Public Procurement Oversight in EU Member States: A New Approach in the New Directive?

1. Public Procurement Oversight in EU Member States: A New Approach in the New Directive? Professor Martin Trybus Director, Institute of European Law University of Birmingham United Kingdom

2. The current EU Directives 1 • The objective of the EU procurement Directives is to open the procurement markets of the Member States. • Emphasis is to ensure non-discrimination on grounds of nationality and equal treatment in public procurement decisions.

3. The current EU Directives 2 • The Directives are NOT intended or designed as an instrument against corruption! • But: principles of transparency and enforceability support probity. • Publication of contract notices, award notices, etc. in the OJ. • Public specs, qualification, award. • Review bodies, procedures, remedies.

4. The current EU Directives 3 • Article 45 Public Sector Directive 2004/18/EC: Personal situation of the candidate or tenderer • 1. Any candidate or tenderer who has been the subject of a conviction by final judgment of which the contracting authority is aware for one or more of the reasons listed below shall be excluded from participation in a public contract: […] • (b) corruption, as defined in Article 3 of the Council Act of 26 May 1997(21) and Article 3(1) of Council Joint Action 98/742/JHA(22) respectively;

5. United Kingdom • According to the PWC report on corruption in the UK, procurement stands out as the most vulnerable business operation. • The Office of Government Commerce (OGC); The Scottish Procurement Directorate (SPD); Central Procurement Directorate Northern Ireland); The Welsh Assembly – not oversight authorities. • Article 45 Directive 2004/18/EC is enough; UK considers further harmonising measures to be non-beneficial. • UK Anti-Corruption Forum + TI UK (private).

6. Slovenia • Slovenian Independent Commission for the Prevention of Corruption: analysis, coordination and consultancy • National Review Commission: independent public body in charge of the control of the legality of public procurement procedures • In September 2012 many new laws on public procurement introduced, their main goal being to reduce the risks of corruption • Greater transparency, namely with regard to the possible link between the tenderer and individuals involved in the procurement procedure on the part of the contracting authority.

7. Central procurement institutions • Bulgarian Public Procurement Agency • Cypriot Public Procurement Directory • Czech Office for the Protection of Competition • Estonian Public Procurement Office • Hungarian Public Procurement Council • Latvian Procurement Monitoring Bureau • Lithuanian Public Procurement Office • Maltese Department of Contracts • Polish Public Procurement Office • Romanian National Authority for Regulating and Monitoring Public Procurement • Slovak Office for Public Procurement

8. Review and remedies • Imposition of fines on contracting authorities who violated public procurement rules • Disciplinary measures against individual contracting officers • Non judicial resolution of disputes between contracting entities and contractors • Initiation of proceedings for judicial review in courts of law for violations of public procurement law • Prosecution of cases of corruption and other criminal offences in public procurement • Preparation of the rules for arbitrators and administration of the list for arbitrators

9. The ‘new’ Directive (13/7/13) • Recital (43): Public contracts should not be awarded to economic operators that…have been found guilty of corruption • Derogation if overriding requirements in the general interest that make a contract award indispensable exist. • Recital (52) Traceability and transparency of decision-making: keeping copies of concluded high-value contracts; a procurement report by contracting entities. • Article 24(c)b) In particular tenders…where there is evidence of…corruption…shall be considered as being irregular. • Corruption being one of the grounds for exclusion of an economic operator : Article 55(1)(b): as before • Corruption has to be reported to the Commission in a monitoring report every three years : Article 83(3).

10. The ‘new’ Directive 13/07/2013 (6) Even if they do not necessarily lead to corrupt conduct, actual, potential or perceived conflicts of interest have a high potential to improperly influence public procurement decisions with the effect of distorting competition and jeopardising equal treatment of tenderers. Effective mechanisms should therefore be set up to prevent, identify and remedy conflicts of interest. (6) Contracting authorities should make use of all possible means at their disposal under national law in order to prevent distortions in public procurement procedures stemming from conflicts of interest. This could include procedures in order to identify, prevent and remedy conflicts of interests. COM (2011) 896 final

11. The ‘new’ Directive 13/07/2013 (7) Illicit conduct by participants in a procurement procedure, such as attempts to unduly influence the decision-making process or to enter into agreements with other candidates to manipulate the outcome of the procedure, can result in violations of the basic principles of Union law and in serious distortions of competition. Economic operators should therefore be required to submit a declaration on honour that they do not engage in such illicit activities and be excluded if this declaration proves to be false. ? COM (2011) 896 final

12. The ‘new’ DirectiveExplanatory Memorandum p.12 • To reinforce the fight against corruption and favouritism, contracting authorities will be obliged to transmit the text of concluded contracts to the oversight body, which will thus be able to scrutinize these contracts for suspicious patterns, and give access to these documents to interested persons to the extent that legitimate public or private interests are not jeopardized. • However, the creation of disproportionate administrative burden must be avoided; the obligation to transmit the full text of concluded contracts should therefore remain limited to relatively high value contracts. The thresholds proposed would strike the right balance between increasing administrative burden and ensuring greater transparency: with a threshold of 1 000 000 EUR for supplies and services, and of 10 000 000 EUR, this obligation would apply to 10 - 20 % of all procurement published in the Official Journal.

13. The ‘new’ Directive 13/07/2013 Public oversight 1. Member States shall appoint a single independent body responsible for the oversight and coordination of implementation activities (hereinafter 'the oversight body'). Member States shall inform the Commission of their designation. All contracting authorities shall be subject to such oversight. Enforcement 1. In order to effectively ensure correct and efficient implementation, Member States shall ensure that at least the tasks set out in this Article are performed by one or more authorities, bodies or structures. They shall indicate to the Commission all authorities, bodies or structures competent for these tasks. COM (2011) 896 final

14. New Directive COM(2011) 896 • Annual Report containing inter alia: • (d) centralized data about reported cases of fraud, corruption, conflict of interests and other serious irregularities in the field of public procurement, including those affecting projects cofinanced by the budget of the Union. • Tasks including: • (d) establishing and applying comprehensive, actionable 'red flag' indicator systems to prevent, detect and adequately report instances of procurement fraud, corruption, conflict of interest and other serious irregularities;

15. New Directive 13/7/13 • To the Commission every three years monitoring report covering, […] detection and adequate reporting of cases of procurement fraud, corruption, conflict of interest and other serious irregularities.

16. Conclusions • The Directives – old and new – are not intended as anti-corruption instruments. • TFEU does not provide legal base for EU anti-corruption measures unless • Exclusion as irregular tenders + excluded tenderers. • Envisaged oversight body and annual reports to the Commission not in trilog text. • However, this leaves room for Member State action.

17. Děkuji/Ďakujem • Martin Trybus • Professor of European Law and Policy • University of Birmingham • M.Trybus@bham.ac.uk