Monday, 2 February 2009

EU procurement: Specific exclusions

A number of public service contracts belonging to these general groups are excluded from the application of the European Community (European Union) Procurement Directive: purchase or rental of real estate, broadcasting programmes and time, arbitration and conciliation services, securities, employment contracts as well as contracts on research and technological development.

Article 16 of Directive 2004/18/EC indicates the more exact scope of these specific exclusions.

Contracting authorities have to be careful on two grounds with regard to exclusions. First, they have to be justified. Second, exceptions are generally interpreted narrowly.


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Article 16

The EC (EU) Procurement Directive, officially 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 (OJ 30.4.2004 L 134/114), continues its Section 3 treatment of excluded contracts with Article 16 Specific exclusions:



Article 16
Specific exclusions

This Directive shall not apply to public service contracts for:

(a) the acquisition or rental, by whatever financial means, of land, existing buildings or other immovable property or concerning rights thereon; nevertheless, financial service contracts concluded at the same time as, before or after the contract of acquisition or rental, in whatever form, shall be subject to this Directive;

(b) the acquisition, development, production or co-production of programme material intended for broadcasting by broadcasters and contracts for broadcasting time;

(c) arbitration and conciliation services;

(d) financial services in connection with the issue, sale, purchase or transfer of securities or other financial instruments, in particular transactions by the contracting authorities to raise money or capital, and central bank services;

(e) employment contracts;

(f) research and development services other than those where the benefits accrue exclusively to the contracting authority for its use in the conduct of its own affairs, on condition that the service provided is wholly remunerated by the contracting authority.


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Purchase or rental of land or buildings


The recitals put the legal act into context and offer brief explanations of the choices made. Recital 24 of the Procurement Directive 2004/18/EC tells us that certain contracts relating to immovable property have particular characteristics which make them less suitable for public procurement rules.

The need for an existing building or a site is local. It has to be rented or bought locally, and it does not affect intra-Community trade.

Thus, in the context of services, contracts for the acquisition and rental of immovable property and rights to such property are to be excluded from the application of the Procurement Directive.

Public works contracts (building contracts) do not fall under the exclusion. Financial contracts related to the acquisition of real estate do not form part of the exception:


(24) In the context of services, contracts for the acquisition or rental of immovable property or rights to such property have particular characteristics which make the application of public procurement rules inappropriate.


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Public service broadcasting

Recital 25 of the Procurement Directive excludes public service contracts concerning broadcasting programmes and times. The exclusion does not extend to the supply of technical equipment:


(25) The awarding of public contracts for certain audiovisual services in the field of broadcasting should allow aspects of cultural or social significance to be taken into account which render application of procurement rules inappropriate. For these reasons, an exception must therefore be made for public service contracts for the purchase, development, production or co-production of off-the-shelf programmes and other preparatory services, such as those relating to scripts or artistic performances necessary for the production of the programme and contracts concerning broadcasting times. However, this exclusion should not apply to the supply of technical equipment necessary for the production, coproduction and broadcasting of such programmes. A broadcast should be defined as transmission and distribution using any form of electronic network.









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Arbitration and conciliation

Recital 26 of the Procurement Directive 2004/18/EC explains that arbitration and conciliation services are ill adapted to procurement rules:

(26) Arbitration and conciliation services are usually provided by bodies or individuals designated or selected in a manner which cannot be governed by procurement rules.






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Financial services

Recital 27 of the Procurement Directive 2004/18/EC excludes securities and debt transactions of contracting authorities as well as central banks:

(27) In accordance with the Agreement, the financial services covered by this Directive do not include instruments of monetary policy, exchange rates, public debt, reserve management or other policies involving transactions in securities or other financial instruments, in particular transactions by the contracting authorities to raise money or capital. Accordingly, contracts relating to the issue, purchase, sale or transfer of securities or other financial instruments are not covered. Central bank services are also excluded.




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Employment contracts

Employment contracts are ruled by collective agreements or individual contracts, excluding the application of the procurement regime.





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Research and technological development

Recital 23 of the Procurement Directive 2004/18/EC explains the exclusion of research and technological development contracts when some benefits accrue beyond the contracting authority:

(23) Pursuant to Article 163 of the Treaty, the encouragement of research and technological development is a means of strengthening the scientific and technological basis of Community industry, and the opening-up of public service contracts contributes to this end. This Directive should not cover the cofinancing of research and development programmes: research and development contracts other than those where the benefits accrue exclusively to the contracting authority for its use in the conduct of its own affairs, on condition that the service provided is wholly remunerated by the contracting authority, are not therefore covered by this Directive.



Ralf Grahn