Brussels, 5 May 2010
Public procurement: Commission refers Netherlands to Court over contract award in Province of Noord-Holland
The European Commission has decided to refer the Netherlands to the Court of Justice over the award of a public contract for the supply and management of coffee machines by the Province of Noord-Holland. The Commission is concerned that the Netherlands has failed to fulfil its obligations under the 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 to the Netherlands in November 2009 asking it to comply with 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 Netherlands not respecting these rules?
The Province of Noord-Holland awarded a public contract for the supply and management of coffee machines through an open EU-wide tender procedure. The Commission was informed of the facts of this case in a complaint and launched an investigation. In the Commission's view, the award procedure did not meet the requirements of EU public procurement rules, in particular those relating to technical specifications, selection criteria and award criteria.
In terms of technical specifications, the Province requested bidders to supply tea and coffee with one or two specific labels, which is not allowed under the public procurement rules as it discriminates against certain bidders. Although the Province stated that it would accept comparable labels, it did not specify substantive criteria that could clarify to bidders when a label would be comparable. This situation was not transparent for competing companies.
With regard to the selection of bidders, the Province required the bidders, amongst others, to indicate what they do to make the coffee market more sustainable and how they contribute to environmentally, socially and economically sound coffee-production. However, the objective of such criteria is not to ensure that bidders have the necessary technical and professional capabilities to perform the contract, as would be required under EU public procurement rules, but rather inform the contracting authority about the general business policy of the bidders. Also, it was not clear how and according to which criteria the Province would assess the information submitted by the bidders. This was detrimental to the transparency of the tender procedure.
Lastly, the Province also breached the rules on award criteria. It used a criterion under which additional points are granted to tenders that offer ingredients (sugar, milk) that have a specific label or a comparable label. In the Commission's view, a contracting authority cannot use such an award criterion, since a label as such is not a criterion suitable to identify the economically most advantageous offer. The Province did not specify any substantive criteria in this regard, which again is not transparent for bidders.
How are EU citizens and/or businesses suffering as a result?
Offering public contracts in an unfair way leads to distortion of competition, discrimination of companies bidding for the contract and wasting taxpayers' money. Under these circumstances there is a risk that public authorities do not select the best bid and therefore do not get best value for money.
About infringement procedures
The European Commission has powers under Article 258 of the Treaty on the Functioning of the European Union (TFEU) to take legal action – known as infringement procedures – against a Member State that is not respecting its obligations under EU rules. These procedures consist of three steps. The first is that the Member State receives a letter of formal notice seeking information if the Commission has concerns that there may be a breach of EU law and has two months to respond. If the Commission's concerns about a breach of EU legislation are confirmed, the Commission sends a reasoned opinion requiring the Member State to comply with EU law within two months. If there is no satisfactory reply, the Commission can refer the matter to the Court of Justice in Luxembourg. If the Court rules against a Member State and the Member State does not comply with the Court's ruling, the Commission can also request that the Court impose a fine on the country concerned.
Latest information on infringement proceedings concerning all Member States: