the government procurement review - mnks · pdf file · 2015-07-10seth dua &...
TRANSCRIPT
The Government procurement
Review
Law Business Research
Third Edition
Editors
Jonathan Davey and Amy Gatenby
The GovernmentProcurement Review
The Government Procurement ReviewReproduced with permission from Law Business Research Ltd.
This article was first published in The Government Procurement Review - Edition 3(published in May 2015 – editors Jonathan Davey and Amy Gatenby).
For further information please [email protected]
The Government Procurement
Review
Third Edition
EditorsJonathan Davey and Amy Gatenby
Law Business Research Ltd
PUBLISHER Gideon Roberton
BUSINESS DEVELOPMENT MANAGER Nick Barette
SENIOR ACCOUNT MANAGERS Katherine Jablonowska, Thomas Lee
ACCOUNT MANAGERS Felicity Bown, Joel Woods
PUBLISHING COORDINATOR Lucy Brewer
MARKETING ASSISTANT Rebecca Mogridge
EDITORIAL COORDINATOR Shani Bans
HEAD OF PRODUCTION Adam Myers
PRODUCTION EDITOR Robbie Kelly
SUBEDITOR Janina Godowska
MANAGING DIRECTOR Richard Davey
Published in the United Kingdom by Law Business Research Ltd, London
87 Lancaster Road, London, W11 1QQ, UK© 2015 Law Business Research Ltd
www.TheLawReviews.co.uk No photocopying: copyright licences do not apply.
The information provided in this publication is general and may not apply in a specific situation, nor does it necessarily represent the views of authors’ firms or their clients.
Legal advice should always be sought before taking any legal action based on the information provided. The publishers accept no responsibility for any acts or omissions contained herein. Although the information provided is accurate as of May 2015, be
advised that this is a developing area.Enquiries concerning reproduction should be sent to Law Business Research, at the
address above. Enquiries concerning editorial content should be directed to the Publisher – [email protected]
ISBN 978-1-909830-48-6
Printed in Great Britain by Encompass Print Solutions, Derbyshire
Tel: 0844 2480 112
THE MERGERS AND ACQUISITIONS REVIEW
THE RESTRUCTURING REVIEW
THE PRIVATE COMPETITION ENFORCEMENT REVIEW
THE DISPUTE RESOLUTION REVIEW
THE EMPLOYMENT LAW REVIEW
THE PUBLIC COMPETITION ENFORCEMENT REVIEW
THE BANKING REGULATION REVIEW
THE INTERNATIONAL ARBITRATION REVIEW
THE MERGER CONTROL REVIEW
THE TECHNOLOGY, MEDIA AND TELECOMMUNICATIONS REVIEW
THE INWARD INVESTMENT AND INTERNATIONAL TAXATION REVIEW
THE CORPORATE GOVERNANCE REVIEW
THE CORPORATE IMMIGRATION REVIEW
THE INTERNATIONAL INVESTIGATIONS REVIEW
THE PROJECTS AND CONSTRUCTION REVIEW
THE INTERNATIONAL CAPITAL MARKETS REVIEW
THE REAL ESTATE LAW REVIEW
THE PRIVATE EQUITY REVIEW
THE ENERGY REGULATION AND MARKETS REVIEW
THE INTELLECTUAL PROPERTY REVIEW
THE ASSET MANAGEMENT REVIEW
THE LAW REVIEWS
www.TheLawReviews.co.uk
THE PRIVATE WEALTH AND PRIVATE CLIENT REVIEW
THE MINING LAW REVIEW
THE EXECUTIVE REMUNERATION REVIEW
THE ANTI-BRIBERY AND ANTI-CORRUPTION REVIEW
THE CARTELS AND LENIENCY REVIEW
THE TAX DISPUTES AND LITIGATION REVIEW
THE LIFE SCIENCES LAW REVIEW
THE INSURANCE AND REINSURANCE LAW REVIEW
THE GOVERNMENT PROCUREMENT REVIEW
THE DOMINANCE AND MONOPOLIES REVIEW
THE AVIATION LAW REVIEW
THE FOREIGN INVESTMENT REGULATION REVIEW
THE ASSET TRACING AND RECOVERY REVIEW
THE INTERNATIONAL INSOLVENCY REVIEW
THE OIL AND GAS LAW REVIEW
THE FRANCHISE LAW REVIEW
THE PRODUCT REGULATION AND LIABILITY REVIEW
THE SHIPPING LAW REVIEW
THE ACQUISITION AND LEVERAGED FINANCE REVIEW
THE PRIVACY, DATA PROTECTION AND CYBERSECURITY LAW REVIEW
THE PUBLIC-PRIVATE PARTNERSHIP LAW REVIEW
THE TRANSPORT FINANCE LAW REVIEW
i
The publisher acknowledges and thanks the following law firms for their learned assistance throughout the preparation of this book:
ADAMS & ADAMS
ADDLESHAW GODDARD LLP
AEQUITAS LEGAL
ALLEN & OVERY
ARAP, NISHI & UYEDA ADVOGADOS
BAHAS, GRAMATIDIS & PARTNERS
BAKER & MCKENZIE
BENTSI-ENCHILL, LETSA & ANKOMAH
BIRD & BIRD LLP
HANNES SNELLMAN ATTORNEYS LTD
HERBERT SMITH FREEHILLS
LEE AND LI, ATTORNEYS-AT-LAW
LENZ & STAEHELIN
LIEDEKERKE
MNKS
NADER, HAYAUX & GOEBEL, SC
SETH DUA & ASSOCIATES
SETTERWALLS ADVOKATBYRÅ AB
ACKNOWLEDGEMENTS
Acknowledgements
ii
SHEPPARD, MULLIN, RICHTER & HAMPTON LLP
ŢUCA ZBÂRCEA & ASOCIAŢII
ÜNSAL GÜNDÜZ ATTORNEYS AT LAW
VIEIRA DE ALMEIDA & ASSOCIADOS
WOLF THEISS ATTORNEYS-AT-LAW
iii
Editors' Preface ..................................................................................................viiJonathan Davey and Amy Gatenby
Chapter 1 AUSTRALIA ...............................................................................1Geoff Wood and Anne Petterd
Chapter 2 AUSTRIA .................................................................................14Philipp J Marboe and Nina Lassner
Chapter 3 BELGIUM ................................................................................26Dirk Lindemans, Frank Judo, Aurélien Vandeburie and Stijn Maeyaert
Chapter 4 BRAZIL ....................................................................................38Massami Uyeda Junior and Rodnei Iazzetta
Chapter 5 CANADA .................................................................................52Theo Ling and Jonathan Tam
Chapter 6 EUROPEAN UNION ..............................................................66Clare Dwyer and Michael Rainey
Chapter 7 FINLAND ................................................................................82Toni Malminen
Chapter 8 FRANCE ..................................................................................95Romaric Lazerges
Chapter 9 GERMANY ............................................................................111Olaf Otting and Udo H Olgemöller
CONTENTS
iv
Contents
Chapter 10 GHANA ..................................................................................122Divine Kwaku Duwose Letsa
Chapter 11 GREECE ................................................................................139Irene Economou
Chapter 12 INDIA ....................................................................................157Sunil Seth and Vasanth Rajasekaran
Chapter 13 ITALY .....................................................................................168Filippo Bucchi, Maria Vittoria La Rosa and Gabriella Ungaro
Chapter 14 LUXEMBOURG ....................................................................183Benjamin Marthoz
Chapter 15 MALTA ...................................................................................201Adrian Delia and Matthew Paris
Chapter 16 MEXICO ................................................................................212Javier Arreola E and Vanessa Franyutti J
Chapter 17 PORTUGAL ...........................................................................225Paulo Pinheiro, Rodrigo Esteves de Oliveira, Catarina Pinto Correia and Ana Marta Castro
Chapter 18 ROMANIA .............................................................................238Oana Gavrilă and Mariana Sturza
Chapter 19 RUSSIA ...................................................................................250Olga Revzina and Lola Shamirzayeva
Chapter 20 SOUTH AFRICA ...................................................................261Andrew Molver and Michael Gwala
Chapter 21 SPAIN .....................................................................................277Raquel Ballesteros
v
Contents
Chapter 22 SWEDEN ...............................................................................290Ulf Djurberg and Natali Phalén
Chapter 23 SWITZERLAND ...................................................................301Astrid Waser, Marcel Meinhardt
Chapter 24 TAIWAN ................................................................................312Pauline Wang and Claire C Lin
Chapter 25 TURKEY ................................................................................326Okan Gündüz and Burçak Ünsal
Chapter 26 UNITED KINGDOM ...........................................................337Amy Gatenby, Bill Gilliam and Clare Dwyer
Chapter 27 UNITED STATES .................................................................352David S Gallacher
Appendix 1 ABOUT THE AUTHORS .....................................................369
Appendix 2 CONTRIBUTING LAW FIRMS’ CONTACT DETAILS ...387
vii
EDITORS’ PREFACE
We are delighted to introduce this, the third edition of The Government Procurement Review. It brings even wider geographic coverage than the second edition, now covering six continents and 27 national chapters (including the EU chapter).
The political and economic significance of government procurement is plain. Government contracts are of considerable value and importance, often accounting for 10 to 20 per cent of GDP in any given state. Government spending is often high-profile and has the capacity to shape the future lives of local residents.
Even as the economic climate improves, it is perhaps no surprise that, with austerity the watchword throughout the developed economies, governments seek to demonstrate more effective, better-value purchasing; nor that many suppliers view government contracts as a much-needed revenue stream offering relative certainty that they will be paid. A concern to simplify procurement procedures and increase opportunities for small and medium-sized enterprises is also prevalent, particularly in the EU.
The World Trade Organization’s revised Agreement on Government Procurement (GPA) now covers the 28 EU Member States, Armenia, Canada, Hong Kong (China), Iceland, Israel, Japan, Korea, Liechtenstein, the Netherlands with respect to Aruba, Norway, Singapore, Switzerland, Chinese Taipei and the United States. Montenegro and New Zealand were invited to accede to the GPA on 29 October 2014. Eight other states have started the process of acceding (Albania, China, Georgia, Jordan, the Kyrgyz Republic, Moldova, Oman and Ukraine).
In last year’s preface, we mentioned potential new, protectionist clouds on the procurement horizon with the European Parliament having approved measures that would prevent firms from bidding for larger public contracts unless their home country allows reciprocal access to EU firms. While the European Parliament viewed these measures as encouraging third countries to reciprocate in opening markets, some (including the International Chamber of Commerce) feared it would have the opposite effect, provoking trade wars. It seems, for the moment at least, that these proposals are not proceeding, which in the authors’ view is to be welcomed.
Editors’ Preface
viii
Regardless of these possible difficulties, we expect that the principles of transparency, value for money and objectivity enshrined in the UNCITRAL Model Law on Public Procurement and in the national legislation of many states will continue gradually to have a positive effect.
The biggest single development internationally in the period since the second edition is undoubtedly the adoption of new EU directives and progress towards the required national implementation, Member State by Member State. The New Directives cover, respectively, mainstream public sector and utilities procurement (replacing the 2004 directives) and concessions, an area previously only partly covered by the EU regime. The new directives have been described as effecting evolution rather than revolution, but cynics, pointing to the lengthening of the directives and the addition of new procedures, query whether the originally stated aims of simplification and ‘flexibilisation’ (a word that could only have been invented in Brussels!) have really been achieved.
At the time of writing, only the United Kingdom has implemented the mainstream directive, with the deadline for transposition being 18 April 2016.
Incidentally, when reading chapters regarding European Union Member States, it is worth remembering that the underlying rules are set in the directives at EU level. Readers may find it helpful to refer to both the European Union chapter and the relevant national chapter, to gain a fuller understanding of the relevant issues. As far as possible, the authors have sought to avoid duplication between the EU chapter and national chapters.
Some national authors have reported significant increases in challenges to contract award decisions, and this is certainly the experience in the United Kingdom. While it is clear that there are considerable variations between jurisdictions in the willingness or ability of suppliers to challenge, it seems to us that the increased risk of challenge can help hold awarding authorities to account and is likely to encourage greater compliance with national procurement rules. It may be that, in jurisdictions where bringing procurement challenges is either difficult or expensive, further measures are needed to amplify this effect.
Finally, we wish to take this opportunity to acknowledge the tremendous efforts of the many contributors to this third edition as well as the tireless work of the publishers in ensuring that a quality product is brought to your bookshelves in a timely fashion. We hope you will agree that it is even better than previous editions, and we trust you will find it to be a valued resource.
Jonathan Davey and Amy GatenbyAddleshaw Goddard LLPLondonMay 2015
183
Chapter 14
LUXEMBOURG
Benjamin Marthoz1
I INTRODUCTION
i Preliminary observations
To fully appreciate the references to Luxembourg laws and regulations, it is worth considering briefly the hierarchy of norms and the authority attributed to them.
Luxembourg is a civil law country. It has a written Constitution that is at the highest level of the hierarchy of norms. It provides that Luxembourg is a parliamentary democracy governed by the principles of the separation of powers: the legislative power, the executive power and the judicial power.
Luxembourg has one national language (Luxembourgish) and two administrative languages (French and German).
The national law is adopted by the Parliament, only composed of one Chamber: the Chamber of Deputies. National laws to be adopted must comply with the Constitution.2
The Law is implemented by the Grand Duke through grand-ducal regulations and decrees.3 Local regulations and decisions are those taken by the local authorities: communes and associations of communes. These general and local regulations, decrees or decisions must comply with the laws.4
Decisions regarding public procurement procedures may also be taken by the public establishments, each being incorporated by a specific law.
1 Benjamin Marthoz is a senior associate at MNKS.2 Article 95-ter of the Constitution provides that ‘The Constitutional Court decides, by way of
judgment, on the conformity of the laws with the Constitution’.3 Article 36 of the Constitution provides that ‘The Grand Duke enacts the regulations and
decrees necessary for carrying laws into effect’.4 Article 95 of the Constitution provides that ‘Courts and tribunals may apply general and
local decisions and regulations only in so far as these comply with the laws’.
Luxembourg
184
ii Key legislation governing public procurement procedures
The Law of 25 June 20095 on public procurement (the Law) implemented Directives 2004/18/EC (the Public Sector Directive) and 2004/17/EC (the Utilities Sector Directive). The Law is divided into three books, each governing a specific field:a Book 1 applies to every procurement procedure (national procedures below EU
thresholds, above EU thresholds and utilities sectors);b Book 2 applies to procurements above EU thresholds (public sector); andc Book 3 applies to procurements regarding utilities sectors.
The Law of 10 November 20106 establishing procurement remedies transposes Directive 2007/66/EC.7
The Law of 26 December 20128 transposes the provisions of Directive 2009/81/EC on public procurement in the fields of defence and security.9
The Grand-Ducal Regulation of 3 August 200910 (the Regulation) puts the law on public procurement into effect and provides the details governing the different procurement procedures. It has the same structure as the Law and is divided into three books, each one detailing the rules applying to the corresponding book of the Law.
The Regulation was modified at the beginning of 2015 by the Grand-Ducal Regulation of 27 January 201511 modifying Article 103(2) of the Grand-Ducal Regulation of 3 August 2009 dealing with the adaptation clauses provided in public procurement contracts. This modification aims at permitting an individualised procedure for the adaptation of any procurement contract. This modification is also the first national measure of execution from the new EU Directive 2014/24/EU (Article 72). Now, the contracting authority or entity may introduce into the general conditions of the procurement a procedure dealing with the adaptation of the contract. If no clause is added in the general conditions, the Grand-Ducal Regulation provides for a procedure that would apply in the absence of a contractual procedure. Previously, an adaptation
5 Law of 25 June 2009 on public procurements, Mémorial A, No. 172, p. 2,493.6 Law of 10 November 2010 establishing procurement remedies, Mémorial A, No. 203,
12 November 2010, p. 3,378; doc parl 6119; Directive 2007/66/EC).7 Directive 2007/66/EC of 11 December 2007 amending Council Directives 89/665/EEC and
92/13/EEC with regard to improving the effectiveness of review procedures concerning the award of public contracts, OJEU, 20 December 2007, L335/31.
8 Law of 26 December 2012 on public procurements in the fields of defence and security (…), Mémorial A, No. 293, 31 December 2012, p. 4,547.
9 This Law was finally adopted following the decision of the European Commission to refer an appeal to the Court of Justice of the European Union against Luxembourg for failure to implement the Directive.
10 Grand-Ducal Regulation of 3 August 2009 putting the Law of 25 June 2009 on public procurements into effect (…), Mémorial A, No. 180, 11 August 2009, p. 2,607.
11 Grand-Ducal Regulation of 27 January 2015 modifying the Grand-Ducal Regulation of 3 August 2009, Mémorial A, 9 February 2015, No. 19, p. 210.
Luxembourg
185
clause was only permitted for works contracts. This regulation entered into force on 1 April 2015.
The Grand-Ducal Regulation of 24 March 201412 provides and standardises the special specifications for public contracts in a specific technical regulation. This new text repeals the Grand-Ducal Regulation of 8 July 2003,13 with effect from 1 June 2014, and only applies for public works procurement.
The Ministry Regulation of 24 July 201414 institutes standardised general conditions regarding general contractual stipulations and standardised special conditions for technical specifications, and applies to all public works contracts related to the building sector; it also institutes standardised special specifications for works contracts.
The Grand-Ducal Regulation of 27 August 201315 brings the law on public procurement into effect and modifies the Regulation by providing for conditions regarding the use of electronic means in public procurement procedures. This Regulation has also been brought into effect by a Ministry Regulation of 2 December 2013,16 which cites the conditions for the use of the public procurement portal.
Luxembourg is also a party to the Agreement on Government Procurement (GPA) and is thus bound by its provisions, which impose rights and obligations. The Law confirms the application of the GPA.17 The GPA was recently amended by a protocol18 negotiated by the European Commission on behalf of the Member States and was integrated into the European legal framework through a decision of the Council of 2 December 2013.19
12 Grand-Ducal Regulation of 24 March 2014 instituting and providing standardised specifications for contracts on public works, Mémorial A, 7 April 2014, No. 50, pp. 562–564.
13 Grand-Ducal Regulation of 8 July 2003 instituting and providing standardised specifications for public procurements, Mémorial A, No. 93, 10 July 2003, p. 1,669.
14 The Ministry Regulation of 24 July 2014 instituting standardised general conditions regarding general contractual stipulations and standardised special specifications for technical specifications, applying to all public work contract related to the building sector, and instituting standardised special specifications for works contract, Mémorial A, No. 155, 11 August 2015, pp. 2,394–2,395.
15 Grand-Ducal Regulation of 27 August 2013 regarding the use of electronic means in public procurement procedures (…), Mémorial A, No. 161, 6 September 2013, p. 3,096.
16 Ministry Regulation of 2 December 2013 instituting the terms of use of the public procurement portal, Mémorial A, 10 December 2013, No. 214, p. 3,860.
17 Article 52 of the Law provides that ‘In cases of procurement with economic operators from the Member States of the European Community, contracting authorities shall apply the conditions as favourable as those that they grant to economic operators of third countries pursuant to the Agreement on Government Procurement concluded in the context of multilateral negotiations in the Uruguay Cycle.’
18 Council Decision 2014/115/EU of 2 December 2013 on the conclusion of the Protocol Amending the Agreement on Government Procurement, OJEU, 7 March 2014, L68/1.
19 Protocol Amending the Agreement on Government Procurement, OJEU, 7 March 2014, L68/2.
Luxembourg
186
The fundamental principles governing public procurement in Luxembourg are provided by Article 10 of the Law and can be summarised as follows:a contracting authorities shall treat economic operators equally, without
discrimination and act with transparency;b contracting authorities shall ensure that, during the procurement, the issues and
problems related to the environment and promoting sustainable development are considered. Relevant conditions and the importance attributed to these conditions shall be specified in the special specifications;
c contracting authorities shall inform the economic operators as soon as they have taken decisions about their tenders delivered under a public procurement procedure; and
d contracting authorities may use electronic means in procurement procedures in accordance with the rules set out in the Regulation.
Decisions on how to organise the tendering process concretely are left to the contracting authorities, which must comply with the rules set out in the Law and the Regulation. This is why law firms are usually required to write down specifications and other tender documents for contracting authorities.
II YEAR IN REVIEW
The past few months have been eventful in the area of public procurement:a the number of cases introduced before the administrative courts remained
noticeably high. The reasons attributed to the increase are notably:• the evolution of an aggrieved attitude among tenderers: they challenge more
systematically the rejection of their tenders by the contracting authorities. This change can mainly be explained by the consequences of the economic crisis, the application of stricter conditions and also a significant stringency on the part of the contracting authorities in the application of the Law and the Regulation;
• the amount of litigation dealing with the procurement procedures of entities in the water, energy, transport and postal services sectors has also risen. This is most probably due to the opening of the markets and the expansion of the European Union, providing more economic operators for public procurements;
• the number of public projects currently managed by contracting authorities or entities. Luxembourg is a country in perpetual movement and the lack of specific historical institutions is currently resolved through ambitious public projects, such as the development of the University of Luxembourg and all its attendant procurements (building new premises, etc.), and the development of the south part of the capital, where the most famous companies have decided to site their own buildings (the new suburb known as ‘Ban de Gasperich’).
Luxembourg
187
b the government (the Grand-Duke) adopted the Grand-Ducal Regulation of 27 January 201520 modifying Article 103(2) of the Grand-Ducal Regulation of 3 August 2009 dealing with the adaptation clauses provided in public procurement contracts. This modification aims at permitting an individualised procedure for the adaptation of any procurement contract;
c the Ministry Regulation of 24 July 201421 instituting standardised general conditions regarding general contractual stipulations and standardised special conditions for technical specifications, applying to all public work contracts related to the building sector, and instituting standardised special specifications for works contracts.
d the approval by the European Union of the new rules on public procurement and concession contracts on 26 February 2014 and the repealing of both Directive 2004/18/EC and Directive 2004/17/EC with effect to 18 April 2016 (the final date for adoption of a national measure of execution to introduce the new rules into national law);
e conferences and working groups were organised to give explanations and guidance to public procurement participants, taking into account the number of important rules to comply with and the growing technical nature of the matter. Participants called for such meetings. On the one hand, the contracting authorities wish to avoid annulment of their public contracts; on the other, economic operators are willing to increase their chances of being awarded; and
f conferences and working groups were also organised to provide for explanations to public procurement actors regarding the New Directives adopted on 26 February 2014.
III SCOPE OF PROCUREMENT REGULATION
i Regulated authorities
Article 2 of the Law provides the definition of the ‘contracting authorities’ caught by the government procurement rules. This definition only applies for the first two books of the Law, having implemented the Public Sector Directive.
Luxembourg has two levels of institutional power: the state and the communes. Pursuant to Article 107 of the Constitution: ‘Communes form autonomous authorities,
20 Grand-Ducal Regulation of 27 January 2015 modifying the Grand-Ducal Regulation of 3 August 2009, Mémorial A, 9 February 2015, No. 19, p. 210.
21 The Ministry Regulation of 24 July 2014 instituting standardised general conditions regarding general contractual stipulations and standardised special specifications for technical specifications, applying to all public work contract related to the building sector, and instituting standardised special specifications for works contract, Mémorial A, No. 155, 11 August 2015, pp. 2,394–2,395.
Luxembourg
188
on a territorial basis, possessing legal personality and administrating their patrimony and own interests.’ The other regulated authorities are:a public establishments (public bodies) of the state placed under the supervision of
a member of the government;22
b public establishments placed under the supervision of the communes; andc associations of local authorities23 created under the Law of 23 February 200124 on
associations of communes.
Pursuant to Article 56 of the Law, which applies to the utilities sector, ‘public undertaking’ is also included as a contracting authority and meant as the Utilities Sector Directive defines it.
ii Regulated contracts
Small-scale procurementSmall-scale procurement covers public contracts related to carrying out works, supplying products or providing services below the threshold of €55,000. The use of the open procedure or the restricted procedure with publication of notice is not required. The negotiated procedure or the restricted procedure may be used without publication of notice without any further justification.
When the total amount of the contract is between €55,000 and €113,904,25 recourse may be either to a restricted procedure without publication of notice or to a negotiated procedure. In the case of a restricted procedure without publication of notice, the contracting authority must ensure there are at least three candidates invited to tender. A negotiated procedure allows for at least three candidates for negotiations, provided there is a sufficient number of suitable candidates.
Large-scale procurementLarge-scale procurement covers public contracts related to carrying out works, supplying products or providing services above the EU thresholds. Luxembourg has a below-threshold regime in the public and utilities sectors, with the same approach to thresholds and procedures as that adopted in the public sector.
22 Établissements publics de l’État placés sous la surveillance d’un membre du gouvernement.23 Syndicats de communes créés en vertu de la loi du 23 février 2001 concernant les syndicats
de communes.24 Law of 23 February 2001 concerning associations of communes, Mémorial A, No. 36,
26 March 2001, p. 859; doc parl 4138.25 Updated amount; the Law provided the amount of €14,000 excluding VAT, per cent value
price index for consumption on 1 January 1948.
Luxembourg
189
The thresholds for procurement procedures are the same as those provided by the European Commission. The updated thresholds26 are:a public sector:
• supply and services contracts, design contests (central government authorities): €134,000;
• supply and services contracts, design contests (other contracting authorities), services contracts linked to works contracts and subsidised by more than 50 per cent by contracting authorities, research and development (R&D) services contracts, services of Annex IIB of the Law: €207,000; and
• works contracts, contracts subsidised by more than 50 per cent by contracting authorities, public works concession: €5,186,000;
b utilities:• supply and services contracts: €414,000;• works contracts: €5,186,000;• design contests: €414,000; and• public works concession (concessionaire is not a contracting authority):
€5,186,000; andc defence and security:
• supply and services contracts: €414,000; and• works contracts: €5,186,000.
Above EU thresholds, Articles 26 to 32 of the Law make the same provision for excluded contracts as that which is set out in Articles 12 to 19 of the Public Sector Directive: in the field of telecommunications, secret contracts or those requiring particular measures of security, service concessions, land agreements, programmes for radio diffusion, arbitration and conciliation, financial services, labour contracts, R&D (specific), public contracts based on exclusive rights.
Below EU thresholds, the contracting authority must publish a public contract notice in the Luxembourg press (for open procedures and restricted procedures with publication of a contract notice). Above EU thresholds, the publication at national level cannot precede the publication at EU level.
If the contracting authority cancels a procurement launched with an open procedure because of significant variations, the relaunch of the procurement shall be made with an open procedure.27
iii Options to vary a contract or to transfer the contract to a different supplier
The Law provides that, in the event of important changes regarding prices, salaries or contract performance clauses arising between the initial tender and the completion of the contract, the contract may be:a cancelled:
26 Updated by EU Regulation 1336/2013 of 13 December 2013, OJEU, 14 December 2013, L335/17; published in Luxembourg in Mémorial B, 23 January 2014, No. 8.
27 Article 92 of the Regulation.
Luxembourg
190
• upon request of the contracting authority, in the event of an act constituting force majeure; or
• upon request of the successful tenderer, in the event that the date of the beginning of the performance of the works is in excess of 40 days; or in the event that the contracting authority modifies the contract to impose a variation of more than 20 per cent of the contract value;
b adapted:• the modification of the Regulation dated 27 January 2015 provides that, in any
procurement procedure, the contracting authority may stipulate a procedure for the adaptation of the contract. In the absence of such a stipulation, the common rule from the Grand-Ducal regulation of 3 August 2009 shall apply:• upon request of one of the parties, in the event of an unforeseen variation
of the prices or salaries because of new legal rules since the bidding; or• upon request of one of the parties, in the event of an important and
unforeseen fluctuation of the prices or salaries based on official quotation; orc modified:
• upon request of one of the parties, in the event of an act constituting force majeure; or
• upon request of the successful tenderer, in the event that the date of the beginning of the performance of the works exceeds 40 days, based on the fault of the awarding authority; in the event the contracting authority modifies the contract to impose a variation of more than 20 per cent of the contract value; or in the event that the contractual delay is in excess of more than 40 days.
In any of the above-mentioned cases, the request shall in general be notified to the other party using a formal notice (registered letter) providing the reasons justifying a cancellation, an adaptation or a modification of the contract.
IV SPECIAL CONTRACTUAL FORMS
i Framework agreements and central purchasing
Regarding the treatment of framework agreements, Article 46 of the Law provides that contracting authorities may conclude framework agreements by following the rules of procedure referred to in the Regulation for all phases up to the award of contracts based on that framework agreement. The parties to the framework agreement shall be chosen by applying the award criteria set in accordance with Article 11 of the Law. The term of a framework agreement may not exceed four years (save in exceptional cases duly justified, in particular by the subject of the framework agreement).
First, after determining one or more economic operators to be parties to the framework agreement in accordance with the rules laid down for the open, restricted or negotiated procedure, there is the conclusion of the framework agreement, which defines the terms of contracts to come. In this phase, there is a selection of operators to become parties to the agreement.
Luxembourg
191
The following contracts to the framework agreement shall be concluded with fewer formalities:a where only one economic operator is party to the framework agreement, the
contracting authority addresses its requirement in writing to the operator; orb where several economic operators (at least three) are parties to the framework
agreement, there is a reopening of competition among the operators selected. They can either maintain their offer or improve it. As a result of these contracts, prices and quantities are set.
Contracting authorities may purchase works, supplies or services from or through a central purchasing body, by applying one of the procedures set out in the Law (open or restricted procedure, competitive dialogue or negotiated procedure). The same rules apply for the utilities, defence and security sectors.
The Regulation also provides rules regarding dynamic purchasing and electronic auctions.
ii Joint ventures
Contracting authorities may cooperate, by launching a common procurement or by grouping themselves into a new legal entity with the objective of dealing with specific procurements (e.g., through a public establishment, an economic interest grouping or a European economic interest grouping).
The joint ventures of public authorities constitute contracting authorities bound by the rules on public procurement. Following the case law of the European Court of Justice, the in-house exception may apply if conditions set out in the Teckal28 and Oulu29 cases are fulfilled.
Luxembourg had its first experiences with private-public partnerships (PPPs) over the past three years with the construction of public schools, public swimming pools, etc. Most PPPs are covered by public procurement law and should therefore be concluded in accordance with the relevant rules. Even in the case of use of institutional PPPs, the mixed structure may be forced to comply with procurement law if it meets the definition of a contracting authority as set out by the Law.
V THE BIDDING PROCESS
i Notice
Public contract notices must be published in the national press. They should also be published on an online portal in electronic format.30
28 CJEU, 18 November 1999, Teckal, C-107/98, Rec. p. I-8121, point 50.29 CJEU, 22 December 2010, Oulu, C-219/09.30 The portal, which can be found at https://pmp.b2g.etat.lu/?page=entreprise, is the online
platform offering different types of service; some are free, while others require an advanced electronic signature.
Luxembourg
192
ii Procedures
Depending on the type of procedure launched, contracting authorities may comply with the rules detailed in the Regulation.
On the one hand, there are normal procedures for which advertising notices are required, and on the other, there are exceptional procedures, the use of which is possible only in cases provided by law. Normal procedures include the open procedure and the restricted procedure with publication of a contract notice. Exceptional procedures include the negotiated procedure (with or without prior information) and the restricted procedure without publication of notice.
In Luxembourg, contracting authorities may use electronic procurement and electronic auction.
Contracting authorities shall adjudicate the public contract within two months following the opening of tenders; this period can be extended to five months. When an extension of more than two months is needed, the tenderers’ consent is required.
iii Amending bids
When the bid has been deposited or sent, no changes can be made (with the exception of arithmetical mistakes). If the contracting authority proposes changes to the tendering, these changes cannot prejudice the tenderer.
VI ELIGIBILITY
i Qualification to bid
Works, supplies and services can only be awarded to economic operators who, on the date of opening of the tender, meet the legal requirements for professional care for the execution of works, delivery of supplies or the provision of services that are the subject of the public contract.
The Law and the Regulation provide criteria disqualifying bidders:a disqualifying criteria (mandatory): participation in a criminal organisation,
corruption, fraud, money laundering; andb disqualifying criteria (facultative): bankruptcy and insolvency procedures,
sentenced for any offence concerning their professional conduct; guilty of grave professional misconduct; non-fulfilment of obligations relating to the payment of social security contributions; non-fulfilment of obligations relating to the payment of taxes; guilty of serious misrepresentation in supplying the information required.
ii Conflicts of interest
The procurement legislation does not provide any specific rule regarding conflicts of interest, with the exception of the fundamental principles on the matter set out in Article 4 of the Law.
iii Foreign suppliers
Foreign suppliers can bid in national or European procurements launched in Luxembourg. As in the other 26 Member States of the European Union, Luxembourg
Luxembourg
193
opens up its public contracts to third countries (non-EU states) that take similar action, mainly through the GPA. They must meet the requirements imposed by the Law and the specifications of the procurement.
Articles 52 (the public sector) and 65 (utilities) of the Law provide that in the case of public procurement concerning economic operators from other Member States of the European Union, contracting authorities shall apply as favourable conditions as those reserved to economic operators from third countries, provided for by the agreement on government procurement by the conclusion, in January 1994, of the Uruguay round of multilateral negotiations conducted within the context of the General Agreement on Tariffs and Trade.
VII AWARD
For open and restricted procedures (with or without the publication of notice) the opening of tenders must be organised publicly.
i Evaluating tenders
In Luxembourg, if a tender is 15 per cent below the average price, the economic operator is required to produce a price analysis. If this analysis does not explain the low offer, it can be rejected.
The contracting authorities shall base the award of public contracts either:a on the most economically advantageous tender from the point of view of the
contracting authority, various criteria linked to the subject matter of the public contract in question;31 or
b on the tender with the lowest price only.
The criteria to be taken into account must be linked to the subject of the contract to be concluded. The criteria should be weighted according to a mode of evaluation by points, percentages or other modes specified in the special specifications. The scoring criteria must be specified in the specifications.
ii National interest and public policy considerations
Contracting authorities may use requirements in the specifications, for example, description of the method of production and manufacturing, use of recycled products, recycling of materials, acquisition of prescription food from organic production, fair trade production, or use of environmental and social labels.
Article 18 of the Law provides that, for public contracts of the local authority (communes) below a threshold of €20,000, the contracting authority may award the contract to a tenderer established on the territory of the local authority, provided that
31 Examples listed include quality, price, technical merit, aesthetic and functional characteristics, environmental characteristics, running costs, cost-effectiveness, after-sales service and technical assistance, delivery date, and delivery period or period of completion.
Luxembourg
194
the price of the bid of the local tenderer is not more than 5 per cent more than the price of the tenderer having the lowest cost or the most economically advantageous tender.
Articles 20, 33 and 79 of the Law provide that contracting authorities may reserve the right to participate in public contract award procedures regarding 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 who, by reason of the nature or the seriousness of their disabilities, cannot carry on occupations under normal conditions. The contract notice shall make reference to this provision.
Environmental or social considerations may also be imposed by the contracting authority at different stages of the procedure:a among the selection criteria for the procurement of works and services: by
including the environmental management measures that the economic operator will be able to apply when performing the contract;
b among the awarding criteria; andc requirements relating to the contract must be included in the special specifications;
for example, delivery or wrapped bulk packaging recycling obligation, reuse containers for delivery.
VIII INFORMATION FLOW
In general, the Regulation on Non-Litigious Administrative Procedure32 ensures the right of the public to access their administrative files.
Pursuant to the Law, the contracting authority shall notify its awarding decision to unsuccessful tenderers and communicate the reasons for the rejection of their bids.
The contract with the successful bidder can only be signed after the expiry of a period of at least 15 days begins to run from the date of notification of the rejection of the offer to other competitors. Thus, the administrative withdrawal of the award decision (in the event of a valid objection) within this delay is possible before the signature of the contract.
Except in cases where the Law provides otherwise, the retroactive withdrawal of a decision that created or recognised rights is only possible during the exercise period for an appeal against this decision litigation, or during the course of the procedure litigation brought against the decision. The withdrawal of such a decision can be taken as one of the causes that would justify the annulment of a contentious decision.33
The signing of the contract shall be formalised by the contracting authority on the tender document already signed by the tenderer before it submitted its bid.
32 Grand-Ducal Regulation of 8 June 1979 regarding the procedure to be followed by the governmental and local administrations, Mémorial A, No. 54, 6 July 1979, p. 1,096; doc parl 2313.
33 Article 8.
Luxembourg
195
IX CHALLENGING AWARDS
Article 84 of the Constitution provides that ‘any disputes regarding civil rights are to be ruled upon exclusively by the courts’. Depending on the matter, disputes are ruled upon by the judiciary or by the administrative courts.
Disputes regarding public procurement are mainly ruled by the administrative courts, awarding and rejecting decisions being qualified as ‘administrative acts’. However, administrative courts have only limited jurisdiction for the annulment of the decision taken by the public authority in the procurement procedure. They have no jurisdiction to grant damages. For example, following the annulment of an administrative decision, a new procedure may be introduced before the judicial courts to get damages to compensate the prejudices caused by the cancelled decision.
Luxembourg legislation provides two main methods of challenging the award of a contract to an economic operator: internal administrative appeals and judicial appeals.
i Procedures
Internal administrative appealsFirst, an internal appeal may be addressed to the author of the decision, the supervisory authority or the hierarchical authority. Such an appeal is generally in administrative matters and is provided by the Regulation on Non-Litigious Administrative Procedure.
The internal appeal may be addressed to the contracting authority by any party with a legitimate interest within the time limit for bringing an action (three months).
The appeal before the supervising authority is provided by the Law and regards local entities (communes).
The plaintiff may then address an appeal to the Tender Commission established by the Ministry of Sustainable Development and Infrastructure. It is an advisory commission for procurement that may receive requests in the event of a dispute between a contracting authority and a bidder. The Tender Commission is regularly consulted during the procurement procedure, with the aim of smoothing out difficulties that have arisen between them.
Finally, the Mediator34 or Ombudsman35 also has jurisdiction to deal with any dispute arising between an administrative authority and the public. Before calling upon the Mediator, the tenderer must have previously taken the necessary steps against the public administration, which may consist either of asking for further explanations or of disputing the decision. The Ombudsman then recommends taking these previous steps in writing and preferably by registered mail and prescribes an intervention in the case of a persisting disagreement with the administration. The intervention of the Mediator would be more effective at a later stage, in the case of the annulment of a procurement that has already been executed by the awarding party (the final judgment only being
34 The function of the Mediator was created by the Law of 22 August 2003: Loi du 22 août 2003 instituant un médiateur, Mémorial A, No. 128, 3 September 2003, p. 2,654.
35 The current Ombudsman is Ms Lydie Err. For further information, see the official website: www.ombudsman.lu.
Luxembourg
196
rendered several months or years after the awarding decision was taken). The intervention of the Ombudsman may be favourable to settle an agreement between the contracting authority and the aggrieved tenderer regarding its compensation and the amount to be paid as damages.
Judicial appealsThe aggrieved bidder may submit via an attorney-at-law an action for annulment before the Administrative Tribunal. An appeal against the decision may be brought before the Administrative Court. The Supreme Court has jurisdiction for administrative matters.
The contentious appeal is an objective appeal, whose central issue is to decide whether the contested act is legal.
The appeal period is three months, which starts to run from the correct notification of the decision of rejection or award (with reasons for the refusal and remedies). A notification is correct if the decision was notified directly to the addressee, gives explanations on the grounds of the decision and provides information about legal remedies and delays within which they may be exercised. Without a correct notification of the decision, the delays for appealing do not run.
The procedure is of a written nature.The Law of 21 June 199936 on administrative procedures provides fixed and
compulsory periods to notify briefs.Following the filing of the request with the clerk of the Tribunal:
a the contracting authority shall notify its brief in answer within a three-month period;
b the applicant shall then notify its reply within a one-month period; andc the contracting authority shall finally notify its reply within a one-month period.
The attorneys-at-law shall then be convened for the pleadings in the months following the last notification of defendant’s brief.
A decision from the Tribunal shall not be expected before a nine month or one-year period from the filing of the request.
The Law of 10 November 2010 establishing procurement remedies provides more details on the remedies for contracts falling within the scope of the European directives.
If a contracting authority is seeking damages, it must appeal to the civil courts.
ii Grounds for challenge
The aggrieved bidder must prove an interest to challenge the decision. The interest must be actual, innate, direct and personal. It is a condition under which legal actions are admissible.
As an objective appeal, the illegality of the decision may be deduced from the incompetence of the acting authority, the violation of the law or of the substantial forms
36 Law of 21 June 1999 regarding the procedure in front of the administrative courts, Mémorial A, No. 98 du 26 July 1999, p. 1,892; doc parl 4326.
Luxembourg
197
prescribed to safeguard private interests; it may also result from actions being ultra vires (abuse of power).
Challenges of awarding decisions are very frequent. The appealing against decisions has become almost systematic in the past four years. The economic crisis has resulted in such an increase in the cases ruled by the administrative courts, the aggrieved bidders looking for procurement to provide work to their employees.
iii Remedies
Law of 10 November 2010 establishing appeals concerning public contracts (the Remedies Law)The Remedies Law frames in more detail the remedies for contracts falling within the scope of the European directives.
One of the particularities of the Luxembourg remedies legislation is to give jurisdiction either to the administrative courts or to the judicial and ordinary courts.
Indeed, in Luxembourg, the administrative judge is not qualified to rule on actions arising from public law contracts, including damages claims, claims to obtain compensation in kind or compensation for prejudicial continuation of an illegal administrative act, as well as for the rights to compensation resulting from disturbances concerning property law, including deciding on compensation in the event of expropriation; all of these incidents fall within the jurisdiction of a civil judge.
Administrative courts’ jurisdictionDuring the procurement procedure
Pursuant to Article 3 of the Law of 10 November 2010, the President of the Administrative Tribunal may provisionally order all necessary and interim measures that aim to correct the alleged infringement or prevent further damage being caused to the interests concerned, including measures to suspend or to render suspended the award procedure of the relevant procurement as long as the contracting authority or contracting entity has not carried out the requested correction.
The President may in particular remove the technical, economic or financial discrimination contained in the documents calling for tenders, specifications or any other document relating to the procurement procedure involved.
Taking into account the probable consequences of the measures for all interests likely to be harmed, as well as the public interest, the President may decide not to grant such interim measures where their negative consequences could exceed their benefits. A decision not to grant interim measures shall not prejudice any other claim of the person seeking such measures. If a referral procedure is lodged, the contracting authority or contracting entity is obliged to defer to the continuing process of competition or the award decision until the notification of the President’s order. The order is enforceable as of the notification.37
37 Article 4 of the Law of 10 November 2010.
Luxembourg
198
During the standstill periodA contract may not be concluded following the decision to award a contract before the expiry of a period of:a at least 10 calendar days with effect from the day following the date on which the
contract award decision is sent to the tenderers and candidates concerned if fax or electronic means are used; or
b at least 15 calendar days with effect from the day following the date on which the contract award decision is sent to the tenderers and candidates concerned if other means of communication are used.
Tenderers shall be deemed to be an ‘interested party’, and are thereby permitted to take action if they have not yet been definitively excluded. Exclusion is definitive if it has been notified to the tenderers concerned and has either been considered lawful by an independent review body or can no longer be subject to a review procedure. Candidates shall be deemed to be an interested party if the contracting authority has not made available information about the rejection of their application before the notification of the contract award decision to the tenderers concerned.
Regarding the procedural rules, the provisions of the ordinary law governing procedures before the administrative courts apply. Article 11 of the Law of 21 June 199938 provides that the stay of execution of an administrative decision during the appeal proceedings can be decreed only on the double condition that:a the execution of the contested decision may cause serious and definitive harm; andb the means invoked with the support of the appeal directed against the decision
appear serious.
The demand for a stay of execution is to be presented by distinct application addressed to the Chair of the Tribunal and must meet the conditions planned for any appeal before the administrative courts of law.
The contracting authority or contracting entity is obliged to defer to the award decision until the notification of the President’s order.
Judicial courts’ jurisdictionRegarding public contracts, ordinary courts (civil and commercial courts) have jurisdiction to deal with interim measures to be ordered by the president of the district court; and damages claims.
Pursuant to Article 9 of the Law of 10 November 2010, the president of the district court, sitting as the interim measures judge, can decree that a public contract is considered ineffective:a if the contracting authority has awarded a contract without prior publication of
a contract notice;
38 Law of 21 June 1999 regarding the procedure in front of the administrative courts, op. cit. 33.
Luxembourg
199
b in the case of an infringement of the Law, if this infringement has deprived the tenderer applying for review of the possibility to pursue pre-contractual remedies and if that infringement has affected the chances of the tenderer applying for a review to obtain the contract; and
c if the infringement regards contracts based on a framework agreement.
The consequences of a contract being considered ineffective shall be left to the discretion of the president of the district court. The retroactive cancellation of all contractual obligations is possible, but the scope of the cancellation can be limited to those obligations that still have to be performed. In that case, the President must impose fines on the contracting authority.
In any case, the president of the district court may not consider a contract as ineffective, even though it has been awarded illegally, if he or she finds, after having examined all relevant aspects, that the general interest requires that the effects of the contract should be maintained. In this case, the President must impose alternative penalties, as provided in the Law, on the contracting authority.
The application must be initiated:a before the expiry of 30 calendar days with effect from the day following the date
on which:• the contracting entity published a contract award notice; or• the contracting entity informed the tenderers and candidates concerned of the
conclusion of the framework agreement; orb before the expiry of a period of at least six months with effect from the day
following the date of the conclusion of the contract.
In the event of the initiation of a frivolous or vexatious claim or an abuse of process, the contracting authority or entity can claim for an adequate compensation to be granted by the President.
Remedies for public contracts below EU thresholdsIn the case of contracts below EU thresholds, the regular procedure for appealing an administrative decision will apply. No specific delay to challenge the decision and no standstill period apply.
The aggrieved party may introduce an application for the annulment of the administrative decision to the district court within the three-month period. Where such an appeal is lodged, the applicant may also introduce a referral procedure to obtain the suspension of the decision during the annulment proceedings.
In any case, if a contracting authority or an aggrieved bidder is seeking damages following the annulment or the confirmation of the award decision, it must appeal to the civil courts.
Luxembourg
200
X OUTLOOK
Taking into account the recent approval of the New Directives on public procurement,39 which were published in the OJEU on 28 March 2014, Luxembourg shall incorporate these new rules into binding provisions of national law.
To comply with the obligation imposed upon Member States to transpose new rules within a 48-month period from the adoption of the New Directives, a new bill amending the current Law shall, most likely, be presented to the parliament during 2015.
Following the active role of European deputies from Luxembourg during the legislative process, notably regarding social and environmental issues, it is expected that Luxembourg law shall change significantly in the next few months.
39 Directives 2014/24/EU, 2014/25/EU and 2014/23/EU.
369
Appendix 1
ABOUT THE AUTHORS
BENJAMIN MARTHOZMNKSBenjamin Marthoz is an avocat à la Cour admitted to the Luxembourg Bar Association. He is a widely experienced litigation lawyer whose practice spans all areas of litigation. His wide-ranging legal skills are employed in challenging projects that require innovative procedural and legal solutions.
He usually deals with commercial, civil and administrative matters. In particular, he has acquired strong experience in administrative matters during the past years and has contributed to several conferences and workshops dealing with public procurement procedure and state employment affairs.
He is frequently involved in litigation that requires the analysis of commercial contracts from a Luxembourg legal perspective.
Mr Marthoz has written a number of articles relating to administrative, civil and IP/IT matters. He also worked from 2005 to 2008 as a researcher at the Centre de Recherche Information Droit et Société within the electronic commerce department at the University of Namur (Belgium).
In addition, he also provides internal and external training sessions on specific legal topics such as European and national public procurement procedures, specific procedural questions and cross-border and national debt recovery procedures.
He acts regularly as a speaker at national conferences regarding administrative law matters, such as ‘Luxembourg and European public procurement procedures’ and ‘Luxembourg civil service’.
About the Authors
370
MNKSVertigo Polaris Building2-4 rue Eugène Ruppert (2nd Floor)2453 LuxembourgTel: +352 26 48 42 1Fax: +352 26 48 42 35 [email protected]