New EU rights for tenderers proposed

Tenderers who feel that a public contract may have been awarded unfairly, whether at government or local council level, may soon have a new tool to defend their rights as a result of a new proposal tabled by the European Commission.

The new directive, amending the current Remedies Directive, would require public authorities to wait for a certain number of days, being called a "standstill period", before concluding a public contract following the announcement of its award.

This would give rejected bidders the opportunity to start an effective and swift review procedure at a time when any unfair decisions could still be corrected. It would apply not only to contracts awarded following a tender procedure but also to contracts awarded directly to a single bidder, known locally as direct orders, which under EU law are allowed only exceptionally and under very restrictive conditions.

Launching this new proposal yesterday in Brussels, Internal Market Commissioner Charlie McCreevy said that the introduction of these new rights for rejected bidders will create stronger incentives for EU businesses to bid for contracts anywhere in the EU. He said that providing clear and effective procedures for seeking redress is crucial to making sure contracts ultimately go to the company which has made the best offer.

According to the new proposals, in case of a compliant, the awarding authorities or other public entities will be obliged to suspend the conclusion of a public contract for a short period of time, normally 10 calendar days, after the communication of the award decision, in order to allow bidders to bring review procedures in the most effective manner.

The proposed directive also specifies the details of the "standstill obligation", such as its scope, consequences and enforcement, the time span and permissible exceptions, for example in cases of extreme urgency.

The new proposals have already been discussed with all the 25 member states as part of a wide consultation process. According to the Commission only Malta and Slovenia did not respond to a questionnaire sent to member states asking for information regarding the application of the current two Remedies Directives and for opinions on how to improve remedy and control mechanisms.

Asked by The Times whether these new procedures will delay the award of important contracts even further, something which is already a problem in Malta due to litigations between tenderers and contract-awarding committees - and which in many instances end up at court - a spokesman for the Commission said that the new proposals seek to limit potential delays strictly to the minimum required, in order to strike a balance between the public interest in awarding a public contract and the legitimate interests of harmed tenderers.

"This is why we only limited the 'standstill period' to just 10 days," the Commission spokesman said.

The new proposals will now have to be approved by the European Parliament and the Council before coming into force.