Public Procurement

EU

Critical Medicines

A proposed Critical Medicines Regulation would provide for the use of public procurement to diversify and support the resilience of supply chains, including through the use of non-price criteria to favour EU production for certain medicines. It would also provide for collaborative procurement between Member States of critical medicines and medicines of common interest. The Commission invites feedback until 2 July 2025.

Defence

A proposed Regulation establishing the European Defence Industry Programme and a framework of measures to ensure the timely availability and supply of defence products has been endorsed by the European Parliament and will now be negotiated with the Council. It includes provision for joint procurement between Member States of defence products.

Green Public Procurement

According to the European Commission’s Working Plan 2025-2030 for the Ecodesign for Sustainable Products Regulation and Energy Labelling Framework Regulation, the Commission will assess the scope to set minimum public procurement requirements for products prioritised in the working plan. Further information on the plan is available here: Commission rolls out plan to boost circular and efficient products in the EU.

Modifying Concessions

German case C-452/23 concerned the extension of concessions for the operation of motorway service areas to include the construction and operation of EV charging stations. Many of the concessions were originally awarded without a tendering procedure in the 1990s to the predecessor of the two operators in question for a maximum period of 40 years, at a time when the predecessors were State-owned. The predecessors were subsequently privatised.

Article 43 of the Concessions Directive provides circumstances in which a concession may be modified without a new award procedure. The circumstance provided by Article 43(1)(c) is where there is a new replacement concessionaire as a consequence of an unequivocal review clause or option in the initial concession documents; universal or partial succession into the position of the initial concessionaire as a result of restructuring etc; or where the contracting authority assumes the main concessionaire’s obligations towards its subcontractors where this is provided for under national legislation.

The CJEU stated that Article 43(1)(c):

• means that a concession may be modified without a new award procedure even where it was initially awarded, without a competitive tendering procedure, to an in-house entity, and the modification of the subject matter of the concession occurs when the concessionaire is no longer an in-house entity;
• does not require the Member State to ensure that the national courts review, indirectly and on application, the lawfulness of the initial award of a concession in the context of an action for annulment of the modification of the concession, where that action is brought after the expiry of the time limit for challenging the initial award, by an operator showing an interest in being awarded solely the part of the concession that is the subject of the modification;
• means that the ‘need for’ modification of a concession has been ‘brought about’, within the meaning of Article 43, if unforeseeable circumstances make it necessary to adapt the initial concession to ensure that proper performance of the concession may continue.

A summary is available in a press release provided by the CJEU.

In-house Exemption

Dutch case C-692-23 concerned Article 12 of the Public Contracts Directive, which provides that contracts awarded to entities controlled by the contracting authority are outside the scope of the Directive where the contracting authority exercises control over the entity similar to the control it exercises over its own departments, and the entity carries out the essential part of its activities for the benefit of the contracting authority.

Article 12(3)(b) provides that a contracting authority that does not exercise control over an entity governed by private or public law may nevertheless award a contract without applying the Directive where certain conditions are fulfilled, including that more than 80% of the entity’s activities are carried out in the performance of tasks entrusted to it by the contracting authority. Article 12(5) sets out criteria for the determination of the 80% threshold. The Dutch Court wished to determine, where the controlled entity is part of a group of undertakings, how the ‘percentage of activities’ is calculated.

Advocate-General Rantos’s Opinion for consideration of the CJEU is that:

• where the percentage of activities is determined on the basis of turnover and the controlled entity is the head of a group for which consolidated accounts are drawn up, it must be assessed on the basis of the consolidated turnover of the group in accordance with Articles 22 and 24 of Directive 2013/34/EU or, insofar as that Directive does not apply, the criteria derived from the concept of ‘undertaking’ derived from EU competition law, and
• for the purposes of determining turnover of the controlled entity in the performance of tasks entrusted to it by the controlling contracting authorities, account must be taken of the turnover achieved from third-party users in markets in which that entity also competes with private operators, provided that it is shown that those tasks have actually been entrusted to it by those contracting authorities.

Modifications of Contracts

In Swedish case C-282/24, a contracting authority concluded framework agreements with two providers of vehicle towing services. They were evaluated on the basis of the lowest price, and awarded on the basis of a fixed price for assignments where the pick-up point was within a 10km radius of a certain location, and an additional price/km outside that radius. The contracting authority later agreed to modify the remuneration without increasing the total value by increasing the radius for which a flat rate of remuneration was paid, as well as the price level.

Article 72(2) of the Public Contracts Directive provides a ground for modifying a contract without a new procurement procedure where the value of the modification is below both: (i) the contract thresholds in Article 4, and (ii) 10% of the initial contract value for service and supply contracts and 15% of the initial contract value for works contracts.

Advocate-General Rantos’s Opinion for consideration of the CJEU is that Article 72(2) means that a modification to the remuneration model in a framework agreement originally awarded on the basis of the criterion of the lowest price offered, whereby the balance between fixed and variable prices is altered and the price levels are adjusted to such an extent that the total contract value does not change to more than a marginal degree, may have the effect of altering the overall nature of the framework agreement only if the modification is likely to entail modifications to the subject matter or type of contract, irrespective of whether such a modification is covered by the broader concept of ‘substantial modifications’ in Article 72(1)(e) and (4).