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

07.01.2022 NL law
FAQ: Gevolgen van het Didam-arrest voor de verkoop van onroerende zaken door overheden

Short Reads - In het 'Didam'-arrest van 26 november 2021 (ECLI:NL:HR:2021:1778) heeft de Hoge Raad geoordeeld dat overheden bij de verkoop van grond gelegenheid moeten bieden aan (potentiële) gegadigden om mee te dingen. Dat betekent dat overheden niet zonder meer vrij zijn om grond te verkopen aan een partij naar keuze. Overheden moeten gelijke kansen bieden bij uitgifte van grond. In dit blogbericht bespreken wij in FAQ-vorm het arrest en gaan wij in op de praktische betekenis van dit arrest voor de praktijk.

Read more

02.12.2021 NL law
Google Shopping: self-preferencing is a form of abuse of dominance

Short Reads - On 10 November 2021, the General Court (GC) almost entirely dismissed Google’s action against the European Commission’s Google Shopping decision. According to the European Commission (the Commission), Google illegally favoured its own comparison shopping service by displaying it more prominently in its search results than other comparison shopping services (see our July 2017 Newsletter). The Commission found that Google was abusing its dominant position and imposed a EUR 2.42 billion.

Read more

02.12.2021 NL law
Back to the future – Commission publishes roadmap for green and digital challenges

Short Reads - The Commission’s Communication “A competition policy fit for new challenges” (link) (the “Communication”) identifies key areas in which competition law and policy can support European efforts in dealing with the challenges of the green and digital transitions. The document covers all areas of competition law (antitrust, merger control, and State aid) and identifies various ways in which new and existing tools can contribute to addressing these challenges.

Read more