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© OECD

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SIGMA Regional Conference

on Public Procurement

Legal protection in public procurement –

institutional models for the establishment of a

review system

Erika Bozzay, SIGMA/OECD

Beirut, Lebanon

3 June 2015

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Remedies

• legal actions

• available to economic operators participating in contract award procedures,

• which allow them to request the enforcement of their rights and public procurement regulations

• in cases where contracting authorities,

• either intentionally or unintentionally,

• fail to comply with the legal framework for public procurement.

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Importance of the review and remedies system

Effective remedies

allow irregularities occurring in procurement procedures to be challenged and corrected as soon as they occur,

(and as a consequence)

increase the lawfulness and transparency of public procurement procedures;

ensure fairness;

discourage illegal practices, incite for compliance and integrity of the procurement process;

generate trust in the system, build confidence among businesses as conditions for competition.

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A functioning review and remedies system

According to the EU and other international standards a functioning review and remedies system has to provide aggrieved tenderers with remedies, which must be

rapid,

effective,

transparent,

non-discriminatory, and

provided through an independent review body.

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A functioning review and remedies system

• available to any economic operator having an interest in obtaining a particular public procurement contract and who/whose interests being harmed by an alleged infringement

• clear and easy to use for economic operators

• effective in preventing and correcting unlawful acts of contracting authorities and economic operators

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EU legislative framework

• Directive 89/665/EEC for Public Sector

• Directive 92/13/EEC for Utilities sector

as “the Remedies Directives”

• Directive 2007/66/EC amending the Remedies Directives

• Treaty on the Functioning of the European Union

• Case law of the Court of Justice of the European Union

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What good procurement requires? Key requirements in SIGMA’s Principles:

1. Public procurement is regulated by duly enforced policies and procedures that reflect the principles of the Treaty on the functioning of the European Union and the European Union acquis, and are supported by suitably competent and adequately resourced institutions.

2. In case of alleged breaches of procurement rules, aggrieved parties have access to justice through an independent, transparent, effective and efficient remedies system.

3. Contracting authorities are adequately staffed and resourced and carry out their work in accordance with applicable regulations and recognised good practice, interacting with an open and competitive supply market.

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Principle 12

The remedies system is aligned with the acquis standards of independence, probity and transparency and provides for rapid and competent handling of complaints and sanctions.

(+7 sub-principles)

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Sub-principles

1. The procurement legislation lays down the mechanisms and institutional set-up for handling complaints in compliance with the European Union Directives, and covers both public contracts and concessions.

2. The acquis mechanisms for ineffectiveness of the contract and the imposition of penalties are transposed into the national legislation.

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Sub-principles

3. Due consideration is given to achieving the main goals of public procurement (particularly value for money through open, transparent and non-discriminatory competition), as opposed to focusing on purely formal errors and omissions, especially those that do not impact on the outcome of the procurement process.

4. The review and remedies system provides speedy, effective and competent handling and resolution of complaints and sanctions, including comprehensive publication of judgements and their rationale.

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Sub-principles

5. The review and remedies system is easily available to economic operators, without discrimination and excessive cost.

6. The review organisation handles complaints and sanctions in a timely manner, in accordance with the law, and ensures their effective and competent resolution.

7. Data on the functioning of the remedies system is published without delay.

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Review and remedies system in the EU Member States

• EU Member States are left to decide on the choice of administrative and legal solutions for organising the review system

• a variety of models in EU Member States:

• Regular courts (civil or administrative courts);

• Specialised administrative bodies;

• A combination of the two.

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Institutional models: Courts

• In half of the Member States (14) the review body is a judicial body: the ordinary civil or administrative courts in each country.

e.g.: in DE, EL, IE, IT, LT, PT, UK

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Institutional models: administrative bodies

• In the remaining Member States there is an administrative review body at first instance, e.g.:

• BG: the Commission on Protection of Competition

• CZ: the Office for the Protection of Competition

• LV: Complaints Review Commission of the Procurement Monitoring Bureau

• RO: National Council for Solving Complaints 14

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Institutional Models: Administrative Bodies 2.

• 10 Member States (CY, DK, EE, ES, HR, HU, MT, PL, SK and SI) have established specialised public procurement review bodies (= established solely to deal with cases relating to public procurement), e.g.: • the Tenders Review Authority in Cyprus, • the State Commission for Supervision of Public

Procurement Procedures (SCSPPP) in Croatia, • the Public Procurement Arbitration Board (PPAB) in

Hungary, • the Public Contracts Review Board in Malta, • the Office of Public Procurement (PPO) in Slovakia.

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Specialised Public Procurement Review Bodies

• The procedure is usually simpler and quicker than is the case in regular courts.

• The members of the specialised review body deal exclusively with procurement cases (as a result, they quickly gain specialised expertise).

• The cost involved when regular courts review complaints may be much higher than it would be in specialised review bodies, due to the length of the procedure and the need for legal representation.

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Institutional Models: combination of the two

• In a few countries, depending on the nature of the claim and the remedy sought, an application for review can be made either to the administrative or judicial body at first instance.

• e.g. in Belgium: • claims for annulment or suspension:

• the Council of State (Administrative Branch) when the CAE is an administrative body,

• the ordinary courts otherwise,

• claims for damages, declaration of absence of effects and alternative sanctions: the ordinary courts (Ordre judiciaire)

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Status and independence of a specialised review body

• The independence of the review body is a cornerstone for ensuring credible results of the remedy procedures against public procurement decisions (requirement of the Remedies Directives as well as according to international best practice)

• The issue of independence should be addressed on two levels:

• Independence of the review body as an institution;

• Independence of the members of the review body. 18

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Independence of the review body as an institution

1. independent from the parties of procurement procedures – contracting authorities/entities and economic operators and

2. functionally independent of the government

Implications to the location of the review body within the governmental hierarchy.

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Independence of the members of the review body

• The member’s independence is an essential requirement for demonstrating the independent status of the review body as an institution.

• Requirements: • proper rules on the procedures of appointment and

dismissal of the members; • the members must be protected by law from any

interference or even pressure; • the members must exercise their functions with

complete independence, and any instructions given, in the performance of their duties, on behalf of any other person must be prohibited by law;

• proper conflict of interest rules; • financial safety of the members

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Key determinants of a well-functioning review system

• the transparency and efficiency of the procedures

• the institutional capacity

• the quality of the decisions and how they are implemented

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Major risks in developing PRBs

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Independent PRB

Lack of experience in

public procurement

Lack of financial independence

Lack of transparency in the process of selection of the

members of PRB

Influence of the political

structure

Increased bureaucracy in the

procedure and possible delays in

procurement procedure

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4 major steps for successful remedies system

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Education of the private and public sector about legal protection in public procurement

PRB set-up

- Independents of PRB

- Sufficient budget

- Premises for PRB

Branding of the PRB

Transparent functioning

Webpage

Awareness raising material

Manuals for all stake holders

PRB in the public procurement system

• Relationship towards the government

• Relationship towards the representatives of private sector

• Relationship toward the contracting authorities

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Further information

See SIGMA procurement briefs on SIGMA website:

http://www.sigmaweb.org/publications/public-procurement-briefs.htm

SIGMA Paper No. 41 Public Procurement Review and Remedies Systems in the European Union

SIGMA Brief 12 Remedies

SIGMA Brief 25 Establishing Procurement Review Bodies

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