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18 March 20213 minute read

Public procurement: The EC publishes notice to fight collusion and provides guidance on grounds for exclusion

The European Commission published a notice, on 15 March 2021, for contracting authorities on how to deal with collusion or “bid rigging” in public procurement.

The Commission refers to collusion as a “recurring phenomenon” in public procurement markets, including in key economic sectors such as construction, IT or health. Emergencies, such as the COVID-19 pandemic, are a seedbed for bid rigging practices. The public authorities’ urgent need to procure in a short timeframe large quantities of supplies and services for their health systems increases the risk of collusion among some economic operators, who may try to take advantage of the emergency and artificially restrict competition in order to maximise their gains at the expense of public finances.

Challenges in detecting collusion

The Commission recognises the challenges for national authorities to detect and adequately address cases of collusion in public procurement. Many cases remain undetected and hence, unprosecuted. Long term collusive schemes may even become part of “doing business” as economic operators are tempted to participate in such schemes in order to “guarantee” their share of the market. In that regard, the Commission indicates several possible reasons why contracting authorities have difficulties in detecting collusion when carrying out procurement procedures:

  • lack of properly trained and experienced staff capable of detecting collusion;
  • main focus of procurement staff is on ensuring that the procedure meets the basic procedural and legal requirements and is completed on time;
  • staff is not fully aware of the available means to react against collusion;
  • the prospect of delays in the award procedure may dissuade staff from dealing effectively with suspected cases of collusion.
EC notice addresses some challenges

The purpose of the Notice is to remedy these difficulties by deploying tools (a work in progress) which aim at building capacity with the contracting authorities to effectively incorporate methods to deter, detect and address collusion before the award procedure is concluded.

The Commission emphasises on national authorities to take measures to:

  • incentivise staff to actively detect, address and report possible cases of collusion;
  • organise training courses and awareness-raising events for staff;
  • focus on economic sectors that are considered sensitive.

The tools must, furthermore, foster cooperation between the national central procurement and competition authorities. In that regard, the Commission builds further on its 2017 Communication titled “Making public procurement work in and for Europe” (COM(2017)572). In this communication the Commission announced its intention to develop tools and initiatives to minimise the risks of collusive behaviors in procurement markets.

Guidance for contracting authorities

As an annex to the Notice, a handy, concise, and ready-to-use guidance for national authorities and procurement staff is included on how to:

  • design award procedures in a way that would deter collusion between tenderers (Section 2 of the Annex).
  • detect potential collusion when evaluating tenders (Section 3 of the Annex) and
  • react to such suspected collusion (Section 4 of the Annex).

Finally, the Notice also sets out the European Commission’s guidance on how to best use the EU public procurement directives to exclude tenderers in cases where there are sufficiently plausible indications of collusion.

Please do not hesitate to contact the authors for further information. DLA Piper’s public procurement lawyers remain at all times available to assist and train contracting authorities’ staff on detecting and addressing collusion in procurement procedures.