The Implementation of Judicial Protection Public Procurement Directives Act (WIRA)
On 20 December 2009 Directive 2007/66/EC with regard to
improving the effectiveness of review procedures concerning the
award of public contracts (the Judicial Protection Directive)
should have been implemented in national legislation. The Dutch
Implementation of Judicial Protection Public Procurement Directives
Act (bill 32 027) was adopted on 26 November 2009 in the Lower
House of Parliament, but is currently still being debated in the
Senate. It is expected that this Implementation Act will enter into
force shortly.
The intention of the new Act is to improve and clarify public
procurement law enforcement.
The Most Important Provisions of the Bill
The bill provides for changes in relation to two phases: the phase
after the provisional award of a contract but prior to the signing
of the contract between the contracting authority and the winning
bidder and the phase after the signing of this contract. Below you
will find a short overview of the changes made vis-à-vis current
legislation.
Prior to the final awarding of a contract
- Standstill period: although the Judicial Protection
Directive offers the possibility to shorten this period (also
called the Alcatel period) after the award decision during
which a contract may not be definitively awarded to a minimum
of ten days, in the bill a choice was made to adhere to a
period of a minimum of fifteen calendar days. A new rule under
the bill is that the notification must in any case be sent by
e-mail or by fax.
- Substantiation: under the bill, the contracting authority
is obliged to disclose the relevant reasons for this decision
when rendering the decision to award a contract. The exact
details of this substantiation depend on the circumstances of
the case. When providing the information the contracting
authority must indicate the time that the bidders and
interested parties actually have to institute an appeal
procedure.
- Suspensory effect: if an appeal is actually instituted
before a court within the Alcatel period, the bill introduces
the obligation to suspend the conclusion of the contract until
the appeal authority has decided on the appeal.
- Parties involved: when an interested party has not received
any information from the contracting authority about the
rejection of its request to bid (amply) before the decision to
award a contract is sent to the bidders, the contracting
authority must also inform this interested party about the
decision to award a contract under the new bill.
After the conclusion of a contract
At the moment, once a contract has been concluded between the
contracting authority and the winning bidder, the contract cannot
become void or voidable pursuant to Dutch law, even if it appears
that one of the parties has acted in violation of public
procurement law. The bill will change this: any interested party
may claim that the contract is to be declared void on two grounds
within a certain period. If the court goes along with this request,
the court's judgment will take away the legal ground of the
contract and the obligations of the contract performed mutually
will have to be undone.
The first ground for declaring the contract void is the
situation in which the contract has been concluded on the basis of
an unlawful private award of a contract. Under the bill a private
award of a contract is only permitted when this is allowed under
the Bao or the Bass without prior notification. With this new rule
contracts that were not concluded in conformity with public
procurement law can be dealt with more effectively.
The second ground for declaring the contract void is the
situation in which the contract has been concluded without due
observance of the mandatory suspensory period of fifteen calendar
days.
The bill - just like the Judicial Protection Directive - provides
the court with the possibility not to declare the contract void
entirely or partially for compelling reasons of general interest.
Economic interests are only considered to be compelling reasons if
in exceptional circumstances declaring the contract void would have
disproportionately large consequences; economic interests that are
directly connected with the contract concerned are explicitly
excluded as compelling reasons of general interest. According to
case law of the Court of Justice, the concept of a compelling
reason of general interest includes, in any case, public order,
public security and public health.
In the event that the court upholds a contract for compelling
reasons of general interest or only limits the effect of the
contract, the bill obliges the court to impose an
alternative sanction on the contracting authority. Alternative
sanctions included in the bill are the reduction of the term of the
contract and an administrative law penalty that may be imposed by
the Dutch Competition Authority (Nederlandse
Mededingingsautoriteit (NMa)). The maximum amount of the
penalty is fifteen percent of the order value. When determining the
amount of the penalty, the seriousness of the violation, the
behavior of the contracting authority and the extent to which the
contract is upheld will be taken into account.
Pursuant to the bill, a request to declare the contract void must
be filed within a period of 30 days starting on the day after:
- the date of the publication of the announcement of the
awarded order in conformity with the Bao or the Bass, or
- the date on which the contracting authority informs the
bidders and the parties involved concerned of the conclusion of
the contract and substantiates this decision in conformity with
the Bao or the Bass.
If the contracting authority does not make a public announcement
or sends this announcement to the bidders and parties involved with
no or insufficient substantiation, this period will be six months
starting on the day after the date on which the agreement has been
concluded.
Conclusion
Although in some respects the bill is nothing more than a
codification of ECJ case law, in our view particularly the
regulation with regard to the nullification of contracts already
concluded offers a welcome addition to existing legislation.
Therefore, a rapid entry into force of the bill is desirable for
the public procurement practice.