Third country bids in EU procurement: always excluded?

The European Commission recently issued guidance on the participation of third country bidders in public procurement. It clarified bids may be excluded, but remains silent on whether they may be accepted and under which conditions. 

Commission guidance on the participation of third country bidders and goods

On 24 July 2019 the European Commission issued a communication on public procurement and the participation of third country bidders to address the lack of level playing field between EU and non-EU bidders, goods and services. Non-EU bidders are not necessarily bound by the same, or equivalent, environmental, social or labour standards as those applicable to EU bidders. Therefore, the Commission aims to stimulate contracting authorities or entities to apply public procurement more strategically to foster innovation, sustainability, green procurement etc. To this end it provides guidance on tools for contracting authorities or entities to ensure such strategic goals when dealing with third country participation. The Commission discusses the ability to reject abnormally low tenders and to insert quality standards (applicable to all bids alike, foreign or not), as well as the access of third country bidders to the EU procurement market.

The guidance stresses that the EU has granted access to its procurement market under international agreements such as the Agreement on Government Procurement (GPA) and bilateral free trade agreements. Moreover, the Public Contracts Directive and the Utilities Directive require equally favourable treatment to EU and non-EU works, supplies, services and economic operators to the extent an international agreement covers the procurement. 

The guidance emphasises that economic operators from third countries or foreign goods and services have no secured access to EU procurement procedures outside the scope of these abovementioned international agreements. This may according to the guidance result in exclusion. 

This way, the Commission appears to indicate that contracting authorities or entities have the right but not the obligation to reject foreign bids if access is not secured. Nevertheless, the guidance does not explicitly confirm that such foreign bids can be allowed. 

EU International Procurement Instrument

In previous documents, the Commission did not expand on this question either. The Commission’s proposal for an international procurement instrument (IPI), would provide for a price penalty whenever there is a substantial lack of reciprocal opening of public procurement access in the originating country. In essence, this proposed regulation would allow the Commission to investigate the access that EU economic operators have to the procurement market of a third country. If the Commission established disadvantageous treatment of EU goods, it could request the third country to open up its procurement market. If unsuccessful, a 20% price penalty could be imposed for the evaluation of the bids from this third country (article 8). Importantly, the proposal would also prevent member states and contracting authorities or entities to restrict access beyond the price penalty (article 1.5). It would thus prevent more restrictive measures, such as an exclusion. Interestingly, a previous version of the proposal explicitly allowed exclusion under certain circumstances as an alternative course of action (article 6). 

The IPI proposal has been dormant since 2016. However, in early 2019 the Commission urged Council and Parliament to continue the legislative process, and to adopt the IPI before the end of 2019. Progress would appear more likely now since several Member States (Germany, France, Spain) have indicated that their position has changed. 

In any case, the IPI proposal does not discuss the question whether contracting authorities or entities could allow foreign bids and under which conditions. 

Conclusion

In conclusion, the Commission is of the opinion that contracting authorities or entities can exclude bids if no access is secured. This is at least the case as long as the IPI proposal is not adopted which would prevent more restrictive measures than the 20% price penalty. 

However, both the recent Commission guidance and the IPI proposal do not discuss if and under which conditions contracting authorities or entities can allow foreign bids if no access is secured.