Public Procurement in the European Union This page intentionally left blank Public Procurement in the European Union By Christopher Bovis © Christopher Bovis 2005 Softcover reprint of the hardcover 1st edition 2005 978-1-4039-3607-3 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2005 by PALGRAVE MACMILLAN Houndmills, Basingstoke, Hampshire RG21 6XS and 175 Fifth Avenue, New York, N. Y. 10010 Companies and representatives throughout the world PALGRAVE MACMILLAN is the global academic imprint of the Palgrave Macmillan division of St. Martin’s Press, LLC and of Palgrave Macmillan Ltd. Macmillan® is a registered trademark in the United States, United Kingdom and other countries. Palgrave is a registered trademark in the European Union and other countries. ISBN 978-1-349-51836-4 ISBN 978-0-230-50144-7 (eBook) DOI 10.1057/9780230501447 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Bovis, Christopher. Public procurement in the European Union / by Christopher Bovis. p. cm. Includes bibliographical references and index. 1. Government purchasing–Law and legislation–European Union countries. 2. Public contracts–European Union countries. I. Title. KJE5632.B687 2005 346.2402′3–dc22 2005042933 10 9 8 7 6 5 4 3 2 1 14 13 12 11 10 09 08 07 06 05 to Pine for taking care of business This page intentionally left blank Contents Cases before the European Court of Justice xiii Foreword xix Introduction 1 The emergence of public markets and their interface with 1 the common market The public policy dimension in public procurement 5 Regionalism and public procurement 6 The industrial policy potential in public procurement 9 Public procurement and defence 10 Chapter 1 European Integration and Public 14 Procurement Introduction 14 Public procurement as a component of the common market 14 The conceptual elements of public procurement regulation 17 The evolution of public procurement regulation 23 Chapter 2 Public Procurement Regulation 33 Introduction 33 Part 1 The legal regime on public procurement 33 The supplies procurement 33 The works procurement 35 Utilities procurement 38 Procurement of services 42 Enforcement and compliance: The Compliance Directives 45 The WTO Government Procurement Agreement 46 Part 2 Definitions and the mechanics of public 49 procurement regulation The concept of contracting authorities 49 The principle mandatory advertisement and publication of 50 public contracts The monetary applicability of the Public Procurement 52 Directives Selection and qualification criteria 54 vii viii Contents Legal requirements for the qualification of contractors 56 The list of recognised contractors 56 Part 3 The award of public contracts 58 Tendering procedures 58 The award criteria 61 Framework agreements 64 In-house contracts and contracts to affiliated undertakings 65 Design contests 65 Concession contracts 66 The award of public housing schemes 66 Socio-economic considerations 67 Employee protection and transfer of undertakings 68 Environmental considerations as award criteria 69 Chapter 3 Lessons from Jurisprudence 71 Introduction 71 Part 1 The European Court of Justice and Public 72 Procurement The principle of non-discrimination 72 Technical standards 72 Selection and qualification 73 Preference purchasing schemes 76 The principle of objectivity 78 Award procedures 78 Award criteria 79 Part 2 The emerging themes 82 The public nature of public procurement 82 The functional dimension of contracting authorities 83 Bodies governed by public law 85 The dependency test 85 Commerciality and needs in the general interest 88 The dual capacity of contracting authorities 91 The connection of contracting authorities with private 92 undertakings Procurement as a policy instrument 95 Social considerations as award criteria 95 Transfer of undertakings and public procurement 98 Environmental considerations as award criteria 99 Chapter 4 Public Procurement as Economic and 100 Policy Exercise Introduction 100 Contents ix The new approach towards the integration of public markets 101 A neo-classical perspective to public procurement regulation 106 The distinctiveness of public markets 106 Procurement regulation as an economic exercise 107 Anti-trust and public procurement regulation 111 The ordo-liberal approach to public procurement regulation 112 Public procurement as part of the European Integration 113 Contract compliance and public procurement 115 A rule of reason 117 Inherent dangers in the regulation of public procurement 121 Chapter 5 A Critical Assessment of Public Procurement 124 Introduction 124 Inherent shortcomings in the public procurement rules 125 The dimensionality of public procurement 125 The effects of the principle of transparency 128 The abuse of award procedures which may restrict competition 130 Public monopolies 134 Standardisation and specification 136 Reluctance in initiating litigation 137 Public procurement and the sustainability of certain industries 139 Chapter 6 The New Public Procurement Regime 145 Introduction 145 Part 1 The new concepts in public procurement 146 regulation The Codified Public Supplies, Works and Services Directive 146 A thematic analysis of the new concepts in procurement 148 Eligibility of bodies governed by public law to tender 148 Joint and centralised procurement 149 A new award procedure: the competitive dialogue 150 Framework procurement 153 Electronic procurement 155 Electronic auctions 157 The use of electronic signatures 160 Public procurement and the environment 160 Procurement and employment 162 Public procurement and WTO 163 Procurement and culture 164 Procurement, small and medium enterprises and 164 subcontracting Contractual performance and public procurement 164 Procurement and probity 165