Scope of EU Procurement Rules

EU procurement law is applicable to public authorities in entering most contracts above certain thresholds. It covers most central and local government entities, as well as agencies, bodies and authorities which are supported as to more than 50% of their turnover by public funds.

The Directives list major categories of departments and entities within their scope.  This is not necessarily a definitive list. The courts from time to time, have held particular agencies and bodies to be subject to procurement rules, which had argued that they were not so subject.

The procurement legislation applies to bodies that provide public interest functions or which are governed by public law.  They are generally established for a specific purpose under law.  They need not have a separate legal existence. They may be, commercial or non-commercial in nature.  The legislation applies to bodies that are financed either wholly or for the most part, i.e. more than 50% by central, regional, local government and are under their control.

The Utilities Directive brought entities operating in the transport, energy, water and telecommunication sectors within the scope of public procurement law.  This Directive also extends to public undertakings.  These are undertakings in respect of which the State may directly or indirectly exercise a dominant influence through ownership, financial participation or regulation which govern the undertaking’s operation.

Dominant influence may refer to a majority shareholding , controlling interest or the right to appoint the Board of management.  Apart from ownership, undertakings and entities are subject to the Utilities Directive, where their exclusivity in the particular market precludes other entities from entering on equivalent terms and conditions.


A key feature of procurement legislation is the principle of transparency.  It increases accountability and expenditure of public money and prevents discrimination, in particular, between contractors from the different Member States.  It also seeks to achieve value for money in establishing the optimum price.

EU procurement law provides for EU wide publicity for public contracts. Every public authority subject to the legislation must give notice of its procurement intentions for the coming year. This is designed to give businesses the opportunity to anticipate the size of the market and possible forthcoming awards.

A tender must be issued for all contracts above the EU procurement threshold levels.  There must be an advertisement publicising the invitation to tender.  It may refer to a range of similar contracts on a repeat basis.

A contract award notice must be published.  It must set out the price and the successful tender.  It should set out the reasons why the contract was awarded to that tender.  In some cases, the price may be withheld on the basis of commercial confidentiality.

Publication is undertaken through the Publications Office of the European Union. Tenders are published daily.  They are published in full in the language of the relevant Member State and summarised in other EU languages.  The Commission undertakes translations.

Contracts below the threshold are not subject to EU procurement law.  They are however subject to Irish governmental guidelines which are subject of a separate section.

Principles in Selection

The principles of procurement law require fairness in the selection process. After the requisite advertising and publicity, the contracting authority is to review the responses and determine the suitability of the tenders with the reference to objective and published criteria.

There must be no discrimination on the grounds of nationality.  Where differing technical specifications in other States yield an equivalent solution. It is likely to constitute discrimination to insist on national standards.  In practice, standards in many areas have been harmonised through EU legislation and to a greater extent through EU standards bodies.

The tender criteria regarding qualification and standing are to be provided for.  Tenderers may be excluded on the basis of insolvency, professional misconduct, failure to fulfil tax and social security obligations.

Tenderers may be ranked on the basis of technical ability and capacity, previous experience, educational and professional qualifications, expertise etc.

Evidence of Competence

In the case of construction contracts, any required references are to be specified.  References and evidence of competence must be specified.

Evidence of satisfactory completion of equivalent contracts, tenderers may be requested to give details of the value of works, date, location and confirmation, that they were carried out in accordance with the sectoral rules and norms.

A contracting authority may request certificates to be furnished directly of evidence of financial capacity managerial capacity and technical capacity.

In case of supplies contracts, references may be requested in relation to equivalent supplies in the previous three years with particulars of dates, recipients, public or private, including to be certified if required by the relevant authority,

The following may be required

  • the details of e technical capacity and facilities available,
  • quality assurance provisions,
  • indication of the technical persons and bodies involved, whether or not part of the undertaking;
  • particulars of quality control;
  • samples, descriptions, photographs of products;
  • certificates by trade and official quality control bodies confirming conformity of goods with specifications and standards.

Evidence of financial standing may be required through bankers, references, accounts and evidence of turnover in respect of a particular type of work or service.

The awarding authority may fix requirements in relation to proof of the contractor’s economic and financial capacity and standing.  There is an element of flexibility as to the requirements.  The above are not exhaustive.

Tenderers may be individuals, corporate bodies established under the law of any State, joint ventures, groupings, consortiums etc.  The appropriate party or parties must be party to be awarded the contract.

A successful tenderer must have sufficient economic and financial standing.  It must have the requisite technical ability and capacity to undertake the contract.

Open Procedure

It is a fundamental principle of procurement law that the process should be transparent. In an open procedure, all interested tenders may participate.

The open procedure should be used where possible and should be the normal method of procurement.  Restricted or negotiated procedures are more appropriate where the requirements are complex.  Generally, the decision may not be based on price, but on the most economically advantageous offer in terms of the solution.

Negotiated Procedures

Under negotiated procedures, authorities consult a number of prospective contractors and negotiate the contract with one or more of them. The negotiated procedure may be with or without prior notification.

Where prior notification has been given, all interested parties may submit tenders in the first round.  The Authority then selects a number of tenderers who are invited to negotiate in the second round.  This is commonly three, but there must be sufficient number of appropriate tenderers.

The negotiated procedure without prior notification permits contracting authorities to select a contractor and commence negotiations directly.

Restricted Procedures

Restricted procedures are very commonly used. The restricted procedure provides for submission of tenderers by invited contractors, in generally two rounds with all prospective parties being allowed to give notice of their interest.

Candidates who are selected will be invited to tender.  Under the restricted procedures, there should be at least, generally,  five candidates invited to tender.

In cases of urgency, an accelerated, restricted or negotiated procedure may be used.  The basis for the accelerated procedure must be set out in the notice.  It must be limited to cases where there is genuine urgency in relation to the supply of the products or services concerned.

Use of Restricted and Negotiated Procedures

The use of the negotiated procedure should be justified objectively.  Past procurement may have led to unsatisfactory tenders.

Negotiated procedures without prior notice is appropriate only in limited cases where

  • the contract involves manufactured products or construction works purely for research and development
  • where there are technical or artistic  reasons or reasons connected with exclusive rights,
  • cases of extreme urgency or other unforeseeable events
  • when other arrangements would cause disproportionate technical and maintenance issues.

Discussions may be held with candidates to clarify their tender, the contents of the tender or the authority’s requirements.  However, discussions must not be discriminatory.

Under the open and restricted procedure, there is no negotiation on price.  The award should be kept distinct from the selection process

Competitive Dialogue

Competative dialogue may be used in exceptional cases with very complex contracts.  Where other methods of procurement are inappropriate, it will be generally be a highly complex contract the specification of which, cannot be sufficiently defined.

There are three principal phases with various possibilities.  There must be a contract notice setting out the requirements and specifications.  Authorities may engage in a competitive dialogue in relation to the preparation of the specification.  Competition must be maintained.

A further phase will reduce the number of candidates will be invited to participate in the competitive dialogue.  There should be at least three, provided that fewer may be justified if there is sufficient competitiveness or there are a limited number of initial responders.

The competitive dialogue may be opened with the candidates to identify the best method of meeting the authority’s requirements.  Discussions may be undertaken with each contractor.  Principles of equality and non-discrimination must be maintained.  Tenderers should not be given an advantage over the other.  They may not reveal each other’s solutions and proposals without prior consent.

Basis of Award

Public contracts must be awarded on the basis of the lowest price or the most economically advantageous offer.  The lowest tender must meet the required criteria, financial, economic, technical etc.

An assessment of the most economically advantageous tender will be based on a range of factors including price, , profitability, technical merit, aesthetic and functional considerations, technical assistance, after-sales service, maintenance, security of supply.

THe process is undertaken to weigh the various factors. The sequence and relative weighting of factors other than price must be set out in the prior invitation to tender or other published documents.


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