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Brussels, 5 May 2010

Public procurement: Commission closes infringement procedure against United Kingdom over land contract in York

The European Commission has decided to close a legal case against the United Kingdom concerning the award of a contract by City of York Council relating to the residential development of a piece of land known as "Osbaldwick". The initial contract did not comply with EU public procurement rules, meaning that an EU-wide tender process had not been undertaken and certain companies could have been denied the possibility to bid for the contract. The Commission started legal proceedings against the United Kingdom in order to have the contract reviewed. Now, the responsible authorities have recognised the need to follow EU rules and have reopened the contract to competition accordingly. Taxpayers can now be sure that the contract will be awarded to the company offering best value for money, while companies from all over the EU can now put in their bids for this important development.

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.

Contract for development of land in city of York

In 2002, City of York Council awarded a contract for the residential development of a piece of land known as "Osbaldwick" directly to a UK housing trust. The contract in question was a public works concession contract – where the contractor is paid in part by being given the right to exploit the development after it has been built. Under EU public procurement rules, this type of contract should have been awarded following an EU-wide tender process.

After the Commission formally requested the United Kingdom to change the procedures followed (in the form of a "reasoned opinion" under EU infringement procedures - see IP/09/1000, the UK authorities took the appropriate measures in order to reopen the contract to competition. This means that the project will not be realised on the basis of the original concession contract, but instead will be carried out in four distinct phases. The UK provided its commitment that the contract for each construction phase of the development will be awarded following a separate, open and transparent tendering process, in full compliance with EU law. In this way commercially attractive opportunities will be created for a wide range of potentially interested developers, with a positive impact on the region in terms of economic growth and employment.

In addition, the UK has put in place measures aimed at ensuring that these issues will not arise in future projects. To this end, it has published guidance on how public procurement rules apply to the award of concession contracts for land development. This gives the additional guarantee that in future, contracting authorities across the UK will comply with EU law in this area.

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Latest information on infringement proceedings concerning all Member States:

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