Procurement regulations doubts

A proposed amendment to European Union regulation on the access for third-country goods and services to the Union’s internal market in public procurement is being opposed by three European associations.

EIC (European International Contractors), FIEC (the European Construction Industry Federation) and EuDA (the European Dredging Association) have come together and jointly formulated voting recommendations, calling on Members of the International Trade (INTA) Committee of the European Parliament to reject the proposed amended regulation.

The European federations said they were concerned that the amended proposal removed the option for contracting authorities or entities in EU Member States to exclude from tenders third country foreign bidders which have themselves closed their domestic government procurement market for European companies.

The proposal on an International Procurement Instrument (IPI) is said to be the EU’s response to the lack of a level playing field in world procurement markets.

The associations said that while the EU’s public procurement market was open to foreign bidders, the procurement markets for foreign goods and services in third countries remained to a large extent closed – in theory or in practice.

They said the IPI aimed at encouraging partners to engage in negotiations and opening participation for EU bidders and goods in third countries’ tenders.

However, they said they felt that contrary to the original proposal of 2012, the amended version proposed preventing the ability to close the market and to limit possible restrictive measures to price penalties – now called price adjustment measures.

They said this meant that foreign bidders, products and services which were subject to a price adjustment measure for evaluation purposes could still be awarded the contract, if –despite the price adjustment – the offer remained competitive in terms of price and quality.

‘Not suitable’

The associations pointed to recent and ongoing infrastructure projects in Poland and Croatia featuring Chinese contractors which they said suggested that the planned limitation of possible restrictive measures to price penalties of up to 20% was not suitable for the opening of third country procurement markets to EU companies.

They added that they could not prevent unfair competition by third country firms, particularly state-owned enterprises, in the EU Internal Market.

They said, therefore, that the proposed draft regulation, in particular in its amended version, would not help with the opening of third-country procurement markets for European companies, but would open the EU’s internal procurement market – which they said was contrary to the spirit of the GPA (Agreement on Government Procurement) – entirely for third country bidders.

The associations added that this would lead to particularly severe implications for the – privately operating – European construction industry.