Regulaton & Policy
Do EU Procurement Thresholds and Inconsistent Court Rulings Overcomplicate the Cross-Border Interest Test?  

In the sixth episode of Dr Pedro Telles’ Public Procurement Podcasts, guest expert Piotr Bogdanowicz discusses how the EU deals with cross-border interest in public procurement. Mr Bogdanowicz is an assistant professor in European law at the University of Warsaw, but is also a legal adviser and has authored more than 40 articles on European Union law and public law. The subject of the podcast is in a similar area to that of the previous PPP episode, which we wrote about here, and primarily focuses on the complex cross-border interest test created by the Court of Justice.

Mr Bogdanowicz begins by explaining that cross-border interest is important in EU law because ‘not dealing with it’ would result in a “purely internal situation,” limiting the scope of EU public procurement law. While public contracts with a value above certain EU thresholds must follow EU procurement laws and be put out to tender to companies from other states, there are different rules for contracts below the thresholds. If the contract generates “cross-border interest,” then the public authority should follow EU laws; but the problem is defining what constitutes as cross-border interest and how to know beforehand whether the contract will generate it.

According to Mr Bogdanowicz, the problem stems from the fact that the cross-border interest rules are not written in the secondary law, in directives, but are created by the Court of Justice. However, judgements delivered by the Court of Justice regarding cross-border interests are often inconsistent. There are many factors to take into account when considering whether there may be cross-border interest, including the value of the contract, where the goods or services will be delivered, and the characteristics of the market. Given the number of factors involved, Mr Bogdanowicz says a court may deliver different judgements despite very similar situations, such as the cases of Comune di Ancona and Belgacom.

Dr Pedro Telles agrees and argues that because the Court of Justice produces slightly different rulings each time, this makes it difficult for petitioners who want to apply public procurement rules or at least the principles to be sure they are doing the right thing. Dr Telles adds that because of this, contractors must now consider “hypothetical analogies or theoretical scenarios” before deciding whether there may be cross-border interest and whether they must comply with EU principles. Contractors are then caught up in a catch-22 situation, he says, because they may not know until they launch a tender whether it will generate cross-border interest.

Mr Bogdanowicz says that the basis for these thresholds is the assumption that contracts above threshold value would be of automatic interest to contractors from other member states. However, just because a contract is above the threshold doesn’t mean it will have cross-border interest, and similarly a contract below the threshold may have cross-border interest. His point is to question whether thresholds are actually a good factor in determining whether cross-border interest exists. A potential solution could be to leave the decision on what constitutes cross-border interest to national authorities. They should then decide whether to cut thresholds to the very minimum or whether to apply a quantitative test. Although this would be in line with the principle of subsidiarity, Mr Bogdanowicz admits that this wouldn’t resolve the question of certainty and may result in different laws in each member state.

Another potential but radical solution, proposed by Dr Telles, would be to cut all thresholds to a minimum and open a procurement market for almost all procurement cases. While Mr Bogdanowicz agrees with the approach in general, he believes that inexperienced procurement markets may struggle with it. In countries such as Poland, procedures for below-threshold contracts are easier and more flexible, which benefits contractors. Contractors may be reluctant to follow strict procedures set out in the EU Directives.

As well as cross-border interest, Mr Bogdanowicz discusses the nature of his procurement work and the challenge that comes with working both in academia and as a lawyer. He also says that the next big “discussion” for EU public procurement should be the implications of the Transatlantic Trade and Investment Partnership (TTIP). To hear Mr Bogdanowicz’s insightful views on the challenges that TTIP may pose for EU public procurement, see the sixth episode of the podcast here.