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Brussels, 3rd December 2003

Public procurement: Commission welcomes conciliation agreement on simplified and modernised legislation

The European Commission has welcomed the agreement reached in Brussels on 2nd December by representatives of the European Parliament and the EU's Council of Ministers, after a successful conciliation procedure, on the legislative package simplifying and modernising the public procurement Directives. The Directives impose competitive tendering for public contracts, transparency and equal treatment for all tenderers to ensure that the contract is awarded to the tender offering best value for money. The package of amendments was proposed by the Commission in May 2000 (see IP/00/461). The main point at issue was the circumstances in which contracting authorities could take social and environmental criteria into account in attributing contracts. This has now been resolved, on the basis of recent case law from the European Court of Justice. Conciliation procedures take place when the European Parliament, the Council and the Commission have been unable to reach full agreement on a Commission legislative proposal but where enough common ground exists to suggest that such agreement might be achievable. The agreement reached by the conciliation committee will now need to be ratified by a plenary session of the Parliament and by the Council.

Internal Market Commissioner Frits Bolkestein said: "Europe needs these reforms of public procurement rules and I trust the agreement will now be endorsed by the Parliament and the Council. Public procurement accounts for around 14% of the Union's GDP, so modernising it and opening up procurement markets across borders is crucial to Europe's competitiveness, to giving taxpayers high quality and good value for money and to creating new opportunities for EU businesses. The compromise reached over award criteria is an acceptable one which allows national authorities to use appropriate and objective environmental and social criteria transparently for the public good, without creating scope for arbitrary and unfair contract awards based on issues unconnected with the works or services to be provided."

Objectives of the legislative package

The legislative package, which was based on extensive consultations with contracting authorities and businesses, has two main objectives. The first is to simplify and clarify the existing Directives. The second is to adapt them to modern administrative needs, for example by facilitating electronic procurement and, for complex contracts, by introducing more scope for dialogue between contracting authorities and tenderers in order to determine contract conditions. The package also excludes telecommunications, a sector now subject to effective competition, from the scope of the legislation.

With the objective of enhancing transparency in the award process and of combating corruption and organised crime, the legislative package also includes measures designed to make for greater clarity in the criteria determining the award of the contract and the selection of tenderers. It was principally over some of these measures and in particular the ways in which social and environmental criteria can be taken into account, that the conciliation procedure was necessary.

Social and environmental criteria

The text agreed takes current law as interpreted by the Court of Justice in particular in the "Finnish buses" case (C/513/99, see European Court of Justice press release CJE/02/73) as its starting point. The Court ruled that the contracting authority must award a contract to the tenderer whose tender is the most economically advantageous, but that it may nevertheless take environmental criteria (in the Finnish buses case, exhaust emissions and noise levels) into account when deciding which bids to take into consideration (i.e. the awardcriteria), provided that those criteria are expressly mentioned in the contract documents or the tender notice, are connected with the subject-matter of the contract, do not give the contracting authority an unrestricted freedom of choice, and comply with all the fundamental principles of Community law, in particular the principle of non-discrimination.

The text would also allow contracting authorities to require specific environmentally friendly production methods - such as organic production for foodstuffs for schools.

Under the compromise text agreed, similar conditions would be attached to the use of social criteria in practice, that would mean, for example, that contracting authorities could take into account, for the construction of a public building, accessibility criteria for people with disabilities. In addition the text provides the possibility of reserving contracts for sheltered workshops or sheltered employment programmes for disabled people

The text would allow companies who have not complied with EU legislation in economic, social or environmental fields to be excluded from tendering processes.

Electronic signatures

The text agreed encourages the use of electronic signatures and allows Member States to require that electronically transmitted tenders be accompanied by the electronic equivalent of handwritten signatures, that is, a "qualified electronic signature". The integrity of data and the confidentiality of tenders are provided for elsewhere in the Directives and do not depend on the choice of whether to require electronic signatures and in which form.

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