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 emailNick.Barette@lbresearch.com

The Government Procurement

Review

Third Edition

EditorsJonathan Davey and Amy Gatenby

Law Business Research Ltd

PUBLISHER Gideon Roberton

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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

14

Chapter 2

AUSTRIA

Philipp J Marboe and Nina Lassner1

I INTRODUCTION

The main source of law for Public Procurement in Austria is the Federal Public Procurement Act 2006 (BVergG) and the Federal Act on the Award of Contracts in the Fields of Defence and Security (BVergGVS). As well as the aforementioned Acts, because of the country’s federal structure (federal state, provinces and municipalities) there are nine separate public procurement acts at the regional level.

The BVergG applies for the entirety of public tenders awarded by the nine Austrian provinces and the communities and public bodies governed by them. In contrast, the review proceedings at the regional level are exempted from the BVergG; these are regulated by the nine distinct regional laws. However, these regional laws do not significantly deviate from the review proceedings stipulated in the BVergG.

The BVergG transposes the Public Sector Directive, the Utilities Directive and the Remedies Directive. In addition, the case law of the Federal Administrative Court, the nine administrative courts, the Supreme Administrative Court (VwGH) the Supreme Constitutional Court (VfGH) and the Court of Justice of the European Union (CJEU) applies.

Furthermore, Austria implemented its obligations under the GPA (the World Trade Organization Agreement on Government Procurement). As a Member State of the EU, Austria is at the same time a  Contracting Party to the Agreement between the European Community and the Swiss Confederation on Public Procurement (and another six sectors).

The general principles of public procurement were formulated in compliance with the EU directives, the EC Treaty and the Federal Constitution. Accordingly, the

1 Philipp J Marboe is a senior associate and Nina Lassner is an associate at Wolf Theiss Attorneys-at-Law.

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basic principles for public procurement are free and fair competition as well as equal treatment of all candidates and tenderers in due consideration of the Community rules on the fundamental freedoms and the principle of non-discrimination. Pursuant to Section 19 BVergG, the contracts shall be awarded to authorised, capable and reliable entrepreneurs at reasonable prices.

II YEAR IN REVIEW

The past year was marked by a profound reform of the administrative jurisdiction system. Pursuant to the Federal Administrative Jurisdiction Act, which entered into force on 1 January 2014, the hitherto existing higher-level government authorities but also the Independent Administrative Senates and more than 120 special authorities including the Procurement Control Senates and the Federal Public Procurement Office (BVA) were abolished. Instead, nine administrative courts at the provincial level and two at federal level were established.

One reason for such a vast reform was the hope of considerable savings in the national budget. Another objective was to establish truly independent bodies with independent judges within the meaning of Article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms.

III SCOPE OF PROCUREMENT REGULATION

1 Regulated authorities

The ‘classic’ contracting authorities covered by the BVergG are the federal state, the provinces (regional states) and municipalities, associations formed by the previously mentioned bodies, and ‘bodies governed by public law’.

A body governed by public law is an entity that is controlled, financed or supervised by contracting authorities and established for the specific purpose of serving needs in the general interest, not having an industrial or commercial character.

Within the utilities sector, three groups of contracting authorities may be differentiated, namely the classic contracting authorities, public undertakings engaging in a utility activity, and (private) entities carrying out utility activities on the basis of special or exclusive rights. Thus, in practice, the utility regime also applies to a variety of private-sector utilities including, for example, water companies.

ii Regulated contracts

In general, supply contracts, service contracts and works contracts awarded by the aforementioned contracting authorities are subject to the procurement regulations. In the utilities sector a  less strict regime applies. The contracting authority benefits from more freedom in the execution of the procurement procedure (for example, a  wider choice of eligible tender procedures).

In addition, the BVergG sets forth specific rules and provisions applicable for awarding service and works concession contracts. Service or works concession contracts are contracts of the same type as service or works contracts, except for the fact that the consideration for the services or works to be carried out consists either solely in the right

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to exploit the services or construction or in such a right together with a specific amount of payment. Both service and works concessions are regulated by the BVergG, but a more flexible regime applies to classic works and service contracts. Regarding the awarding of service concessions, (only) the EC fundamental principles (i.e., equal treatment and transparency) and the principle of non-discrimination must be adhered to. The BVergG states that – depending on the subject and the value of the contract – a service concession shall be, in principle, awarded through a  competitive procedure. Procedures for the awarding of service concessions do not fall under the jurisprudence of the administrative courts, but must be challenged before civil courts. Regarding works concessions, only certain provisions of the BVergG apply (e.g., minimum deadlines, provisions regulating pre-qualification and the content of the tender documents, as well as the rules on the contract award and the remedies section). Again, the general principles of transparency and equal treatment must be observed.

The BVergG does not apply when the special provisions of the BVergGVS prevail. The latter provides special rules for defence and security procurement. It covers the supply of military or sensitive equipment, including any parts, components or subassemblies thereof. Moreover, the BVergGVS regulates works, supplies and services directly related to the aforementioned equipment and works and services for special military purposes or sensitive works and sensitive services. However, neither the BVergG nor the BVergGVS shall be applicable to public contracts when they come under the exemption pursuant to Art 346(1)(b) of the TFEU. Pursuant thereto, EU countries may take measures as they consider necessary for the protection of the essential interests of their security that are connected with the production of or trade in arms, munitions and materiel. Austria has exercised this exemption right in Section 10 Subparagraph 2 BVergG.

The Regulation  1336/2013 in respect of the application thresholds for the procedures for the awards of contracts entered into force on 1 January 2014. It is binding in its entirety and directly applicable in all Member States.

Public service and public supply contracts Public Sector Directive

From €134 000 (specified contracting authorities; e.g., ministries) to €207,000

Public service and public supply contracts

Utilities DirectiveDefence Directive €414,000

Public works contractsPublic Sector DirectiveUtilities DirectiveDefence Directive

€5,186,000

Please note that the BVergG also applies below these thresholds. Whether or not the contract exceeds the thresholds is relevant for the scope of the applicable regulations; for example, with regard to the number and conditions of the eligible tender procedures. The rules for contracts below the thresholds are in general less stringent (e.g., providing for simplified rules on publication obligations). In contrast, above the thresholds more formalised and transparent procedures apply.

Moreover, contracts that do not exceed the value of €100,000 may be awarded directly. Direct awards with a prior market survey are applicable to supply and service contracts with a contract value less than €130,000 in the classic sector and €200,000 in

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the utilities sector, respectively; the contract value of works contracts must not exceed €500,000. When resorting to direct awards with a  prior market survey, the contract authority is obliged to publish a notice prior and subsequent to the awarding procedure. The course of the awarding procedure may be determined by the contracting authority, but in due consideration of the general principles of the TFEU.

The BVergG allows various exemptions for contracts. The procurement regulations shall not apply, for instance, to contracts on the acquisition or lease of rights to real estate or buildings or other immoveable property, employment contracts, arbitration and conciliation services, certain international contracts, central bank services and certain financial services, in-house-procurement, certain research and development services and certain broadcasting services. The applicability of these exemptions must be demonstrated and documented by the contracting authority and is subject to review proceedings before the administrative courts. The majority of the aforementioned exceptions correspond to the exceptions provided for the utilities sector, irrespective of minor differences, (e.g., in relation to contracts on financial services). However, certain exemptions are reserved to the utilities sector exclusively, such as, for instance, specific contracts awarded for purposes of resale or lease to third parties.

IV SPECIAL CONTRACTUAL FORMS

i Framework agreements and central purchasing

Framework agreements are widely used, in particular in market sectors characterised by significant price dynamics, (e.g., information technology or the power and gas markets). However, framework agreements are merely available in open, restricted or negotiated procedures. In principle, the term of a framework agreement must not exceed a three-year period. Framework agreements can be concluded between one or several contracting authorities on the one side and one or several entities on the other side. Therefrom results enhanced competition and flexibility, both advantages widely appreciated by contracting authorities.

Contracting authorities are entitled to conduct tender procedures jointly. Moreover, the BVergG allows the establishment of central purchasing entities. One such entity is the Austrian Federal Purchasing Agency (BBG). Its main task is to provide procurement services to the federal state, the provinces and municipalities, as well as to associations formed by the previously mentioned bodies.

ii Joint ventures

Public-public joint ventures are common in Austria. In practice, one the most relevant forms thereof is the ‘intercommunal cooperation’. According to the jurisdiction of the CJEU, the regulations on public procurement are under certain conditions not applicable to the intercommunal cooperation.

According to the ground-breaking Stadtreinigung Hamburg2 decision, the CJEU pointed out that a  public authority is entitled to perform the public interest tasks

2 C-480/06, Commission v. Germany.

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conferred on it by using its own resources without being obliged to call on outside entities not forming part of its own departments; thus, without the obligation to conduct a  procurement procedure. Moreover, the public authority may do so in cooperation with other public authorities. One of the most remarkable clarifications made by the CJEU refers to the fact that, in the aforementioned case, it was undisputed that the four public authorities concerned did not exercise any control that could be qualified as similar to that which they exercise over their own departments. This means that the CJEU did not merely hold that projects of intercommunal cooperation are exempt from the procurement regime, but also, in particular, that this exemption was not subject to a control criterion. Especially for this reason, the Stadtreinigung Hamburg decision is of utmost significance.

Another important exemption is the ‘in-house’ exemption. The in-house provisions of the BVergG correspond to the jurisdiction of the CJEU (in particular, Teckal 3 and Stadt Halle).4 The in-house exemption, even if the contracting authority is an entity legally distinct from the contracting authority, applies only if two conditions are met. First, the public authority, which is a contracting authority, must exercise over the distinct entity in question a control that is similar to that which it exercises over its own departments. Second, it is required that the entity carries out the essential part of its activities with the local authority or authorities that control it. In this respect, it is not admissible to include any private ownership or participation.

Moreover, the BVergG does not apply if sectoral entities award contracts to an affiliated company, or if a joint venture (formed by several sectoral entities for the purpose of performing sectoral activities) awards the contract to one of those sectoral entities or to an affiliated company, provided that at least 80 per cent of the average annual turnover of the seller has been realised by performing such services to the joint venture.

There is no specific legislation applicable to the awarding of concessions or PPP projects, but rather they are regulated by general public procurement rules, (i.e., the BVergG). The notion of PPP is not recognised by Austrian public procurement law and PPPs are typically classified as service or works concessions.

V THE BIDDING PROCESS

i Notice

Contracts that come under the procurement regulations must be advertised in the OJEU. In addition, they have to be published at a nationwide level. With regard to tenders of a public authority at a regional level, the legislator provides its own regional publication platform. Contracts not exceeding the thresholds are advertised on national portals, exclusively.

Besides compulsory advertising, contracting authorities have the option to publish ‘ex ante transparency notices’ on a voluntary basis. This option is used above all

3 C-107/98, Teckal Srl v. Comune di Viano.4 C-26/03, Stadt Halle, RPL Recyclingpark Lochau GmbH v. Arbeitsgemeinschaft Thermische

Restabfall- und Energieverwertungsanlage TREA Leuna.

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if contracting authorities have awarded a contract through a direct award, thus in the absence of competitive procedures, or subsequent to other admissible tender procedures without prior publication. The voluntary transparency aims at avoiding the risk of the contract being declared ineffective as a consequence of a breach of the obligation to duly advertise. However, the Fastweb II 5 decision by the CJEU has created further doubt as to whether contracting authorities can rely upon their own assumption of having taken the correct position. Essentially, the CJEU held that the ‘securing’ effect of an ex ante transparency notice does apply provided that the contracting authority has acted diligently and provided it can legitimately hold that the conditions for the exemption from the conduct of a formal award procedure on which the contracting authority has relied (in the case at hand, a negotiated procedure without prior publication of a contract notice with only one economic operator) have in fact been satisfied.

ii Procedures

Contracting authorities must use one of the tender procedures provided for in the BVergG, (i.e., open, restricted or negotiated procedures, direct award (with or without prior public market survey), competitive dialogue, dynamic purchasing system, electronic auction, design and realisation contest or framework agreement).

Whereas the open procedure and the restricted procedure can be chosen regularly, other procedures are subject to certain conditions. In the open procedure an unrestricted number of economic operators are publicly invited to submit tenders. In restricted procedures (with prior notice), any undertaking may submit an application for participation, whereupon the contracting authority merely invites a restricted number of qualified undertakings among the applicants to submit tenders. Subsequently, the full scope of the contract is negotiable.

In principle, the negotiated procedure may be chosen unless an open or restricted procedure with prior notice has resulted in any tenders, or any tenders appropriate for the purchase. However, the original terms and conditions for the contract must not be modified and amended materially. Moreover, the negotiated procedure may be selected if the special characteristics of the contract do not allow an open or a restricted procedure, or the services of the contract cannot be stipulated in contractual specifications.

In the negotiated procedure without prior notice, the contracting authority calls upon economic operators designated preliminarily to submit an offer. Subsequently, the terms and conditions of the contract are negotiated. The admissibility of this procedure is subject to particular conditions, such as, for instance, extreme urgency, recurrence of similar circumstances or if only one specific economic operator is able to execute the contract.

The competitive dialogue is most appropriate if solutions to particularly complex projects are sought. This is the case when the contracting authority is not capable of determining the technical specifications or legal or financial conditions of the project. An electronic auction is, in the strict sense, to be qualified as a part of a tender procedure

5 C-19/13, Ministero dell’Interno v. Fastweb SpA.

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rather than a tender procedure as such. Therefore, it can merely be held subsequent to a procurement procedure.

Framework agreements do not entail a purchase obligation but a non-binding basis for future purchases. A dynamic purchasing system is an entirely electronic process that is restricted to certain services in line with standard market conditions. Generally, the term of a dynamic purchasing system is restricted to four years.

Design contests are procedures in which plans or designs are selected by a jury; they can be conducted with or without prizes or payments to participants. Realisation contests are followed by a negotiated procedure to award a service contract.

iii Amending bids

Whether or not amendments to bids and the scope thereof are admissible depends on the tender procedure chosen. In open or restricted procedures, bidders are not allowed to amend their bids when the time limit for receipt of tenders has expired. However, queries to the contracting authority for clarification are admissible provided that all bidders are treated equally. In contrast, in negotiated procedures, generally, the entire content of the contract is negotiable. However, such negotiations must not modify the essential characteristics of the contract.

VI ELIGIBILITY

i Qualification to bid

To be qualified to bid, the bidders must prove their suitability, their technical and professional ability, and their economic and financial standing.

In this respect, the bidder is entitled to submit a  self-declaration pursuant to Sec  70 BVergG. This declaration serves as preliminary evidence of the qualification requirements. If the proofs of suitability are not complete, the bidder can hand them in later within an appropriate time limit. The evidence of technical ability and economic and financial standing can be substituted by a third party (Sec 76 BVergG); however, each bidder has to be reliable on its own account.

Tenderers shall be excluded from participating in award procedures in cases of:a a final judgment against them or natural persons on their managerial body because

of participation in a criminal organisation, corruption, fraud or money laundering;b bankruptcy or composition (reorganisation) proceedings against them, or

bankruptcy proceedings rejected in the absence of sufficient assets;c liquidating or winding up the business;d guilt of grave professional misconduct, in particular violation of provisions of

labour or social laws, according to evidence available to the purchaser or a final judgment against the tenderers or natural persons on their managerial  body challenging their professional conduct;

e violation of their obligations to pay social security contributions or taxes and levies; or

f guilt of serious misrepresentation in providing information.

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However, in certain cases tenderers may be permitted to participate in a  procedure despite one of the aforementioned exclusion grounds if they ‘self-clean’ themselves. To do so, they are obligated to clarify the facts and circumstances in a wide-ranging manner by actively collaborating with the investigating authorities and by taking technical organisational and personal measures that are suitable to prevent further criminal offences or misconduct.

ii Conflicts of interest

Pursuant to Sec 20 Para 5 BVergG, economic operators that have participated, directly or indirectly, in the elaboration of the tender documents must be excluded from the participation in the pertaining tender procedure if their participation would distort an equal and fair competition. However, the contracting authority may prescind from the exclusion if in exceptional cases the participation of certain economic operators is indispensable.

iii Foreign suppliers

In principle, foreign (non-EU or EEA) suppliers may also participate in public tender procedures. However, they are obligated to comply fully with the conditions and requirements of the tender documents including, inter alia, the minimum eligibility and qualification criteria. The establishment of a local branch or subsidiary is generally not a precondition to participate.

In the utilities sector, a contracting authority can exclude a foreign candidate or bidder from an award procedure above the thresholds with regard to products originating from countries that are not signatories of the EEA Agreement or have no agreement with the EU according to which actual access to their national markets is guaranteed in favour of EU-based entities and that have a  legal situation comparable to the one provided by the BVergG. Moreover, the bidder can be excluded if 50 per  cent of the required products stem from a country that is not a signatory of the EEA Agreement or has not concluded an agreement with the EU on the aforementioned terms.

The GPA establishes the principles of equal treatment and non-discrimination in favour of candidates and bidders originating from the signatory states and parties to the GPA.

VII AWARD

i Evaluating tenders

Tenders may be evaluated either on the basis of the tender most economically advantageous or merely the lowest price. If the tender most economically advantageous is chosen, all awarding criteria must be specified and notified. They may refer to quality, price, running costs, aesthetic and functional characteristics, environmental characteristics, technical merit, cost-effectiveness, after-sales services and technical assistance, delivery date and delivery period or period of completion. In addition, for the sake of transparency, the contracting authority is compelled to notify the weighting that is linked to each awarding criteria. Ultimately, the award should be made in accordance with what the individual

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contracting authority considers the most economically advantageous solution among those offered.

Alternative bids are exclusively admissible if explicitly mentioned in the tender documents. They are allowable only in the context of contracts to be awarded on the basis of the technically and economically most advantageous tender. Unless stated otherwise in the tender documents, alternative tenders are, however, only permissible if submitted in addition to a ‘main’ offer in conformity with the tender conditions.

In contrast, bids marginally amending the tender are permitted unless explicitly stated otherwise in the tender documents. However, bids marginally amending the tender may merely entail minor technical modifications of the contract. Bids marginally amending the tender are allowable with regard to both contracts to be awarded on the basis of the technically and economically most advantageous tender or the lowest price. Unless stated otherwise in the tender documents, bids marginally amending the tender are, however, only permissible if submitted in addition to a ‘main’ offer in conformity with the tender conditions.

ii National interest and public policy considerations

National interest and, in particular, public policy considerations can be taken into account exclusively to the (limited) extent conceded by the legislator and, in particular, in due consideration of the procurement principles. Consequently, when elaborating their award procedures and tender documents contracting authorities are entitled to take into account, for instance, the following aspects: environmental justice, energy efficiency, employment of women, long-term unemployed individuals, persons in training, handicapped people or elderly workers. Likewise, the interests of small and medium-sized undertakings may be taken into account in award procedures.

VIII INFORMATION FLOW

Contracting authorities are obliged by the law to assure fair and transparent award procedures in accordance with the procurement principles, above all the principle of equal treatment and non-discrimination. On the one hand, this means, essentially, that candidates and bidders must be notified of the same information to guarantee a  level playing field. On the other hand, contracting authorities are compelled by the law to protect the confidential character of all information provided to them, especially trade and business secrets.

Tenderers are entitled to request clarification with regard to the tender or pre-qualification documents. The contracting authority must respond to such requests. It must summarise the anonymised questions and the answers and communicate them to all participating candidates or bidders.

The contracting authority is obliged to notify the other bidders of the successful tenderer to which the award shall be made. Moreover, it must indicate the award sum, the characteristics and advantages of the winning tender, the reasons for their non-selection and the end of the standstill period.

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IX CHALLENGING AWARDS

i Procedures

There are two distinct main types of proceedings before the administrative courts. Review proceedings that can be brought in prior to the award of the contract; and proceedings for declaratory decisions subsequent thereto. Applications for review proceedings seek to have decisions by the contracting authority declared null and void. Applications for declaratory decisions tend to seek to have award procedure faults declared unlawful.

Subject to the type of proceedings and the means of communication of the decision concerned, there are distinct time limits. Applications for review proceedings must be filed within 10 days if the decision was transmitted by electronic means or fax; and within seven days in cases of notification by letter or cases concerning sub-threshold procurements. Tender documents have to be challenged at the latest seven days prior to the deadline for submitting applications to participate or bid.

ii Grounds for challenge

According to BVergG, only certain explicitly enumerated decisions by the contracting authority may be challenged by economic operators and bidders. These decisions refer, inter alia, to the selected award procedure, the tender documents, the invitation to tender, the selection (or exclusion) of the bids and the award decision.

The legitimacy to file a  complaint is subject to an interest in obtaining the appertaining contract. In addition, the plaintiff must be harmed by the alleged infringement or at least face the risk of being harmed.

Challenges are rather frequent in Austria. Because of the fundamental reform of the administrative jurisdiction system effective as of 1 January 2014, the most recent comprehensive statistical data still refer to annual numbers of proceedings before the former BVA. Accordingly, 121 review proceedings were initiated. In addition, 104 applications for preliminary injunctions and nine applications for declaratory decisions were filed. As to the chances of success, among 121 review proceedings, only 15 of these applications prevailed (12 per cent), whereas 30 were denied (25 per cent) and seven disallowed (6  per  cent). However, if the cases of applications withdrawn, discontinued, transferred or still pending are disregarded, the percentage of successes rises to 28.8 per cent.

For each application a fixed basic fee has to be paid. The amount depends on the contract and the type of proceeding and varies from €308 to €6,156. The basic fee may be further increased (e.g., trebled when the estimated contract value is more than 10 times higher than the relevant thresholds) or reduced (e.g., quartered in the case of applications for review of tender documents).

The decision deadline for the courts is six weeks.

iii Remedies

The main remedies, which correspond to the two main types of proceedings, are applications for review proceedings and for proceedings for a  declaratory judgment. The administrative courts have the power to annul decisions taken by the contracting authority, (e.g., the award decision). The contracting authority is obliged to adhere to the

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court’s ruling and release a corresponding decision, anew. To safeguard the effectiveness of the review proceedings, the authority is entitled to grant interim relief (upon a respective application) and suspend the tender procedure or certain decisions.

The courts may declare contracts null and void. If they refrain from doing so, they must impose fines instead. In 2015, a sanction of €367,000 was imposed on a contracting authority (BBG), constituting the highest fine imposed since the introduction of such a possibility into the law in 2010.

Judgments in procurement cases are rendered in both the first and last instance. They can be further challenged exclusively through complaints before the VwGH or VfGH.

Infringements of the procurement law entitle disregarded economic operators to claim forbearance, abatement and damages under the Unfair Competition Act. In addition, they may claim damages under civil law. However, entitlement to bring a claim before the civil  courts is conditional upon a declaratory judgment of violation of the procurement law.

X OUTLOOK

i Proposed amendment to the BVergG and BVergGVS

When proposing an amendment to the BVergG and BVergGVS6 in April 2015, the government announced that public procurement should become not only more efficient, but also fairer. The pertaining amendment aims at minimising medium and long-term costs for the taxpayer while stimulating growth. The following measures were proposed:

Complete transparency regarding subcontractorsUnless otherwise stipulated in the tender documents, the bidder shall be obliged to indicate every subcontractor in its offer. The contracting authority shall, in principle, also be compelled to approve a change of the subcontractor subsequent to the contract award.

Combating wage and social dumpingThe main measure proposed is the introduction of an obligatory request pursuant to the Employment Contract Law Amendment Act. By making such a  request, contracting authorities would obtain information as to whether fines in relation to the wage and social dumping law had been imposed on candidates or bidders, or could be imputed to them. Together with the increased transparency resulting from the obligatory indication of all subcontractors, this should constitute an effective measure against wage and social dumping.

Strengthening the best bidder principleFor specific contracts the best bidder principle (most economically advantageous tender) should become mandatory; for example, for intellectual services or works contracts in which the required quality standard cannot be determined in a clear and unambiguous

6 Proposed amendment to the BVergG and BVergGVS, 10 April 2015.

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way, rendering it impossible to receive comparable offers. This means that in respect of these specific contracts, the lowest price shall no longer be the only evaluation criterion for a bid. Rather, other criteria shall be taken into account compulsorily, (e.g., the duration of the construction period, operating costs or the qualification of the staff deployed).

Modification of the lots rulesThrough an ‘optimisation’ of the rules on the subdivision of contracts into lots, the access for small and medium-sized undertakings to tender procedures exceeding the thresholds shall be made easier. Therefore, the contracting authorities should have alleviated lots rules at their disposal. Moreover, the contracting authorities shall face the obligation to justify their position if they do not provide for a subdivision of the contract into lots. In particular, small and medium-sized trades and crafts companies will benefit from these changes. Likewise, the changes should have positive effects on employment.

Some assume (e.g., the Austrian Federal Economic Chamber) that the aforementioned amendment will be enacted as early as prior to the summer break of Parliament in 2015. Although it is at present premature to speculate as to what extent and when this will be the case, these initiatives, as announced, shall most certainly have an impact on the established law.

ii The New Directives

On 17 April 2014, the New Directives came into force.7 They must be transposed by 18 April 2016. No legislative proposal in respect of these has been made public yet. However, the New Directives will deliver a  significant impetus for reforming and simplifying the existing rules.

7 New Concession Contracts Directive, New Public Sector Directive and New Utilities Directive.

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Appendix 1

ABOUT THE AUTHORS

PHILIPP J MARBOEWolf Theiss Attorneys-at-LawPhilipp J Marboe is an attorney-at-law and senior associate at Wolf Theiss and a member of the regulatory and procurement practice group. He has extensive professional experience in public commercial law, focusing on procurement law, project development and contract law. In 2010, he became head of the procurement team of a prestigious Vienna-based Austrian and central-European law firm, inter alia, acting as contact person for the firm’s offices in Central and Eastern Europe, and in Turkey. In recent years, Philipp advised on and assisted with major infrastructure and PPP projects, including railways, in Austria and Central and Eastern Europe. One particular area of focus in his practice is the planning and implementation of tender procedures. Moreover, Philipp advises and represents Austrian and international clients – both bidders and contracting authorities – in review proceedings. Philipp gained international experience in working at the Vienna office of a British multinational law firm and for a law firm in Paris.

In addition to his law practice, Philipp frequently lectures on regulatory and procurement-related topics, and he has authored numerous publications in his field. He studied law at the University of Vienna and the Autonomous University of Madrid, and he wrote his doctoral thesis in international law at the French Institute of International Relations (IFRI). Philipp is fluent in German, English, French and Spanish.

NINA LASSNERWolf Theiss Attorneys-at-LawNina Lassner is an associate in the regulatory and procurement practice group in the Vienna office of Wolf Theiss. Prior to joining Wolf Theiss in 2013, Nina gained valuable experience at several large law firms in Vienna as an intern during her law studies at the University of Vienna, from which she holds a Mag. iur. (2010) and a Dr. iur. (2013) degree. Nina specialises in international and national procurement law. As a member

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of the procurement team in the firm’s Vienna office, she has worked on a number of assignments with a  public procurement law background. Furthermore, she regularly publishes articles as co-author in national procurement journals and magazines.

WOLF THEISS ATTORNEYS‑AT‑LAWSchubertring 61010 ViennaAustriaTel: +43 1 51510 5358Tel: +43 1 51510 5357Fax: +43 1 51510 66 5358Fax: +43 1 51510 66 5357philipp.marboe@wolftheiss.comnina.lassner@wolftheiss.comwww.wolftheiss.com