Articles

Third country bids in EU procurement: always excluded?

Third country bids in EU procurement: always excluded?

Third country bids in EU procurement: always excluded?

12.11.2019 EU law

The European Commission recently issued guidance on the participation of third country bidders in public procurement. It clarified bids may be excluded, but remains silent on whether they may be accepted and under which conditions. The Commission is of the opinion that contracting authorities or entities can exclude bids if no access is secured. However, it does not discuss if and under which conditions contracting authorities or entities can allow foreign bids if no access is secured.

The European Commission recently issued guidance on the participation of third country bidders in public procurement. It clarified bids may be excluded, but remains silent on whether they may be accepted and under which conditions. 

Commission guidance on the participation of third country bidders and goods

On 24 July 2019 the European Commission issued a communication on public procurement and the participation of third country bidders to address the lack of level playing field between EU and non-EU bidders, goods and services. Non-EU bidders are not necessarily bound by the same, or equivalent, environmental, social or labour standards as those applicable to EU bidders. Therefore, the Commission aims to stimulate contracting authorities or entities to apply public procurement more strategically to foster innovation, sustainability, green procurement etc. To this end it provides guidance on tools for contracting authorities or entities to ensure such strategic goals when dealing with third country participation. The Commission discusses the ability to reject abnormally low tenders and to insert quality standards (applicable to all bids alike, foreign or not), as well as the access of third country bidders to the EU procurement market.

The guidance stresses that the EU has granted access to its procurement market under international agreements such as the Agreement on Government Procurement (GPA) and bilateral free trade agreements. Moreover, the Public Contracts Directive and the Utilities Directive require equally favourable treatment to EU and non-EU works, supplies, services and economic operators to the extent an international agreement covers the procurement. 

The guidance emphasises that economic operators from third countries or foreign goods and services have no secured access to EU procurement procedures outside the scope of these abovementioned international agreements. This may according to the guidance result in exclusion. 

This way, the Commission appears to indicate that contracting authorities or entities have the right but not the obligation to reject foreign bids if access is not secured. Nevertheless, the guidance does not explicitly confirm that such foreign bids can be allowed. 

EU International Procurement Instrument

In previous documents, the Commission did not expand on this question either. The Commission’s proposal for an international procurement instrument (IPI), would provide for a price penalty whenever there is a substantial lack of reciprocal opening of public procurement access in the originating country. In essence, this proposed regulation would allow the Commission to investigate the access that EU economic operators have to the procurement market of a third country. If the Commission established disadvantageous treatment of EU goods, it could request the third country to open up its procurement market. If unsuccessful, a 20% price penalty could be imposed for the evaluation of the bids from this third country (article 8). Importantly, the proposal would also prevent member states and contracting authorities or entities to restrict access beyond the price penalty (article 1.5). It would thus prevent more restrictive measures, such as an exclusion. Interestingly, a previous version of the proposal explicitly allowed exclusion under certain circumstances as an alternative course of action (article 6). 

The IPI proposal has been dormant since 2016. However, in early 2019 the Commission urged Council and Parliament to continue the legislative process, and to adopt the IPI before the end of 2019. Progress would appear more likely now since several Member States (Germany, France, Spain) have indicated that their position has changed. 

In any case, the IPI proposal does not discuss the question whether contracting authorities or entities could allow foreign bids and under which conditions. 

Conclusion

In conclusion, the Commission is of the opinion that contracting authorities or entities can exclude bids if no access is secured. This is at least the case as long as the IPI proposal is not adopted which would prevent more restrictive measures than the 20% price penalty. 

However, both the recent Commission guidance and the IPI proposal do not discuss if and under which conditions contracting authorities or entities can allow foreign bids if no access is secured. 

Team

Related news

24.09.2020 BE law
Stibbe hosts a webinar on dawn raids organised by IBJ/IJE

Seminar - On 24 September 2020, several Stibbe lawyers ​​​​​explain the rights and obligations of companies when confronted with announced or unannounced raids. What do to when, for example, tax authorities, the competition authorities, police services or a bailiff are at your doorstep?

Read more

03.09.2020 NL law
Home, but not alone: Commission may complete dawn raids from home

Short Reads - The European Court of Justice (ECJ) has rejected Nexans’ appeal in the power cables cartel case. The Commission started the dawn raid at Nexans’ premises, but due to lack of time finished the raid at the Commission’s premises in Brussels. The ECJ found that the Commission can copy data and assess its relevance to the investigation at its own premises, while safeguarding companies’ rights of defence.

Read more

03.09.2020 NL law
COVID-19 impacts level and payment of antitrust fines

Short Reads - As well as granting companies leeway on certain COVID-19 initiated collaborations (see our May 2020 newsletter), the coronavirus outbreak has also led competition authorities to take a more lenient stance towards fine calculations and payments. The European Commission has extended the due date for fine payments by an additional three months in response to potential short-term liquidity issues brought about by the pandemic. Similar reasons led the Dutch Trade and Industry Appeal Tribunal to reduce a EUR 1 million cartel fine to just EUR 10,000.

Read more

03.09.2020 NL law
The ACM’s Green Deal: achieving sustainability via competition law?

Short Reads - The ACM has issued draft guidelines on the application of competition law to sustainability agreements. Companies entering into agreements that restrict competition but contribute to governmental sustainability objectives – i.e. lower CO2 emissions – may expect more room for collaboration. The proposed framework would allow these types of agreements if their anti-competitive effects are outweighed by their environmental benefits to society as a whole (rather than to in-market consumers only, as under the existing framework).

Read more

02.07.2020 NL law
European Commission to pull the strings of foreign subsidies

Short Reads - The European Commission is adding powers to its toolbox to ensure a level playing field between European and foreign(-backed) companies active on the EU market. On top of merger control and Foreign Direct Investment screening obligations, companies may also need to account for future rules allowing scrutiny of subsidies granted by non-EU governments if those subsidies might distort the EU Single Market.

Read more