The Increasing Risk Of Firms Being Excluded From Bidding For Public-Sector Contracts Across Europe Because Of Past Offences Or Misconduct
Published date | 14 June 2023 |
Subject Matter | Antitrust/Competition Law, Government, Public Sector, Antitrust, EU Competition , Cartels, Monopolies, Government Contracts, Procurement & PPP |
Law Firm | Herbert Smith Freehills |
Author | Mr Tim Briggs, Adrian Brown, Florian Huerkamp and Pilar Carrasco |
Contracts awarded by Governments and other public bodies ("contracting authorities") are a major source of business for firms operating in many sectors, including construction, defence, IT and professional services. However, firms face an increasing risk of being excluded from bidding for such contracts if they have previously committed certain types of wrongdoing, such as violations of competition law, grave professional misconduct or the poor performance of previous public contracts.
The UK and other countries across Europe are becoming more organised in tracking and, in some cases, black-listing unsuitable suppliers. For example:
- In the UK, the Procurement Bill that is currently before Parliament proposes to introduce a centrally managed "supplier debarment list" for the first time
- Germany has recently introduced a centralised "Competition Register" that provides information on whether suppliers fall within any of the grounds that would justify their exclusion from public tenders in Germany
- In Spain, in the last few years, the national competition authority has imposed public procurement bans on numerous companies sanctioned for infringing competition law.
This blogpost rounds up some of the latest developments in this area.
The legal framework for exclusions from public procurement procedures
The award of valuable contracts by contracting authorities ("public procurement") across the European Union is governed by directives laid down at EU-level (principally, Directive 2014/24/EU) and implemented into national law. In the UK, the regulations implementing these EU directives (such as the Public Contracts Regulations 2015) remain in place for now, despite Brexit, but they are due to be replaced next year by the Procurement Bill which is currently before Parliament.
These directives and regulations lay down a series of grounds on which contracting authorities may, and in some cases must, exclude firms from participating in public procurement procedures. The grounds for mandatory exclusion relate to convictions for serious criminal offences within the previous five years. The grounds for discretionary exclusion include:
- Violation of environmental, social or labour laws
- Being subject to proceedings for insolvency or bankruptcy
- Grave professional misconduct
- Entry into agreements aimed at distorting competition ("cartel offences")
- Deficient performance of a prior public contract, leading to its early termination or other sanctions
- Serious...
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