Contracting authority is one of the key concepts of the EC (EU) Procurement Directive 2004/18/EC, popping up in almost every provision. With the position as a contracting authority goes the responsibility to follow the right procedures.
Even if state, regional and local authorities are normally easy to recognise, the role of other bodies or associations can be tricky.
Here is the definition of a contracting authority in Article 1.9 of the Procurement Directive, also known as the Classic Directive:
9. ‘Contracting authorities’ means the State, regional or local authorities, bodies governed by public law, associations formed by one or several of such authorities or one or several of such bodies governed by public law.
A ‘body governed by public law’ means any body:
(a) established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character;
(b) having legal personality; and
(c) financed, for the most part, by the State, regional or local authorities, or other bodies governed by public law; or subject to management supervision by those bodies; or having an administrative, managerial or supervisory board, more than half of whose members are appointed by the State, regional or local authorities, or by other bodies governed by public law.
Non-exhaustive lists of bodies and categories of bodies governed by public law which fulfil the criteria referred to in (a), (b) and (c) of the second subparagraph are set out in Annex III. Member States shall periodically notify the Commission of any changes to their lists of bodies and categories of bodies.
The quick route to check if a body is a contracting authority, is in principle, to look at the relevant country list in Annex III List of bodies and categories of bodies governed by public law as referred to in the second subparagraph of Article 1(9).
Notice that the Commission has updated its country lists 15 December 2008. They are available on the web page Contracting authorities bound by EU public procurement rules:
For an overview of the changes, you can read the press release Public procurement: updated lists of Contracting Authorities give better access to public contracts for businesses (IP/08/1971, Brussels, 15 December 2008). The press release paints a broad picture of EU public procurement, potential savings to taxpayers and it contains the current contract thresholds, in force since 1 January 2008:
But even if updated, the list does not exclude other organisations from the responsibilities of a contracting authority. The interpretation is functional.
To mention one example, the Commission’s Guide to Community rules on public works contracts (based on the old Directive 93/37/EEC) explains the contracting authority in the following way (page 9 to 11):
1.3 The contracting authority
The Directive defines contracting authorities as the State, regional or local authorities, bodies governed by public law, or associations formed by one or more such authorities or bodies governed by public law.
It is worth stressing that for the purposes of applying the Directive, the concept of the State is not confined to the administration as such, but also covers bodies which, albeit not formally part of the traditional structures of the administration, have no legal personality of their own and carry out tasks that are normally the responsibility of the State administration, which they merely represent in different ways. This point was clarified by the Court of Justice in Beentjes v Netherlands State, in which it had to rule whether Directive 71/305/EEC applied to the award of public works contracts by the Waterland Local Land Consolidation Committee, a body with no legal personality of its own. To that end, the Court stressed that “the objective of Directive 71/305/EEC is to coordinate national procedures for the award of public works contracts concluded in Member States on behalf of the State, regional or local authorities or other legal persons governed by public law” and that the term “the State” within the meaning of Article 1(b) Directive 71/305/EEC defining contracting authorities “must be interpreted in functional terms. The aim of the Directive, which is to ensure the effective attainment of freedom of establishment and freedom to provide services in respect of public works contracts, would be jeopardized if the provisions of the Directive were to be held to be inapplicable solely because a public works contract is awarded by a body which, although it was set up to carry out tasks entrusted to it by legislation, is not formally a part of the State administration.
Consequently, a body such as that in question here, whose composition and functions are laid down by legislation and which depends on the authorities for the appointment of its members, the observance of the obligations arising out of its measures and the financing of the public works contracts which it is its task to award, must be regarded as falling within the notion of the State for the purpose of the abovementioned provision, even though it is not part of the State administration in formal terms.”
Bodies governed by public law
The Directive defines bodies governed by public law on the basis of three cumulative criteria. A body governed by public law thus means any body:
(1) established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character, and
(2) having legal personality, and
(3) * either financed, for the most part, by the State, or regional or local authorities, or other bodies governed by public law,
* or subject to management supervision by those bodies,
* or having an administrative, managerial or supervisory board, more than half of whose members are appointed by the State, regional or local authorities or by other bodies governed by public law.
The Directive thus applies to any body with legal personality under public or private law, established in the general interest, whose operational choices and activities are or may be influenced by a contracting authority as a result of the links between them by virtue of one or more of the conditions that go to make up the third criterion.
The only bodies which are established in the general interest and fulfil the other criteria but are not regarded as contracting authorities by the Directive are those set up for the specific purpose of meeting needs of an industrial or commercial nature, i.e. needs which they satisfy by carrying on economic activities in the industrial or commercial field that involve supplying goods or services on markets which are open to other public or private operators under fully competitive conditions. These are therefore bodies which carry on a business equivalent to that of a private operator.
It should be emphasized that the exemption provided for by the Directive applies only to bodies which carry on such economic activities since they were set up in order specifically to do so. Consequently, the exemption does not apply to bodies which, while carrying on commercial or industrial activities, were in fact set up to satisfy a different general interest: e.g. a body set up specifically to carry out administrative tasks so as to meet general–interest needs of a social nature, which, to ensure that its books balance, also carries on a profitable commercial activity.
Nevertheless, each individual case must be analysed to determine whether the body governed by public law is subject to the Directive.
In the interests of greater transparency in application, the Directive sets out, in Annex I, a list19 of bodies and categories of bodies fulfilling the criteria for bodies governed by public law and lays down a procedure for updating the list to ensure that it is as exhaustive as possible.
The obligation on a body governed by public law to comply with the Directive does not, however, depend on its prior inclusion in the list: it is under such an obligation as soon as it fulfils the criteria. Similarly, although a body may be on the list, it could be exempted from complying with the Directive if it were no longer to meet one or more of the cumulative criteria.
Once you have established that you are a contracting authority or aim to do business with one, the procedures become important.
Because the procedures are mandatory for contracting authorities and valuable to know for contractors, suppliers and service providers, step by step guides have been published.
Although the implementing national legislation differs from jurisdiction to jurisdiction, the legal background (EC/EU) and the basic challenges remain the same. Here is one example in English:
The Irish Government has published Public Procurement Guidelines – Competitive Process, which apply to supplies and services (39 pages) as well as other guides for public purchasers: