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Public procurement directive strengthens rights of rejected bidders

Ten day 'standstill period' allows challenges

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A directive has been passed that aims to encourage more businesses to bid for public contracts anywhere in the EU by giving them stronger rights of challenge where they consider that a public authority has awarded a contract unfairly.

The new law was proposed by the European Commission and adopted by the Council of Ministers and European Parliament on Thursday. It provides that public authorities will need to wait for at least 10 days after deciding who has won a contract before the contract can actually be signed. This "standstill period" is designed to give unsuccessful bidders time to challenge the decision.

If this standstill period has not been respected, the directive requires national courts to set aside a signed contract, by rendering the contract ineffective. National courts will also be able to render public contracts ineffective if they have been illegally awarded without transparency and prior competitive tendering.

Public procurement accounts for some 16 per cent of EU GDP, according to the commission.

Internal Market and Services Commissioner Charlie McCreevy said: "I am pleased that this directive has been adopted so rapidly. We need effective procedures for seeking review in all EU member states in order to make sure that public contracts ultimately go to the company which has made the best offer. By strengthening national review procedures in line with this Directive, businesses will have stronger incentives to bid for public contracts anywhere in the EU."

The directive will soon be published in the EU's Official Journal. EU Member States will then have 24 months to implement it in their national laws.

See: Commission info about the directive

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OUT-LAW.COM is part of international law firm Pinsent Masons.

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