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EU Purchasing Authorities Struggle With Cross-Border Interest Regulations

Dr Andrea Sundstrand is the subject of the fifth edition of Dr Pedro Telles’ weekly public procurement podcast, in which the two discuss how to deal with the cross-border interest test in EU procurement. Dr Sundstrand works at Stockholm University, is an expert lawyer in public procurement, and recently founded the Procurement Law Journal.

She discusses the legislative difficulties that arise from situations involving EU procurement thresholds and cross-border interest. Dr Sundstrand explains that EU laws primarily regulate dealings between member states, while issues within one member state aren’t as much of a priority. In the context of public procurement, there is the perception that contracts with a value above the set EU financial thresholds are covered by EU law, but ones below may be governed by national laws. Dr Sundstrand says this can be a problem in itself, but that contracting authorities could also be caught out if there is a cross-border interest in a below-threshold contract.

A few recent cases have prompted the European Court of Justice to state that even public contracts below procurement thresholds may be subject to EU primary law, as long as there is interest from suppliers in other member states. These may include situations where the contracting authority is close to a border, or if the contract would normally receive offers from other countries, for specific goods for example.

According to Dr Sundstrand, this exception has made the process complicated for contracting authorities, who must decide in advance whether the contract would be of interest to foreign suppliers. Deciding a contract would generate cross-border interest would mean further advertising costs and having to put efficient remedies in place for aggrieved suppliers. Failing to do the latter would violate EU law.

As well as having to make a difficult judgement call, some contracting authorities may not be used to cross-border interest procurements and EU law. Dr Sundstrand says that while some countries rigorously regulate all below-threshold contracts in order to ensure broader competition, others may not. In the podcast, Dr Sundstrand goes into further detail on how Sweden approaches this particular issue.

A lack of below-threshold regulation is a problem in itself, she says, as contracts may be awarded unfairly. And while a cross-border interest would ensure competition, contracting authorities and suppliers could be tripped up if they don’t fully understand what regulation to follow. Dr Sundstrand says she has no obvious solution to the issue, but that lowering thresholds could improve the system. However, she admits that even this wouldn’t be able to cover all public contracts.

It is all a bit of a “chicken and egg” situation really in our opinion. How can you possibly know whether a contract might stimulate cross-border interest, unless you advertise it widely? But then if you do advertise everything widely, there is not much point having thresholds in the first place and we might just as well say “everything should be advertised”. Perhaps the solution is some single EU portal where every contract over perhaps 10,000 Euros would be advertised? But that raises other issues, some practical and some philosophical – let’s leave those for another day.

Anyway, back to the Telles interview. As well as talking about cross-border procurement, Dr Sundstrand also discusses the Procurement Law Journal she founded in 2014. She says the journal has been an unexpected success, and has managed to attract many subscribers including the Swedish Government, Parliament and High Administrative Court. The journal focuses on procurement in Nordic and Baltic countries, with researchers from Sweden, Estonia, Finland and Denmark. She also hopes to eventually include researchers from Norway and Iceland as well.

The journal focuses on practical procurement issues faced in these countries. Last year the journal held a conference, which invited researchers from Nordic countries to come together to discuss and share research that may help public procurement issues in the region. Dr Sundstrand hopes that the conference could become a regular event.

For more information about the Procurement Law Journal, which publishes articles in both Swedish and English, have a listen to the fifth episode of the Public Procurement Podcast – another interesting interview from Dr Telles!