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Impact of economic crisis on public procurement law

internationallawoffice.com, 2009
1. April 2009

Accelerated Procedures

According to a European Commission press release of December 19 2008, the EU Public Contracts Directive (2004/18/EC) allows recourse to accelerated procedures where such recourse is justified on grounds of urgency. The commission recognizes that the exceptional nature of the current economic situation can justify the use of accelerated procedures, thus reducing considerably the overall time taken by the procedure. Such presumption of urgency will apply throughout 2009 and 2010 for all major public investment projects. The term ´major public (investment) project´ is not defined in the press release; nor do the Presidency Conclusions of the Brussels European Council of December 11/12 2008 explain what the European Council understood by the term. The use of the word ´major´ supports the assumption that accelerated procedures cannot be used for standard tenders - that is, contracts awarded by the contracting authorities on a regular basis (eg, energy supply contracts, contracts for office supplies). Instead, to promote national economies in the current economic climate, it is likely that the commission wished to accelerate big infrastructure projects in the construction field. However, the wording of the press release does not prevent the use of such accelerated procedures for the award of major service and supply contracts.

As a result, the Austrian contracting authorities are to reduce the deadlines for restricted procedures with prior notice and negotiated procedures with prior notice on grounds of urgency. The term for receipt of applications to participate in the award procedure will be reduced to 10 days, as will the deadline for receipt of tenders in a restricted procedure with prior notice. No statutory provision regarding deadlines for receipt of tenders exists for negotiated procedures, but the provision regarding the deadline for a restricted procedure with prior notice gives an indication regarding negotiated procedures. Finally, the standstill period will be reduced to seven days. However, pursuant to the Federal Procurement Act 2006, open procedures do not allow for a reduction of terms and deadlines on grounds of urgency.

New Thresholds

According to press releases and media reports, the federal chancellor plans to raise the thresholds for direct awards and restricted procedures without prior notice by ordinance. Such an ordinance is admissible pursuant to Section 18 of the act. The increased thresholds will help to stimulate the economy and will be limited to a particular time period. Small and medium-sized companies will particularly benefit from this ordinance.

Currently, a direct award is permitted only if the estimated contract value is below €40,000. Contracts may be awarded in restricted procedures without prior notice with respect to works contracts, provided that the estimated contract value is below €120,000, and with respect to supply and service contracts where the estimated contract value is below €80,000.
The government reportedly intends to raise the threshold for direct awards for all types of contract to €100,000. Furthermore, a contracting authority will be entitled to choose a restricted procedure without prior notice where the estimated contract value does not reach €1 million in case of works contracts or, for supply and service contracts, where the estimated contract value is below €100,000. Similar measures have already been taken by Germany through Konjunkturpaket II 1/09, which reportedly has already been implemented by most of the country.

The ordinance is due to come into force on May 1 2009.


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