Public purchasing — rules for water, energy, transport and postal sectors
Directive 2014/25/EU on procurement by entities operating in the water, energy, transport and postal services sectors
It sets out rules on the use of public contracts by companies or individuals in the water, energy, transport and postal sectors to obtain works, supplies or services.
Although the basic rules and principles laid down in Directive 2014/24/EU. apply to the water, energy, transport and postal sectors, Directive 2014/25/EU takes account of the specific features of these sectors which play key roles in meeting society’s needs.
Contracts must be issued by national, regional or local authorities, public undertakings or entities benefiting from special or exclusive rights (i.e. the entities covered by this directive), according to the directive’s rules, when the sums involved are above the following ceilings (valid from 1 January 2016):
€418 000 for supply and service contracts and design contests;
€5 225 000 for works contracts;
€1 000 000 for service contracts for social and other specific services.
The European Commission assesses these thresholds every 2 years to determine whether they should be changed in accordance with the EU’s international obligations.
The directive applies to public procurement in:
gas and heat sectors, electricity and water (when it is a service to be provided to the public and in connection with their production), transport or distribution;
public transport by railway, tram, trolley, bus or cable car;
airports, maritime and inland ports and other terminals for air, sea or canals;
postal services and other businesses which provide the public with similar services involving the clearance, sorting, routing and delivery of postal items;
oil and gas extraction and exploration for, or extraction of, coal and other solid fuels.
The directive does not apply to contracts:
on the resale or lease of items to another company or organisation;
for works or services in all previously mentioned sectors in a non-EU country;
covered by other public procurement or international legal obligations (e.g. the World Trade Organisation Agreement on Government Procurement);
subject to Directive 2009/81/EEC or excluded therefrom (contracts involving defence or security aspects).
New standard forms for procurement notices
Commission Implementing Regulation (EU) 2015/1986 introduces new standard forms for publishing public procurement notices. These new forms applied to all new public procurement notices until 18 April 2016.
It has applied since 17 April 2014. EU countries had to incorporate it into national by 18 April 2016.
General EU legislation setting out the rules for public purchasing is contained in Directive 2014/24/EU. These rules lay down the procedures to be followed and stipulate that national authorities, when using public procurement to invite tenders for work they wish carried out, must treat all applicants equally and avoid any discrimination between them. They must also be transparent in the way in which they operate and take decisions.
For more information, see:
‘Public procurement’ on the European Commission’s website.
Directive 2014/25/EU of the European Parliament and of the Council of 26 February 2014 on procurement by entities operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC (OJ L 94, 28.3.2014, pp. 243-374)
Successive amendments to Directive 2014/25/EU have been incorporated in the original text. This consolidated version is of documentary value only.
Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC (OJ L 94, 28.3.2014, pp. 65-242)
See consolidated version
Directive 2014/23/EU of the European Parliament and of the Council of 26 February 2014 on the award of concession contracts (OJ L 94, 28.3.2014, pp. 1-64)
See consolidated version
Commission Implementing Regulation (EU) 2015/1986 of 11 November 2015 establishing standard forms for the publication of notices in the field of public procurement and repealing Implementing Regulation (EU) No 842/2011 (OJ L 296, 12.11.2015, pp. 1-146)
Water, energy, transport and postal services sectors (Earlier)
The European Union is updating the rules concerning procurement procedures in the water, energy, transport and postal services sectors. This revision is based on the fundamental principles of the internal market and basically strives for simplification, harmonisation and modernisation. It promotes the development of electronic procedures. Recourse to social and environmental criteria is authorised for the selection of economic operators * and is based on Court of Justice case law.
Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors [See amending acts].
The European Union is updating and simplifying the legislation on public procurement procedures *. Applicable in a Union of 27 Member States, this revision merges the four existing European directives into two legal instruments:
- The so-called “traditional” Directive 2004/18/ECfor public works contracts, public supply contracts and public service contracts;
- Directive 2004/17/EC on the “special sectors” of water, energy, transport and postal services.
The “special sectors” directive applies to:
- all contracting authorities * or public undertakings * which pursue activities in one of the following fields: gas, electricity, water, transport services, postal services *, the extraction of fuels, or the provision of ports or airports;
- all contracting entities which, when they are neither contracting authorities nor public undertakings, pursue one (or more) of the above activities and enjoy special or exclusive rights *granted by a competent authority of a Member State.
Non-exhaustive lists of contracting entities are given in the Annexes. Member States must notify the Commission of any changes.
The directive applies to the following activities:
- the provision or operation of fixed networks intended to provide a service to the public in connection with the production, transport or distribution of gas, heat or electricity, or the supply of gas, heat or electricity to such networks;
- the provision or operation of fixed networks intended to provide a service to the public in connection with the production, transport or distribution of water, or the supply of water to such networks;
- where the contracting entity is active in the drinking water sector, contracts or design contests connected with irrigation, land drainage or hydraulic engineering projects, or contracts connected with the disposal or treatment of sewage;
- the provision or operation of networks providing a service to the public in the field of transport by railway, automated systems, tramway, trolley bus, bus or cable.
Bus transport services are excluded from the scope of the directive where other entities are free to provide those services, either in general or in a particular geographical area, under the same condition as the contracting entities;
- the provision of postal services *. These services cover: postal services which are reserved under the terms of Directive 97/67/EC, as well as those which may not be reserved under Directive 97/67/EC; all of the following services are also covered, on condition that such services are provided by an entity which also provides postal services and that the market is not yet open to competition: mail management services (e.g. mailroom management services), added-value services linked to and provided entirely by electronic means (e.g. the secure transmission of coded documents, address management services), direct mail bearing no address, financial services (e.g. postal money orders and postal giro transfers), philatelic services and logistics services;
- the exploitation of a geographical area for the purpose of 1) exploring for or extracting oil, gas, coal or other solid fuels, or 2) the provision of airports and maritime or inland ports or other terminal facilities to carriers by air, sea or inland waterway.
Contracts awarded in the sectors in question are no longer subject to the Directive if effective competition exists. Member States have had the possibility of asking the Commission to adopt a decision testifying to the existence of effective competition in a Member State for a given sector in accordance with a specific procedure. This procedure is based on the characteristics of the goods and services under consideration, the existence of alternatives, prices and the presence of several competitors. On its own initiative or at the request of the national contracting entities, when the national transposition of the directive allows them to do so, the Commission may adopt a decision testifying to the existence of effective competition in a Member State and for a given sector. If no decision is made within the deadline set, the exclusion becomes applicable.
The directive applies to contracts that have a value excluding VAT estimated to be no less than the following thresholds for the period from 1 January 2010 until 31 December 2011:
- EUR 387 000 in the case of supply and service contracts;
- EUR 4 845 000 in the case of works contracts.
These thresholds are re-calculated by the Commission every two years. The calculation of their value is based on the average daily value of the euro, expressed in special drawing rights (SDR), over the 24 months ending on 31 August for the revision with effect from 1 January.
For those Member States that have not adopted the single currency, the value of these thresholds calculated and published by the European Commission in the Official Journal when the recalculated thresholds in Euros are published.
Certain contracts are excluded or reserved
The scope of the directive excludes:
- works and service concessions in the sectors of activity concerned;
- contracts awarded for purposes of resale, lease to third parties, for purposes other than the pursuit of an activity in the sectors concerned or for the pursuit of such an activity in a third country.
The Commission may publish in the Official Journal the list of the categories of products and activities excluded;
- contracts which are secret and require special security measures or are awarded pursuant to international rules;
- certain contracts awarded by a contracting entity to an affiliated undertaking or awarded by a joint venture formed exclusively by a number of contracting entities for the purpose of carrying out the activities concerned.
By definition, an affiliated undertaking has annual accounts which are consolidated with those of the contracting entity or is subject to a dominant influence by virtue of ownership, financial participation, or the rules which govern it.
Contracting entities must notify the Commission of the names of the undertakings or (joint) ventures concerned and the nature and volume of the contracts involved;
- service contracts awarded on the basis of an exclusive right;
- service contracts for the acquisition or rental of land, existing buildings or other immovable property or concerning rights thereon (excluding financial service contracts concluded at the same time as, before or after the contract of acquisition or rental); arbitration and conciliation services; financial services in connection with the issue, sale, purchase or transfer of financial instruments (such as transactions to raise money or capital); employment contracts; and research and development (RTD) services wholly remunerated by the contracting entity;
- contracts awarded by certain contracting entities for the purchase of water and for the supply of energy or of fuels for the production of energy;
- certain contracts subject to special arrangements in Germany, Austria, the Netherlands and the United Kingdom and in the field of the exploration or extraction of oil, gas, coal and other solid fuels.
- certain contracts awarded in the fields of defence and security covered by Directive 2009/81/EC.
Member States may reserve participation in certain public contracts to sheltered workshops or provide for such contracts to be performed in the context of sheltered employment programmes where most of the employees concerned are handicapped persons.
Contract award criteria
The criteria used by the contracting entities are:
- either the lowest price only;
- or, where the contract is awarded to the most economically advantageous tender, various criteria linked to the subject-matter of the contract in question (quality, price, technical merit, aesthetic and functional characteristics, environmental characteristics, etc.). As a general rule, the contracting entity should specify the relative weighting it gives to each of the criteria.
Rules on publication and transparency
Throughout the procedure, public contracts whose value exceeds the thresholds in the Directive are subject to obligations regarding information and transparency. This takes the form of publishing information notices drawn up in accordance with standard Commission forms. There are several types:
- the notice of the publication of a periodic indicative notice (not compulsory);
- the periodic indicative notice for supplies and services contracts in excess of EUR 750 000 and for works contracts of more than EUR 4 845 000. The contracting entity publishes this notice on its buyer profile itself (after having sent the notice of the publication of a periodic indicative notice) orsends it to the Office for Official Publications of the European Communities (Publications Office).
This publication is compulsory when the contracting entity wishes to reduce the time limits for the receipt of tenders or when the notice is used as a means of calling for competition;
- the contract notice or notice of a design contest (compulsory).
The contracting entity may publish this notice itself nationally and should send it to the Publications Office. Publication by the Publications Office is free. The notice is published in full in an official language of the Community, and a summary is translated into the other languages;
- the contract award notice and notice of the results of a design contest (compulsory).
- the notice on the existence of a qualification system.
The notices sent by the contracting entities to the Commission can be transmitted by traditional or electronic means. Standard forms and details on transmission procedures are accessible on the information system for public procurement (SIMAP).
The contracting entity shall provide information on the decisions reached concerning the award of a contract, including grounds for not awarding it. For all contracts, it must be able to justify its decisions and should keep all the appropriate information for at least four years. It shall, as soon as possible, inform:
- any unsuccessful candidate of the reasons for rejecting his/her application;
- any tenderer who has made an admissible tender of the relative advantages of the tender selected, as well as the name of the economic operator chosen.
The exchange and storage of information involving the various parties to the contract ensure the integrity of the data and confidentiality. The contracting entity only examines the content of the tenders after the time limit set for submitting them has expired. Use of electronic means is non-discriminatory and helps to speed up the procedures. Devices for the electronic receipt of tenders permit the use of electronic signatures, guarantee the authenticity, integrity and confidentiality of the data and are capable of detecting possible fraud.
The technical specifications define the characteristics required of a material, supply or service such that they fulfil the use for which they are intended. They are out in the contract documentation (contract notices, contract documents or additional documents) without creating unjustified obstacles to competition. These characteristics include environmental performance, design, conformity assessment, performance, safety, dimensions, quality assurance, and production methods. For public works contracts, they also cover test, inspection and acceptance conditions, as well as construction techniques.
When drawing up its technical specifications, a contracting entity refers to national standards transposing European standards, European technical approvals, and international standards. It can also determine performance and functional requirements, particularly in the environmental domain (e.g. European Eco-label). The tender is valid if it manages to prove that it meets the requirements defined by the technical specifications in an equivalent fashion. An appropriate means may be constituted by the submission of a technical dossier or a test report from a recognised body (laboratory, certification and inspection body).
In principle, technical specifications do not mention a specific make or process nor do they refer to trade marks, patents or a specific production.
Economic operators’ capabilities, combating fraud and corruption
European public procurement legislation provides conditions, which may be required for the purposes of participation in public procurement. These conditions aim to check the suitability of economic operators tendering for contracts on the basis of criteria relating to their economic and financial capacity, and their technical and professional knowledge or abilities.
The conditions for participation also aim to effectively combat fraud and corruption, systematically excluding from public procurement contracts any economic operators who have been found guilty of participating in a criminal organisation or of corruption, fraud or money laundering. A contracting authority may ask tenderers for any document testifying to their professional conduct and/or economic situation. To obtain this information, it may turn to the competent national authorities or those of another Member State. It should be noted that the application of these exclusion clauses is only compulsory for contracting authorities. For other contracting entities (public enterprises and private enterprises with a special or exclusive right), these clauses are optional.
Any economic operator may be excluded from participation in a public contract where that economic operator:
- is bankrupt (or the subject of proceedings for a declaration of bankruptcy), is being wound up, has suspended business activities or his/her affairs are being administered by the court;
- has been convicted of any offence concerning his/her professional conduct;
- has been guilty of grave professional misconduct (e.g. misrepresentation);
- has not paid social security contributions or taxes.
Traditional and electronic means of communication are on equal footing
With regard to the exchange of information, the new directive places traditional and electronic means of communication on equal footing. It leaves market operators free to choose which means of communication to use for the procedures. If electronic means are used, the contracting entity is able to reduce the time limits (but within irreducible margins):
- The electronic transmission of notices used as a means of calling for competition (depending on the individual case, a contract notice, periodic indicative notice or notice on the existence of a qualification system) makes it possible to reduce by seven days the time limit for the receipt of tenders in open procedures. The same applies for the receipt of requests to participate in restricted and negotiated procedures;
- On top of the previous reduction, time limits for the receipt of tenders in open, restricted and negotiated procedures may be further reduced by five days where the contract documents are available on the Internet.
A new purchasing technique has entered the scene: the dynamic purchasing system. It is exclusively based on electronic means of communication.
A contracting entity may hold an electronic auction to award a contract. This is valid for all types of contract, with the exception of certain works and service contracts having as their subject-matter intellectual performances (e.g. the design of works). The electronic auction shall be based:
- either on prices when the contract is awarded to the lowest price,
- or on prices and/or the values of the features of the tenders, when the contract is awarded to the most economically advantageous tender.
The specifications shall contain the following details:
- the quantifiable features (figures or percentages) whose values are the subject of the electronic auction and the minimum differences when bidding;
- the electronic auction process and the technical specifications for connection.
Before proceeding with the electronic auction, the contracting entity shall make a full initial evaluation of the tenders. All tenderers who have submitted admissible tenders shall be invited to take part simultaneously by electronic means. The invitation shall state the date and time of the start of the auction and, if appropriate, the number of phases. It shall also state the mathematical formula to be used to determine automatic rerankings, incorporating the weighting of all the award criteria. Throughout each phase, the participants shall know their relative rankings compared to the other participants, but without knowing their identity.
The electronic auction shall close either at a date and time fixed in advance, or when a certain amount of time has elapsed after receipt of the last submission, or when the number of phases in the auction has been completed.
Rejection of tenders that are abnormally low or contain products originating in third countries
A contracting entity may reject a tender if it:
- is abnormally low, particularly because the tenderer has obtained State aid which was granted illegally; it should, however, give the economic operator the opportunity to justify the constituent elements of its tender.
- contains products amounting to over 50 % of its value which originate in third countries with which the Community has not concluded multilateral or bilateral market access agreements for Community enterprises.
Member States shall inform the Commission of any general difficulties encountered by their enterprises in securing the award of service contracts in third countries. They may, for example, report the non-observance of international labour law provisions. The Commission shall, at the same time, draw up an annual report to the Council on negotiations with third countries regarding access for Community enterprises to the markets covered by this Directive in these countries. It may propose that the Council restrict (or suspend) access to service contracts in the European Union covered by this Directive to enterprises with links to these third countries.
There are different public procurement procedures: the open procedure, the restricted procedure, and the negotiated procedure with or without the publication of a public contract notice.
Contracting entities may award a contract without a prior call for competition under the following conditions:
- when no suitable tenders or applications have been submitted in response to a prior call for competition; where a contract is awarded purely for the purposes of RTD; when, for technical or artistic reasons, or for reasons connected with the protection of exclusive rights, the contract may be executed only by a particular economic operator; in cases of extreme urgency brought about by unforeseeable events; for contracts based on a framework agreement, when this has been concluded in accordance with the Directive;
- supply contracts: for additional deliveries where a change of supplier would oblige the contracting entity to acquire material having different technical characteristics; for supplies quoted and purchased on a commodity market; for bargain purchases or purchases of supplies under particularly advantageous conditions from an economic operator definitively winding up his business activities or in receivership;
- for additional works or services which were not included in the initial project and have become necessary through unforeseen circumstances;
- for new works consisting in the repetition of similar works;
- for public service contracts, when the contract should, according to the rules of the contest, be awarded to the successful candidate in the design contest.
The open procedure
In an open procedure, any interested economic operator may submit a tender.
The minimum time limit for the receipt of tenders is 52 days from the date on which the contract notice was published. If a periodic indicative notice has been published, this time limit can be cut, as a general rule, to 36 days. In no case may the time limit for the receipt of tenders be less than 22 days.
The restricted procedure
In the case of restricted procedures, any economic operator may request to participate and only candidates invited to do so may submit a tender.
The time limit for the receipt of requests to participate is, as a general rule, 37 days from the date of the notice (or the invitation to confirm interest, when the call for competition is made by means of a periodic notice). In no case may it be less than 22 days (or 15 days if the notice is transmitted electronically). The contracting entity then, simultaneously and in writing, invites the selected candidates to submit their tenders. The time limit for the receipt of tenders, which is the same for all applicants, can be set by mutual agreement between the contracting entity and the selected candidates. If no agreement is reached, the contracting entity fixes a time limit that is, as a general rule, at least 24 days – and never less than 10 days – from the date of the invitation to tender.
The negotiated procedure
In a negotiated procedure, the contracting entity consults the economic operators of its choice and negotiates the terms of the contract with them.
In negotiated procedures with the publication of a contract notice, the procedure and the minimum time limits for the receipt of requests to participate and for the receipt of tenders are identical to those for the restricted procedure.
Service Design Contracts
The directive applies to design contests for service procurement procedures worth over EUR 387 000 or where the contest prizes and payments are in excess of this value (this threshold will be updated by a Commission Regulation which is to be adopted shortly).
A design contest may not be held for:
- contracts awarded for purposes other than the pursuit of an activity in the sectors concerned or for the pursuit of such an activity in a third country;
- contracts which are secret, require special security measures or are awarded pursuant to international rules;
- any activity which is exposed to competition.
The contracting entity publishes a contest notice drawn up in accordance with the rules for public procurement procedures. The exchange and storage of information ensures the integrity and the confidentiality of data. The contracting entity examines the projects only after the time limit set for submitting them has expired.
Admission to design contests may not be limited to the territory (or part of the territory) of a Member State or by the legal nature of the participants. The selection criteria are clear and non-discriminatory, ensuring genuine competition. The jury shall be composed exclusively of independent natural persons. Where a professional qualification is required of participants in a contest, at least a third of the jury members shall have this qualification. The jury is autonomous in its decisions and examines the plans on the basis of the selection criteria. Anonymity must be observed until the jury has reached its final decision.