Procurement Update

The European Commission have been busy of late, following up on a number of "reasoned opinions" where the member states concerned have failed to provide what the Commission regard as a satisfactory response. Below are a couple of recent examples.

Germany: Combo wishes - do not separate.

The Commission have decided to refer Germany to the Court of Justice of the EU over the matter of an award of a contract for architectural and planning services, relating to a renovation project in the municipality of Niedernhausen.

The decision to renovate its multi purpose hall was taken by the municipality in 2006. The renovation works were due to be spread over 3 years, which meant that the construction work would be done in a number of phases during that time. That was enough for the German authorities to decide that the work amounted to three separate public service contracts and as each would be below the EU financial threshold, there was no requirement for a full EU compliant tender process for any of the phases.

The Commission, however, took the view that it was a single project, influenced, no doubt, by the fact that all of the architectural and planning services concerned were being undertaken by the same architect for every stage of the project. This would mean that the total cost of the project overall would be above the threshold. As such, there should have been a formal tender procedure with European wide publication of a tender notice.

The Commission sent a reasoned opinion to that effect to Germany in January 2010 and as they were not happy with the response provided, the matter will now go to the CJEU.

Greece: Nice work... if you can get it.

A number of Greek municipalities directly awarded 6 public service contracts for work relating to mapping and planning to just one company. However, over a period of time the contracts were renegotiated, leading to the company providing more services than originally anticipated by the original contracts. Accordingly, the value of the contracts also increased, in some cases, quite substantially.

Some of the examples given allege price increases in one case from an original cost of €1.7 million rising to €3.7 million, following renegotiation. In another example, the original cost of €440,000 rose to €1.3 million. The Commission have said that contracts increasing in value of up to 300% were not uncommon.

The Commission have taken the view that as the contracts were altered to such an extent, the work should have been advertised and a tender exercise undertaken. As a result, the Commission have decided to refer the matter to the CJEU.

Those of us concerned about making, post award of contract alterations, following the Pressetext judgement will be watching this one with interest.

Allan J. Donovan

Allandon Services Limited