaty. If there is no satisfactory reply within two months, the Commission may refer the matters to the Court of Justice.

Public procurement is about how public authorities spend public money. It covers purchases of everything from paper clips 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 law mean more competition, stronger safeguards against corruption, and better service and value for money for taxpayers.

Austria – food supply to Upper Austrian hospitals

In 2008 and 2009, the Upper Austrian 'Health and hospitals' company ("gespag" AG) conducted tender procedures for the conclusion of framework agreements on the supply of fresh food to the public hospitals run by gespag. In the Commission's view, these tender procedures did not respect the standards of European public procurement law. The duration of the framework agreements as well as certain requirements concerning evidence for the qualitative selection are not in line with the rules of EU public procurement Directive 2004/18/EC. Also, the direct award of two lots for supply of milk to hospitals close to the border did not comply with EU principles of transparency and non-discrimination.

Germany – waste disposal in Wesermarsch (Lower Saxony)

In 1997, the Landkreis of Wesermarsch (Lower Saxony) directly awarded a disposal contract with a duration of more than 14 years to a mixed undertaking held by the Landkreis and a private disposal undertaking. In 2007 the Landkreis directly awarded bio-waste recovery services with an annual contract value of approximately EUR 580,000 to the same mixed undertaking. EU public procurement rules have not been respected for both contract awards, as EU-wide tender procedures were not carried out.

The German authorities defended this by claiming that in 1997 it was not intended to violate procurement law and that the award of the bio-waste disposal services in 2007 was covered by the contract of 1997. These justifications from the German authorities are not convincing. Lack of knowledge concerning the existence of an EU law violation in 1997 cannot excuse such violation. The award of new services in 2007 should have been carried out in accordance with the provisions of the public procurement Directives, also if these services are executed in the framework of the existing contract of 1997, which furthermore has been concluded in violation of EU law.

About infringement procedures

The European Commission has powers to take legal action – known as infringement procedures – against a Member State that is not respecting its obligations under EU law. These procedures consist of three steps. The first is that the Member State receives a letter of formal notice and has two months to respond. In case the Member State does not entirely comply with EU legislation, the Commission can send a reasoned opinion. Again the Member State has two months to reply. If there is no satisfactory reply, the Commission can refer the matter to the Court of Justice in Luxembourg. It can also request that the Court impose a fine on the country concerned if it does not comply with the Court's ruling.

More information

Public procurement:

Latest information on infringement proceedings concerning all Member States:

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