Friday, 12 December 2008

European Union: Public contracts

Public contracts are such stuff as public procurement is made on. Hence, we look at some of the key terms employed in defining public contracts in Article 1.2(a) of the Procurement Directive 2004/18/EC.

In writing, economic operator and contracting authority are among the concepts given definitions.

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Definition: Public contracts

Article 1.2(a)

‘Public contracts’ are contracts for pecuniary interest concluded in writing between one or more economic operators and one or more contracting authorities and having as their object the execution of works, the supply of products or the provision of services within the meaning of this Directive.

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In writing

After taking note of contracts and a pecuniary interest, we turn to the meaning of ‘in writing’. This leads us to a broad definition in Article 1.12:

12. ‘Written’ or ‘in writing’ means any expression consisting of words or figures which can be read, reproduced and subsequently communicated. It may include information which is transmitted and stored by electronic means.

Electronic means are further explained in the following paragraph, 1.13:

13. ‘Electronic means’ means using electronic equipment for the processing (including digital compression) and storage of data which is transmitted, conveyed and received by wire, by radio, by optical means or by other electromagnetic means.

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Economic operator

Economic operator is a convenient term to cover the concepts of contractor, supplier and service provider, as described in Article 1.8:

8. The terms ‘contractor’, ‘supplier’ and ‘service provider’ mean any natural or legal person or public entity or group of such persons and/or bodies which offers on the market, respectively, the execution of works and/or a work, products or services.

The term ‘economic operator’ shall cover equally the concepts of contractor, supplier and service provider. It is used merely in the interest of simplification.

An economic operator who has submitted a tender shall be designated a ‘tenderer’. One which has sought an invitation to take part in a restricted or negotiated procedure or a competitive dialogue shall be designated a ‘candidate’.

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Contracting authority

What makes procurement public is the existence of a contracting party subject to public law, laid out broadly enough to cover many organisations established under the rules of private law, as elaborated in more detail in Article 1.9:

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.

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An indicative list of contracting authorities is contained 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).



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Object

The object of the public contract is the execution of works, the supply of products or the provision of services.


Works

For the definition of public works contracts we turn to the definition in Article 1.2(b):

(b) ‘Public works contracts’ are public contracts having as their object either the execution, or both the design and execution, of works related to one of the activities within the meaning of Annex I or a work, or the realisation, by whatever means, of a work corresponding to the requirements specified by the contracting authority. A ‘work’ means the outcome of building or civil engineering works taken as a whole which is sufficient of itself to fulfil an economic or technical function.


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Typically, the outcome is a building or a road.


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Products

Article 1.2(c) of the Procurement Directive 2004/18/EC places products at the centre of a public supply contract:

(c) ‘Public supply contracts’ are public contracts other than those referred to in (b) having as their object the purchase, lease, rental or hire purchase, with or without option to buy, of products.

A public contract having as its object the supply of products and which also covers, as an incidental matter, siting and installation operations shall be considered to be a ‘public supply contract’


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Buying office paper or leasing a new car fleet could be thought of as examples.



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Services

After excluding works and products, Article 1.2(d) refers to the services mentioned in Annex II Services referred to in Article 1(2)(d).

d) ‘Public service contracts’ are public contracts other than public works or supply contracts having as their object the provision of services referred to in Annex II.

A public contract having as its object both products and services within the meaning of Annex II shall be considered to be a ‘public service contract’ if the value of the services in question exceeds that of the products covered by the contract.

A public contract having as its object services within the meaning of Annex II and including activities within the meaning of Annex I that are only incidental to the principal object of the contract shall be considered to be a public service contract.

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Maintenance and repair services happen to be the ones first mentioned among the many categories included in Annex II.


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Procurement Directive

Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts
and public service contracts (published OJ 30.4.2004 L 134/114).

The consolidated version of 1 January 2008 of the Procurement Directive 2004/18/EC is available here:

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:2004L0018:20080101:EN:PDF




Ralf Grahn