Implementation of the EU PP Remedies Directive –

the AUT case

EBRD Project Ukraine

Dr. Michael Fruhmann

Federal Chancellery, Austria

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contents

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General introduction to EU PP systemBasic features of the EU Remedies Directives

Transposition in AUT

Volume of PP in EU 27 - 2010

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Total expenditure on works, goods and services: EU: 2.406,98 billion € (19,7% of GDP)AUT: 65,76 billion € (23% of GDP)

Volume of PP published in TED: EU: 447,03 billion € (= 18,6 % of total volume)

No. of published tenders in TED: 163.058

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EU PP system

Directives

Regu-lations

Trade Agreements

Recommendations/Communications mandates to CEN

(for ex EN 45503)Decisions(Utilities)

TFEU – Basic Principles

Association Agreements

EEA-A Europe-A GPA bilateral PP Agreements (for

ex CH)

Public ProcurementEuropean Secondary Legislation (excl. defence area)

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contracting authority

contracting entities (utilities)

supplies

works services

remedies

2004/18/EC

89/665/EEC

92/13/EEC

2007/66/EC

supplies works services

2007/66/EC2004/17/EC

remedies

Remedy system2 Directives 89/665/EC + 92/13/EC amended by 2007/66/EC:

all decision during a PP procedure falling in the scope of the procedural Directives may be reviewed (see ECJ Case C-26/03, Stadt Halle)

review must be effective and, in particular, as rapidly as possible

review procedures must be available at least to any person having or having had an interest in obtaining a particular contract and who has been or risks being harmed by an alleged infringement

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Remedy system II

Review procedures must include provision for powers to

take interim measures (esp. suspension of the procedure)

set aside unlawful decisions, including the removal of discriminatory technical, economic or financial specifications in any document relating to the contract award procedure

award damages to persons harmed by an infringement (without condition that infringement being culpable; C-314/09, Strabag)

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Remedy system III

•MS must ensure that decisions taken by bodies responsible for review procedures can be effectively enforced •Remedies Directives contain institutional/organizational requirements regarding the review bodies:

written reasons for their decisions judicial review by a body which is a court or tribunal within the

meaning of Article 267 TFEU contradictory procedure (both sides must be heard) must fulfill requirements of Art. 6 ECHR (independence)

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Remedy system IV•Directive 2007/66/EC introduced:compulsory standstill period prior to the conclusion of a contract (see ECJ C-81/98, Alcatel; only limited exceptions to this obligation exist) + written reasons for their decisions

harsh consequences if contracting authorities infringe basic obligations of the procurement process

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Remedy system V•MS must ensure that a contract is considered ineffective by a review body independent of the contracting authority in the following cases:

contract award illegally without prior publication in the OJEU

infringement of the standstill obligationillegal “call-offs” of contracts based on

a framework agreement and a dynamic purchasing system

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Remedy system VIconsequences of a contract being considered ineffective shall be provided for by national law

retroactive cancellation of all contractual obligations (ex tunc annullment) or

limitation of the scope of the cancellation to those obligations which still have to be performed (ex nunc annullment) – in this case: compulsory application of “alternative” penalties

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Remedy system VII

“alternative” penalties

must be effective, proportionate and dissuasive

shall be- imposition of fines on the contracting authority; and/or - shortening of the duration of the contract

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Remedy system VIII(absolute) time limits for challenging a concluded contract

application for review must be made before the expiry of at least

30 calendar days with effect from the day following the date on which the contracting authority published a contract award notice in accordance with the procedural Directive or

in any case before the expiry of a period of at least six months with effect from the day following the date of the conclusion of the contract

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Transposition in AUTDirectives

Federal Procurement Act 2006 (BVergG 2006)

contains common material provisions

FPA 2006 – contains remedy system for

federal procurement

State Laws for Remedy system for respective State (regional +

local procurement)

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Transposition in AUT IIBasic features:

FPA contains only rules on remedies for federal level and incorporates EU regimeFPA regime covers PP above + below EU thresholds – same remedy system applies! (constitutional reasons)Federal Public Procurement Office (FPPO) – a specialised body (“court” according to EU standards) - is the review body of first instance at federal level (will be replaced by Administrative Court of First Instance from 2014 on)

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Transposition in AUT IIBasic features contd.:

FPPO rules in senates (3 persones: 2 lay judges and 1 full time judge; exceptions for “minor” decisions and for interim measures)

complaints initited at FPPO are not for free (system of charges depending on type of contract and contract value; betw 219.- and 5.472.- €)

no system of Procurement State Attorneys

Transposition in AUT III

Specific features:Remedy procedures only for

tenderers/candidates (not for contracting authorities) – see ECJ C-570/08: 2(8) 89/665 does not require the MS to provide, also for contracting authorities, a right to seek judicial review of the decisions of non-judicial bodies responsible for review procedures concerning the award of public contracts (however MS may do so)

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Transposition in AUT IV

Specific features:ECJ “all decisions must be subject to review”

– in AUT: yes “all” but not all decisions right away – “sequencing” of the procurement process to focus potential remedy procedures at sensitive phases of the procurement procedure (system of separately and non seperately contestable decisions)

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Transposition in AUT VSpecific features contd.:

“sequencing” of the procurement:example open procedure - seperately contestable:(all) fixtures in tender documents, decisions during offer period, decision to exclude a tender, decision to cancel the procedure, contract award decision

all decisions “between” seperately contestable decisions can be challenged only in connection with the consequent seperately contestable decision

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Transposition in AUT VISpecific features contd.:

above mentioned system combined with system of rigid delays (above thresholds 10 days, below 7 days)

after publication/communication of seperately contestable decisions complaints must be initiated within these delays; delay sanctioned with preclusion (foreclosure; admissible according to ECJ see C-470/99, Universale)

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Transposition in AUT VIISpecific features contd.:

System of “ineffectiveness” basically mirrors Directive 2007/66 with following additions

“ineffectiveness” = annullment of illegal decisions: default rule – ex tunc annullment!

exception ex nunc annullment when- restitution “in natura” or- restitution without any reduction of value not possible

Annullment below EU tresholds only if procedure was manifestly illegal

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Transposition in AUT VIII

Specific features contd.:If no “ineffectiveness” (annullment) Directive

2007/66 asks for “alternative” penaltiesAUT: alternative penalties = fines!fines both for natural and legal personsLimitation of maximum fines to 20% of

contract value (gentleman’s agreement btwn Commission and MS)

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Thank you for your attention!

Contact:Dr. Michael Fruhmann

Constitutional Service, Republic of Austria

michael.fruhmann@bka.gv.at

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