How does public procurement work in the Netherlands?
Category: Aanbestedingsrecht, Administrative law
If a public authority intends to award contracts to third parties for construction, supply or services, rules on tendering apply in the Netherlands. The rules are also intended to give companies wishing to be considered for a public contract a fair chance to compete for it. If the appropriate procedure is not followed, injured parties may claim damages. Blenheim has created an overview of the rules on tendering.
For what activities does a public authority have to organise a call for tenders?
There are different types of contracts for which a public authority must organise a call for tenders or a transparent procedure, namely:
- Services: all procurements not covered by “works” or “supplies”, for example cleaning services, care services or office security
- Works: construction and civil engineering works such as road construction, bridge building, building a station, etc.
- Supplies: such as purchase, rental, leasing and hire purchase of products
- Real estate transactions: such as sale of plots, properties, allocation of leaseholds, and the like, where there are several candidates for the object
- Concessions: such as transport services, operation of a public swimming pool, and the like.
Legal framework for tendering procedures
This is the regulatory framework that determines how public authorities must perform invitations to tender for works, contracts or supplies:
- Procurement Act: The Public Procurement Act 2012 implements the European Directives 2014/24/EU and 2014/25/EU (herein “Public Procurement Directives”), Directive 2014/23/EU on the Award of Concession Contracts (“Concessions Directive”) and Directive 2007/66/EU (“Review Procedures Directive”). This Act offers a single framework for public and concession contracts above and – to a limited extent – below the (European) threshold values and the legal protection in (European) invitations to tender.
- European legislation and regulations: Legislation and regulations in the field of tendering originate from the European Union. The “Public Procurement Directives” and “Concessions Directive” are currently the principal basis. The interpretation of these Public Procurement Directives and the Concessions Directive can follow from Green Papers, Interpretative Communications, and the like from the European Commission.
- Dutch Civil Code: The legal framework applicable to contracts.
- Municipalities Act and Provinces Act: The legal framework for municipalities and provinces.
- General Administrative Law Act: The legal framework for all public authorities.
- Proportionality Guide: The (revised) Proportionality Guide 2016 (in Dutch) is, in its entirety, the guideline designated in the Public Procurement Decree and gives points of reference on the reasonable application of the principle of proportionality.
- Works Procurement Regulations (ARW): ARW 2016 includes procedural rules on the way in which calls for tender for works are to proceed.
- Rules of case law: For example, the Didam Supreme Court Judgment (in Dutch), to also apply the principle of equal treatment in real estate transactions with transparent procedure for candidates.
Principles always applicable to any form of invitation to tender
- Equal treatment (principle of equality): Equal circumstances should not be dealt with differently unless such difference is objectively justified. Disguised or indirect discrimination is also prohibited.
- No discrimination (principle of non-discrimination): Discrimination on grounds of nationality is not allowed.
- Transparent procedure (principle of transparency): The procedure to be followed should be transparent (and therefore verifiable). This is a logical consequence of the principle of equal treatment. Normally careful and attentive tenderers should know where they stand.
- Proportionality (principle of proportionality): The requirements, conditions and criteria imposed on the tenderers may not be disproportionate in relation to the object of the contract. The municipality applies the principle of proportionality to the requirements, conditions and criteria to be set for tenderers and tenders and to the contractual conditions.
- Mutual recognition: Services and goods of companies from other Member States of the European Union must be permitted, insofar as such services and goods can meet the legitimate needs of the municipality in an equivalent manner.
Departures from European obligations to issue a call for tenders
Departures from tendering procedures above the European threshold are not allowed, with the exception of some possibilities defined in the Public Procurement Act 2012. Only very rarely can a departure from this procurement and tendering policy below the European threshold be justified on the basis of specific technical, economic or sustainability considerations, if it is in line with the frameworks of the amended Public Procurement Act 2012. A public authority often also has its own procurement and/or tendering policy. Departing from that policy is only possible and permitted on the basis of a solidly reasoned decision by the persons authorised for that purpose.
Threshold value for public contracts above which a call for tenders is mandatory
There is a threshold value above which a call for tenders is mandatory for public authorities. Threshold amounts are reviewed every two years by the European Commission on the basis of the average daily value of the euro. Recent threshold amounts were published in November 2021 in the Official Journal of the European Union (in Dutch). For example, for the provision of services or supplies, the lower limit is now € 215,000 and for the central government it is € 140,000. That threshold differs by type of tender. For the central government, the amount may differ from local authorities. The current threshold values can be found. For example, no threshold value applies to real estate transactions and scarce permits for which there are several candidates. In these cases, the government must always start a transparent procedure in order to give candidates the opportunity to compete.
Failure to observe rules on tendering can lead to liability
The award of a public contract following an erroneous tender can lead to liability. For example, if the tender of the winning party is invalid and should have been set aside, the second tenderer may assert a claim. That is what happened in this lawsuit about tendering (in Dutch) for outdoor advertising. An awarding authority must treat tenderers in an equal and non-discriminatory manner (the principle of equality) and act transparently (the principle of transparency). In the procurement procedure, it is necessary to ensure that any risk of favouritism and arbitrariness is eliminated by the awarding authority. Therefore, the same conditions must apply to all tenderers and in doing so the requirements and criteria of the tender must be formulated in a clear, precise and unambiguous manner. If an awarding authority does not exclude a tenderer whose tender does not comply with the formal or suitability conditions, or to which a ground for exclusion applies, and awards the contract to that tenderer, then that authority is acting unlawfully in respect of other tenderers whose tenders do comply with the requirements.
Blenheim provides advice and conducts legal proceedings on tendering issues. Feel free to contact us.