Internal market rules traditionally aimed at abolishing barriers between Member States. In the context of public procurement legislation, the emphasis was put on the abolition of barriers to access to procurement. Notwithstanding, EU legislation on public procurement matters is usually applied to contracts over a certain threshold only, unless such contracts are of cross-border interest. With the increase of digitalisation in public procurement, the likelihood of a contract having cross-border interest increases, thus rendering EU legislation applicable. This phenomenon constitutes an enlargement of the scope of application of EU law as well as a paradigm on how we need to apply EU law capable to limit the sovereignty of national authorities.
The digitalisation of the internal market
The last set of directives on public contracts constituted a large step towards the modernisation and digitalisation of public procurement, as well as the consolidation of an ongoing trend for the promotion of transparency in public administration. Among the new features introduced by Directive 2014/24/EU, we can outline the introduction of the European Single Procurement Document (ESPD) and the eCertis system. Together with the Virtual Company Dossier (VCD), the digitalisation of public procurement allows economic operators and contracting authorities to have an interoperable system adapted to the conditions and criteria laid down in Directive 2014/24/EU. This set of tools, comprised by the ESPD, eCertis, and VCD, are aimed to enhance communication between tenderers involved in a team as well as to ease the access of contracting authorities to documentation from other member states whilst checking whether economic operators have the necessary technical specifications to participate in a tender.
The use of the ESPD, as well as other electronic means, is included under the sphere of the Internal Market Information system (IMI). Launched in 2008, the IMI constitutes an IT-based information network that links public authorities across the Member States. It enables quick and easy communication. The main features of IMI are the multilingual features that allow public authorities to identify counterparts in other member states; the use of pre-translated questions and forms pulls down potential boundaries concerning administrative procedures, language, and access to information. The implementation of all the aforementioned mechanisms not only enhances the interoperability of public administrations but also simplifies the administrative and language burdens faced by an economic operator willing to participate in public procurement. Because of the above, the digitalisation of the tools used in public procurement can potentially eliminate bureaucratic burdens such as handling physical documentation, allow for shorter deadlines or even language barriers. Digitalisation means therefore that the public procurement market is becoming closer to an internal market not limited by day-to-day bureaucratic barriers.
Cross-border interest and public procurement
Directive 2014/24/EU on public procurement applies to contracts above a pecuniary threshold. For contracts below the threshold, the general principles of EU law apply whenever there is a cross-border interest. From the existence of a cross-border interest and the application of principles such as transparency, derives an obligation for contracting authorities to publish information that enables economic operators to participate in public procurement.
According to the CJEU, a cross-border interest is any circumstance that facilitates an economic operator to have access to a contract notice and submit a tender (C‑95/10, Strong Segurança SA, 17 March 2011, para 35). In other words, this means that the identification of a cross-border interest revolves around assessing the conditions of the contract. This assessment determines to what extent it is worthwhile for an economic operator to engage with the inherent constraints of a cross-border procedure (administrative burdens, language requirements…). Similarly, the CJEU also found that the use of international standards could reveal a cross-border interest as it has considered that they facilitate the provision of cross-border supply contracts.
Notwithstanding the above, the determination of the existence of cross-border interest is the snake that bites its tail. To apply transparency obligations below the thresholds, a public contract must be of cross-border interest. However, without transparency obligations, an economic operator from a different member state will most likely not be aware of the existence of such a contract, to begin with.
Digitalisation of cross-border interest
As briefly addressed above, one of the reasons for the CJEU not to identify the existence of a cross-border interest was the existence of intrinsic bureaucratic and language barriers between member states. However, those difficulties became significantly lesser with the use of digital tools. Directive 2014/24/EU modernised how public procurement was conducted. The use of the ESPD and the eCertis database reduces significantly administrative burdens and language limitations, thus allowing economic operators to engage with contracting authorities more easily.
With the extension of the use of digital tools and ICT systems, not only is it easier for contracting authorities to publish tender notices, but it is also easier for economic operators to reply to them and to understand the requirements governing the procurement process. All in all, there is a paradigm change in which we no longer have to ask which contract is of cross-border interest, but which one is not. However, the extension in the determination of the existence of a cross-border interest brings about a series of issues to be considered.
A paradigm change
When a contract is considered of cross-border interest below the pecuniary thresholds of Directive 2014/24/EU, the CJEU has repeatedly stated that the general principles of EU public procurement law apply, namely transparency, non-discrimination, equal treatment, and proportionality. Consequently, even when Directive 2014/24/EU is not applicable because a contract falls outside its scope, the existence of a cross-border interest and the applicability of EU public procurement law, based on pecuniary values, is outdated: it does not correspond with the reality of the available mechanisms.
Taking as a starting point the definition provided above as well as the examination of the case law from the Court of Justice the only logical conclusion is that, as part of the natural developments of law and technology, European public procurement law must adapt to the changes. Due to the increase in the digitalisation of public procurement, European principles should become automatically applicable to every public procurement contract as the line between purely national contracts and those with cross-border interest blurs.
Based on the definition of cross-border interest provided by the case law, any facilitating element that eases access to information increases the likelihood of having a contract with cross-border interest. Assuming that one of the elements to consider a contract not to have a cross-border interest is indeed the intrinsic bureaucratic challenges associated with cross-border tendering, the increase of digitalisation renders administrations more accessible. Thus, the interaction with a contracting authority via public procurement should reflect that process. Additionally, the mechanisms introduced in Directive 2014/24/EU are directly aimed at increasing transparency and abolishing internal market barriers potentially arising from the difficulty to understand public procurement below the thresholds in different member states.
To sum up, cross-border interest is understood as an element capable of attracting foreign operators despite the intrinsic burdens of engaging in public procurement in another Member State. It is also intended to enable undertakings from another Member State to examine the contract notice and submit a tender. The inclusion of the mandatory use of electronic ESPD and eCertis repository makes a contract likely to automatically have a cross-border interest. The automatic determination of cross-border interest stems from the fact that digital tools enable a tenderer to be aware of the contract as well as to get through bureaucratic challenges and language barriers. This automatic determination of cross-border interest causes a paradigm change in how to apply EU public procurement law.
And now, what?
Since the presence of digitalisation in public procurement and the reliance on tools such as ESPD or VCD is increasing, so does the number of contracts having cross-border interest. Based on the proposed definition of cross-border interest as ‘an element capable to attract foreign operators despite the intrinsic burdens of cross-border procurement and intended to enable undertakings from another Member State to examine the contract notice and submit a tender’, the increased digitalisation of public procurement law renders cross-border interest automatically present.
An automatic determination of the presence of cross-border interest entails that the general principles of EU public procurement law apply to the contract despite its low value. This results in a significant enlargement of European Law thus entering the realm of national sovereignty.
The determination of cross-border interest is by itself the snake that bites its tail: a contract will have cross-border interest when foreign operators can participate, however, for economic operators to participate they need to be made aware of the existence of the contract. The latter will only happen when the contract is published EU-wide. Contracting authorities are, however, only obligated to publish a contract EU-wide when it has cross-border interest. Does the determination of cross-border interest fall under the capacities of a contracting authority to self-organise? And is thus the expansion of digitalisation unintendedly limiting national competences?
Considering that the harmonisation of public procurement law is only intended for contracts above the thresholds the use of cross-border interest as a hinge is bold. True, it is logical that the division between contracts covered by EU law cannot be solely made on the basis of 1 € difference. Notwithstanding, a low-value contract does not have the same significance nor does it need to be safeguarded in the same way as a high-value contract. But when does cross-border interest end?
As part of the expansive effect of EU law an ongoing trend of Europeanization has occurred. Clearly, the more the EU legislative corpus grows the more its roots get entrenched within national law. However, as it can be seen from the effects of cross-border interest, it can affect the daily decision-making capacity of a contracting authority. A decision such as whether to publish a contract EU-wide has consequences. Whereas the publication of a contract – despite its low value – EU wide may entail that EU law is applicable, the lack of publication may be a barrier to the freedom of services.
Before the 2014 Directives, European public procurement legislation differentiated between Part A and Part B services. The rationale was that some services were not of sufficient relevance as to be of cross-border interest, and some sectors were nonetheless too entrenched in national traditions (e.g. legal services) to be effectively capable to have foreign bidders. Therefore, there were two separate pecuniary thresholds where one group of services was considered to be incapable to have cross-border interest whilst the other still had that possibility.
On the one hand, bringing back to life a similar division as the one between A and B regimes below the current thresholds plus expanding it to sectors other than services could be a solution to the issues expressed above. Not only it will provide certainty over the legislation applicable to a contract and the consequences thereof, but it will control the expansion of the spill-over effect in public procurement, at least temporarily. In essence, there could be two different thresholds, one for the directives and another one to distinguish those contracts so minor in value that they cannot be of cross-border interest regardless.
On the other hand, the creation of an ‘in-between’ regime to cover the now-grey area of contracts with an automatic cross-border interest could lead to an increase in cross-border participation. As of right now –although there has been a slight increase in later years- (direct) cross-border participation is low, with lack of access to procurement information, administrative, and language barriers mentioned as main causes. Given the economic significance of public procurement, the lack of cross-border mobility in the sector is paradoxical.
To summarise the above, the expansion in digitalisation has rendered cross-border interest automatically applicable, thus expanding the scope of EU law. Such expansion has the risk to minimise the sovereignty of national authorities, as their margin of discretion is reduced. Nonetheless, we propose that the re-instauration of a light-touch regime could bring some certainty to the determination of cross-border interest and contribute to delimit the expansive effect of the combination between digitalisation and cross-border interest.
Posted by Delia Lucía Martínez Lorenzo (Hasselt University, Belgium and Maastricht University, The Netherlands)
Lucía works as a double PhD candidate at Maastricht and Hasselt Universities under the supervision of Prof. Dr. S. van Garsse (UHasselt/Antwerp University), Prof. Dr. M. Eliantonio (Maastricht University) and Prof. Dr. S. Schoenmaekers (Maastricht University / Open University). Since her incorporation, she has been working on addressing the limitations to the freedom to contract and organise the team in public procurement projects as well as how to reconcile them with the characteristics of the construction sector. She is a registered lawyer and prior to her academic career, she worked as a consultant. In addition to her work experience, Lucía holds a LL.M from Maastricht University (The Netherlands) on European Law – Public Law and Governance, a LL.M from Universidad de Nebrija (Spain) on legal practice and a LL.B with a specialization on public law from Deusto University (Spain).
Suggested citation: DL Martínez Lorenzo, “A Paradigm Change in EU Public Procurement Law: Cross-Border Interest and Digitalisation”, REALaw.blog, available at https://realaw.blog/2021/10/31/649/