The Commission has decided that the procurement of a high bandwidth network service by the Welsh Assembly Government for public sector organisations in Wales does not constitute state aid within the meaning of Article 87 (1) of the EC Treaty and so has not raised any objections to implementation of the project.

Competition Commissioner Neelie Kroes commented: “The Welsh authorities designed the procurement for the public sector network in such a way that it does not involve state aid. The Commission is satisfied that the procedure is compliant with the EU's public procurement Directives and suitable for achieving best value for money.”

The aim of the project is to provide public sector organisations in Wales with high availability, high bandwidth managed network services in order to improve the delivery of public sector services to citizens and businesses. By aggregating public sector demand, the project will realise economies of scale whilst mostly using existing network infrastructure. In view of the particular complexity of the contract, the so-called "competitive dialogue" procurement procedure is used for selecting the service provider in compliance with EU procurement Directives. The UK authorities notified the project to the Commission in January 2007.

In its assessment, the Commission considered the situation of the users of the network, the service provider to be selected as a result of the procurement procedure as well as third party operators. In particular, the Commission took into account that:

  • the users of the network are public sector organisations which do not carry out economic activities and therefore do not qualify as undertakings under the state aid rules
  • the award of the contract does not provide any economic advantage to the service provider which would go beyond market conditions. It is a pure procurement transaction compliant with the EU procurement directives and suitable for achieving best value for money. There are appropriate mechanisms to ensure cost effectiveness over the entire contract duration and there are no extra advantages resulting from the contract for the service provider
  • the procurement does not confer an advantage to third party operators

On the basis of these considerations, the Commission has confirmed that the measure does not involve state aid within the meaning of Article 87 (1) of the EC Treaty. [30 May 2007]