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Public Procurement Review System

in EU Member States

– Practical Examples –

Chisinau, 9 June, 2014

Leogrand Hotel

Bodies responsible for

review (EU)

• To ensure an efficient functioning of the remedies system, review bodies must meet few essential conditions:

- to be independent of the contracting authorities and tenderers, so as to ensure that they adopt correct decisions

- to work on the basis of certain procedures which enable a rapid resolution of disputes

Bodies responsible for

review (EU)

- to be conferred with powers for:

imposing interim measures with the aim of correcting the infringement or preventing further damage, including measures to suspend or to ensure the suspension of the tender procedure or the implementation of any decision taken by procuring organization;

set aside or ensure the setting aside of decisions taken unlawfully, including the removal of discriminatory technical, economic or financial specifications in the tender notice or in tender documentation;

award damages to persons harmed by an infringement.

Legal Basis (EU)

• EU Member States are basically free to choose the organisation and procedures for their national review system;

• pre-contractual and post-contractual remedies;

• equivalence and effectiveness of national remedies;

• there is a great variety of review mechanisms among EU Member States and Candidates (e.g. ordinary, special or administrative courts, automatic suspension of award procedures, interim measures,…).

Institutional set-up in EU

member states

Ordinary Courts

• Belgium, France, Ireland, Lithuania, Netherlands, Portugal, Sweden, United Kingdom

Specialised Review Body

• Austria, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, Germany, Hungary, Luxembourg, Poland, Romania, Slovenia, Croatia

as well as:

• Balkan countries (Albania, FYROM etc.), Ukraine

First-Instance Review before and after the

Conclusion of the Contract

Specialised

Review Body

Civil or Ordinary

Court

Administrative

Court

Prior to

conclusion

of the contract

Austria, Bulgaria, Cyprus,

Czech Republic, Denmark,

Estonia, Finland, Germany,

Hungary, Latvia, Malta,

Poland, Romania, Slovakia,

Slovenia

Belgium (utility), Denmark,

France (private utility), Ireland,

Lithuania, Luxembourg (utility),

Netherlands, United Kingdom

Belgium (public), Estonia,

France (public), Luxembourg

(public), Portugal, Sweden

After conclusion

of

the contract

(damages)

Denmark Belgium (utility), Cyprus,

Czech Republic, Denmark,

Estonia, Finland, France

(private utility), Germany,

Hungary, Ireland, Latvia,

Lithuania, Luxembourg (utility),

Malta, Netherlands, Poland,

Slovakia, Slovenia,

Sweden, United Kingdom

Belgium (public), France

(public), Luxembourg (public),

Portugal, Romania

First-Instance Review before and after the

Conclusion of the Contract

Instance Specialised

Review Body

Civil or Ordinary

Court

Administrative

Court

1st instance Austria, Bulgaria, Cyprus, Czech

Republic, Denmark, Estonia,

Finland, Germany, Hungary,

Latvia, Malta, Poland, Romania,

Slovakia, Slovenia

Denmark, France (private

utility), Ireland, Lithuania,

Luxembourg (utility),

Netherlands, United Kingdom

Belgium, Estonia,

France (public),

Luxembourg (public),

Sweden

2nd instance Cyprus, Denmark, France

(private utility), Germany,

Hungary, Ireland, Lithuania,

Luxembourg (utility),

Netherlands, Poland, Romania,

Slovakia, United Kingdom

Austria, Bulgaria, Czech Republic,

Estonia, Finland,

France (public), Latvia,

Luxembourg (public), Portugal,

Sweden

3rd instance Estonia, France (private

utility), Hungary, Lithuania,

Netherlands, Slovakia, United

Kingdom

Latvia, Portugal, Sweden

POLAND

Current - administrative set up

Main Players

Public Procurement Office – President of PPO

• Centralgovernment body competent for matters concerning public contracts, defined by PPL

• PPO – office supporting activities of President of PPO

• A separate body within public administration created 1995

• Staff of PPO: 135 working in 7 org units + internal auditor

l

National Appeals Chamber

NAC established in November 2007 replacing panels of arbiters who were responsible for review of appeals on the basis of previously legal provisions

The bodies of National Appeals Chamber are:

Chairman

Vice-chairman and

General Assembly composed of all members NAC

Composition: 38 members

Current review system

Two-instance review procedure:

1st – appeal to the National Appeals Chamber (NAC), special review body only for public procurement

and then

2nd – complaint to the relevant common (regional) court

Review system (1994-2007)

3 stage review process with list of arbiters

I Protests

- supplier filed a protest directly to the contracting authority

II Appeals

- supplier filed an appeal to the Chairman of PPO, appeals were examined by panels of arbiters selected from list of arbiters - arbiters appointed ad hoc for specific case

III Complaints

- Suppliers filed a complaint to the regional court (competent for the place of residence of the contracting authority)

Review system (2007-2010)

3 stage process with NAC

I Protests

- Supplier filed a protest directly to the contracting authority

II Appeals

- Supplier could file an appeal to the Chairman of PPO, appeals were examined by National Appeal Chamber

III Complaints

- suppliers/contracting authority could file a complaint against NAC’s ruling to the regional court (competent for the place of residence of the contracting authority)

Submission of appeal

Appeal should be lodged with the President of the National Appeal Chamber in writing or by electronic means with a secure electronic signature verifiable using a valid qualified certificate The conclusion of a contract does not restrict the possibility of lodging the appeal

Standstill period

• contracting authority/entity may not conclude a contract until NAC adopts judgment or decision which ends the procedure

• a motion to NAC in order to revoke the above

• accepted only where non-conclusion of a contract might cause a negative effects for public interest exceeding the benefits related to the necessity of protecting of all interests

Rulings of NAC

• Rejection of appeal – formal reasons other than lack of entry fee

• Dismissal – appeal ungrounded

• Admission – appeal justified

Rulings by NAC (2): admission of

appeal

• order to correct action in breach of law

• declare the contract ineffective; or

• declare the contract ineffective with regard to the unfulfilled obligations and impose a financial penalty instead; or

• impose a financial penalty or rule the shortening of the duration of contract if important public interest requires the contract be maintained

• make a statement on the violation occurred

Ineffectiveness of contracts

A procurement contract shall be null and void if the awarding entity:

1. used the negotiated procedure without publication or single-source procurement in breach of provisions of the Act;

2. failed to publish the contract notice in the Public Procurement Bulletin or submit it for publication to the Publications Office of the European Union;

3. conclude the contract in breach of provisions the relevant provisions on standstill / suspension period, if this prevented NAC from examining the appeal before the conclusion of a contract;

Ineffectiveness of contracts (2)

A procurement contract shall be null and void if the awarding entity:

[…]

4. prevented the economic operators from submitting (indicative) tenders in a contract award procedure conducted under a dynamic purchasing system;

5. awarded a contract under framework agreement prior to the expiry of the relevant time-limits;

6. used the request-for-quotations in the breach of provisions of the PPL

Complaint

• may be submitted by both the contracting authority/entity concerned and the economic operator + by the President of PPO

• within 7 days (21 days for the PPO President)

• to regional court relevant for the seat of the contracting authority/entity - via PPO Pres.

• ruling given immediately but not later than within one month

Review procedures – evolution of

thresholds

< 20,000 € no review procedures (1994)

< 30,000 € no review procedures (1997)

< 6,000 € no review procedures (2004)

< 60,000 € only protests (2006)

< 137,000 € (5,278,000 € for works) only protests (2007-2008)

2008 – 2014 no legal protection below 14,000 € (PPL not applicable), limited below EU thresholds, full coverage above EU thresholds

Entry fee – current amounts

Supplies and services < EU thresholds cca 1800 euros Supplies and services > EU thresholds cca. 3800 euros Works < EU thresholds – 2500 euros Works > EU thresholds – 5000 euros

AUSTRIA

System of Settling PP Disputes in

Austria

Procurement procedure

PPO: pre contr., interim

measure

PPO: post

contractual

Courts: action

for damages

Highest

Administrative

Court

Constitutional

Court Supreme Court

EU: Court of Justice

after the award of contract

PP Review Institutions in Austria

• Federal Public Procurement Review Authority – PPO (specialised administrative court)

• 9 Laender Procurement Review Authorities (UVS, VKS) in each of the Austrian provinces for the legal control of provincial and municipal public procurement award procedures (general and specialised administrative courts)

PPO

new organisation since Sept. 2002 (former PPO was part of the Ministry of Economic Affairs; now an independent administrative court specialised for pp control only)

14 senates, each senate consists of one chairperson (lawyer) and two associated judges (procurement practitioners, lawyers, economists, engineers)

all members

• independent like judges

• chairpersons: first appointment for a period of five years; then unlimited and independent

• other members: appointed for 5 years, possibility for reappointment

PPO – Internal Procedures

• distribution of cases according to a pre-determined rotation principle, regulated in an internal rulebook (fair, transparent, previsible);

• publication of cases to be handled, composition of senates and dates of oral hearings are published on the PPO board (electronic);

• Oral hearings – standard procedure

• Legal deadline of 6 weeks (usually respected)

• Publication of all pp decisions on the webpage in an anonymised form (www.ris.gv.at; publication of PPO decisions only: www.bva.gv.at)

Fees - Austria

Regulation on Lump-Sum Fees: Legal Gazette II 72/2010

Direct award EUR 208,--

Direct award above EU thresholds EUR 623,--

Direct award below EU thresholds EUR 311,--

Negotiated procedure without prior publication below EU thresholds

works contracts EUR 415,--

supply and service contracts EUR 311,--

intellectual service contracts EUR 363,--

Restricted procedure without prior publication below EU thresholds

works contracts EUR 2.594,--

supply and service contracts EUR 830,--

Other procedures above EU thresholds

works contracts EUR 5.188,--

supply and service contracts EUR 1.660,--

HUNGARY

Dual System of Public Procurement

Review

Two separate paths of review:

1. a specialized review body (first instance)

appeal against its decision to administrative court (second instance)

remedies other than damages

2. civil courts

damages

render the contract ineffective in a given case

30

Prior Complaint to the Contracting

Authority

• possibility to complain directly to the contracting authority as well: preliminary dispute settlement

• optional - not a precondition for judicial review

proved to be very useful – quick and inexpensive solution of disputes

getting more and more frequent way of dispute settlement in public procurement cases in Hungary (and most complaints do not go any further)

First-instance Review Body

PUBLIC PROCUREMENT ARBITRATION BOARD

• operates in the framework of Public Procurement Authority (PPA)

independent part of PPA

independent from the Government

independent from Contracting Authorities

independent from the economic operators

• permanent body, founded by law in 1995

• takes decisions on the basis of legal rules

• its decisions are legally binding

• its decisions are subject to an appeal in administrative courts

Public Procurement Authority (PPA)

the main policy making body in public procurement

established in 1995 (by law)

autonomous administrative body

independent from the Government, subordinated only to Parliament

it has a collective governance structure – Public Procurement Council

Public Procurement Council

• operates within the framework of the PPA

• 14 members – includes all relevant stakeholders in the public procurement market (contracting authorities, economic operators, public interest)

• the law defines the organizations that have the right to designate the members of the Council

• members serve for at least a two-year-term

• members are not employed full-time, are not remunerated for their activity from the budget of the PPA

• the working body: the Secretariat (supervised by the Secretariat general + divided into various units)

Public Procurement Arbitration

Board

• Specialised for public procurement cases - experience and expertise!

• Members: Public Procurement Commissioners

civil servants (appointed by the PP Council)

must fulfil almost the same requirements such as judges (e.g. not having been convicted for a criminal offence)

minimum criteria: higher education degree, 3 years professional practise + a special examination in public administration (for lawyers: bar exam)

35

Public Procurement Arbitration

Board

• Public procurement commissioners

legal commissioners (with bar exam)

professional commissioners (public procurement experts with economic, transport, IT, construction or engineering background)

• panel of three commissioners as a general rule

• each time the members of the panel are appointed by the chairperson of the PPAB

• at least two of them shall be a lawyer and one member shall have a university or college degree in the field mostly connected to the subject-matter of the procurement

• The President of the Arbitration Board is assisted by three public procurement secretaries having a degree in law

36

Public Procurement Arbitration

Board

Public procurement commissioners

• strict conflict of interests rules:

members cannot assume other paid occupation except scientific, teaching, artistic or other legally protected intellectual activity

no membership with financial obligation in business companies

no political membership

no financial interest above a certain threshold in a business company

• shall act in an independent and impartial manner

• are not subject to any kind of instruction but solely to law

37

Legal effects of launching a review

proceeding

Initiating a review process does not suspend automatically the procurement procedure

BUT:

the contracting authority may suspend the ongoing procedure

the contract cannot be concluded until the final decision of the PPAB

Communication of Decisions

PPAB decisions (alongside with their rationale) are

delivered to the parties and other interested parties by regular mail

also published in the Public Procurement Bulletin (official press of PPA, only on-line version)

published on its own website as well – on the day of their drawing up

Judgements of the court are also published on the website of the courts and in the Public Procurement Bulletin

The most important decisions are also published and commented in Közbeszerzési Szemle (Public Procurement Law Review), which is a monthly legal publication.

Time limits for decision making

PPAB has to take decisions rather quickly:

within 15 days when there is no hearing,

within 30 days if a hearing is necessary

within 60 days, if the proceedings initiated against the amendment or performance of procurement contracts

an additional 10 days (in the third case 30 days) extension can be granted if justifiable circumstances arise

Courts require considerably more time to issue a judgement – there are no mandatory time limits for courts to make decisions

Unified application of law within the

PPAB

• for the sake of the uniformity of the remedies procedures, a general council (a college) including the public procurement commissioners operates within the framework of the PPAB

• if the proceeding panel of the PPAB has made a decision on a matter of principle, it has to present its decision to the President of PPAB

• the President presents the decision concerning the matter of principle to the general council

• if the general council establishes that the decision or any element of it is considered as a matter of principle, it publishes a guideline on the decision or on a given element of it.

Thank you for your

attention !