Annexes to COM(2012)565 - Transposition of directive 2009/81/EC on Defence and Security Procurement - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2012)565 - Transposition of directive 2009/81/EC on Defence and Security Procurement. |
|---|---|
| document | COM(2012)565  |
| date | October 2, 2012 |
Since exclusions have to be interpreted strictly, the Commission will monitor closely the use of exclusions by Member States and verify that none of them, especially the exclusions under Article 12 and the exclusion of government to government sales, Article 13 (f), is used to circumvent the rules of the Directive.
C. Provisions relating to subcontracting (Articles 21 and 50 to 54 – title III).
The Directive lays down extensive rules on subcontracting. Their aim is to enhance competition within the supply chains of successful tenderers. The more systematically they are used by contracting authorities the more they will improve market access in particular for SMEs and economic operators established in smaller countries and thereby contribute to a truly European Defence Equipment Market. The subcontracting rules are therefore a cornerstone of the Commission's policy.
Article 73 requires the Commission to report specifically on their transposition. Such rules are new to European public procurement legislation. Directive 2004/17/EC and 2004/18/EC only state that "the contracting authority may ask or may be required by a Member State to ask the tenderer to indicate in his tender any share of the contract he may intend to subcontract to third parties and any proposed subcontractors". Contracting authorities have no further rights under Directives 2004/17/EC and 2004/18/EC to intervene in the choice of subcontractors by the main contractor.
While reiterating this basic principle in Article 21 (2), the rules of the Directive provide important additional tools for the Member States and their contracting authorities.
Firstly, according to Article 21 (3), contracting authorities can oblige the successful tenderer to award all or certain of its proposed subcontracts through the competitive procedure described in Title III of the Directive. While Member States had to transpose this provision, they could decide whether contracting authorities are free to impose to award subcontracts through such a competitive procedure or whether they are obliged to do so.
Twenty-two Member States have given their contracting authorities the option to oblige the successful tenderer to award their subcontracts using the competitive procedure. No Member State obliges its contracting authorities to so oblige the successful tenderer. One Member State seems to have omitted to transpose Article 21 (3) at all.
Secondly, under Article 21 (4), Member States may provide for compulsory subcontracting by the successful tender. However, the transposition of these provisions is left to the discretion of the Member States. If a Member State introduces compulsory subcontracting, it has two options: It can either give its contracting authorities the possibility to require subcontracting from the successful tenderer or it can oblige its contracting authorities to do so. Both options, if exercised, create additional business opportunities for potential subcontractors.
It has to be noted that the successful tenderer can only be obliged to subcontract up to 30% of the main contract and that the subcontracts have to be awarded using the competitive procedure of Title III.
Only two Member States have chosen not to provide for compulsory subcontracting. All other Member States have given their contracting authorities the possibility to require subcontracting without obliging them to require it.
A preliminary assessment suggests that Member States' transpositions of the subcontracting provisions are generally compatible with the Directive. The Commission is satisfied that a majority of Member States have seized these opportunities to enhance competition in the supply chains and is confident that this will have a positive impact on the internal market. Since the subcontracting provisions are an important tool for the creation of a European level playing field in the defence market, the Commission will closely monitor their use by Member States.
D. Review mechanism, Articles 55-64
The Directive includes a comprehensive set of provisions aimed at making effective means of redress available to aggrieved bidders. These provisions are based on those coordinating national review systems for civil procurementsDirective2007/66/EC of the European Parliament and of the Council of 11 December 2007 amending Council Directives 89/665/EEC and 92/13/EEC with regard to improving the effectiveness of review procedures concerning the award of public contracts[6].
Approximately half the Member States have transposed the provisions on review in the national implementing measures of the Directive, the other half have chosen to transpose these provisions within their general rules on remedies.
The Directive foresees some adaptations to the general review system to take the special characteristics of defence into account. This report will highlight the two most important ones.
First, Article 56 (10) foresees that "Member States may decide that a specific body has sole jurisdiction for the review of contracts in the fields of defence and security" in order to guarantee an adequate level of confidentiality of classified information. The provision also contains specific rules on how "to reconcile the confidentiality of classified information with respect for the rights of the defence".
It seems that no Member has used the option to endow a specific body with jurisdiction. Only a few Member States have included specific rules on security clearance for the members of the review body. These rules deal with the capacity of a member of the review body to sit on a case but do not contain specific provisions for granting or requesting security clearance. It seems, therefore, that the Member States did not share some of the concerns voiced in the legislative process, which had given rise to the specific rules of the Directive on that point.
Second, Article 60 (3) foresees that a review body may not consider a contract ineffective, even though it has been awarded illegally, "if the review body finds that overriding reasons relating to a general interest, first and foremost in connection with defence and/or security interests, require that the effects of the contract should be maintained (…) In any event, a contract may not be considered ineffective if the consequences of this ineffectiveness would seriously endanger the very existence of a wider defence or security programme which is essential for Member State's security interests."
All Member States but two have included this specific possibility to abstain from declaring a contract ineffective.
A preliminary assessment suggests that Member States' transpositions of the review provisions in general are compatible with the Directive. The Commission, therefore, expects that procurement in the field of defence and security will be subject to effective national review.
V. Impact of the Directive on Member States' offset provisions
In the past, 18 Member States maintained offset policies requiring compensation (offsets) from non-national suppliers when they procured defence equipment abroad. In these Member States, contracting authorities were generally obliged to require such compensation for purchases above a certain value. Such offset requirements are restrictive measures which go against the basic principles of the Treaty. They discriminate against economic operators, goods and services from other Member States, and they impede the free movement of goods and services.
Offsets thereby jeopardize the proper application of the Directive and hinder the creation of a European level playing field in defence procurement. EU law can tolerate offsets only on the basis of a Treaty-based derogation, in particular Article 346 (1)(b) TFEU, i.e. if an offset requirement is necessary for the protection of the essential security interests of a Member State. The use of the derogation, however, has to be justified by the Member State concerned on a case-by-case basis.
The Commission has, therefore, been in close contact with the 18 Member States concerned, helping them to abolish or revise their offset rules. As a result, most of these Member States have either abolished the respective rules or revised their legislation. In this case, offsets are no longer required systematically but solely in exceptional cases where the conditions of Article 346 TFEU are met. Major legal changes have, therefore, been implemented. In addition, the European Defence Agency and its participating Member States clarified that its Code of Conduct on Offsets may be applied only to offsets which are justified on the basis of Article 346 TFEU.
The Commission will now monitor whether these changes will bring about a change in practice. It is convinced that a rapid phasing out of the discriminatory practice of offsets is necessary to create a truly European Defence Equipment Market. The Commission will, therefore, take appropriate action where this is not the case. It will also do so where Member States continue to have offset rules that are clearly incompatible with EU law.
VI. Conclusion
The aim of the Directive is to create a European level playing field, applying to large and small Member States and companies alike. Defence procurement is now subject to internal market rules and only exceptionally exempted from them. Thus, Member States now have to publish business opportunities, apply harmonised procedures, and phase out offsets.
Timely transposition proved challenging for the vast majority of Member States. However, most of the 23 Member States who have transposed the Directive as of July 2012 have prima facie done so correctly. In particular, the Commission considers it an encouraging sign that many Member States have also transposed the non-compulsory subcontracting provisions and thereby seized additional opportunities to foster competition.
A consistent and correct application of the Directive is necessary to strengthen the European Defence Technological and Industrial Base. Therefore, the Commission will closely monitor especially the use of exclusions and derogations as well as the phasing out of offsets. In general, this report is without prejudice to the power of the Commission to bring infringement proceedings against individual Member States whose national implementing measures are not in compliance with the provisions of the Directive.
Moreover, the Commission will pay particular attention to the impact of the Directive on the openness of the Defence market and the strength of the European Defence Industrial Base. By 21 August 2016 the Commission will report on this subject to the European Parliament and the Council as provided under Article 73(2).
Further initiatives may be necessary to promote the internal market in this area, with efforts from all relevant actors, in particular Member States and industry. The Commission has, for its part, set up a Task Force to examine ways of further developing European policies in the defence sector. It will do so in association with the European Defence Agency and in close cooperation with all other stakeholders in order to ensure overall coherence of European efforts in an area which is of strategic importance for the Union as a whole.
[1] OJ L 216 of 20 August 2009, p. 76 (the "Directive").
[2] OJ L 146 of 10 June 2009, p. 1.
[3] OJ L 134 of 30 April 2044, p. 1.
[4] OJ L 134 of 30 April 2004, P. 114.
[5] Decision defining the list of products (arms, munitions and war material) to which the provisions of Article 223 (1)(b) – now Article 346 (1)(b) TFUE – of the Trieaty apply (doc. 255/58). Minutes of 15 April 1958: doc. 368/58.
[6] OJ L 335 of 20 December 2007, p. 31.