Commission requests Greece to ensure fair access to public contracts for supply of school bus services and electricity cables

Thursday January 27th, 2011

The European Commission has requested Greece to ensure full compliance with EU rules on public procurement – the purchase of goods and services by public authorities – as regards school bus services and the supply of underground electricity cables.

The first case concerns the award of several school bus contracts by means of a negotiated procedure without the prior publication of a contract notice. Such a procedure is allowed only in exceptional circumstances, and in this case no justification was found. The second case concerns a contract for underground electricity cables that was awarded in breach of the open tendering procedure. EU rules are designed to ensure fair and transparent competition for public contracts in Europe, thereby creating opportunities for European companies while ensuring the best value for public money. If the rules are not respected, there is a risk of a closed market and wasted public money.

The Commission’s requests to Greece take the form of reasoned opinions. If Greece does not reply satisfactorily within two months, the Commission may refer these matters to the Court of Justice.

What is the aim of the EU public procurement rules?

Public procurement is about how public authorities spend public money on construction, goods and services. It covers purchases of everything from computer systems to waste water plants, ship building, and consulting services. Total public procurement in the EU is estimated at about 17% of the Union’s GDP. The open and transparent tendering procedures required under EU public procurement rules mean more competition, stronger safeguards against corruption, and better service and value for money for taxpayers.

How is Greece not respecting these rules and how are businesses and citizens suffering as a result?School bus contracts

The contracts in question were awarded by the Greek Districts of Drama, Pella and Salonica for the academic years 2007-2008 and 2008-2009, and by the District of Argolida for the 2008-2009 academic year. The value of these contracts ranged from €2 million to €5 million. As all of the contracts were awarded using a negotiated procedure, no contract notices were published and no transparent tendering procedures were launched. Consequently, other interested companies in Europe were prevented from bidding for the contracts.

EU public procurement rules allow contracting authorities to use the negotiated procedure only in exceptional circumstances, which are assessed according to the case-law of the EU Court of Justice. According to the Commission, the use of this procedure in the present case is not in line with those rules.

Underground electricity cables

In 2008, the Greek Public Power Corporation launched an open public tender for the supply of underground electricity cables. The contract was valued at €55 million. The call for tender stated that the contract was to be awarded to the bidder offering the lowest price. During the course of the open tendering procedure, after the legal binding submission of the offers, one bidder unilaterally proposed to discount its initial offer from €39.4 million to €37.4 million. This bidder was subsequently awarded the contract at the new, lower price. Modifying a legally submitted offer is against the rules of an open procedure. Because of this discount, the nature of the procedure was altered and other candidates were precluded from participating on an equal and non-discriminatory basis.

Contracting authorities are required to comply with the terms and criteria that they define at the outset of a tendering procedure. All participants must be aware of the applicable rules in advance and must be assured that the rules apply equally to everyone. Otherwise, there is a risk that arbitrary changes will be made to the conditions of the bid, resulting in a violation of the principle of transparency and unequal treatment of the participants.

More information

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