Report concerning the
Study on Pre-Contract
Problem-Solving
Systems
Report concerning the Study on
Pre-Contract Problem-Solving
Systems
1
Report concerning the Study on Pre-Contract
Problem-Solving Systems
Printed by Schultz Grafisk, Denmark
The Danish Competition Authority, Copenhagen
www.ks.dk
August 2002
ISBN 87-7029-274-4 Print
ISBN 87-7029-277-9 Online
2
Contents
1. Introduction to the study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
2. Background: The need for efficient procurement markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
3. The formal review system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4. Analysis of the formal review systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5. Alternative methods of problem-solving . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6. Analysis of the alternative methods of problem-solving . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7. Preconditions for efficient pre-contract problem-solving – Observations . . . . . . . . . . . . . . . . . . . 33
Annex 1: Questionnaire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Annex 2: National Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
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1. Introduction to the study
In 1998 a pilot project on public procurement (in
the following referred to as the PPPP) was established by Germany, Italy, the Netherlands, Spain,
the UK and Denmark with the support of the
European Commission. One of the key elements in
the project was to conduct a study on pre-contract
problem-solving. The objective was to enable the
participants to identify efficient methods for solving pre-contract problems in procurement procedures, i.e. ways of solving problems before a
procedure is closed and a contract awarded.
The purpose of this report is to highlight the results
of the study of problem-solving in 12 countries1. It
describes the various ways by which complaint systems have been set up in the countries participating
in the study2 and presents some of the advantages
and disadvantages of the various systems.
The study is based on written answers to the questionnaire from 12 countries, namely Austria, Denmark, Finland, Germany, Ireland, Italy, the
Netherlands, Norway, Spain, Sweden, Switzerland
and the United Kingdom.
The participants in the study have agreed that the
result of the study should not lead to any identification of “best practices” as the various national
administrations differ so much in structure and
working procedures etc. that a uniform system
might impede the efficiency of the problem-solving systems. Therefore the conclusions drawn from
the study are presented as “observations” on how
to make problem-solving work in practise – be it
formal or informal, which also contains identification of what requirements that must be met if the
problem-solving method preferred is to be efficient.
The first part of this report offers a general introduction to the context that calls for efficient procurement and thus for expedient problem-solving.
In the following chapters, various aspects of formal
review systems followed by alternative methods of
problem-solving are considered – based on the
questionnaire. This leads to the final part where
preconditions for efficient pre-contract solving
methods are identified.
Since far from all countries have set up a separate
procurement authority, the term Competent
Authority (CA) will be used throughout the report
to refer to administrative units taking action or
providing information or advice in order to solve
problems that occur in public procurement proceedings.
1. See questionnaire in Annex 1.
2. The answers to the questionnaire have been collected in 12 national reports in Annex 2.
5
2. Background:
The need for efficient procurement markets
On a number of occasions, the Commission has
encouraged Member States to come up with initiatives that could make the market for public procurement more efficient. A key component would
be to improve the application and enforcement of
the procurement rules.
Efficient methods for solving disputes in a swift
and flexible manner are crucial in this context.
Open and efficient procurement markets will
ensure equal and fair competition amongst suppliers, which again will result in an effective use of the
limited public resources and thus contribute to the
welfare of the Member States.
Efficient application of the procurement rules
helps to realise one of the main aims of the procurement regime, which is the opening up of markets by giving assistance to suppliers with market
access problems. When the suppliers face problems
in concrete public procurement cases, it is vital for
the functioning of the system that they have access
to rapid problem-solving. This is why alternative
methods of pre-contract problem-solving have
been introduced.
2.1
The broad perspectives
The European Union sees an effective regulatory
framework for public procurement markets as an
important part of the economic policy in the EU.
This framework is necessary for the public sector
to optimise its procurement decisions. It is important, both at the national level and at the European
level, to ensure “value for money”. It may also be
argued that the procurement regime has a special
significance for SME’s, which may be given an
opportunity to access markets they might not otherwise have entered, by participating in public tenders under the procurement directives.
The essential reason for ensuring effective application of the procurement rules – spending resources
optimally by stimulating competition in a large
single European market – will now be addressed.
2.2
Strengthening competition
For many small and medium-sized suppliers as
well as contracting authorities, the existing public
procurement system based on the EU directives
very often has proven to be difficult to use and to
interpret. One way of reducing the number of
complaints will of course be to simplify the directives on public procurement and make them more
transparent for the suppliers as well as for the contracting authorities.
Even if the directives will be simplified there will,
however, still be a need for systems which are able
7
to handle complaints and problems arising from
alleged violations of the rules in a fast and relatively inexpensive manner before a contract is
awarded.
In a Commission Communication on Public Procurement from 1998,3 the Commission stresses
that it is imperative to reduce the obstacles that
SME’s face when they participate in procurement
procedures as SME’s have the potential to provide
additional competition, flexibility and capacity of
innovation: “Every effort to make public procurement more accessible for businesses should start
off from the point of view of the SME”.4 This could
also be seen as an indication of the fact that if
obstacles are reduced to a level where SME’s are
able to participate in public procurement, larger
companies will have to act in a more competitive
way.
In this light it appears striking that many of the
SME’s are facing problems that prevent them from
participating in public procurement activities in
other EU countries.
These problems have been an important reason for
launching the PPPP – and for the efforts to analyse
the need for efficient problem-solving.
2.3
Pilot Project on Public Procurement
When the PPPP was launched in 1998 it was
agreed that the project should initially focus on
three out of the five elements of the Work Programme:
• Pre-contract problem-solving systems.
• Formal complaint systems.
• Application and interpretation of the rules.
The aim of studying the pre-contract problemsolving systems was explained in the Work Programme: The aim is to identify “methods to obtain
reliable – however speedy – (informal) solutions to
solve market access problems at the national level”.
In the Work Programme it was implied that an
evaluation of the various systems for solving precontract problems was to be made to demonstrate
how the various methods applied in the respective
participating countries conform to the objectives
of the PPPP.
When this study was commissioned, it was agreed
that the objective was not to measure each country’s practices against artificial best practices. Nor
should the pilot project develop a single method
for the participating states. Instead, each country’s
method for problem-solving should be described,
analysed and assessed on its own merits.
3. Commission Communication, Public Procurement in the European Union, COM (98) 143
4. Ibid p 19.
8
In the attached Annex 2 a comparison of the various systems is presented. The countries participating in the study may use the results as a source of
inspiration for improving problem-solving at
national level – and possibly – at cross-border
level.
In this connection it should be mentioned, that the
participating countries in the PPPP have developed a “Guideline for co-operation on solution of
cross-border problems in relation to access to procurement contracts”. This guideline describes very
specifically how the participating countries should
react if a participating country requests co-operation from another participating country concerning a cross-border problem. As mentioned earlier
it is not the ambition with this study to develop a
uniform system, but to secure that there are alternative methods to solve pre-contract problems in a
fast and inexpensive manner.
The study focuses on pre-contract cases. In accordance with the PPPP objectives the term ”pre-contract problem-solving” refers to action taken in the
course of a public contract award procedure with a
view to ensuring equal and fair competition
regarding the contract in question. In other words,
it is action taken before the contract has been
awarded and possibly signed, in contrast to the
notion of ”post-contract”, which relates to events
after the award/signature of the contract when possible reactions are normally limited. Problem-solving can take place within both a formal and an
informal system used in a participating country.
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3. The formal review system
Based on the participating countries’ answers to
the questionnaire, the manner in which the different countries have chosen to establish a review system will be described in this chapter. This includes
how the countries have chosen to organise the formal review system, the use of the system – measured by the number of cases, and the advantages
and disadvantages of the system.
Table 1.
3.1
Organisation
The questionnaires reveal that the countries participating in the study have chosen different ways to
set up the formal review system. Therefore, precontract problem-solving is also different in these
countries.
Type of system, formal problem solution
Austria
The unit responsible for meeting the requirements of the remedy is the
Bundesvergebeamt (BVA), an independent legal review system.
Denmark
The Complaints Board for Public Procurement acts as required in the
remedies directives as a legal administrative court.
Finland
The Competition Council has the jurisdiction and works as the Complaint
Authority.
Germany
Complaint Boards, responsible for the proceedings in the first instance, are set
up in each Land. Federal contracts fall within the jurisdiction of the federal
Complaint Board.
Ireland
There is no designated Complaint Authority. The Governments Contracts
Committee is responsible for procurement policy and practice.
Italy
Infringements of the EU rules regarding the public procurement awarding procedures are subject to the administrative court.
The Netherlands
There is no designated Complaint Authority. Decisions of a public authority
regarding procurement are seen as legal transactions under civil law.
Norway
There is no designated Complaint Authority. The national court is used as a
review body.
11
Spain
There is not an administrative court in the matter of procurement. Taken
decisions by an administrative authority are submitted, in case of remedies in
the ambit of the juridical system, to the final decision of the competent judge.
Sweden
There is no designated Complaint Authority. The review system operates
through the administrative courts in Sweden.
Switzerland
At a federal level the independent the Federal Appeal Commission takes the
final decisions. At the cantonal level the administrative Courts works as the formal review system.
United Kingdom
The directives are implemented in the UK by Regulations. They allow for
proceedings to be brought in the High Courts. The Courts then have the necessary power.
The table shows that some countries have not
established specific national complaint systems for
procurement. The reason is that the general rules
of civil procedure offer the facilities requested by
the remedies directives, for instance interim proceedings in urgent cases, normal or accelerated
proceedings and claims for damages. The courts
have the powers to investigate and intervene in
procurement cases under national law, and to suspend or set aside a decision made by the contracting authority.
As seen above this is the case in for instance Norway, Ireland, Italy, the Netherlands, Spain, Switzerland and the UK. In the Netherlands, decisions of a
public authority regarding procurement are also
seen as legal transactions under civil law. Disputes
in procurement procedures outside the scope of
the directives (for instance tenders under the
threshold values) may also be brought before the
ordinary courts. Specific remedies like a corrective
12
mechanism, conciliation and attestation/verification have been implemented separately in the
Dutch law.
Some of the countries using the courts operate at a
regional level. Procurement undertaken by the
regional authorities may be challenged in the
regional (administrative) courts. This is, for
instance, the case in Switzerland.
Other countries, for instance Austria, Germany
and Denmark, have set up Complaints Boards to
meet the requirements of the remedies directives.
These boards have the necessary power to review
the cases brought before them, as required by the
directives.
The Complaints Boards are independent administrative units that hear complaints submitted by
complainants concerning violation of the EU rules
in specific cases. As required by the directives deci-
sions of the Complaint Board can be subject to
juridical review. Since the cases are brought before
the Complaint Boards in the same manner as cases
are brought before civil courts, these boards do not
normally have the powers to investigate and intervene in procurement cases under national law on
their own initiative.
When considering the remedies for breaches of the
directives the member states have different opinions on appropriate measures.
In some member states, for instance in Germany
and in Denmark, the Complaints Board can intervene in an ongoing procedure and has the power to
nullify illegal decisions. Thus the Board can intervene both before and after the contract has been
awarded.
In other member states, for instance in the Netherlands and in the UK, if the award decision is challenged after a contract between a contracting
authority and a company has been concluded,
damages are the only potential remedy.
The countries participating in the questionnaire
have also been asked about the possible time gap
between the award decision (and the notification)
of the contract and the conclusion of the contract.
In Germany a new provision has been put into
force requiring the contracting authority to inform
the bidders 14 days in advance of the awarding
date.
In other countries, like the Netherlands, the UK,
Denmark and also Austria, the awarding and the
conclusion of the contract is contemporaneous. In
Denmark, however, there is a possibility both to
have an illegal awarding nullified and to have the
signed contract declared illegal.
3.2
Use of the system
The participating countries were also asked about
the number of cases treated per year under the formal review system:
13
Table 2.
No. of cases, formal problem solution
Austria
83
Denmark
20
Finland
130-140
Germany
114
Ireland
2-3
Italy
800
The Netherlands
Norway
8501
10
Spain
N/A
Sweden
100
Switzerland
N/A
United Kingdom
< 10
N/A: Not available
1 Only arbitration within the building industry
It appears that the number of cases varies a great
deal from one country to another, depending on
how the Member State has implemented the
review system.
3.3
Advantages and disadvantages of the
system
The participating countries were asked about the
advantages and disadvantages of their particular
system.
The typical advantages of the formal review system
mentioned by the participating countries:
• Conformity with the law
• The systems provide a final decision
• There is a possibility to intervene in an ongoing
procedure.
In general the countries do point out the following
disadvantages:
• Typically high costs for the involved parties
• The length of the procedure
14
• Complainants are reluctant to use the formal
review system because of the above
• The companies fear the chances of winning the
future contracts might be harmed.
The above stresses that there – in addition to the
above described formal systems – can be a need for
alternative methods to handle pre-contract problems.
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4. Analysis of the formal review systems
By its very nature, every formal review system is
part of a specific legal system – with its traditions,
concepts and principles. Therefore the objective is
not to propose a “standard solution” that works for
all systems, but rather to identify a number of
issues and possible solutions to be addressed.
Among them are the following:
• Should the formal consideration of procurement
cases be part of the general rules of procedure or
should a specific regime be established to deal
with pre-contract review cases?
The advantage of using general rules of procedure
is obvious: by submitting the cases to a court of
justice, the parties apply legislative developments
that have developed over generations. Furthermore, the costs and difficulties – financial as well
as “political” – of arranging an alternative procedural system will be saved. Therefore, in general,
there must be strong arguments for “re-inventing
the wheel” and develop a sui generis system for
public procurement cases. The next question
might lead to the identification of such arguments:
• Do the general rules of procedure allow for sufficient remedies for a party to prevent ongoing –
presumably unlawful – proceedings from being
effected?
The answer to that question depends mainly on
how the court system allows for interim measures.
Most court systems have such rules, but the conditions for applying them vary substantially. As mentioned under some of the disadvantages in section
3.3., it may take weeks for a court to arrange a preliminary hearing in some jurisdictions, in others it
can be done overnight. Some legislatures provide
the formal review procedure with an automatic
suspension effect on the contract award procedure
to which they relate. In other systems the costs of
invoking these procedures are paramount, notably
because the plaintiff is requested to produce a bank
guarantee to cover any loss to the defendant, in
case an injunction has been handed down unlawfully. In other systems, the remedy is available at
no substantial costs.
If the said rules may generally prevent SME’s from
producing an injunction before a final contract is
made in a medium-scale procurement process, or
whether such costs would generally be considered
to be prohibitive and if, in a large scale of cases, the
application of the court rulings is considered to be
prohibitive, alternative ways to deal with the said
pre-contract complaints should be considered. If
so, the following question arises:
• If the consideration of cases is subject to a specific procedure, should this procedure be part of
17
the court system or should a specific administrative body be delegated to consider these matters?
The answer to that question is to a large extent
dependent upon the structure of the court system
and the administrative system in question. Therefore, obviously, it can not be answered without
taking the two systems into consideration. Among
the aspects to be considered, the time and costs
factors are again paramount.
• If a specific administrative body is appointed to
consider these complaint matters, how should
the powers be delimited between the said body
and the court system?
In answering this question, some crucial decisions
have to be made in regard to the operation of the
two systems. As in other areas of procedural law,
there is a general need to balance the rule of law
principle with the interests of efficiency: Justice
takes time and costs money. In this delicate balance
that should be decided at the national level and in
accordance with the legal traditions of the jurisdiction in question, some simple points can be made.
Among them are the following:
• If decisions from an administrative tribunal can
be brought before a court of justice, it may be
18
justifiable to lower the procedural guarantees in
the interest of expediency.
• If the procedure before the administrative body
includes safeguards similar to those provided by
the procedural system, it may be justifiable to
preclude an overlap of the two systems.
• If a preliminary injunction – be it produced by a
court of law or by an administrative tribunal –
allows the unsuccessful party to bring the case
before an appeals court with no substantive
costs, it may be justifiable to lower the procedural guarantees in the interest of expediency
and efficiency.
• If a specific administrative tribunal is empowered to consider cases, it must be decided what
powers it is to have. In this decision, there is not
“one size that fits all”. To some parties, the power
to grant damages in a pre-contract case may be
the proper solution, whereas to other parties a
decision to suspend the procedure provides the
adequate remedy. In some cases, the suspension
of the procedure may be viewed to be extremely
cumbersome to the respondent, whereas in other
cases – notably when big volumes are at stake – a
decision to pay damages may be so.
5. Alternative methods of problem-solving
In this chapter the participating countries’ alternative methods of handling pre-contract problemsolving will be described. Also the different characteristics of the individual methods, for instance the
use of the alternative methods and the reasons for
the companies to complain, will be discussed in
the chapter.
Table 3.
5.1
Organisation
Only a limited number of the countries participating in the questionnaire have established specific
systems for informal pre-contract problem-solving.
Most of the countries have, instead, set up advisory
boards, contact points or equivalent bodies.
Type of system for informal problem solution
Austria
Separate dispute settlement body. Only recommendations in pre-contract cases.
Denmark
The Competition Authority considers the complaints. Only recommendations in
pre-contract cases. Possibility to bring cases before the Complaints Board.
Finland
Single Market Contact Point – only cross-border cases
Germany
Some federal and regional governments have established administrative procurement review bodies.
Ireland
No specific body established
Italy
Independent body with contact to the Commission, but with no legal authority to
solve disputes
The Netherlands
No specific body established. The Ministry of Economics considers the complaints
Norway
No specific body established. The Ministry of Economics considers the complaints
with assistance from a panel of experts, NFOA
Spain
No specific body established. The Ministry of Finance considers the complaints with
assistance from an Advisory Committee (on Public Contracts)
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Sweden
The National Board for public procurement, NOU, which is a body under the Swedish Ministry of Finance, is responsible for dealing with this type of case
Switzerland
A Commission on Public Procurement (CPCC) is responsible for the informal problem solution.
United Kingdom
Single Market Contact Point – only cross-border cases.
As appears from the table, some countries have set
up contact points that render advice and assist companies facing problems specifically in cross-border
cases. This is the case in Finland, the UK and Germany. The UK and Germany have set up a Single
Market Contact Point, where companies can complain regarding cross border cases.
Norway intends to establish a new complaint
board. The complaint board will be set up by 1.
january 2003.
A few countries have established an independent
function for informal pre-contract problem-solving. This is the case in, for instance, Austria, Switzerland and Italy.
In Austria a separate dispute settlement body, BVKK, is attached to the formal review body, BVA.
B-VKK’s power is limited to giving recommendations in the pre-contractual phase, especially concerning the scope of application of the rules. All
disputes have to be introduced to the dispute settlement body before they are presented to the for-
20
mal review body. In this way, the settlement body
operates as an informal conciliation system.
In Italy, the Italian Public Works Authority operates in close contact with the European Commission and the European Court of Auditors,
consulting it in all the cases of major interpretative
interest, and with the corresponding authorities in
the other participating countries. Consequently,
this authority can intervene on the request of the
complainant, demanding the necessary information in order to state its opinion regarding the
rightness of the application of the EC rules.
The German procurement legislation authorises
the federal and regional governments to establish
administrative procurement review bodies, which
take no part in the formal and juridical review system. The bodies monitor the application of the
procurement rules on request or on own initiative.
They have the power to reverse the decisions of the
awarding authority if procurement rules have been
violated. They also have the task of informal dispute resolution and act in an advisory capacity to
the awarding authorities.
In Denmark, the Danish Competition Authority
has the overall responsibility in the procurement
area. In order to increase the possibilities of swift
identification of violations of the procurement
rules and a correspondingly speedy treatment of
complaints, the Danish Competition Authority
was given formal legal authority to bring cases
before the formal review body, the Complaints
Board. The Competition Authority has also been
given the task to try to identify – on its own initiative – assumed violations and examine complaints
received regarding violations of the rules.
The Danish Competition Authority cannot order a
contracting authority to comply with the requirements ensuring the legality of a procurement procedure, but can only issue a recommendation to
this effect. Nor can the Danish Competition
Authority issue an enforcement notice for the suspension of a procurement procedure or for compliance with requirements for a procurement
procedure to be made legal. If a contracting
authority has ignored the recommendation from
the Danish Competition Authority as to how the
procedures are to be changed to be in conformity
with the rules, the Authority can bring the case
before the Complaints Board. Through this possibility there is a substantially preventive effect vis-àvis the contracting authority in question. In more
than 90 % of the cases, the contracting authorities
in question follow the recommendation from the
Danish Competition Authority.
5.2
Use of alternative methods
As appears from the above, there is in some countries no pre-contract problem-solving function.
These countries have a significantly lower number
of complaints, which might indicate that a problem-solving function facilitates complaints about
irregularities in procurement procedures. Other
countries have for several years had a system dealing with alleged violations of the rules. These activities have been well known to companies, which
may explain the higher number of complaints.
5.2.1 No of cases
In the answers to the questionnaire, each Competent Authority has listed the number of cases
approximately handled every year. This covers
both pre- and post-contract cases. The completed
questionnaires include primarily domestic cases.
The definition of “a case” varies from one country
to another. In some countries a case is not registered until the company has filed a written complaint describing the alleged breach of the
regulations. In other countries a case is registered
as a case as soon as the company has contacted the
Competent Authority and complained about a
contracting authority. This makes a comparison
between the activity on the pre-contract problemsolving in the different countries difficult.
Below, the activity per year in informal problemsolving is listed for the 12 countries. It is measured
by the number of cases considered, and also to
what degree the cases are pre-contract cases.:
21
Table 4.
No. of cases, in total per year, and no. of pre-contract cases
Austria
Denmark
161
30-40
N/A
100% pre-contract
Finland
-
-
Germany
-
-
Ireland
-
-
Italy
350
50% pre-contract
The Netherlands
3-4
100% pre-contract
Norway
-
-
13
100% pre-contract
60-70
50% + pre-contract
Spain
Sweden
Switzerland
-
-
United Kingdom
-
-
- : Not relevant
N/A: Not available
The table shows that several countries participating in the study only considers a few cases per year.
There may be many explanations for this. One
explanation may be that complainants have just
recently been given the possibility to make informal pre-contract complaints or that the companies
participating in public procurement have not been
informed sufficiently about these possibilities.
Other Competent Authorities have not – as mentioned above – established a problem-solving function at all. However, a low number might also
indicate that the rules are followed, that companies
do not feel injured by possible infringements or
22
that they fear the chances of winning future contracts might be harmed.
As seen in the Annex the Competent Authorities
were also asked:
• If they believed that the companies had heard of
the pre-contract problem-solving system
• if they believed, that the companies know where
to submit a complaint and
• who submitted the actual complaint to the CA
(the company, advisors, business organisations
etc.).
The companies’ familiarity with the option of precontract problem-solving as a means of avoiding
conflicts varies a great deal from one country to
another.
general matter the complaint is rarely filed through
business organisations, lawyers or others. This
indicates that the companies are typically wellinformed about how to complain.
In countries with a high number of cases in precontract problem-solving, the companies that participate in public procurement know in general
about the possibility of pre-contract solving. They
are typically informed through newsletters/journals and the Internet. Furthermore, some Competent Authorities have close co-operation with the
trade organisations on these matters, and the decisions taken by the Competent Authorities are often
used to inform about the rules and practice in
public procurement.
5.2.2 Trust in the alternative methods
The questionnaires show that in most countries
the companies believe that the Competent Authority has the necessary power to prevail against the
contracting authorities. Actually, some countries
point out that the companies often believe that the
CA has greater juridical power than it actually has.
As mentioned earlier there are multiple examples
of companies believing that the CA has the power
to change the decision of authorities who have
already awarded contracts.
Countries with little experience in pre-contracts
problem-solving point out that only a minority of
the companies know about the pre-contract problem-solving system. In these countries there is a
need for more information towards the companies
regarding the system.
In general it seems from the questionnaires that
also the contracting authorities respect the CA.
The fact that the solution recommended by the CA
in most pre-contract cases is accepted and followed
by the contracting authorities indicates that this is
the case.
In general, the complaining companies know
where to submit their complaints when the Competent Authorities are well-established and wellknown institutions. Often, however, companies
have the impression that the Competent Authority
has powers it actually does not have, for instance
that there are legal possibilities to challenge the
decisions already taken by the public authority.
In the questionnaires, the Competent Authorities
were asked if the complaining companies were satisfied with the solution obtained in the concrete
cases. In most of the pre-contract cases, complainants are satisfied with the result of the complaint.
Typically, the complainant has experienced that
misinterpretations and misunderstandings – from
either the contracting authority’s or the company’s
side – have been clarified, or that the contracting
authority has changed its procedure regarding a
public procurement contract.
In almost all cases the company has submitted the
complaint itself. Except for questions of a more
23
In some pre-contract cases the complaining company is disappointed that, regardless of the efforts
of the Competent Authority, it was not awarded
the contract. This does not mean that the CA’s
work has been worthless. Due to the interference
of the CA, future procurement procedures may be
effected in a correct manner.
Moreover, in some post-contract cases the complainants are not satisfied with the results. This is
often the case where the companies had expected
that the Competent Authority was able to change
Table 5.
decisions already taken. Satisfaction on the complainant’s side with the results of the problemsolving process in pre-contract cases is a precondition for the continuous use of this system.
5.2.3 Time consumption regarding case
consideration
The time consumed by the Competent Authority
from the complaint is received by the authority
and until it has determined whether there might be
a procurement problem, and if so, which problem,
is referred to as the identification phase time.
Identification time of problem solution
Austria
Denmark
Finland
2-3 weeks
Less than a week
Germany
-
Ireland
-
Italy
2 months
The Netherlands
2-3 weeks
Norway
Spain
Sweden
Switzerland
United Kingdom
- : Not relevant
24
2-days – 3 months
1 month
2-3 days
The questionnaires show that the identification
time varies from one country to another. The identification time also varies from case to case.
The above makes it difficult to generalise as to how
long the identification time should be under normal circumstances.
In some cases, it just takes a telephone call from the
company to the Competent Authority to identify
whether there is a procurement problem and what
kind of problem. In other more complex cases the
Competent Authority has to meet with the complainant, examine and analyse the case in more
detail and conclude whether there is a procurement problem or not. This is reflected in the questionnaire where the Competent Authorities
indicate that the identification time in concrete
cases varies from 15 minutes to several months.
The time from the problem solution is presented
to the contracting authority concerned, and until
this authority takes appropriate action is referred
to as the response phase time. Especially in pre-contract cases the response phase time is important
since a delay from for instance the Competent
Authority’s side may result in the conclusion of a
contract – in breach of the regulations.
Table 6.
For obvious reasons only a few CA’s participating
in the questionnaire are able to give an indication
of how long the response phase time is:
Response phase time, informal problem solution
Austria
Denmark
2 months
Finland
Varies
Germany
Varies
Ireland
-
Italy
Varies
The Netherlands
Varies
Norway
Spain
Sweden
Switzerland
United Kingdom
Varies
4-6 months
Varies
- : Not relevant
25
The length of the response time is very much
depending on the reactions of the contracting
authority. In some cases the contracting authority
acknowledges the breach instantly, making this
phase very short. In other cases the contracting
authority disagrees with the Competent Authority’s point and further discussions, meetings etc.
are necessary.
Table 7.
For the above reasons it is not possible to make
general time limits for the consideration of the
pre-contract cases in the response phase time.
5.3
Resources
The number of persons involved in considering the
cases under the pre-contract problem solution varies from one country to another:
No. of persons working with pre-contract problem solution
Austria
Denmark
Finland
2-3*
2*
Germany
-
Ireland
-
Italy
The Netherlands
35*
3*
Norway
-
Spain
*
Sweden
2
Switzerland
7*
United Kingdom
3*
*: The persons have also other functions in the CA
-: Not relevant
Since a number of the participating countries have
not set up independent bodies to consider this
26
kind of cases, the persons dealing with the cases
have often several other functions.
In countries with a high activity in problem-solving, as for instance Italy, some 35 persons are occupied with pre-contract problem-solving. As
mentioned, approximately 50% of the cases are
pre-contract cases in this country.
All other countries that are active in pre-contract
problem-solving have significantly fewer persons
employed to deal with this area.
A number of countries with a lower pre-contract
problem-solving activity have 2-3 persons
employed. In many cases these persons are also
involved in other types of ministerial work.
In the questionnaire, the Competent Authorities
are also asked to estimate if the companies involved
had spent a great many resources in the process of
solving the cases. Only in very few cases – typically
when the companies involve lawyers and other
advisors – had the companies felt that they had
spent too many resources on the case. This indicates that the resources that the companies invest
in pre-contract problem-solving is not a barrier to
the use of such a system.
5.4
Reasons for pre-contract complaining
Based on the answers to the questionnaires, the
most common reasons for companies to complain
seem to be:
Omitted announcement of a public procurement
contract
This group covers both cases where the contracting
authority has failed to announce procurement pro-
ceedings as provided by the directives, and cases
where the contracting authority unlawfully has
prolonged contracts despite the fact that there was
no such possibility according to the contract.
Problems regarding the announcement and the
tender dossier
This category covers cases where the dossier or the
announcement is insufficient or companies do not
receive the material requested or the same material
as other bidders. There are also examples of companies receiving the material at such a short notice
that there is no realistic possibility to participate in
the procurement procedure.
Unlawful negotiations under the procurement
procedure
This group covers cases where contracts are negotiated in open or restricted procedures without
complying with the directives.
Problems relating to the criteria
Several CAs have made the point that evaluated
procurement criteria are not mentioned in
advance or that the selection criteria are not complied with in the final decision. This group also
includes cases of conflict of interests where participating companies have previously been engaged in
drawing up the criteria for the procurement.
It is presumed that the above-mentioned reasons
for complaining are valid in all participating countries to a greater or lesser extent. Together with the
high activity in the countries active in pre-contract
problem-solving, this seems to indicate that there
27
is a need for a system that can deal with pre-contract problems in public procurement.
5.5
Reactions of the Competent Authority
The Competent Authorities’ possibilities of reacting in pre-contract cases are very different. The
manner of reacting depends on the national systems. In some countries the Competent Authority’s only possibility to react is to advise the
contracting authority on the rules and point out
any breach of regulation.
The questionnaires reveal that the most typical
ways of reacting are:
• Written communication with the contracting
authority outlining the presumed breaches of the
regulations.
• Setting up a meeting with the contracting
authority and advising on the procurement procedures.
• Organise open hearings regarding the interpretation of general problems of procurement.
• Request an expert statement regarding specific
areas.
• Publicise decisions taken by the Competition
Council.
• Intervention by the Competent Authority in the
procurement procedure.
In cases where the contracting authority has
infringed the procurement rules, the CA may
demand an explanation from the contracting
authority on how it will prevent similar infringements in the future.
28
In cross-border cases the typical reaction is to
present the case to the responsible Competent
Authority or the local embassy in the country
where the invitation to tender was announced.
Also complaints have been made directly to the
European Commission.
5.6
Advantages and disadvantages of
alternative methods of problem-solving
The countries having set up alternative methods
for problem-solving have pointed out the different
advantages and disadvantages of these methods.
The typical advantages of such methods could be
summarised in the following:
• Fast solutions to the problems
• The solution will usually be less costly for the
complainants
• The CA has the possibility to react in an ongoing
procedure
• The CA’s assessments and recommendations are
respected by the contracting authorities.
And the disadvantages are:
• Typically the companies do not have sufficient
knowledge of the problem-solving possibility
• The CA may not have any guidelines for considering the cases
• The CA does not have the ability to impose any
sanctions when the contracting authority violates the procurement rules.
In addition to the above, a few countries point out
that the Competent Authority’s identification time
is too long, which reduces the authority’s possibility to intervene.
In general countries having experiences with alternative methods of pre-contract problem-solving,
indicate that this way of solving procurement
problems satisfy their need for having a fast, efficient and inexpensive way of handling these kind
of problems – a need, which their formal systems
in many ways is not able to satisfy.
29
6. Analysis of the alternative methods of
problem-solving
Following the conclusions of the previous chapter,
the present chapter will highlight some ideas that
might be taken into consideration by participating
countries who endeavour to make processes for
solving pre-contract problems in a swift and flexible manner more efficient.
Also in this regard, there is obviously not one solution that fits all legal systems. Any consideration
on how to reach this goal should initially focus on
questions like:
• Following the main reasons underlying the decision to establish alternative methods for problem-solving, what cases should fall within it?
The foregoing analysis indicates that not all cases
are suited for informal procedures. A participating
country that considers alternative methods for
conflict resolution may therefore wish to consider
what kinds of cases should be left outside.
Common features of the formal review system and
alternative methods for problem-solving handling
show that some elements must be present in order
to ensure that the systems are efficient at the precontract stage. In cases of deliberate infringements,
e.g. where such infringement appears to be the
result of high-level political decisions made
because substantial national interests are at stake
or – by contrast – where the facts are so unclear
that thorough investigation is needed, alternative
methods may not be adequate. This may also be so
in cases where the legal assessment is very complicated or subject to fundamental doubt and where
there is a general need for case law.
• What is the aim of producing alternative methods for pre-contract problem-solving ?
The answers to that question can be given at several levels, following the conclusions from the
questionnaire outlined in chapter 5. In general, the
most fundamental answer should be to make
problem-solving more efficient, both in the interest
of cost saving for the parties, and in a market perspective.
• What authority should be given the task of
assisting complaining parties in starting an alternative problem-solving procedure?
In answering this question it should be borne in
mind that there are competent authorities with
formal powers to enforce the procurement directives. Among the participants in the PPPP, there
have been different views on whether, in addition
to this general task, a particular authority should
31
also be appointed to supervise or monitor the procurement area and work as a contact point. No
general recommendation can be made on this
issue.
• How should cases be handled by the alternative
methods ?
In order to make alternative methods transparent
to its users, the rules by which cases are considered
should be made explicit, for example in a set of
principles for procedure, in a manual or in other
information available to the public. What procedure should complainants follow to initiate a case?
What time frames should complainants expect the
Competent Authority to work within? These questions will be discussed further in the following
chapter.
32
• How should the formal review system and the
alternative methods complement each other?
In general, competent authorities should avoid
getting involved in cases that are already subject to
court procedures. On the other hand, the alternative handling of a case should not prevent the complainant from pursuing the case under the formal
review system.
• How should the participating country give information on the system?
A solution will either be implemented as a government decision or have a specific legislative basis. In
both cases a precondition of success is that the
companies – and the CA – have been informed sufficiently about the problem-solving methods.
7. Preconditions for efficient pre-contract problemsolving – Observations
The foregoing analysis indicates that not all cases
are suited for informal procedures.
country should decide whether it will establish
such methods, and if so: when and how:
Accordingly this chapter will focus on the preconditions of achieving efficient pre-contract problem-solving – be it formal or informal. The
preconditions are based on the answers from the
Competent Authorities participating in the study
and the analysis of the alternative methods of precontract problem-solving.
Observation 1:
Participating countries – which do not currently
have alternative methods for pre-contract problem-solving could decide whether and when they
would like to introduce such methods.
Observation 0:
The aim of this study is not to suggest a uniform
system for all participating countries, but to give
inspiration to the participating countries to further improve their methods for pre-contract problem-solving – should they wish to do so.
The study shows that some countries have the aim
to establish alternative methods for pre-contract
problem-solving. According to the views of these
countries, this will meet the need for a rapid and
less expensive alternative to court proceedings.
When one considers the answers to the questionnaire, it may not seem likely that all participating
countries will agree to introducing alternative
methods of problem-solving. Therefore, each
Even if the alternative methods cannot – and need
not – be exactly the same, it seems, however, useful
to see to which extent an approximation of the
methods can be achieved – with the aim to secure
that a complainant in one country will have the
same possibility to complain over a pre-contract
problem as a complainant in another country.
Such a process of approximation could over time
lead to a common guideline for co-operation.
Observation 2:
Participating countries that have alternative
methods of problem-solving or are planning to
establish such methods should consider agreeing
on a common guideline for co-operation on how
these methods should work among its participants.
33
If it is decided that a common guideline should be
developed, the parties should agree on how to fulfil
the obligations of such a guideline.
Competent Authority’s powers and abilities to prevail. If companies do not have this trust, no complaint will be filed to the Competent Authorities.
It is not possible at this point of time to define
what kinds of mutual obligations should be
included in such alternative methods. However, it
is essential to realise that both internal conditions
in the Competent Authority and external conditions – related to the companies participating in
the public procurement – are important in order
to have efficient pre-contract problem-solving.
The study shows that only a very limited number
of the companies complaining had doubts whether
the Competent Authority had the necessary power.
Actually, it is more common that companies
believe that the Competent Authority for instance
is able to change the decisions of authorities who
have already awarded contracts.
Companies must know where to submit their complaints. They must know how to formulate their
complaints and they must have relatively easy
access to the authorities who will be dealing with
their complaints.
The study shows that visibility and accessibility in
some cases are a problem. Several national authorities which have alternative methods for handling a
pre-contract complaint do not really know to
which extent companies know about the service or
the possibility to complain.
Observation 3:
The Competent Authorities should be committed
to develop a plan for information activities to
inform companies, advisors, business organisations etc. about the available services.
A very important aspect is to ensure that the companies will feel confident that their complaints are
given serious attention and will believe in the
34
Observation 4:
When the Competent Authorities inform about
the activities regarding pre-contract problem
solution, it is necessary to specify the capacities of
the Competent Authorities’ powers.
In order to comply with the above-mentioned
needs, the Competent Authority must have a system
in which certain conditions are fulfilled:
A very important precondition for solving problems in a smooth way within reasonable time-limits is that the Competent Authority has sufficient
resources available. Several countries point out
that a shortage of resources is a problem.
Observation 5:
Each participating country must allocate adequate resources to implement alternative methods
for pre-contract problem-solving and guide-lines
for co-operation.
It is suggested that ”adequate” should be defined in
relation to the consideration of the cases, see
below.
Consideration of the cases
To be able to react adequately and within the tight
time-limits in public procurement, it is important
that the Competent Authority should be able to
consider pre-contract cases within reasonable
time-limits. This applies especially to pre-contract
cases if a solution is to be found before a contract is
awarded.
If the Competent Authority has stopped the procurement procedure, a long response time is not
crucial, but if the procedure is running, this phase
requires a fast reaction from the Competent
Authority in order to intervene before the contract
is signed.
To have an efficient Competent Authority it is necessary to make immediate enquiries into the problem, to draw the issue to the attention of the
contracting authority concerned, and to establish
whether there is, in fact, a problem of market
access or a breach of Community law. In so doing,
the Competent Authority must make its best
efforts to pursue all reasonably available sources of
information. In normal cases the identification
phase time should be less than a month.
During the consideration of the case, the Competent Authorities must inform the company, on
request or at reasonable intervals, of the status of
an examination/investigation initiated and, where
appropriate, provide relevant information.
The Competent Authorities must make their best
efforts to complete their examination as quickly as
possible, and in any case to achieve, if possible, a
solution as soon as possible from the date when the
original request was made.
In general, a number of elements could be specified in order to achieve a common approach of
companies encountering market access problem in
the various participating countries. That is why a
specific guideline – covering the consideration of
specific cases is mentioned. Such a guideline would
come close to the guideline on cross-border cases
between the countries participating in the PPPP.
Observation 6:
The countries should consider a more specific
guideline on how concrete cases are to be dealt
with by the Competent Authorities.
In order to improve the system, each member
should commit itself to provide statistical information to the Commission. Also the Competent
Authorities should agree to participate in exchange
of experience with the other participating countries.
Ability to react
In cases where the rules have allegedly been violated and where action on the part of the Competent Authorities is necessary, it is essential that the
35
Competent Authorities should react with great
urgency.
tion of the regulatory framework in pre-contract
cases.
It is assumed that it will not be possible at this
stage of the development of the common public
procurement policy in the European Union to
establish a common pre-contract problem-solving
system. This, of course, limits possible sanctions
from the Competent Authorities in case of viola-
However, the study shows that legal sanctions are
not the only crucial factor in order to ensure that
the contracting authorities comply with the regulations on problem procurement. Speedy reaction
from the Competent Authority is perhaps a far
more important element.
36
ANNEX 1:
Questionnaire regarding a study on formal review
systems and informal problem solving
General introduction
The following questionnaire consists of two parts.
The first part, A, contains general questions
regarding the Complaint Authority (CA), its powers and organisation. The second part, B, goes into
more detail with the CA's practical experience on
problem solving. In order to allow all members of
the Pilot Project to gain an understanding of the
procedures in the individual countries, there are
five copies of the second part. So, at least five
national cases can be described in more detail. This
would allow all of us to describe examples of formal as well as informal case handling in the
national system. If the CA has already had experiences with handling cross-border cases, one of the
copies could be reserved to describing a cross-border case.
Formal systems could be defined as systems where
the CA has got formal powers to investigate and to
intervene in procurement cases (as the Danish
Complaints Board for Public Procurement). Informal systems could be defined as systems, where the
CA relies on recommendations and guidance in
order to enforce the procurement rules (as the
Danish CA). The distinction is only meant to take
into account the differences among the various
systems, i.e. to include all systems in the analysis.
Hence, great attention should not be given to
whether the individual system is formal or informal.
Throughout the questionnaire, there is a clear distinction between pre-contract and post-contract
complaints.
Introduction to some of the questions
For the sake of clarity, the following explains what
is behind some of the questions. First of all question 4 is intended to reveal, whether the companies
have got sufficient knowledge of the complaint systems or not. The latter could e.g. be the case, if the
companies lack experience in the procurement
procedures.
Question 5 deals with the issue of problem solving
and thus the question: Are the companies aware of
the distinction between pre-contract and postcontract: do they know that there may be an
opportunity to intervene in a procurement procedure in order to enforce the rules before the contract has been awarded?
Question 7 is supposed to give an indication as to
the general level of satisfaction among the compa-
37
nies with the powers that the CA may have and the
use of them.
In the second part (B), question 2 should give the
reader an impression of the facts of the case in
order to understand the subsequent answers.
Question 4 repeats the distinction between precontract and post-contract cases, which is essential
in the whole analysis. Questions 7 to 9 are supposed to describe the procedures that we follow,
i.e. how do we handle cases. Questions 10 to 12
reveal to which degree the complainant was satisfied with the outcome of the case, i.e. the procurement rules and the interpretation and enforcement
of these. Finally, question 13 allows the CA to comment upon the case – were there any obstacles, lack
of powers etc. that the CA was not satisfied with?
A. General questions
1. How many persons have the CA currently available for case handling?
_____________
2.
How many national cases has the CA been involved in in 1999 and in 2000?
1999: ____________ 2000: ____________
3.
How many of these cases could be characterised as:
Pre-contract: _____________ Post-contract: _____________
4.
Do the companies in general know how and where to submit the complaint?
Yes
No
¨
¨
- if no, what could be the reason?
_________________________________________________________________________________
_________________________________________________________________________________
5.
In your opinion, how familiar are the companies that participate in public procurement with the
option of pre-contract problem solving as a means of avoiding conflicts?
Known by most companies
Known by some companies
Known by few companies
38
¨
¨
¨
6.
How does the CA inform the companies about the option of pre-contract problem solving and about
the procedures of complaining?
News letters
Direct mail
Leaflets
Meetings
Internet
Other
¨
¨
¨
¨
¨
¨
- if other, please describe:
_________________________________________________________________________________
7.
In your opinion do the companies participating in public procurement generally believe that the CA
has got the necessary powers to prevail vis-á-vis the contracting authorities?
Most companies
Some companies
Few companies
8.
¨
¨
¨
What would in your opinion enhance the possibilities to solve pre-contract problems in the future?
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
39
B. Questions based on practical cases
1. Who submitted the complaint (the company, an organisation etc.)?
_________________________________________________________________________________
2.
Why did the company complain? Please give a short description of the facts of the case.
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
3.
Under what procedure was the tender called?
_________________________________________________________________________________
4.
Could the complaint submitted be characterised as:
Pre-contract: _____________________ Post-contract: __________________
5.
How long was the identification time (i.e. the time consumed by the complaints authority from the
complaint was received by the authority until it had identified whether there was a procurement problem and if so which problem was in question)?
_________________________________________________________________________________
6.
How long was the response phase time (i.e. the lapse of time from the problem solution was presented
to the contracting authority concerned until the authority took appropriate action)?
_________________________________________________________________________________
7.
Was the contracting entity invited for a meeting to clarify the dispute?
Yes
No
40
¨
¨
8.
Did the CA involve any other authority in the problem solving?
Yes
No
9.
¨
¨
What other action did the CA take?
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
10. What was the result of the case?
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
11. In your opinion was the result satisfactory for the company complaining?
Yes
No
¨
¨
- why?
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
41
12. Did the company involved spend a lot of resources in process of solving the problem?
Yes
No
¨
¨
- why?
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
13. Was the result satisfactory for the CA?
Yes
No
¨
¨
- why?
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
42
ANNEX 2:
Study on pre-contract problem solving systems:
National Reports, May 2002
Information has now been received from the 12
countries that will participate in the study.
National reports have been written on the background of the received information. Copies of
these reports are collected in this enclosure. It
should be noted, that parts of the material are col-
lected in the beginning of the year 2001, meaning
that some figures in the report are not up-to-date.
As in the draft report, the term “Competent
Authority” (CA) is used to designate the administrative authorities giving advise and handling
informal requests / complaints.
Contents:
Austria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
Denmark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
Finland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
Ireland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
Italy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
The Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
Norway. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
Spain. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57
Sweden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64
43
Austria
1. Formal review system
1.1 Short description of the system
The Austrian legal framework concerning public
procurement regarding the EU procurement directives is contained in the Bundesvergabegesetz
(BverG).
The Austrian unit responsible for meeting the
requirements in the remedy directives is the Bundesvergebeamt (BVA), which forms the juridical
review system and has the necessary power as
required by the directives. The BverG regulates the
legal protection of bidders in the pre-contractual
phase. After a contract has been awarded the BVA’s
competence is restricted to statements about the
conformity (or non-conformity) of a procurement
procedure of a contracting authority.
1.2 Use of the system
In the year 1999 the BVA had dealt with 83 cases.
1.3 No. of persons dealing with the cases
2 persons are dealing with the cases in the BVA.
2. Informal problem solving
2.1 Short description of the system
A separate dispute settlement body (Bundes-Vergabekontrolkommission – BVKK) is attached to
the BVA. Its power is limited to giving recommendations in the pre-contractual phase, especially
concerning the scope of application of the rules.
All disputes have to be introduced to the BVKK
before they are presented to the BVA.
44
In this way the BVKK works as a informal conciliation procedure.
2.2 Use of the system
In 1999 the BVKK had to deal with 161 cases. This
is almost the double of the number of cases presented to the BVA, which is a result of the mediating effect of BVKK.
2.3 No. of persons dealing with the cases
2 persons are dealing with the cases in the BVKK.
Denmark
1. Formal review system
1.1 Short description of the system
In Denmark, a special administrative tribunal, The
Complaints Board for Public Procurement, was set
up in 1991 to act as review body as required by the
Remedies Directives. It works as a quasi-judicial
administrative body with the function to hear
complaints and settle disputes arising from alleged
violations of EU rules on public procurement.
The issues decided by the Complaints Board can be
brought before the ordinary courts. Only a few
decisions by the Board have subsequently been
brought before the courts.
Bringing a complaint about an alleged violation of
EU procurement rules before the Board is an
option. Alternatively, such a complaint can be
taken directly before the ordinary courts. There is
no precedent for using this alternative. In reality, it
is therefore the Board that makes the decisions
regarding application of the EU procurement rules
in Denmark.
According to the Danish legislation implementing
the two Remedies Directives, the power of the
Complaints Board are the following: the Board can
either reject a case, e.g. if it falls outside its competence, or go into the merits of it, in part or in
whole. In the latter case, the Board can 1) annul
unlawful decisions, 2) impose interim measures, in
which case the contract award procedures will be
suspended, or 3) impose upon the contracting
authority/entity to comply with the rules (legalise
its actions). However, the Complaints Board does
not have the power to repudiate a contract that has
been concluded.
Through a change in the Danish law in 2000 it is
now possible for the Board to consider claims for
compensation as a consequence of a violation of
the procurement rules.
In cases where a claimant succeeds in his claim
before the Complaints Board, the Complaints
Board may order the contracting entity to pay the
costs to the claimant in connection with the claim.
The defendant contracting authority/entity, however, will not have its costs covered, even if the
claim is dismissed.
Contracting authorities/entities are liable to punishment if the procurement rules are violated.
Moreover, failure on their part to comply with a
prohibition or enforcement notice, wilfully or by
gross negligence, issued by the Complaints Board
is punishable by a fine. For criminal sanctions to
be initiated the contracting entity must be notified
to the prosecution service.
In Denmark the awarding and the conclusion of
the contract are normally contemporaneous,
besides the time allowing for forming and signing
the contract. This makes it difficult to operate with
a time period between the declaration made to the
tenderer, accepting its tender, and the conclusion
of the contract.
1.2 Use of the system
The Complaints Board issues on average about 20
orders every year.
It takes on average a period of four months for the
Board to decide on a complaint brought before it.
1.3 No. of persons dealing with the cases.
3 legal judges and 20 expert (non-legal) judges – all
part time.
1.4 Strengths and weaknesses
Strengths
The activities of the Board are governed by regulations which ensures due process protection of the
rights of parties involved and procedural fairness
with respect to the application and construction of
the rules. In addition, the procedures of the Board
are much faster than in the ordinary courts, where
cases are decided only after several years.
45
Weaknesses
In approx. two thirds of the cases, the procurement
procedures are found to be unlawful. Experience
shows that most award procedures have been concluded and a binding contract has been signed
with a supplier before the case is brought before
the Board. Therefore it is too late for the Board to
change the outcome of the procurement procedures in practice. In the very few cases which have
been submitted to the Complaints Board before
the contract was awarded, the Complaints Board
has rarely used its powers to suspend the procurement procedures. For these reasons the orders of
the Complaints Board have therefore never had as
a consequence that an illegal procurement procedure has been legalised, nor that a cancellation of a
contract has taken place with the result that the
contract subsequently has been – properly –
awarded to another tenderer.
In practice, the main function of the Complaints
Board has thus been reduced to consist of a subsequent expression of opinion on the legality of procurement procedures. This means that an
important intention behind the setting up of the
Board – to achieve swift and efficient intervention
in procurement procedures while in progress – has
not been fully met.
2. Informal problem solving
2.1 Short description of the system
In addition to the formal complaints system, the
Danish Competition Authority has developed a
practice for swift and efficient hearing of com-
46
plaints. Where the Complaints Board in practice in
the majority of cases expresses its opinion on the
legality of contract award procedures at a stage
where the contract has been awarded, the CA,
applying the method developed, may step in to
deal with a complaint during the procurement
procedures.
Through discussions with the contracting authority/entity it tries to change the course in order to
legalise its procedures before the procurement procedure is closed and the contract is awarded. This
way of hearing complaints at the earliest stage possible during an award procedure corresponds to
the intentions behind the Remedies Directives in
the public procurement area.
In order to increase the possibilities of swift identification of violations of the procurement rules and
a correspondingly swift treatment of complaints,
the CA was given formal legal authority to bring
cases before the Complaints Board.
When the CA steps in, it is the CA and not the
claimant who is a party to the case. The CA’s
assessment of a case is drafted as a recommendation to the contracting entity of which the claimant
receives a copy. If the recommendation of the CA is
not followed, the case can be brought before the
Board for a decision.
2.2 Use of the system
Approx. 30-40 complaints are annually brought for
the CA.
The identification time is typically less than twothree weeks and the response phase time takes two
month on average.
The activities of the Danish Competition Agency
in regard to conflict resolution in procurement
cases is known by most relevant Danish companies. The CA arranges conferences twice a year,
and distributes leaflets, newsletters, internet etc.
Most companies believe that the CA has the power
to prevail against the contracting authority.
2.3 No. of persons dealing with the cases
2-3 persons in total are dealing with the cases.
2.4 Strengths and weaknesses
Strengths
In most of cases brought before the CA, the contracting authority/entity has still not finished the
procurement procedures and awarded the contract. Where there is probable cause to believe that
the procurement rules have been violated, the CA
will take up the case with a view to obtain a swift
and smooth solution. Most of the problems complained about are solved in this way. Only very
exceptionally has the CA been forced to bring cases
before the Complaints Board. The consideration of
complaints by the CA satisfies to a wide extent the
need for swift and smooth intervention in cases of
violation before the award of a contract.
Weaknesses
As will appear from the above, the CA has no formal legal authority to undertake investigations of
procurement procedures involving violations of
the rules.
If the legal basis for the activities of the CA in this
area is strengthened, it will improve its possibilities
to intervene early in unlawful procurement procedures. As a result, a better effect will be obtainable
from filing a complaint regarding violations of the
procurement rules.
Finland
1. Formal Review System
1.1 Short description of the system
The competition Council has the jurisdiction and
works as the Complaint Authority.
1.2 Use of the system
The number of cases the CA were involved in in
1999 were 131 and in 2000 approx. 140 cases. Of
these were approx. 2/3 pre-contract and 1/3 postcontract cases.
In general companies know where to submit complaints and they are aware of the possibility of precontract solving. Companies do however in many
cases believe, that the CA has the possibility to
change the decision of the contracting authority.
There is in general a belief in the CA’s power to
prevail against the contracting authority.
47
1.3 No. of persons dealing with the cases
2 persons are working full-time with the cases.
1.4 Strengths and weaknesses
The system could be improved with the following:
• better contracting and tender documents that
precisely state selection criteria,
• effective sanctions in case of infringement,
• effective publication of principles of procurement rules and decisions of the CA.
In addition it is a weakness of the system, that the
CA has inadequate resources.
2. Informal review system
2.1 Short description of the system
Finland has recently set up a Single Market Contact Point, where companies can complain regarding cross border cases.
2.2 Use of the system
The system has until now not been used very
much, since the knowledge of the system is limited
amongst companies. The Contact Point has started
corporation with different organisations with
interest in public procurement to secure, that companies receive information on the initiatives.
Time frames vary from case to case. In some cases
the identification time is only hours – in other
months. Also the response phase time varies from
case to case.
48
In general the companies (and the CA) are satisfied
with the results of the problem solving from the
CA.
2.3 No. of persons dealings with the cases
Two persons are involved in dealing with the cases.
The Contact Point has however other functions as
well, for instance inquiries regarding trade barriers
etc.
2.4 Strengths and weaknesses
A real network between the Member States, where
is would be possible to solve problems informally
and fast, would motivate the companies to participate in public procurement in all countries.
Germany
1. Formal review system
1.1 Short description of the system
Public procurement is regulated in the Act of
Restraints of Competition. In accordance with EU
Law legally enforceable rights are conferred on
companies and contracting entities. Every company interested in the award of a contract, which
can show that is has suffered damage or might suffer damage as a result of an alleged infringement of
the procurement provisions may initiate procurement review proceedings.
Procurement chambers, which are responsible for
the proceedings in the first instance, are set up in
each Länder. Federal contracts fall under the jurisdiction of the federal procurement chamber at the
Federal Cartel Office.
On filing an application for review, the award of
the contract will be suspended, provided the application is not inadmissible or clearly unjustified.
The procurement chamber must make a decision
within four weeks, in the form of an administrative
act. The decision can be appealed. The legal remedy can also suspend an ongoing tender. If the contacting authority makes a special application,
however, the court can allow the procurement proceeding to go ahead and permit the contract to be
awarded. To prevent a large number of review proceedings, the applicant must compensate the
involved, in cases where the complaint is unjustified.
A provision entered into effect 2001 require procurement bodies to inform bidders 14 days in
advance of the awarding date about the name of
the bidders, whose bid is being deemed to win the
race and about the reasons why their own bids
have not been taken into consideration. Contracts
entered into in spite of violating this rule would be
nil and void.
2.2 Use of the system
Since 1999 the informal problem solving has been
used in 6 cases. Of these has only 1 been a pre-contract case.
The limited used of the system indicates that this is
only known by some companies.
Typically the identification time is short, often a
few days, while the response time varies from case
to case.
The practical cases mentioned do not give a clear
picture whether the results have been satisfactory
for the CA or the company.
2.3 No. of persons dealing with the cases
2 persons are dealing with the system.
The possibilities to solve the problem could be
improved if the companies request an earlier problem solving.
Republic of Ireland
1.2 Use of the system
From the period from January 1999 to February
2000 the system has been used 114 times. Of these
has the ruling been in favour of the bidder 41 times
and in favour of the contracting entities 73 times.
2. Informal problem solving
2.1 Short description of the system
The system is administered by the Federal Ministry
of Economics and Technology in Berlin.
1. Formal review system
1.1 Short description of the system
The Republic of Ireland does not have a dedicated
Complaint Authority. Instead they have a Government Contracts Committee (GCC), which has the
responsibility for procurement policy and practice,
and which occasionally receives complaints from
tenders.
The GCC is represented in a Forum for Public Procurement, which is widely representative of play-
49
ers, including suppliers, business representative
bodies, contracting entities etc. The Forum promotes best practice in procurement and through
meetings, public events etc. suppliers become
aware of the GCC and its role.
2. Informal problem solving
2.1 Short description of the system
As already said, Ireland has not given the establishment of a separate CA-function or a function for
informal problem solving high priority.
Due to the countries limited resources Ireland has
not felt that there has been a need for a separate
national “complaint body”, others than the remedies available through the national courts and the
provisions of the EU remedies Directives.
However if an informal complaints procedure
becomes a greater priority, from a national or a EU
viewpoint, a re-focusing of existing resources and
activities will be undertaken.
1.2 Use of the system
In 1999 and 2000 there has been 3 respectively 2
national cases which the GCC has been involved
in. Of theses were 1 pre-contract cases and 4 postcontract cases.
Because there is no dedicated CA in Ireland, the
companies in general do not know of the pre-contract solving or where to submit complaints. Also
few companies believe that it is possible to prevail
against contracting authorities.
As a consequence of the above most of Irelands
cases are national, pre-contract cases.
1.3 No. of persons dealing with the cases
Dealing with complaints is a part of the GCC’s
overall operations with public procurement policy
and administration. GCC is serviced by a full-time
staff of 3 persons.
50
2.2 Use of the system
Of the practical cases mentioned, there has both
been cases with satisfactory results and with unsatisfactory results.
Typically the identification time is a couple of
weeks, while the response time varies from case to
case.
Italy
1. Formal review system
1.1 Short description of the system
According to Italian law, infringements of EC rules
on public procurement is subject to the administrative court, consisting of a three member panel,
with recourse to a high court with a five member
panel. Companies have the right to go to the court
to complain against a presumed unlawful exclusion or decision.
In this case, the complainant can ask for a precautionary measure to obtain the protection of the
companies interests in urgent cases.
The administrative court, having full jurisdiction
in the work, service and supply public procurement procedures, can award damages, set a new
procedure or find for unlawful breaches of the
rules.
The Italian legal system also provide for interim
measures. Normally such action can be made
within ten days – a period that can be shortened to
five days, upon request to the chairman of the
court. Interim procedures also allow for very quick
resolving procedures whereby the opposing party
is not being heard before the decision is rendered.
1.2 Use of the system
The number of national cases (including preliminary questions, explanatory cases and regulatory
acts) were 350 in 1999 and expected to be 800 in
2000. Approx. 55% were post-contract cases and
45% were pre-contract.
Of the 800 cases in 2000 approx. 240 of these were
actual complaints. Of the 240 complaints approx.
80% were settled with a suggested solution
(through meetings with the parties), and in the
rest of the cases there were a formal solution.
It is believed that companies in general know
where to submit the complaints, but only some
companies know of the option of pre-contract
problem solving as a mean of avoiding conflict.
The participants in public procurement are
informed of the role of the CA through meetings,
internet and through journals.
1.3 No. of persons dealing with the cases
A total of 35 persons are dealing with the cases and
other related work.
1.4 Strengths and weaknesses
The strengths of this system are the authority’s
independence and quick decisions related to the
interlocutory proceedings.
The weaknesses are the high costs and the length of
the whole procedure.
2. Informal problem solving
2.1 Short description of the system
At the moment there is not in the Italian system an
independent authority competent to solve the disputes regarding awarding procedures. It is however
the intention to create an authority for the single
market implementation into the Dipartimento
politiche comunitarie, which is the department
having the contact with the Commission.
The Dipartimento politiche comunitarie, where
the authority for the internal market implementation will be created, has already a large independence in respect of the other public bodies, being
competent to implement the EC rules, also at legislative level, either by the community law or by the
derived implementing acts.
The authority will operate in close contact with the
EC Commission, consulting it in all the cases of
great interpretative interest, and with the corresponding authorities of the other member states
51
participating in the pilot project for public procurement awarding procedures.
Consequently, this authority can intervene on
request of the complainant, demanding the necessary information in order to state its opinion
regarding tile rightness of the application of the EC
rules.
The experience of the meetings with the EC Commission has demonstrated that the public procurement entities are inclined to conform to the
opinions of the Dipartimento politiche comunitarie, even if they are not legally binding. If the
authority does not respect the opinions of the CA,
the awarding public entity risks a negative final
judicial decision.
2.2 Use of the system
There are approx. 500 cases per year of which 350
are actual complaints, whilst the remaining are
preliminary questions, explanatory cases etc.
A study of a number of concrete cases shows that
the identification time is approx. 2 months.
2.3 No. of persons dealing with the cases
The same 35 persons as above are dealing with theses matters.
2.4 Strengths and weaknesses
The strengths of this system are quick decisions,
informal procedures and the utilisation of an
already tested and low costs procedure.
The weaknesses are that the decisions are not
legally binding and cannot be executed by enforcement order. Also it is a problem – especially in precontract solving – that identification time is relatively long, i.e. 2-3 months. In most cases this will
reduce the CA’s possibilities to intervene in a current procedure.
Another weakness is, that only few companies
know of the possibility pre-contract problem solving.
The informal system is relatively new – established
in 1999 – and working satisfactory, and a change of
this system is not seen for next couple of years.
The Netherlands
The system is only known by some companies,
which is the reason why an information campaign
is planned. Only some Italian companies believe
that the CA has the necessary power to prevail in
public procurements.
1. Formal Review System
1.1 Short description of the system
There is no specific Dutch national complaints system for procurement.
In the majority of the practical cases mentioned,
the results have been satisfactory for both the CA
and the company.
According to Dutch law, the decisions of a public
authority regarding procurement are seen as acts
of civil law. Disputes in procurement procedures
outside the scope of the directives (for instance
52
tenders under the thresholds values) are also subject to the ordinary courts.
The Dutch civil legislative system has all the facilities requested by the remedies directives (interlocutory proceedings in urgent cases, accelerated
proceedings and normal proceedings etc).
The specific remedies like the corrective mechanism, conciliation and attestation/verification have
been implemented separately in Dutch law.
According to Dutch law there are (in addition to
these remedies and the possibility to notify a complaint to the Commission) only two possibilities to
act in case of complaints: 1) the normal civil court
procedure and 2) arbitration (especially in the
construction sector).
Civil court procedure
Dutch civil procedure law gives every company or
citizen the right to go to the civil court if they
believe that their rights have been violated by an
authority or a public company. Alleged breaches of
the procurement directives have to be pursued in
the ordinary courts on the basis, that the awarding
entity has committed an unlawful breach of Dutch
law.
Interim measure usually takes two weeks to complete.
Arbitration
In the construction sector the central government
did already work with public procurement regula-
tions for works: the Uniform Procurement Regulation (UPR) for the State with its special
Arbitration Committee for the Building Industries
(ABBI). Local government can voluntarily use this
regulation (what they often do in practice, also
sometimes for services and supplies).
This ABBI has been mobilised quite often (around
850 procedures every year) and is rather successful
in this field. Other (non-central) authorities may
voluntarily declare the UPR applicable to a procurement procedure, even including one outside
the scope of the works directive. The ABBI seems
in practice similar to an ordinary court (proceedings are similar concerning hearing both parties
and full argument on both sides/ decisions are
legally binding and can be enforced by enforcement order of a civil court).
The experiences indicate that both ABBI and civil
courts can overturn procurement decisions in case
of breach of the directives. Even concluded contracts can under certain conditions be set aside.
Under Dutch law a contract is effective from the
moment a contracting authority informs the
selected tenderer that it accepts his bid. Thus in the
Netherlands the there is no time limit between the
award decision and the conclusion of the contract
The contracting authority must – as stated in the
Directives – inform tenderers as quickly as possible
of the decisions taken concerning the award of the
contract.
53
There are two possible ways to appeal:
1. If there is an arbitration clause, the Arbitration
Board or another specified arbitrator can be
asked to settle any disputes,
2. In other cases the dispute may be brought before
civil courts (either after the award decision has
been announced or after conclusion of the contract. In such cases the procedure and the execution of the contract can be temporarily
suspended until the case has been examined.
In case of violation of the rules a contract is legally
not nullified, but the aggrieved tenderer can make
an application for the judge to order the contracting authority to cancel the contract or go through
a new procedure.
When a contract between a contracting authority
and a company has been concluded, the judge will
only award damages. Especially when effectuation
of the contract has begun, the judge will not order
the contract to be put aside.
1.2 Use of the system
The number of cases are not registered.
Time frames varies a lot, from a couple of weeks in
some cases to years in other cases.
1.3 No. of persons dealing with the cases
3 persons are working part-time with regulatory
matters and are not involved with the civil court or
arbitration procedures. In addition a number of
people are working with these issues.
54
1.4 Strengths and weaknesses
The strengths of the legal court system are the following:
• conformity of the law,
• no specific civil or public law on remedies of
procurement with different remedies other than
in normal civil law.
The weaknesses are:
• complainants do not use the civil court procedures easily and often,
• complainants do not want to go to court (too
much efforts, costs etc.) or are afraid to loose
contracts in following tenders by the same procuring entity,
• the central government will not go to court
when it discovers an infringement of the directives by other procuring entities. So, the central
government has no possibility to play an active
role in enforcing public procurement rules. It
does play an active role in stimulating contracting authorities to realise a professional purchasing and procurement policy.
The strengths of the arbitration system are the following:
• quick decisions,
• informal procedures,
• practical knowledge of arbiters,
• the procedures are by equals.
The weaknesses are:
• relative high costs,
• the arbiters are not lawyers,
• risk of biased decisions.
2. Informal review system
2.1 Short description of the system
The remedies available from the ABBI and the
ordinary courts appear to be effective and to satisfy
the requirements of the remedies directives. For
this reason The Ministry of Economic Affairs has
not established a informal review system.
From the cases described, there is not a clear picture whether the results were satisfactory for the
CA and the company.
2.2 Use of the system
As there is no informal review system, The Ministry of Economic Affairs has limited experience
with informal problem solving. The Ministry has
contact with only 3-4 companies every year, where
the companies claim that the contracting authority
has broken the law. These are all pre-contract
cases.
2.4 Strengths and weaknesses
The system is quick and informal.
Also few companies know of the pre-contract
problem solving. The CA only informs the public
(by newsletters and via Internet) about the possibility for cross border solutions.
Norway
The weakness of the informal review system is that
there is no systematic information towards the
companies. There are no internal guidelines for
complaint handling. However the guidelines of the
PPP for cross border problem solving are used for
solving cross border problems.
Typically the identification time is a couple of
weeks, while the response time varies from case to
case.
2.3 No. of persons dealings with the cases
As already indicated, three persons are available for
handling the cases.
The weakness of the system is that there is no binding decisions, only persuasion of the authorities.
Also the system is unknown and for this reason the
Ministry has started to marketing the PPPPproject.
1. The formal review system
1.1 Short description of the system
In Norway the national court system is used as a
review body as required in the remedies directives
to secure a correct and effective application of the
rules. So, the courts have the powers to investigate
and intervene in procurement cases under national
law, and to suspend or set aside a decision made by
the contracting authority.
1.2 Use of the system
Since the system was established in 1994 less than
10 cases have been brought to the court. All cases
were post-contract complaints. It is believed that
only few of the suppliers know about the possibility to complain.
55
In general the courts work fast in the identification
time: Typically a meeting will be held in a couple of
days after a complaint has been submitted. The
court is hereafter able to suspend the decision
made by the contracting authority only days after
having received the complaint. However, the decision made to – for instance – set aside a decision
made by the contracting authority (i.e. response
phase time) will vary from case to case. In actual
cases it took more than 7 months.
Besides the court system, the EFTA Surveillance
Authority (ESA), which is formally not a part of
Norway’s review system, plays an important role in
complaint cases. The Ministry of Trade and Industry, which is responsible to ESA, has handled 13
enquiries in 1999 and 9 in 2000. The cases are both
pre- and post contract complaints and submitted
by the suppliers and always on initiative from ESA.
Also enquiries could be a general investigation
from ESA regarding a specific case, where no complaint has been submitted. It is also believed that
only few suppliers know of the possibility to make
pre-contract complains through ESA.
1.3 No. of persons dealing with the cases
4 persons in the Ministry are employed with case
handling (primarily ESA-cases).
1.4 Strengths and weaknesses of the system
Three studies carried out from 1996-99 showed
several reasons for suppliers not to use the formal
review system:
56
• the suppliers feared future relations with the
authority,
• the suppliers did not perceive the possibilities to
submit a complaint as satisfactory,
• the suppliers did not have enough knowledge of
the regulations and procedures,
• the contracting authority often fails to inform
the suppliers about the possibilities to complain,
• the cost of complaining are considered too high,
• in the actual cases it is mentioned as a problem
that taking a case to the court is very costly for the
company involved. Furthermore, it is a problem
that it has no real consequences for the authority
if it does anything wrong in the procedure.
The strengths of the current system is a fast identification whether there is a problem in the tender or
not, and also a possibility to intervene in an ongoing tender.
2. Informal problem solving
2.1 Short description of the system
The Ministry has no direct power, and therefore
only gives general statements and instructions on
the comprehension of the directives. It is believed
that the Ministry has indirect power by the assessment of the actual cases. In this way the Ministry
acts as informal problem solving in Norway.
In 1997 a panel of experts from the contracting
authorities and the suppliers (trade and industry
organisations) was established, NFOA. The panel
gives its statements on cases brought forward by
parties involved in public procurement cases, but
has no formal power.
In order to improve the informal problem solving
system the Ministry prepares the establishment of
a new complaint board. The board, which is
expected to start 1. January 2003, will still be an
advisory board and thus a supplement to the existing formal review system. The intention is to create
a system, which in a quick way can solve problems
at a low conflict level.
2.2 Use of the system
Approx. 130 enquiries are handled on an annual
basis. Most enquiries are questions regarding the
understanding of the regulation, and can therefore
be described as pre-contract cases. Few suppliers
submit complaints, which indicates that only a
limited number of companies know of the possibility to submit complaints regarding an ongoing
procurement case.
In 1999 the NFOA-panel handled 11 cases and it
has handled 8 cases in 2000. It is believed that only
few suppliers know the existence of this panel.
Having no legal power the NFOA is limited in its
sanctions. Cases are typically presented on the
internet, which has a limited impact on the
authority.
The Ministry informs on the activities using internet, leaflets etc. regarding their activities on public
procurement.
Typically the identification time is short, a couple
of days, while the response time varies from case to
case.
The satisfaction with the results varies from case to
case.
2.3 No. of persons dealing with the cases
It is the same 4 persons, who are employed with
this work as above.
2.4 Strengths and weaknesses of the system.
The system is cheap and gives a quick guidance for
the contracting authorities to comprehend the
rules.
The weaknesses are identified as the following:
• known by few companies
• no legal power
• no sanctions possible
Spain
1. Formal review system
1.1 Short description of the system
Concerned parties may lodge various administrative or judicial appeals against the acts of public
administrations according to the level of the
awarding authority in the corresponding organic
structure. The internal procedure of the body
responsible for assessing the documentation submitted by candidates and for assessing tenders
(contracts committee) must also provide for hearing candidates' complaints.
Accordingly, an objection to an awarding authority's decision to announce a procedure to award a
contract during which the contract dossier and the
conditions governing it at the award stage and during implementation are approved, and which lays
57
down the conditions, requirements, technical
specifications and regulations governing the contract may be lodged within one month if the contracting authority does not report to a higher body
within the organic structure. Called a recurso de
alzada, this appeal has to be heard by the body to
which the awarding authority reports within three
months. This higher body may hear an optional
appeal for reconsideration of its decision. Called a
recurso de reposición, this appeal must be lodged
and heard within one month. Whether or not this
optional appeal is lodged, a judicial appeal known
as an administrative appeal may be lodged against
the body within two months if an express ruling is
made or within one year if no response is forthcoming.
If the contracting authority is the highest hierarchical authority, and therefore reports to no other,
objections may take the form of the optional
administrative appeal or the judicial appeal.
In practice, while courts have recently seen set up
in which a single judge hears administrative disputes and hands down a decision within four
months, these cases are normally heard by a group
of judges sitting in the Higher Courts of Justice, in
which a decision may be handed down more than
four years after the appeal was lodged.
1.2 Use of the system
There is no information from Spain on how many
cases arise each year, but we believe there are many.
No mechanism exists whereby specialised authorities hear objections concerning public tendering.
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1.3 Number of persons dealing with the cases
For the same reason as mentioned above, this
information is not available.
1.4 Strengths and weaknesses
The strength of the court system, obviously, lies in
its possibility of getting a final legal decision on the
matter. Its weaknesses, on the other hand, is the
time consumption necessary to get at final decision
and the associated costs.
2. Informal problem solving
2.1 Short description of the system
There are no rules which apply directly to this
informal procedure. Instead, contracting bodies
and enterprises use a series of practices and forms
of conduct to overcome difficulties in specific
issues arising in managing the procedures for
awarding contracts. In this respect, we can comment on informal procedures which the contracting authority applies directly in its internal
business, managing its own services when compiling the conditions and the contract dossier and in
its dealings with candidates. We could also refer to
external legal advice sought to provide criteria
affording a solution to problems.
In the former instance, questions may arise concerning the accreditation of candidates' capacity
(solvency) and in public works and service contracts, in both cases to a value in excess of 120 202
euros, in which an enterprise may need to be classified in a specific sub-group of activities and a
minimum specific category according to the
annual value of the contract. Questions also arise
on the setting of objective criteria for assessing tenders when contracts are to be awarded to the economically most advantageous tender in what are
known as "competitions" in Spain, and the inviability of such criteria when they refer to means of
accrediting solvency. These questions may have
particular influence on the assessment of documentation provided by firms and the assessment of
bids, when their correct definition is important to
the contracting authority and to the enterprises.
Other equally significant concerns are the classification of the subject of the contract in the event of
mixed contracts or contracts with a similar tenor
albeit governed by a different system, which gives
rise to misclassifications and the application of different rules, whereupon candidates who qualify
fully for award of the contract may be excluded.
Questions arising In assessing tenders essentially
concern documentary assessment, the influence of
variants presented, often because the conditions
are not as specific as they should be, the assessment
of an abnormally low offer and the weighting and
valuation of award criteria.
Whenever these issues arise, which are sometimes
assessed by the contracting authority and sometimes by candidates, legal advice is sought within
or outside the awarding authority so that conflicts
may be resolved without objections being lodged.
As for the second aspect, concerning external legal
advice on criteria which permit problems to be
solved, the contracting services of public administrations and enterprises, through business organi-
sations, put questions on the interpretation of
legislation to the Advisory Board on Public Tendering, which is laid down in the Law on Public
Procurement as the specific advisory body on public procurement questions, or within the scope of
the Autonomous Communities (regions), to bodies with the same or similar titles and functions,
which issue the corresponding opinion on how to
interpret and apply the rule. These opinions are
published on the Internet site of the Ministry of
Finance, where any interested part may consult
them directly at will. Some provincial bodies (Provincial Deputations) incorporate these reports into
their Intranet systems, with links to search thesauruses to facilitate municipalities' work. The assessment of the Advisory Board's reports is
particularly important inasmuch as it provides
bodies bound by decisions on tendering in every
sphere with the criteria to be applied to questions
arising.
2.2 Use of the system
In general do most companies know where to submit complaints.
During the year 2000 the number of complaints
has increased compared to the year 1999.
A majority of the complaints have been on precontracts cases, but in 2000 also a number of postcontract cases has occurred.
2.3 No. of persons dealing with the cases
Varies, depending on the number of cases.
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2.4 Strengths and weaknesses
In the treated cases both the contracting authorities and the suppliers have expressed satisfaction
with the process, which has helped the parties to
settle the dispute and clarify points in the procurement procedure, which were not clear.
In most of the cases the complainant has not spend
many resources on the complaint.
Sweden
1. Formal Review System
1.1 Short description of the system
In pre-contract situations the review court system
is operating through the administrative courts.
Only suppliers who have suffered or risk to suffer
losses, due to a contracting authority’s infringement of a provision in the Procurement Act, are
allowed to submit a complaint. The county administrative court may decide that the procurement
procedures shall be recommenced or that it may
not be concluded until a correction of the infringement has been made. The court can also make an
interim decision pending a final decision. Reviews
have priority at the county administrative courts.
Appeals against the decision of the administrative
court can be lodged at the administrative court of
appeal.
The administrative courts only deal with cases
where the contract has not been signed. If a contract is signed a supplier who considers that he has
been harmed can institute proceedings for damages against the contracting entity at a general
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court. Appeals against the decision of the general
court can be lodged at the court of appeal.
The Swedish National Board for public procurement (NOU) is an independent authority under
the Ministry of Finance. NOU is typically heard
when the highest administrative court needs an
experts opinion.
1.2 Use of the system
The number of cases concerning procurements
both below and above the EC threshold values that
the administrative court has been involved in since
its start in 1994 is more than 600.
In general suppliers know where to submit complaints and most of them are aware of the possibility of pre-contract solving.
The time used in the county administrative court
(the first instance) is typically 1-2 weeks. A possible
appeal will typically take another 1-2 months. If the
case is appealed to the highest court of appeal the
process can continue for several months.
1.3 No. of persons dealing with the cases
There is no statistics but an estimation is that at
least 2 persons are working full-time with the
cases.
1.4 Strengths and weaknesses
The formal review system with the administrative
court is cheap, simple and rapid, which means that
it often is the most effective way for a complaining
supplier to solve a problem in a pre-contract situation. One weakness, however, is that the existing
legislation does not yet prescribe any period
between the award decision and the concluding of
the contract. An amendment to the Swedish law is
proposed to come into force from the first of July
2002. Another weakness is that the legislation does
not offer the suppliers any remedy action when the
contracting entity does not at all follow the procurement law.
2. Informal review system
2.1 Short description of the system
NOU is responsible for the informal problem solving. NOU receives about 60 complaints a year in
writing from persons alleging violation of the procurement law, predominantly dissatisfied suppliers
who have participated in a public procurement.
The opinions issued by NOU are of a recommending character. The Swedish government has stated
that NOU shall only consider complaints of “general or particular interest”. NOU conducts individual information through a telephone service and
by answering written questions (e-mail and fax).
NOU refrains from advising contracting entities
on how to perform or act in a particular procurement situation. NOU may only inform the contracting entity or the supplier on the interpretation
of the public procurement laws and submit a general comment. It has happened several times that
NOU has been consulted for interpretative reasons
both by the supplier and by the contracting entity
about an ongoing procurement.
2.2 Use of the system
NOU receives and investigates approx. 60-70 written complaints per year under the informal com-
plaint system. Almost all of the complaints that
NOU receives are post-contract cases. During one
week NOU answers in general 130 telephone calls.
Most of the suppliers know where to submit complaints and most of them are aware of the possibility to consult NOU to receive information about
how to interpret the provisions in the public procurement law. There is no requirement in the law
that the complainant should be a supplier. Among
the complaints that NOU receives, both in writing
and by telephone calls, the major part comes from
dissatisfied suppliers but also politicians, trade
associations and taxpayers consult NOU.
Time frames vary from case to case. Within 1
month NOU mostly has decided whether a written
case is of general or particular interest or not. If
NOU decides to scrutinise the case, it will decide
upon the final statement in the case mostly within
4 to 6 months.
NOU informs the companies through letters,
newsletters, by Internet and by use of other material. The companies are also informed through the
trade associations.
If NOU decides to examine a case a letter is drawn
up to the contracting entity enclosed by a copy of
the complaint. After receiving the answer from the
contracting entity NOU prepares a decision. When
the scrutiny results in some criticism against the
contracting entity NOU asks in the final statement
the entity to report, after perhaps six months,
about what actions have been taken to improve the
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procuring system or to prevent that the same
errors are repeated. In all cases including criticism
a copy of the final statement is sent for information
to the auditors of the entity. Some of the decisions
are published in NOU’s newsletter.
NOU tries to answer the telephone calls immediately but if the question is of a more complicated
character the answer sometimes must be investigated further.
2.3 No. of persons dealings with the cases
All the employees at NOU are involved in dealing
with the cases.
2.4 Strengths and weaknesses
In the pre-contract situation the complainant is
often successful. In post-contract cases the result
can often only be of interest for the future and have
a preventive effect.
NOU’s possibility to sue in court would improve
the NOU’s possibility to solve pre-contract problems in the future. Also rules that prevent illegal
direct purchase from a specific company would
improve these possibilities.
on the case. The Commission can take procedural
decisions such as giving suspensive effect to a complaint. It decides itself on the case or reverts the
case for decision with a binding recommendation
to the contracting entity. If a contract has already
been concluded, the award cannot be revoked and
the Commission for appeal can only state that federal law has been violated. Only expenses caused
by the tender are reimbursed.
At the cantonal level, the Administrative Courts
receive appeals against procurement decisions of
cantonal and community authorities. Their decisions can, under specific circumstances, be subject
to a complaint at the Supreme Court of Switzerland. The procedure at the cantonal level is very
similar to the procedure at the federal level.
1.2 Use of the system
The system is regularly used. In Annexes 1 and 2 of
the annexed report, you will find an overview of
the questions submitted to appeal at the federal
and cantonal level.
Switzerland
1.3 No. of persons dealing with the cases
The Federal Appeals Commission consists of 9
people. The number of people in cantonal Administrative Courts depends on the Canton.
1. Formal review system
1.1 Short description of the system
At the federal level, decisions concerning procurement falling under the scope of the Federal Law on
Government procurement can be complained
against at the “Federal Appeals Commission”, an
independent authority which takes a final decision
2. Informal problem solving
2.1 Short description of the system
In Switzerland, informal problem solving is done
by the Commission on public procurement of the
Confederation and the Cantons (CPCC). This
Commission has been instituted by the Federal
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Government and the Swiss Cantons in 1996. The
Federal Government and the Cantons each
appoint the members of this Commission which is
chaired by a member of the Board of the State Secretariat for Foreign Economic Affairs.
The CPCC has several tasks. It has first to ensure
the coherent implementation of international obligations in the field of public procurement at all
levels in Switzerland, i.e. at the federal, cantonal
and – with the entry into force of the bilateral
agreement with the EU regarding public procurement – at the community level. Furthermore, it
prepares – together with the relevant negotiating
authorities – the negotiating position of Switzerland in international fora dealing with public procurement, e.g. the GPA Committee.
Another central task of the CPPC, which is related
to the above-mentioned study in the framework of
the PPPP, is its role in informal problem solving.
This can relate to specific questions regarding the
implementation of international obligations or
mediation activities in concrete cases.
In order to evaluate the effects of liberalisation of
government procurement markets in Switzerland
since the entry into force of the GPA in 1996, the
CPCC has elaborated the annexed report.
2.2. Use of the system
The CPPC has not often been solicited for problem
solving. Following three examples of informal
problem solving by the CPPC:
Example 1: A Swiss bidder was awarded a contract
although its bid was more expensive than the bid
of a foreign company. The contract was awarded to
this bidder on the ground that the he was also able
to store the goods for the producing entity, a condition which was introduced in the proceedings
after the procurement notice had been published.
The procuring entity was made aware of the fact
that such a way of proceeding didn’t meet the
international requirements of the GPA. Since then,
no further complaint was forwarded to the CPCC
regarding this case which involves annually recurring procurement of the specific good.
Example 2: A bidder in a large procurement
project informed the CPCC that the relevant
authority had, in its procurement notice, asked for
residency requirements for subcontractors. On
request of CPCC, the authority acknowledged not
to base its decision on residency requirements and
no further complaints were made to the CPCC
with respect to this case.
Example 3: An entity active in the production and
distribution of electricity has submitted to the
CPCC the question whether its purchases of
energy on the market is subject to government
procurement procedures. The resolution of this
question had to take into account, on the one
hand, the specific commitments of Switzerland in
the GPA, and, on the other hand, the developments in the liberalisation of electricity markets in
Switzerland.
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2.3 No. of persons dealing with the cases
At the moment, the CPPC consists of 14 members.
United Kingdom
1. Formal review system
1.1 Short description of the system
The directives are implemented in United Kingdom legislation by Regulations (a Statutory Instrument applicable to the whole of the United
Kingdom). Under each set of Regulations the duty
to comply with those Regulations, and any other
enforceable Community obligations in relation to
a contract subject to the Regulations, is expressed
to be a duty owed to (Community) suppliers, contractors or service-providers. A Community supplier, for example, is defined as a person
"established in or a national of a Member State,
who sought, or who seeks, or who would have
wished to be the person to whom a (public supplies) contract is awarded".
The Regulations provide that a breach of the duty
owed under them, as above, shall not be a criminal
offence but shall be actionable by any supplier,
contractor or service-provider, who in consequence suffers or risks suffering loss or damage.
The Regulations then make arrangements for proceedings to be brought in the High Courts, but
only if:
• the complainant has notified the contracting
authority of the nature of the alleged breach and
the intention to bring proceedings under the
Regulations; and
• they are brought promptly and in any event
within three months from file grounds arising,
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unless the Court considers there is good reason
for extending that period.
The Regulations make it clear that the Courts have
all the necessary powers, for example to suspend
award procedures, to set aside decisions, to annul
awards and award damages, except that damages
are to be the only remedy once a contract has been
entered into.
The Regulations are silent as to the amount of
damages, leaving it to the Courts to decide in
accordance with the facts whether to compensate,
for example, for loss of tendering costs, loss of
opportunity or lost profit and whether to award
legal costs.
The review system could be summed up in the following:
• breach of the Regulations, the directives they
implement, or other enforceable Community
law governed by the Regulations apply, was
established as a new and dedicated cause of
action, with its own procedural rules for interlocutory hearings, normally with legal representation, allowing proceedings to be brought in the
High Courts by Community suppliers, or equivalent, if harmed or at risk of harm, if notified to
the contracting authority and if brought
promptly and within three months unless leave
is granted by the Court,
• the Courts have all the necessary powers to provide, and enforce if necessary, all the required
remedies, and
• once a contract is entered into, claiming damages is the only remedy but there is scope for
damages for loss of opportunity or lost profit in
addition to tendering costs.
cial activities disturbed because an aggrieved
competitor alleges a breach of the EC rules by the
contracting authority/entity and that the public
interest favoured contractual certainty.
In the United Kingdom, interim measures can be
effected within a time frame of 24 hours by the
High Court, and that possibility is often used in
practice.
1.2 Use of the system
The number of cases per year is unknown but
thought to be very few. There is no mechanism for
contracting authorities to notify to a central body
cases brought before the courts.
In general in the UK the awarding and the conclusion of the contract are in effect simultaneous.
Thus introduction of a mandatory gap between the
award decision or its notification and the contract
conclusion, will require a change in the Regulations on this area.
The UK’s implementation of the Remedies Directive means that where acceptance of a tender constitutes unconditional acceptance of an offer so
that award of the contract coincides with its conclusion – perhaps with signature of a contract document following as a formality – damages are the
only potential remedy if the award decision is challenged. Damages may be substantial, and they have
hitherto been considered to be an adequate remedy.
1.3 No. of persons dealing with the cases
Depends on the contracting authority concerned
but unlikely to have dedicated staff to deal with
complaint cases. Would involve their legal advisers
who may or may not be in-house.
1.4 Strengths and weaknesses
The system has a deterrent effect on contracting
authorities, especially after a recent high profile
case in the High Court concerning the House of
Commons.
It is a weakness, that the system is expensive and
the length of time for court decisions to be reached
is also a problem.
Aggrieved undertakings cannot then apply to the
Courts for interim measures to have the award
procedures suspended or to have an unlawful
award decision set aside.
2. Informal problem solving
2.1 Short description of the system
The establishment of formal review procedures
does not mean that suppliers are obliged to litigate.
Of other procedures available is the possibilities
The underlying policy was that ‘innocent’ providers should not be at risk of having their commer-
• to complain to the contracting authority, perhaps at a more senior level,
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• to make agreements with the contracting
authority to have recourse to some form of alternative dispute resolution such as conciliation,
mediation or binding arbitration,
• in the case of Community suppliers etc, to bring
the case towards their national authorities,
• to proceed by informal contact with the UK
members of the Advisory Committee for Public
Contracts, or
• to make use of the UK's Single Market contact
point (Action Single Market).
2.2 Use of the system
It is difficult to quantify how much the present system is used as far as domestic complaints are concerned because each contracting authority is
responsible for dealing with such complaints.
Known complaints vary from pre- and post-contract.
As regards cross-border complaints, there have
only been a couple of cases each year. In most cases
the identification time is usually very short – a few
days – and the response phase time varies from
case to case.
Of the practical cases mentioned, there is not a
clear picture, whether the results were satisfactory
or not.
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2.3 No. of persons dealing with the cases
For domestic cases individual contracting authorities do not usually have staff dedicated to deal with
complaints.
For cross-border cases 2 persons (Action Single
Market) and 1 person (Office of Government
Commerce) all full time.
2.4 Strengths and weaknesses
In the practical cases mentioned there have been
cases with both satisfactory and unsatisfactory
results.
The system is as mentioned quick and inexpensive
compared to taking a case to the court.
It is a fact of life, that many possible complainants
still are reluctant to complain because of the fear of
damaging future business prospects. This applies
particularly to cross-border cases. Also, the informal problem solving system is only known by a few
companies, and only some believe that the PA has
the power to prevail against the contracting
authorities in another country.
Schultz Grafisk