The EU Commission itself may take proceedings on its own initiative or in response to a complaint against a state that has failed to comply with its obligations under EU Law including procurement rules. In addition, the Remedies Directive has provided a special procedure to provide for intervention in cases where there has been a breach of procurement rules. There is a separate Remedies Directive and Utilities Remedies Directive.
The corrective procedure may be invoked where the Commission considers there has been a clear and manifest breach of the procurement rules. It notifies the state and authority of the reasons for its conclusions and requests correction. The State must reply within 28 days. It must confirm correction or give an explanation why correction was not made.
If a satisfactory reply is not received, the Commission may take enforcement proceedings in accordance with its Article 226 power. A reasoned opinion will be given after the expiry of a reasonable period.
The state may be held responsible for public bodies with which it has a sufficient connection. It will not necessarily be accountable for the activities or all contracting authorities. The State may be accountable where it exercises specific controls that are relevant to the activity.This may include for example authorities under the Utilities Directive, entities operating, energy, water and transport services which had been privatised.
The postponement of a procurement procedure leading to an award or postponement of the contract after award may be sought by way of an interim measure, where a tenderer challenges the legality of the selection and award.
Court Action by Commission
On an application by the Commission, the court may grant interim measures under general powers. The Commission must generally follow certain procedures before initiating compliance proceedings, even in the case of interim measures.
Interim measures are not automatically granted. There must be a prima facie case. The application must not be manifestly without foundation. The interim measures must be necessary to prevent serious and irreparable damage to the applicant. The court applies a balance of interests tests. The courts balance the interests of the parties and the public interest at large.
Decisions of the EU court may be enforced by fines against States. States will be given all opportunities to correct the position and avoid future violations. In some cases, enforcement against States is benign and seeks to be dissuasive.
In addition to enforcement by the Ccommission, the procurement rules allow enforcement by tenderers at national levels. State have a certain method of appreciation in relation to the rules.
States are required into the Remedies Directive to ensure that interim measures are available to aggrieved tenderers and candidates in procurement award procedures. The most important interim measure is the ability to suspend the award, particularly prior to conclusion of the contract.
Suspension may lead to the nullity of the award or other measures. It appears generally that a public contract, once awarded is not subject to set aside or annulment. As a general rule, States have a discretion as to whether to allow judicial or administrative authorities to take into account, the likely consequences of the interim measures on the parties to the dispute and to balance the respective interests against the public interest at large. In most states, courts apply a balance of interests test.
The complainant must show a prima facie that he is likely to suffer serious and possibly irreparable harm unless the information is granted. The harm must outweigh the inconvenience or harm or damages which the interim award would cause to the awarding authority and the public at large. He may also have to show that he is likely to suffer harm if the interim measure is not granted which could not be adequately compensated by monetary damages.
The Remedies directive requires that Courts or administrative tribunals in states must be given the power to set aside or annul acts of contracting authority. This will not invalidate the contract itself.
An authority’s decision to withdraw an invitation to tender for a public service contract is itself open to review procedure. A decision by a public authority not to apply the procurement rules on the basis that the case it falls outside the rules is itself subject to judicial review and challenge.
Preparatory works and studies of the market are not subject to review under the Remedies Directive. The decision to withdraw a tender may be capable of review.
Review procedures must be available to persons who have an interest in the contract and who risk being harmed by an alleged infringement. The person will normally be a tenderer but the right to challenge will extend slightly wider. It may be possible for States to require that participation is required to have the necessary interest.
States may lay down relatively short time limits in which procedures must be initiated.
There is provision for an award of damages to persons harmed by the infringement of public procurement rule. This incentivises the contractors to ensure compliance. An award of damages will not necessarily be made simply because there is an infringement. There must be an obligation owed to the claimant and the claimant’s losses must be foreseeable. Some states allow an exemption in relation to exercising legislative and administrative rules in good faith.
Damages may be regulated by national rules. A tenderer may have to show that he would have been accepted but for the infringement. Damages are largely determined by national law and practice. The claimant must generally show that he has suffered economic losses as a direct result of the infringement.
The tenderer should be in a position to recover his costs for participation. The general principles of law in the state determine whether a wider measure of damages may be available.
In relation to utilities, states may provide an alternative remedy of penalty payments where the infringement is not corrected or prevented. This has been taken up in a number of states only in a limited number of sectors.
Where a dispute arises in relation to the utility sector, the aggrieved tenderer may initiate a conciliation procedure under the remedies directive. The tenderer requests the procedure and the Commission asks the unitliy n question whether it is willing to part in the procedure. The procedure may only proceed with the utility’s consent.
The Commission proposes a conciliator drawn from a list of independent persons. Both parties must state whether they accept the conciliator. Each may designate an additional conciliator.The tenderer’s utility and other candidates if relevant have the opportunity to make representations. The conciliator endeavours to reach an agreement between the parties in accordance with community law.
The GATS agreement has made provision in relation to public procurement. See the separate section on international trade. There is an intergovernmental mechanism for settling disputes under the WTO procurement agreement. It is applicable for states not individuals.
State must first exhaust other ways of dealing with the matter before invoking the dispute settlement procedure If the matter cannot be settled, it may request the WTO settlement dispute to establish a panel to hear the matter.