Two essential European legal guidelines have lately entered into pressure which have a big influence on the way in which during which bidders from outdoors the EU, or backed from third nations, take part in public procurement procedures throughout the EU. These are:
- the European Regulation on Overseas Subsidies (“FSR”) (Regulation (EU) 2022/2560) which entered into pressure on 12 January 2023; AND
- Regulation (EU) 2022/1031 on the Worldwide Procurement Instrument (“IPI”), which entered into pressure in August 2022.
Overseas Subsidies Regulation
The FSR has an influence on mergers and concentrations and on public procurement procedures. With specific regard to public procurement, the basic obligation is that imposed on firms collaborating in tender procedures to inform the European Fee if (i) the estimated contract worth is not less than 250 million euro and (ii) the contribution overseas financing in query is not less than 4 million euro per non-EU nation. In such circumstances, the contract can’t be awarded to the corporate in query and, following investigations, the European Fee might prohibit the award of contracts to firms benefiting from distortive subsidies. Along with this notification obligation for bigger contracts, the Fee additionally has the ability to provoke an own-initiative overview on smaller public contracts.
Following the notification of such a 3rd nation subsidy, the Fee will look at its influence. No public procurement may be concluded pending this investigation and breach of this requirement can lead to a positive of as much as 10% of the corporate’s mixture annual turnover. In the midst of an investigation, the financial operator could have the chance to current proof displaying that, in actual fact, there isn’t any distortion (or that he’ll take steps to treatment any distortion). The Fee might prohibit the conclusion of the contract, permit it or permit it underneath sure situations.
When it comes to timing, the FSR doesn’t apply to procurement procedures began earlier than 12 July 2023. The notification obligation doesn’t apply to firms till 12 October 2023. Nonetheless, after these two deadlines, the facilitations for bidders who occurring at any time throughout the earlier 3 years have to be disclosed.
The FSR applies to all public procurement procedures coated by the EU public procurement directives (aside from the Protection Directive), except contracts awarded straight underneath excessive urgency. Curiously, the opposite provisions that permit for direct procurement (corresponding to the one provider exemption) are topic to the FSR.
In a process exceeding the related threshold of €250 million, bidders (in addition to “essential subcontractors” and “essential suppliers”, i.e. these whose services or products relate to key components of the contract or exceed 20% of the contract worth) are required to inform the contracting authority if they’re topic to a certified overseas grant. The contracting authority is then liable for forwarding the related notifications to the European Fee. Contracting authorities ought to due to this fact be certain that the procurement paperwork for procedures beginning after 1 July 2023 embrace directions informing tenderers of their obligations and informing them of the implications of receiving a overseas subsidy (particularly, investigation by the fee and potential rejection of the tender). Contracting authorities even have an obligation to tell the Fee if they think {that a} tenderer is receiving a overseas subsidy, even when not notified.
Curiously, the FSR contains very particular necessities concerning lacking documentation. If a young doesn’t embrace the required declaration whether or not the tenderer is topic to a overseas subsidy, the contracting authority might request its provide inside 10 days. If it’s not supplied following this request, the Regulation then offers that the associated supply is rejected.
The Fee is at the moment finalizing an implementing regulation which is able to set out the sensible and procedural facets of making use of the brand new guidelines (eg types and time-limit guidelines).
Contracting authorities ought to be certain that they permit time of their wider procurement procedures to have in mind a overview by the Fee, ought to one of many tenderers obtain a overseas subsidy.
Suppliers must also pay attention to the brand new guidelines and be certain that they notify any eligible grants to the contracting authorities in all related tender procedures. Suppliers must also be ready to supply info and justifications to the European Fee, if obligatory, in an effort to display that the subsidy doesn’t have a distortive impact or that the destructive impacts of the subsidy are outweighed by the constructive influence of the financial exercise.
Worldwide Procurement Software
The IPI introduces measures limiting the entry of non-EU firms to the open EU public procurement market if the governments of those nations don’t permit related entry to their nationwide public tenders for EU firms. By selling reciprocity, the IPI goals to open up protected markets and finish discrimination towards EU firms in third nations. The IPI doesn’t apply to 3rd nations with which the EU has bilateral or multilateral market entry agreements.
The European Fee will decide whether or not and to what extent third-country firms must be topic to an IPI measure, relying on the extent of commerce limitations. The Fee can due to this fact implement one in all two approaches:
- Rating adjustment – this could negatively have an effect on the evaluations of the bids submitted by the third nation bidders; if that third nation discriminates towards EU bidders;
- Exclusion of presents from a discriminatory third nation.
The influence of those measures will likely be felt by any bidder from a rustic to which an IPI applies, in addition to by any member of that bidder’s consortium (because the exclusion or correction will apply to all members of the bidder). Any rating changes imposed will solely have an effect on the ranking; it won’t have an effect on the worth to be paid if the tenderer is awarded the contract.
Any IPI measures put in place by the Fee will enter into pressure in procurement procedures launched after 29 August 2022 for contracts price €15 million or extra for works and concessions and €5 million or extra for items and providers . The IPI measures won’t apply to the termination of contracts underneath a framework settlement.
An organization that has received a contract by means of a procurement process which has been the topic of an IPI measure should adjust to the next obligations all through the length of the contract:
- The profitable tenderer might not subcontract greater than 50% of the full contract quantity to third-country firms topic to an IPI measure; AND
- For procurement of products, the profitable tenderer should be certain that the products or providers provided, originating within the third nation topic to the IPI measure, symbolize not more than 50% of the full worth of the procurement.
Failure to adjust to the above obligations might expose the profitable tenderer to a positive starting from 10% to 30% of the contract quantity.
Conclusion
Each of those initiatives purpose to make sure that European firms aren’t unfairly prejudiced in public procurement procedures by the actions of third nations. The FSR goals to fill a regulatory hole, whereby grants from EU Member States are topic to very strict EU State assist guidelines, whereas grants from third nations are at the moment unregulated (resulting in distortion of the market). Likewise, the IPI emphasizes the idea of reciprocity; The entry of non-EU firms to the EU’s open public procurement market may be restricted if the governments of those nations don’t permit EU firms related entry of their nationwide public tenders for the EU.
The measures will likely be of curiosity to contracting authorities (which can obtain presents from non-EU firms or firms backed by non-EU states). Non-EU suppliers and people financed by non-EU grants may also want to pay attention to these legal guidelines, to make sure they will proceed to produce to the EU public sector.
