Out-Law News 2 min. read
27 Mar 2012, 2:01 pm
A new draft Regulation (30-page / 102KB PDF) will increase the incentives for the EU’s international trading partners to open up their public procurement markets to European bidders as well as ensuring that EU companies can compete with foreign companies within the internal market on an equal footing. It also includes measures which will penalise international governments which restrict access to tenders to European companies.
The proposals include a mechanism allowing the Commission to “restrict access to the EU market” if a country outside the EU does not take action to address market imbalances affecting European bidders. In the event of "repeated and serious discrimination", the Commission will have the power to conduct investigations into suspected discriminatory procurement practices by particular countries against European suppliers and, where necessary, take targeted action restricting that country's companies from bidding on EU contracts in a particular sector.
In addition, the Commission may allow individual EU contracting authorities to exclude tenders made up of a “significant part of foreign goods and services” for contracts with an estimated value above €5 million, where these contracts are not covered by existing international agreements. Member states will need prior approval from the Commission before they can reject these bids, and no discrimination against foreign bidders will be allowed for contracts below this value.
Public procurement represents up to 19% of European GDP, according to Commission figures. However, only a quarter of the world’s procurement market is open for international competition despite the equivalent “traditionally very open” European procurement market, the Commission said.
“The EU should no longer be naive and should aim for fairness and reciprocity in world trade,” Michel Barnier, Internal Market Commissioner said. “Our initiative builds on Europe’s belief that the opening up of public procurement generates benefits at global and European levels.”
He added that Europe was “ready to open up more” - but only if its companies were able to compete on an equal footing with their competitors. “The Commission will remain vigilant in the defence of European interests and European companies and jobs,” he said.
The Commission denied that the draft Regulation was intended to be “protectionist” in nature. “It is not the EU which has a closed market; it is third countries which have closed markets. The initiative confirms that the EU public procurement market is fundamentally open,” a statement said.
It added that the Regulation “fully respected” the EU’s existing international commitments. The World Trade Organisation (WTO) Government Procurement Agreement (GPA) sets out an agreed framework of rights and obligations in respect of international government procurement, incorporating tender rules and certain market access commitments. In addition the EU has various Free Trade Agreements with countries including Mexico, Switzerland and Chile, which include procurement provisions.
The Regulation also contains measures designed to increase transparency in situations where public authorities intend to accept “abnormally low” tenders. Authorities will have to inform the other tenderers if they intend to do so and explain their reasons in order to increase the transparency of the procedure. A tender will be deemed abnormally low when the price charged to the contracting authorities appears to be too low in relation to the goods or services offered.
If approved by the Council and European Parliament, the proposals could come into effect in the second half of 2013.
