The EC Has Released New Guidance For European Contracting Authorities

The European Commission has released new guidance for European contracting authorities on how to use EU law to address suspected cases of collusion in public procurement. It is also providing further detail on tools announced in 2017 to help EU countries better deter, detect, and address collusion.

Illegal secret agreements between companies to coordinate their tenders and predetermine who will win a public contract has been estimated to raise the price a public authority pays by up to 60% when compared to normal market conditions. In emergencies, such as the COVID-19 pandemic, public authorities’ urgent need to quickly procure large quantities of supplies and services for health systems may exacerbate this risk. Some companies may try to take advantage of the emergency and artificially restrict competition to maximise their gains at the expense of public finances.

The detrimental effects of collusion on public finances may prove even greater in the aftermath of emergencies as economic recovery greatly depends on the best possible use of public funds and on sizeable investments in critical economic sectors. Undue spending of excessive amounts for works, supplies and services means fewer public funds for core state business, larger budget deficits, and a greater need for borrowing. This jeopardizes countries’ financial stability and undermines recovery efforts. In addition, widespread collusion may make legitimate businesses hesitant to participate in public sector projects, further undermining efforts to attract private investment into infrastructure.

The notice adopted on Wednesday, March 17, provides a handy, concise, and ready-to-use tool for national authorities and procurement officers to help minimize the risk of collusion and address suspected cases. It includes tools for EU countries and contracting authorities to improve their capabilities to address the problem, as well as ways to foster cooperation between national central procurement and competition authorities. It also sets out the European Commission’s guidance on how to best use the EU public procurement directives to exclude tenderers in cases where there are sufficiently plausible indications of collusion.

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