Brussels, 20 November 2009
Public contracts: Commission refers Germany to Court of Justice over waste disposal service contracts awarded by city of Rostock
The European Commission has decided to refer Germany to the European Court of Justice over the conclusion of a waste disposal service contract in 1998 with a contract period of 25 years and a contract value of approximately 150 million Euros between the city of Rostock and a mixed undertaking, and the amendment of that contract in 2004. Furthermore, the case also concerns the conclusion of an agreement in 2007 with a mixed undertaking concerning the provision of waste collection, treatment, recycling and street cleaning services with an annual contract value of 10.8 million Euros per year. All these contract awards or modifications have been carried out without the execution of tender procedures.
The award of service contracts to mixed undertakings or the amendment of such contracts containing essential contract modifications require the execution of tender procedures pursuant to the EU public procurement directives.
Germany has acknowledged the violations but the illegally awarded contracts are still being executed. For this reason the case is referred to the Court of Justice.
Total public procurement in the EU – i.e. the purchases of goods, services and public works by governments and public utilities – is estimated at about 16% 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.
Under the EC Treaty, 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 rules. 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 further compliance with EU legislation is needed, the Commission sends 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 European 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.
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