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What is the relevant legislation regulating the award of public contracts?
On 1July 2016, the amended Dutch Public Procurement Act (DPPA) entered into force. The amended DPPA implements the latest European Union (EU) procurement directives (2014/23/EU, 2014/24/EU and 2014/25/EU). The DPPA applies to both national and European procurement procedures.
The structure of the DPPA has changed since the implementation of the latest EU procurement directives. On 1July 2016, Part 2a (the award of concession contracts) was added to the DPPA. The DPPA now consists of the following sections:
- Part 1: General provisions;
- Part 2: Procurement procedures that meet EU thresholds;
- Part 2a: Award of concession contracts;
- Part 3: Award of special sector contracts; and
- Part 4: Final provisions (including legal review).
Some provisions of the DPPA are further elaborated in the Public Procurement Decree. The Works Procurement Regulations 2016 (mandatory for contracts below the EU threshold), the European Single Procurement Document and the Proportionality Guide form parts of the Public Procurement Decree.
In the Netherlands public procurement law is enforced through litigation. The Dutch Public Procurement Experts Committee (PPEC) accepts complaints about procurement procedures, but the PPEC’s advice is non-binding.
Is there any sector-specific procurement legislation supplementing the general regime?
Yes. In the fields of defence and security, the Public Procurement Act supplements the general regime. This Act implements Directive 2009/81/EC on the coordination of procedures for the award of certain works contracts, supply contracts and service contracts by contracting authorities or entities in the fields of defence and security.
Further, the Works Procurement Regulations 2016describes the procedures for the award of works contracts, and the Utilities Procurement Regulations 2016may be applicable (under certain circumstances) to special sector procurement procedures.
In which respect does the relevant legislation supplement the EU procurement directives or the GPA?
The Public Procurement Decree states that the Proportionality Guide is to be considered as a mandatory directive. The Proportionality Guide further elaborates on the proportionality principle and how it should be applied in procurement procedures.
Are there proposals to change the legislation?
There are currently no proposals to change the legislation, except for a proposal to make some minor amendments to repair or clarify existing legislation.
Applicability of procurement law
Which, or what kinds of, entities have been ruled not to constitute contracting authorities?
The definition of a contracting authority, as laid down in the EU procurement directives, has been implemented in the DPPA. Therefore, case law of the European Court of Justice (ECJ) regarding the definition of ‘contracting authorities’ is also relevant for the interpretation of the Dutch definition of a ‘contracting authority’.
Central government authorities and bodies governed by public law that meet the following cumulative criteria are considered to be contracting authorities. The criteria are that:
- they are established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character;
- they have legal personality; and
- are financed, for the most part, by the state, regional or local authorities, or by other bodies governed by public law;
- are subject to management supervision by those authorities or bodies; or
- have an administrative, managerial or supervisory board, more than half of whose members are appointed by the state, regional or local authorities, or by other bodies governed by public law.
The question whether an undertaking constitutes a contracting authority depends on the circumstances of the case and must be assessed on a case-by-case basis.
Are contracts under a certain value excluded from the scope of procurement law? What are these threshold values?
Even when the value of a contract falls below the relevant EU threshold, EU Treaty-based principles of non-discrimination, equal treatment, transparency, mutual recognition and proportionality apply.
Where the contracting authority considers that a contract is likely to attract cross-border interest it is obliged to publish a sufficiently accessible advertisement to ensure that economic operators in other member states can have access to appropriate information before awarding the contract.
The relevant EU thresholds are:
- Works contracts, concessions for works or services contracts: €5.548million.
- All services concerning social and other specific services: €750,000.
- Supplies and services contracts and design contests for local government: €221,000.
- Supplies and services contracts and design contests for central government: €144,000.
Contracts awarded by contracting authorities operating in the field of defence
- Works: €5.548million.
- Supplies and services: €443,000.
- Works contracts, subsidised works contracts special sectors: €5.548million.
- All services concerning social and other specific services special sectors: €1million.
- All other service contracts, all design contests, subsidised service contracts, all supplies contracts: €443,000.
If the EU thresholds are not exceeded, national procurement legislation may apply. The Proportionality Guide provides guidance on which procurement procedure should be applied if the EU threshold is not exceeded. Relevant considerations are:
- the size of the contract;
- the transaction costs of the contracting authority and economic operators;
- the number of potential economic operators;
- the desired outcome;
- the complexity of contract; and
- the type of contract or sector.
Amendment of concluded contracts
Does the legislation permit the amendment of a concluded contract without a new procurement procedure?
Yes. Contracts and framework agreements may be modified without a new procurement procedure in accordance with Chapter 2.5of the DPPA (articles 2.163a-2.163g), in any of the following cases:
- where the value of the modification is below the EU thresholds, 10per cent of the initial contract value for service and supply contracts, and below 15per cent of the initial contract value for works contracts;
- where the modifications have been provided for in the initial procurement documents in clear, precise and unequivocal review clauses;
- for additional works, services or supplies by the original contractor that have become necessary and that were not included in the initial procurement;
- the need for modification has been brought about by circumstances which a diligent contracting authority could not foresee;
- where a new contractor replaces the one to which the contracting authority had initially awarded the contract; or
- where a modification of a contract or a framework agreement does not render the contract materially different in character from the one initially concluded.
Has there been any case law clarifying the application of the legislation in relation to amendments to concluded contracts?
The ECJ ruled in various judgments on the admissibility of modifications of concluded contracts, without a new procurement procedure (eg, Succhi di Frutta (C-496/99); Commission v Italy (Case C-340/02); Pressetext (C-454/06); Wall (C-91/08) and Commission v Germany (C-160/08). Article 72of Directive 2014/24/EU is implemented in Chapter 2.5of the DPPA and can be considered as the codification of these judgments.
In which circumstances do privatisations require a procurement procedure?
There are no specific rules for privatisations. It follows from Recital 6of Directive 2014/24/EU that the Directive should not deal with the liberalisation of services of general economic interest, reserved to public or private entities, or with the privatisation of public entities providing services.
In which circumstances does the setting up of a public-private partnership (PPP) require a procurement procedure?
There are no specific rules for the selection of private parties in PPP projects. Whether a public procurement procedure must be followed must be assessed on a case-by-case basis.
Advertisement and selection
In which publications must regulated procurement contracts be advertised?
Contracts that exceed the EU thresholds must be advertised in the Official Journal of the EU and the Tenders Electronic Daily website. The DPPA also requires that the procurement contracts are advertised on the Dutch electronic publication system, TenderNed.
Are there limitations on the ability of contracting authorities to set criteria or other conditions to assess whether an interested party is qualified to participate in a tender procedure?
Yes, there are limitations on the ability of contracting authorities to set criteria or other conditions to assess whether an interested party is qualified to participate in a tender procedure.
Overly demanding requirements concerning economic and financial capacity frequently constitute an unjustified obstacle to the involvement of small and medium-sized enterprises (SMEs) in public procurement. Any such requirements should be related and proportionate to the subject matter of the contract. In particular, contracting authorities are not normally allowed to require economic operators to have a minimum turnover that would be disproportionate to the subject matter of the contract; the requirement should normally not exceed, at the most, twice the estimated contract value. However, in duly justified circumstances, it should be possible to apply higher requirements. Such circumstances might relate to the high risks attached to the performance of the contract or the fact that its timely and correct performance is critical, for instance because it constitutes a necessary preliminary stage for the performance of other contracts.
Requirements must be limited to economic and financial standing, technical ability and/or professional ability. The grounds for exclusion (both facultative and mandatory) are specified in the DPPA.
The Proportionality Guide further elaborates on the proportionality of requirements to meet minimum capacity levels.
Is it possible to limit the number of bidders that can participate in a tender procedure?
Yes, it is possible to limit the number of bidders that can participate in a tender procedure. In restricted procedures, competitive dialogues, competitive procedures with negotiation and innovation partnerships, contracting authorities may limit the number of suitable candidates they will invite, provided that a sufficient number of suitable candidates are available.
The contracting authorities shall indicate in the contract notice the objective and non-discriminatory criteria or rules they intend to apply, the minimum number of candidates they intend to invite and, where appropriate, the maximum number. For the restricted procedure at least five bidders must be invited, and for the competitive dialogues, competitive procedures with negotiation and innovation partnerships, at least three bidders must be invited.
Regaining status following exclusion
How can a bidder that would have to be excluded from a tender procedure because of past irregularities regain the status of a suitable and reliable bidder? Is the concept of ‘self-cleaning’ an established and recognised way of regaining suitability and reliability?
Any economic operator that is excluded from a tender procedure because of past irregularities may provide evidence to the effect that measures taken by the economic operator are sufficient to demonstrate its reliability, despite the existence of a relevant ground for exclusion. If such evidence is considered as sufficient, the economic operator concerned shall not be excluded from the procurement procedure.
For this purpose, the economic operator shall prove that it has paid or undertaken to pay compensation in respect of any damage caused by the criminal offence or misconduct, clarified the facts and circumstances in a comprehensive manner by actively collaborating with the investigating authorities and taken concrete technical, organisational and personnel measures that are appropriate to prevent further criminal offences or misconduct.
The measures taken by the economic operators shall be evaluated taking into account the gravity and particular circumstances of the criminal offence or misconduct. Where the measures are considered to be insufficient, the economic operator shall receive a statement of the reasons for that decision.
The procurement procedures
Does the relevant legislation specifically state or restate the fundamental principles for tender procedures: equal treatment, transparency and competition?
The DPPA specifically states the fundamental principles of equal treatment and transparency. The principle of effective competition is referred to throughout the DPPA, for example by stating that the design of the procurement shall not be made with the intention of excluding it from the scope of the DPPA or of artificially narrowing competition.
In the case Succhi di Frutta (C-496/99), the ECJ ruled that the principle of equal treatment aims to promote the development of healthy and effective competition between undertakings taking part in a public procurement procedure.
Independence and impartiality
Does the relevant legislation or the case law require the contracting authority to be independent and impartial?
Yes. It follows from (new) article 1.10b DPPA that contracting authorities shall take appropriate measures to effectively prevent, identify and remedy conflicts of interest arising in the conduct of procurement procedures, so as to avoid any distortion of competition and to ensure equal treatment of all economic operators.
The concept of conflicts of interest shall at least cover any situation where staff members of the contracting authority, or of a procurement service provider acting on behalf of the contracting authority, who is involved in the conduct of the procurement procedure or may influence the outcome of that procedure have, directly or indirectly, a financial, economic or other personal interest which might be perceived to compromise their impartiality and independence in the context of the procurement procedure.
Conflicts of interest
How are conflicts of interest dealt with?
Article 1.10b DPPA stipulates that contracting authorities shall take appropriate measures to effectively prevent, identify and remedy conflicts of interest arising in the conduct of procurement procedures so as to avoid any distortion of competition and to ensure equal treatment of all economic operators. Contracting authorities can take appropriate measures by, for example, implementing a code of conduct in the event of a conflict of interests.
A conflict of interest can ultimately result in an invalid procurement procedure or the exclusion of an economic operator.
Bidder involvement in preparation
How is the involvement of a bidder in the preparation of a tender procedure dealt with?
Where a candidate or tenderer or an undertaking related to a candidate or tenderer has advised the contracting authority or has otherwise been involved in the preparation of the procurement procedure, the contracting authority shall take appropriate measures to ensure that competition is not distorted by the participation of that candidate or tenderer.
Such measures shall include the communication to the other candidates and tenderers of relevant information exchanged in the context of or resulting from the involvement of the candidate or tenderer in the preparation of the procurement procedure and the fixing of adequate time limits for the receipt of tenders. The candidate or tenderer concerned shall only be excluded from the procedure where there are no other means to ensure compliance with the duty to observe the principle of equal treatment.
Prior to any such exclusion, candidates or tenderers shall be given the opportunity to prove that their involvement in preparing the procurement procedure is not capable of distorting competition.
What is the prevailing type of procurement procedure used by contracting authorities?
In principle, open or restricted procedures are used by contracting authorities. Under specific circumstances the competitive dialogue, competitive procedure with negotiation, innovation partnership or the negotiated procedure without publication can be applied. With regard to special sector procurement procedures, the negotiated procedure is most commonly used.
Separate bids in one procedure
Can related bidders submit separate bids in one procurement procedure?
The case law of the ECJ (Asitur, C-538/07) disallows an:
... absolute prohibition on simultaneous and competing participation in the same tendering procedure by undertakings linked by a relationship of control or affiliated to one another, without allowing them an opportunity to demonstrate that that relationship did not influence their conduct in the course of that tendering procedure...
This implies that economic operators must be given an opportunity to demonstrate that, in their case, there is no real risk of occurrence of practices capable of jeopardising transparency and distorting competition between tenderers.
Negotiations with bidders
Is the use of procedures involving negotiations with bidders subject to any special conditions?
Yes, the use of procedures involving negotiations with bidders is subject to special conditions. The competitive dialogue, the competitive procedure with negotiation, and the negotiated procedure with prior publication, are all subject to special conditions.
A competitive procedure with negotiation or a competitive dialogue can be applied if:
- the needs of the contracting authority cannot be met without adaptation of readily available solutions;
- it includes design or innovative solutions;
- the contract cannot be awarded without prior negotiations; or
- the technical specifications cannot be established with sufficient precision.
These procedures can also be applied if only irregular or unacceptable tenders are submitted in response to an open or restricted procedure.
The negotiated procedure without publication can only be applied in accordance with the criteria stipulated in section 220.127.116.11DPPA. This procedure can, for example, be used in the event that no requests to participate or no suitable requests to participate have been submitted in response to an open procedure or a restricted procedure, or if the aim of the procurement is the creation or acquisition of a unique work of art or artistic performance.
If the legislation provides for more than one procedure that permits negotiations with bidders, which one is used more regularly in practice and why?
The competitive dialogue is commonly used for complex infrastructure projects or information technology projects. This procedure allows the contracting authority and economic operator to discuss the best solution for the contracting authority. It is particularly useful if there are no easy solutions for the need of a contracting authority, (eg, a design or innovative solution).
What are the requirements for the conclusion of a framework agreement?
Contracting authorities may conclude framework agreements, provided that they apply the procedures provided for in the DPPA. The term of a framework agreement shall not exceed four years, save in exceptional cases duly justified, in particular by the subject of the framework agreement.
The procedures in relation to framework agreements may be applied only between those contracting authorities clearly identified for this purpose in the call for competition or the invitation to confirm interest and those economic operators party to the framework agreement as concluded. The specific requirements for the conclusion of a framework agreement depend on whether the framework agreement is concluded with a single economic operator or with multiple economic operators. In the event of a single economic operator the criteria of article 2.142DPPA must be complied with. In the event of multiple economic operators, article 2.143DPPA is applicable.
May a framework agreement with several suppliers be concluded?
A framework agreement may be concluded with several suppliers (article 2.46and 2.47DPPA). If the value of the purchases that can be made under the framework agreement exceeds the EU threshold, the contracting authority must launch a European procurement procedure.
Changing members of a bidding consortium
Under which conditions may the members of a bidding consortium be changed in the course of a procurement procedure?
There are no specific rules with regard to changing the members of a bidding consortium because of, for example, insolvency, a merger or a spin-off, as long as the principle of non-discrimination is honoured. In practice, contracting authorities often prohibit changes in the members of bidding consortia in the tender documents.
Participation of small and medium-sized enterprises
Are there specific mechanisms to further the participation of small and medium-sized enterprises in the procurement procedure? Are there any rules on the division of a contract into lots? Are there rules or is there case law limiting the number of lots single bidders can be awarded?
As a general principle in public procurement, contracting authorities are not allowed to favour SMEs. To further the participation of SMEs (within the legal limits) contracting authorities can limit the (amount of) requirements. Also, contracting authorities can try to lower the costs and difficulty of the procurement procedure in order to minimise the administrative costs for SMEs (eg, allowing the use of ‘self-certification’ to assess whether the bidder meets the bid’s requirements).
Further, contracting authorities should not bundle public contracts so that SMEs cannot fulfil the requirements on their own. Public authorities are obliged to divide a contract into lots and may only deviate from this rule in the event that such a division is not considered to be suitable for that specific public contract.
There are no specific rules limiting the maximum or minimum amount of lots single bidders can be awarded.
What are the requirements for the admissibility of variant bids?
A contracting authority can allow or ask bidders to offer different solutions in the same procedure. The contracting authority must explicitly state the possibility of variant bids in the publication of a contract notice. In the tender documents, the contracting authority further determines the criteria for variant bids. Variant bids must be connected to the subject matter of the contract.
Must a contracting authority take variant bids into account?
A contracting authority can allow variant bids or can ask explicitly for variant bids. The contracting authority will only take those variant bids into account that meet the requirements set out in the tender documents.
Changes to tender specifications
What are the consequences if bidders change the tender specifications or submit their own standard terms of business?
The contracting authority must exclude bids that change the tender’s specifications. This also applies when bidders submit their own standard terms of business, if those terms conflict with the tender requirements. A particular procedure, such as the negotiated procedure, can allow companies to submit changes.
What are the award criteria provided for in the relevant legislation?
In the Netherlands, contracting authorities may choose from three award criteria:
(i) best quality-price combination;
(ii) lowest price using a cost-effectiveness approach (life cycle costs or total cost of ownership); or
(iii) lowest price.
Contracting authorities must publish the award criteria (including weighting factors) in the publication of a contract notice. The choice for criteria (ii) and (iii) must be substantiated in the tender documents. Published award (sub)criteria must be transparent and proportional. The criteria cannot be changed after publishing.
Abnormally low bids
What constitutes an ‘abnormally low’ bid?
The DPPA states in article 2.116that it must be determined whether the bid is abnormally low in respect of the works, supplies or services that need to be performed. To establish whether a low bid constitutes an abnormally low bid, three methods can be used:
- the relative method;
- the absolute method; or
- a combination of both the relative and absolute methods.
The relative method looks at the difference between the winning bid and the average price of the bids. In order to value the outcome of this method and to avoid manipulative bids, there must be a minimum number of bidders. The absolute method looks at the difference between the winning bid and the estimated value of the contract. For this method, it is key that the estimated value is correct based on information from the relevant market. The two methods can also be combined in order to establish an abnormally low bid.
What is the required process for dealing with abnormally low bids?
Before dismissing an abnormally low bid, the common procedure is to ask the bidder for a clarification of the bid. The contracting authority can ask for clarification through questions or in a meeting. A clarification cannot lead to an amendment of the bid. When the bid is dismissed as abnormally low, a new winner can be established.
Which authorities may rule on review applications? Is it possible to appeal against review decisions and, if so, how?
In the Netherlands, there is no specialised court for procurement cases. Civil courts may rule on claims for infringements of public procurement law. The competent court is the court of the place where the contracting authority resides. Parties may also choose to submit a dispute to arbitration.
If more than one authority may rule on a review application, do these authorities have the power to grant different remedies?
Most public procurement litigation is conducted in interim procedures. Given the nature of these procedures, the measures are provisional. Depending on whether an agreement has been concluded between parties, the remedies can differ. In interim procedures it is not possible to have a contract annulled by the court nor is it possible to claim damages (asking for an advance is possible). This can be claimed in regular proceedings.
Timeframe and admissibility requirements
How long do administrative or judicial proceedings for the review of procurement decisions generally take?
The duration of interim procedures is approximately one or two months. Regular proceedings may take up to 18months.
What are the admissibility requirements?
With respect to interim procedures, the Dutch Code of Civil Procedure applies and requires a plaintiff to have sufficient and urgent interest in the matter.
What are the time limits in which applications for review of a procurement decision must be made?
A bidder can successfully ask for suspension of a procurement procedure of review of an award decision in interim procedures within 20days of the announcement of the winner (Alcatel period; article 2.127DPPA). The deadline for appeal against an interim judgment is four weeks.
Does an application for review have an automatic suspensive effect blocking the continuation of the procurement procedure or the conclusion of the contract?
An application for review before civil courts does not generally have an automatic suspensive effect, blocking the continuation of the procurement procedure. However, the plaintiff can request a suspension of a pending procurement.
Interim procedures do have a suspensive effect on the conclusion of the contract. Article 2.131DPPA explicitly states that a contract may not be concluded during the Alcatel period nor while interim procedures are pending and the court has not yet ruled on the request for interim measures.
Approximately what percentage of applications for the lifting of an automatic suspension are successful in a typical year?
We are not aware of any official statistics relating to the percentage of applications for successfully lifting an automatic suspension in a typical year.
Notification of unsuccessful bidders
Must unsuccessful bidders be notified before the contract with the successful bidder is concluded and, if so, when?
The contracting authority must notify all bidders. After this formal notification the Alcatel period commences, during which the contracting authority may not conclude a contract with the winning party.
Access to procurement file
Is access to the procurement file granted to an applicant?
Contracting authorities must make the tender documents available to applicants free of charge (article 1.21DPPA). Tender documents are defined in the DPPA as all documents submitted to the procedure by the contracting authority. The DPPA does not explicitly grant access to the procurement file but states that, without prejudice to the provisions of the Act, the contracting authority shall not disclose information that has been provided by a company as confidential information (article 2.57DPPA).
Is it customary for disadvantaged bidders to file review applications?
It is customary for disadvantaged bidders to take legal action against contracting authorities. The Dutch courts deal with approximately 200review applications each year.
Violations of procurement law
If a violation of procurement law is established in review proceedings, can disadvantaged bidders claim damages?
A violation of procurement law constitutes a wrongful act under Dutch civil law. Disadvantaged bidders can claim damages in regular proceedings (see question 34). The damages can entail a claim for expenditure incurred by the plaintiff or a claim for the loss of profit. In the latter case, the plaintiff must prove that the contract would have been concluded with them, if the contracting authority had not violated procurement rules.
May a concluded contract be cancelled or terminated following a review application of an unsuccessful bidder if the procurement procedure that led to its conclusion violated procurement law?
A violation of procurement law does not result in the concluded contract being void. However, interested parties may request a court to annul the agreement within six months after the contract was awarded. In some cases a contracting authority may be ordered by the court not to execute the contract or to terminate the contract.
Is legal protection available to parties interested in the contract in case of an award without any procurement procedure?
In the event that a contract is wrongfully awarded without any procurement procedure, parties can take legal action and request a court order compelling the contracting authority to follow a public procurement procedure. In the event that a contract has already been concluded, parties can request a court order to terminate the agreement and possibly claim damages.
What are the typical costs of making an application for the review of a procurement decision?
The fee for a judicial complaint can be up to €3,903, depending on the type of procedure and the value of the matter. As civil courts rule on claims for infringements of public procurement law, objectors need to engage a lawyer to have the matter examined and argued before a court. It is very difficult to estimate the total costs involved in the litigation proceedings, as this differs strongly from case to case and also depends on whether a party appeals or not, but it can be costly.