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IP/11/600

Brussels, 19 May 2011

Public procurement: The Netherlands agrees to apply EU rules for land development projects in Ede and for public contracts for fire insurance

The European Commission has welcomed The Netherlands' compliance with EU public procurement rules in two cases, one concerning real estate development in the municipality of Ede and the other concerning Dutch authorities' practices when awarding public contracts for fire insurance. Following the pursuit of infringement cases by the Commission, the Dutch authorities have now agreed to correctly apply EU public procurement rules, so that the public contracts are awarded in a fair and transparent manner and are open to all interested companies in the EU. Meanwhile, Dutch taxpayers can now be assured that these contracts will be awarded on the basis of best value for money. The Commission has therefore closed the infringement cases in question.

What is the aim of the EU rules in question?

Public procurement is about how public authorities spend public money. It covers purchases of everything from paper 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.

Land development in Ede

The Commission opened an infringement procedure because the Dutch municipality of Ede awarded several contracts for the land development project "Het Nieuwe Landgoed" to one developer, without having carried out a pan-European tender procedure. The contractor was to develop a centre for commercial and social use, including a sports hall, as well as approximately 1 168 parking spaces and 648 houses, including 60 for social housing. The total value of the contracts was approximately €140 million.

The Commission considered that the contracts concerned were public works contracts and a public works concession and as such should have been awarded following the publication of contract notices in the EU Official Journal and the completion of a tendering process. The Commission was therefore of the opinion that in the absence of such a tendering process, The Netherlands had failed to fulfil its obligations under EU public procurement rules.

As a result of the Commission's reasoned opinion (see IP/10/1233) the Dutch authorities decided to annul those contracts relating to the development of the sports hall and the parking spaces. In addition, the building obligations for the development of the houses and the centre for commercial and social use were removed from the contract. In this way, the revised contract now solely concerns the sale of land and not works. Consequently, the contract should In the light of the Helmut Müller judgment of the Court of Justice (Case C-451/08), not be considered to be a public works concession anymore. A similar infringement case on land development in the Dutch municipality of Eindhoven is currently pending before the EU's Court of Justice (see IP/10/679).

Fire insurance contracts

The Commission opened an infringement procedure because in The Netherlands there was a general administrative practice of awarding public contracts for fire insurance by means of a negotiated procedure with publication of a contract notice. Although such a procedure is in principle open to all interested candidates, the fact that negotiations take place between the public authorities and the individual bidders entails significantly higher risks for the equal treatment of bidders than the open or restricted procedure – the standard procedures under EU law. Furthermore, the negotiated procedure is much less transparent.

EU public procurement rules allow contracting authorities to use the negotiated procedure only in exceptional cases. The generalised use of this procedure in the field of fire insurance is, according to the Commission, not in line with these rules.

Furthermore, the Commission noted that the Dutch authorities did not publish all the required information in the contract award notice in the EU Official Journal, such as the name of the company to whom the contract was awarded as well as the total value of the contract. The Commission considered this makes the public procurement market less transparent.

After the Commission's reasoned opinion (see IP/10/1233) the Dutch authorities publicly clarified that they consider this general administrative practice to be in violation of the EU public procurement rules. The Dutch contracting authorities are now to apply the correct procedures and indicate all the relevant information in the contract award notices in the EU Official Journal.

How will citizens and business now benefit?

The public contracts in question are now to be awarded in a transparent manner, and are open to all interested companies in the EU. As a result, taxpayers in The Netherlands can be assured that these contracts will be awarded on the basis of best value for money.

More information

Public procurement:

http://ec.europa.eu/internal_market/publicprocurement/index_en.htm

Latest information on infringement proceedings concerning all Member States:

http://ec.europa.eu/community_law/index_en.htm

For more information on EU infringement procedures, see MEMO/11/312


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