OJEU regulations, Penalties for Non Compliance.

Compliance

Compliance procedures ensure that the EU procurement rules are properly enforced.

National courts or tribunals in each Member State are empowered to take certain

measures, including interim measures and the European Commission can

commence proceedings against the UK Government under the EC Treaty if any

contracting authority breaches the rules.

The limit for OJEU tendering and therefore the award of any contract is set at £> or €>. No Public Sector Contract should be awarded over this value unless it has the prior approval of the EU or the formal tendering procedure has taken place and the award notice published in OJEC.

The lower value of £> or €> only applies to Local Authorities or Government Departments.

The law pertaining to any breaches of OJEU regulations are complex and each case would have to be judged on it’s merits in line with relevant case law available at that time, it would also be necessary to take into consideration at what stage any such contract would be at.

However any awarding authority should consider the following should any breach occur.

If the contract has not been formally awarded and therefore no work has yet taken place, any company that feels that they had a genuine chance of winning the business and therefore can establish a loss of earnings can apply for an interim order to suspend the contract.

If the contract is already underway the Court can order interim measures (injunctions) as well (i.e. may order the suspension of the contract award procedure).

If the contract is completed it may also award damages to the complainant.

Obviously in cases where the contract has not yet been awarded or where the contract is completed the resolution is relatively simple, in so much as it could mean time delays on the award of contract and or expensive penalties.

However, if the contract is already underway then the individuals wishing to make a complaint would need to write to the EC who may invoke a "corrective" procedure when, prior to a contract being concluded, it considers that a clear and manifest infringement of EU procurement rules has been committed. In such a case, the Commission will notify the awarding authority and the relevant Member State Government of the circumstances of the alleged infringement.

The Commission will set a time limit of at least 21 days (public sector) within which the national Government has to respond. In practice the awarding authority, through the medium of Government, is called upon to justify its conduct, rectify the infringement or suspend the award procedure.

In cases where the Commission is not satisfied with the explanations or actions of the awarding authority or the Member State Government, it may commence formal proceedings against the latter under Article 169 of the Treaty of Rome. Such an action may ultimately result in the European Court of Justice ("ECJ") issuing a ruling which condemns the Government in question for failing to fulfil its Community law obligations. In particularly serious cases, the Commission might also ask the ECJ to grant interim measures.

As to what the penalties could be, it is impossible for any individual to say. However please see extracts below from previous cases.

In the case of Harmon CFEM Facades (UK)Ltd v Corporate Officer of the House of Commons (28 October 1999), the House of Commons was ordered to pay £5.26 million in damages to cover the cost of Harmon's tender and loss of profit, because the contract had been awarded unlawfully.

In addition, following the decision of Alcatel Austria v Bundesministrium Fur

Wissenschatt und Verkehr (C81/98), Member States must ensure that the decision to award a contract is left open to review until the contract is signed so that unsuccessful tenderers could have that decision set aside.

An aggrieved contractor must bring proceedings within three months from the time of the breach and such action must be preceded by a complaint to the contracting authority clearly stating the alleged breaches of the rules.

Complaint to European Commission

In addition to the special procurement compliance rules, an aggrieved contractor can also make a complaint to the European Commission. The European Commission may bring proceedings against a Government purchaser in the European Court of Justice, either in response to a complaint or at its own volition. It should be noted however that although this procedure is available, it is hardly, if ever, used.

The alternatives to us are therefore obvious and transparent. Either fully comply with the legislation on procurement via our own procedures which can be extremely time consuming and costly or purchase via a framework from one of the many consortia available to us.