Compliance with the Public Procurement Directives

Introduction

Public procurement, the process by which public contracts are awarded by state, local, regional or municipal authorities or public bodies is a hugely significant area of economic activity. Ireland is presently going through a massive period of infrastructural expansion. The National Development Plan was published in 1999. The latest estimate, factoring in the costs of inflation, suggests that it could cost in the region of €75 billion if it is fully implemented. High profile projects include the various road projects, the Luas project, the mooted Metro project and the like.

The Directives

The Directives, which constitute the framework for the application of EU law to the Public Procurement process, are as follows: -

• Council Directive 93/36/EEC (the Supplies Directive).
• Council Directive 93/37/EEC (the Works Directive).
• Council Directive 92/50/EEC (the Services Directive).
• Council Directive 93/38/EEC (the Utilities Directive).

The Remedies Directives

In support of these Procurement Directives, there are two Directives, which specifically deal with remedies called "the Remedies Directives": -

• Council Directive 89/665/EEC governs the procedures for reviewing the awards of contracts under the Supplies Directive, the Works Directive and the Services Directive.
• Council Directive 92/13/EEC governs the rules applicable to the review of procedures under the Utilities Directive.

Both these Remedies Directives have been implemented into Irish law by SI No. 309/1994 and SI No. 104/1993.

Typical Breaches

So what are the problems that give rise to alleged breaches of the public procurement rules contained in these Directives? Breaches can be deliberate or they can be inadvertent. Here are some typical examples of the type of problems that have arisen over the years: -

• Deliberate splitting of contracts so as to defeat the relevant applicable threshold;
• Failure to supply interested parties with full and accurate information;
• Inclusion of discriminatory requirements in the tender documentation;
• Failure to comply with the relevant advertising rules for the various award; procedures;
• Failure to comply with the technical rules;
• omitting to refer to accepted European standards;
• discriminatory application of national standards so as to favour national suppliers. In this instance, one of the most important ECJ cases is a decision that dates from 1988 in the case; Commission -v- Ireland (the Dundalk Pipeline");
• Failure to comply with the selection rules;
• Failure to comply with the contract award rules.

The latter failure perhaps constitutes one of the most significant problems. Issues that have arisen include: -

• The discriminatory use of the criterion of the most economically advantageous tender as opposed to lowest price;
• Improper negotiation in the course of the open or restricted procedures;
• Use of award criteria not published to interested parties;
• Substantial amendments to the contract documentation post-tender, with the effect that certain tenderers were eliminated;
• The use of non-objective or transparent evaluation criteria;
• The failure to properly comply with the procedures for dealing with abnormally low tenders;
• The misuse of the concept of unacceptable tenders.

The Irish Experience

As stated in the introduction to this paper, the public procurement marketplace in Europe is enormous and growing. In the Irish economic context, it is hugely significant. It is fair to say that by and large, the application of the public procurement rules in Ireland has largely speaking, been satisfactory.

Monitoring of proper compliance with the Directives by the national courts and at an EU level is at best, haphazard. Many of the infringements of the public procurement rules that have been complained of over the years result from a poor knowledge of the applicable rules. It is imperative that public authorities engaged in the award of public contracts which fall within the remit of the various Directives and which are of a value above the relevant threshold, properly comply with the procedures laid down in the Directives.

In the Irish context, particularly because of the size of the collective procurement budgets year on year, it is important to ensure that the public procurement process is opened up to the greatest extent possible, so that the SME sector can participate to the greatest extent possible.

In a recent study publicised in the Irish Times, a Trinity College economist was reported as suggesting that greater efficiencies needed to be created in the public procurement sector in Ireland and that greater competition is needed to maximise efficiencies. The more people that are aware of public procurement opportunities, the greater the scope for ensuring an effective competitive process.

Again, it is fair to say that Ireland's record, quite apart from any criticisms that might be levied on the grounds of economic inefficiencies, is reasonably good. Recent initiatives, such as the establishment of the dedicated government procurement portal www.e-tenders.gov.ie point to the continuing commitment of the public sector to publicise as widely as possible, procurement opportunities within Ireland as they arise.

Conclusions

Clearly, in an EU wide context, there is room for improvement, especially with regard to measures that can be adopted to improve the participation of SME's in public procurement opportunities. There are a number of EU initiatives in this regard, which seek to promote measures such as: -

• The promotion of partnership between SME's in different regions of the EU to foster their participation on a reciprocal basis in public contracts;
• The improvement of the information flow and to this end, the Irish Government procurement portal initiative is to be commended;
• The provision of technical, legal and linguistic assistance in the preparation and processing of tenders and in the admission to purchasing authorities pre-qualification lists;
• The provision of specialised public procurement training;
• The provision of promotional and awareness raising activities throughout the EU.

For further information or general enquiries contact: -
Patrick Ryan
Email: pryan@kilroys.ie  
Telephone: +3531-439 5600
Fax: +3531-439 5601/439 5602

© Kilroys Solicitors August 2002