The Scottish Government

1. This Directive applies to contracts referred to in Directive 2004/18/ EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, unless such contracts are excluded in accordance with Articles 10 to 18 of that Directive.

Contracts within the meaning of this Directive include public contracts, framework agreements, public works concessions and dynamic purchasing systems.

Implemented in regulations 32(1) and 47(16) .

Member States shall take the measures necessary to ensure that, as regards contracts falling within the scope of Directive 2004/18/ EC, decisions taken by the contracting authorities may be reviewed effectively and, in particular, as rapidly as possible in accordance with the conditions set out in Articles 2 to 2f of this Directive, on the grounds that such decisions have infringed Community law in the field of public procurement or national rules transposing that law.

Implemented in regulation 47, and in particular paragraph(10)(a).

2. Member States shall ensure that there is no discrimination between undertakings claiming harm in the context of a procedure for the award of a contract as a result of the distinction made by this Directive between national rules implementing Community law and other national rules.

No implementation required - there are no national procurement rules in Scots law.

3. Member States shall ensure that the review procedures are available, under detailed rules which the Member States may establish, at least to any person having or having had an interest in obtaining a particular contract and who has been or risks being harmed by an alleged infringement.

Already implemented - regulation 47(6), read with existing regulations 2(1) and 4.

4. Member States may require that the person wishing to use a review procedure has notified the contracting authority of the alleged infringement and of his intention to seek review, provided that this does not affect the standstill period in accordance with Article 2a(2) or any other time limits for applying for review in accordance with Article 2c.

Already implemented - regulation 47(7)(a).

5. Member States may require that the person concerned first seek review with the contracting authority. In that case, Member States shall ensure that the submission of such an application for review results in immediate suspension of the possibility to conclude the contract.

We propose not to implement Article 1(5).

Member States shall decide on the appropriate means of communication, including fax or electronic means, to be used for the application for review provided for in the first subparagraph.

Some of the respondents to the first consultation believed that requiring applicants to first seek review with the contracting authority would encourage parties to resolve disputes quickly and without the need for costly litigation. However, others questioned the need for such a review, believing that it could add significantly to the timetable for awarding contracts and might lead to frivolous review requests.

The suspension referred to in the first subparagraph shall not end before the expiry of a period of at least 10 calendar days with effect from the day following the date on which the contracting authority has sent a reply if fax or electronic means are used, or, if other means of communication are used, before the expiry of either at least 15 calendar days with effect from the day following the date on which the contracting authority has sent a reply, or at least 10 calendar days with effect from the day following the date of the receipt of a reply.

On balance, we believe that an additional review process could potentially lead to greater delays, risks and costs and that Article 1(5) should therefore not be implemented.

1. Member States shall ensure that the measures taken concerning the review procedures specified in Article 1 include provision for powers to:

(a) take, at the earliest opportunity and by way of interlocutory procedures, interim measures with the aim of correcting the alleged infringement or preventing further damage to the interests concerned, including measures to suspend or to ensure the suspension of the procedure for the award of a public contract or the implementation of any decision taken by the contracting authority;

(b) either set aside or ensure the setting aside of decisions taken unlawfully, including the removal of discriminatory technical, economic or financial specifications in the invitation to tender, the contract documents or in any other document relating to the contract award procedure;

(c) award damages to persons harmed by an infringement.

Already implemented - new regulation 47(9) (existing regulation 47(8)).

2. The powers specified in paragraph 1 and Articles 2d and 2e may be conferred on separate bodies responsible for different aspects of the review procedure.

No implementation required - the Scottish Courts are responsible for all aspects of the review procedure.

3. When a body of first instance, which is independent of the contracting authority, reviews a contract award decision, Member States shall ensure that the contracting authority cannot conclude the contract before the review body has made a decision on the application either for interim measures or for review. The suspension shall end no earlier than the expiry of the standstill period referred to in Article 2a(2) and Article 2d(4) and (5).

Implemented in regulation 47(15).

4. Except where provided for in paragraph 3 and Article 1(5), review procedures need not necessarily have an automatic suspensive effect on the contract award procedures to which they relate.

No implementation required.

5. Member States may provide that the body responsible for review procedures may take into account the probable consequences of interim measures for all interests likely to be harmed, as well as the public interest, and may decide not to grant such measures when their negative consequences could exceed their benefits.

Implemented in regulation 47(10).

A decision not to grant interim measures shall not prejudice any other claim of the person seeking such measures.

6. Member States may provide that where damages are claimed on the grounds that a decision was taken unlawfully, the contested decision must first be set aside by a body having the necessary powers.

Not to be implemented. Implementation of this provision would require the Court to set aside a contested decision before considering a claim for damages, which we believe would be unnecessarily bureaucratic.

7. Except where provided for in Articles 2d to 2f, the effects of the exercise of the powers referred to in paragraph 1 of this Article on a contract concluded subsequent to its award shall be determined by national law.

Furthermore, except where a decision must be set aside prior to the award of damages, a Member State may provide that, after the conclusion of a contract in accordance with Article 1(5), paragraph 3 of this Article or Articles 2a to 2f, the powers of the body responsible for review procedures shall be limited to awarding damages to any person harmed by an infringement.

Implemented in regulation 47(13).

8. Member States shall ensure that decisions taken by bodies responsible for review procedures can be effectively enforced.

No implementation required.

9. Where bodies responsible for review procedures are not judicial in character, written reasons for their decisions shall always be given. Furthermore, in such a case, provision must be made to guarantee procedures whereby any allegedly illegal measure taken by the review body or any alleged defect in the exercise of the powers conferred on it can be the subject of judicial review or review by another body which is a court or tribunal within the meaning of Article 234 of the Treaty and independent of both the contracting authority and the review body.

Scottish Courts will be responsible for reviewing procedures. Therefore no implementation is required.

The members of such an independent body shall be appointed and leave office under the same conditions as members of the judiciary as regards the authority responsible for their appointment, their period of office, and their removal. At least the President of this independent body shall have the same legal and professional qualifications as members of the judiciary. The independent body shall take its decisions following a procedure in which both sides are heard, and these decisions shall, by means determined by each Member State, be legally binding.

1. The Member States shall ensure that the persons referred to in Article 1(3) have sufficient time for effective review of the contract award decisions taken by contracting authorities, by adopting the necessary provisions respecting the minimum conditions set out in paragraph 2 of this Article and in Article 2c.

2. A contract may not be concluded following the decision to award a contract falling within the scope of Directive 2004/18/ EC before the expiry of a period of at least 10 calendar days with effect from the day following the date on which the contract award decision is sent to the tenderers and candidates concerned if fax or electronic means are used or, if other means of communication are used, before the expiry of a period of either at least 15 calendar days with effect from the day following the date on which the contract award decision is sent to the tenderers and candidates concerned or at least 10 calendar days with effect from the day following the date of the receipt of the contract award decision.

Implemented in regulation 32(3), read with regulation 32(16)(c).

All respondents to the first consultation agreed that electronic communication or fax and therefore the shorter period (10 days) should be regarded as the normal standstill period. The majority of respondents agreed that the minimum timescales specified in the Directive (10 days where the contract award decision is sent by fax or electronic means, 15 days where it is sent by post) are satisfactory.

Article 2a(2) allows Member States to choose the standstill period to be applied if the award decision is sent by post. To ensure legal certainty, we believe that it would be preferable to specify a standstill period of 15 calendar days where communication with at least one economic operator is by post, as implemented in regulation 32(16)(c), although we would be grateful for views on this (see question 2 in Part 3). Note that the application of regulation 2(4) of the Public Contracts (Scotland) Regulations 2006 means that the 10 or 15 day calendar day periods commence on the day following the date on which the contract award decision is sent. This does not need to be re-stated in regulation 32(16)(c).

Under the 2006 Regulations, information must be sent to all interested economic operators. Article 2a(2), however, requires information to be sent only to "tenderers and candidates concerned". The approach taken in the draft regulations is based upon the Scottish Government's previously broader policy of issuing information to all economic operators. However, this is provided as an example only and is not intended to imply that that is our favoured approach (see question 13 in Part 3).

Tenderers shall be deemed to be concerned if they have not yet been definitively excluded. An exclusion is definitive if it has been notified to the tenderers concerned and has either been considered lawful by an independent review body or can no longer be subject to a review procedure.

Implemented in regulation 32(16)(e).

Candidates shall be deemed to be concerned if the contracting authority has not made available information about the rejection of their application before the notification of the contract award decision to the tenderers concerned.

Implemented in regulation 32(16)(b).

The communication of the award decision to each tenderer and candidate concerned shall be accompanied by the following:

- a summary of the relevant reasons as set out in Article 41(2) of Directive 2004/18/ EC, subject to the provisions of Article 41(3) of that Directive, and,

Implemented in regulation 32(2)(d).

- a precise statement of the exact standstill period applicable pursuant to the provisions of national law transposing this paragraph.

Implemented in regulation 32(2)(e).

Member States may provide that the periods referred to in Article 2a(2) of this Directive do not apply in the following cases:

Views submitted by respondents to the first consultation on the implementation of Article 2b were divided. However, having considered all the evidence, we propose to implement all three derogations from the standstill period.

(a) if Directive 2004/18/ EC does not require prior publication of a contract notice in the Official Journal of the European Union;

Implemented in regulation 32(7)(a).

(b) if the only tenderer concerned within the meaning of Article 2a(2) of this Directive is the one who is awarded the contract and there are no candidates concerned;

Implemented in regulation 32(7)(b).

(c) in the case of a contract based on a framework agreement as provided for in Article 32 of Directive 2004/18/ EC and in the case of a specific contract based on a dynamic purchasing system as provided for in Article 33 of that Directive.

Implemented in regulation 32(6)(b). Note that the rules relating to framework agreements are less extensive in the utilities sector, so there is no ground for ineffectiveness relating to call-off rules.

If this derogation is invoked, Member States shall ensure that the contract is ineffective in accordance with Articles 2d and 2f of this Directive where:

Implemented in regulation 48(8). Note that implementation of this derogation means that above threshold contracts, which are awarded under a framework agreement following a mini-competition, may be declared ineffective if the call-off rules are breached. However, contracting authorities can avoid the risk of having the contract declared ineffective by following the voluntary transparency provisions in Article 2d(5) which are implemented in regulation 48(9).

- there is an infringement of the second indent of the second subparagraph of Article 32(4) or of Article 33(5) or (6) of Directive 2004/18/ EC, and,

- the contract value is estimated to be equal to or to exceed the thresholds set out in Article 7 of Directive 2004/18/ EC.

Where a Member State provides that any application for review of a contracting authority's decision taken in the context of, or in relation to, a contract award procedure falling within the scope of Directive 2004/18/ EC must be made before the expiry of a specified period, this period shall be at least 10 calendar days with effect from the day following the date on which the contracting authority's decision is sent to the tenderer or candidate if fax or electronic means are used or, if other means of communication are used, this period shall be either at least 15 calendar days with effect from the day following the date on which the contracting authority's decision is sent to the tenderer or candidate or at least 10 calendar days with effect from the day following the date of the receipt of the contracting authority's decision. The communication of the contracting authority's decision to each tenderer or candidate shall be accompanied by a summary of the relevant reasons. In the case of an application for review concerning decisions referred to in Article 2(1)(b) of this Directive that are not subject to a specific notification, the time period shall be at least 10 calendar days from the date of the publication of the decision concerned.

The Scottish Regulations currently require applicants to commence court proceedings "promptly" and in any event within 3 months unless the Court considers that there is a good reason for extending the period. Respondents to the first consultation considered that the current period for commencing court proceedings should be preserved. This is implemented in regulation 47(7)(b).

Article 2c states that applicants must have at least 10 or 15 days (depending on whether the contract award decision is communicated by fax or electronic means or by post) within which to commence court proceedings. Regulation 47(8) clarifies that the requirement for proceedings to be brought "promptly" can never mean less that 10/15 days.

Ineffectiveness

1. Member States shall ensure that a contract is considered ineffective by a review body independent of the contracting authority or that its ineffectiveness is the result of a decision of such a review body in any of the following cases:

(a) if the contracting authority has awarded a contract without prior publication of a contract notice in the Official Journal of the European Union without this being permissible in accordance with Directive 2004/18/ EC;

Implemented in regulation 48(5).

(b) in case of an infringement of Article 1(5), Article 2(3) or Article 2a(2) of this Directive, if this infringement has deprived the tenderer applying for review of the possibility to pursue pre-contractual remedies where such an infringement is combined with an infringement of Directive 2004/18/ EC, if that infringement has affected the chances of the tenderer applying for a review to obtain the contract;

Implemented in regulation 48(7).

(c) in the cases referred to in the second subparagraph of Article 2b(c) of this Directive, if Member States have invoked the derogation from the standstill period for contracts based on a framework agreement and a dynamic purchasing system.

Implemented in regulation 48(8).

2. The consequences of a contract being considered ineffective shall be provided for by national law.

National law may provide for the retroactive cancellation of all contractual obligations or limit the scope of the cancellation to those obligations which still have to be performed. In the latter case, Member States shall provide for the application of other penalties within the meaning of Article 2e(2).

The majority of respondents to the first consultation favoured prospective cancellation of contractual obligations. This is implemented in regulation 48(2). Article 2d(2) requires prospective cancellation to be coupled with alternative penalties. This is implemented in regulation 48(10), which also gives the Court discretion to make orders as to the future position of the parties.

3. Member States may provide that the review body independent of the contracting authority may not consider a contract ineffective, even though it has been awarded illegally on the grounds mentioned in paragraph 1, if the review body finds, after having examined all relevant aspects, that overriding reasons relating to a general interest require that the effects of the contract should be maintained. In this case, Member States shall provide for alternative penalties within the meaning of Article 2e(2), which shall be applied instead.

The majority of respondents to the first consultation agreed that the Court should have discretion not to render a contract ineffective if there are good reasons for the effects of the contract to be maintained. This is implemented in regulations 48(12)-(14). regulation 48(15) provides that where the Court has found that there are good reasons for maintaining the contract, alternative penalties (a fine on the contracting authority or shortening the duration of the contract) must be imposed.

Economic interests in the effectiveness of the contract may only be considered as overriding reasons if in exceptional circumstances ineffectiveness would lead to disproportionate consequences.

However, economic interests directly linked to the contract concerned shall not constitute overriding reasons relating to a general interest. Economic interests directly linked to the contract include, inter alia, the costs resulting from the delay in the execution of the contract, the costs resulting from the launching of a new procurement procedure, the costs resulting from the change of the economic operator performing the contract and the costs of legal obligations resulting from the ineffectiveness.

4. The Member States shall provide that paragraph 1(a) of this Article does not apply where:

- the contracting authority considers that the award of a contract without prior publication of a contract notice in the Official Journal of the European Union is permissible in accordance with Directive 2004/18/ EC,

- the contracting authority has published in the Official Journal of the European Union a notice as described in Article 3a of this Directive expressing its intention to conclude the contract, and,

- the contract has not been concluded before the expiry of a period of at least 10 calendar days with effect from the day following the date of the publication of this notice.

Implemented in regulation 48(6).

5. The Member States shall provide that paragraph 1(c) of this Article does not apply where:

- the contracting authority considers that the award of a contract is in accordance with the second indent of the second subparagraph of Article 32(4) or with Article 33(5) and (6) of Directive 2004/18/ EC,

- the contracting authority has sent a contract award decision, together with a summary of reasons as referred to in the first indent of the fourth subparagraph of Article 2a(2) of this Directive, to the tenderers concerned, and,

- the contract has not been concluded before the expiry of a period of at least 10 calendar days with effect from the day following the date on which the contract award decision is sent to the tenderers concerned if fax or electronic means are used or, if other means of communications are used, before the expiry of a period of either at least 15 calendar days with effect from the day following the date on which the contract award decision is sent to the tenderers concerned or at least 10 calendar days with effect from the day following the date of the receipt of the contract award decision.

Implemented in regulation 48(9).

1. In the case of an infringement of Article 1(5), Article 2(3) or Article 2a(2) which is not covered by Article 2d(1)(b), Member States shall provide for ineffectiveness in accordance with Article 2d(1) to (3), or for alternative penalties. Member States may provide that the review body independent of the contracting authority shall decide, after having assessed all relevant aspects, whether the contract should be considered ineffective or whether alternative penalties should be imposed.

Article 2e requires alternative penalties to be available in certain circumstances:

(i) as an alternative to ineffectiveness, for example where the Court has found that there are good reasons for maintaining the contract or where there has been a breach of the review procedures but no accompanying breach of the main procurement rules;

(ii) as an addition to "prospective" ineffectiveness.

2. Alternative penalties must be effective, proportionate and dissuasive. Alternative penalties shall be:

- the imposition of fines on the contracting authority; or,

- the shortening of the duration of the contract.

On balance, we believe that ineffectiveness should not apply where there has been a breach of the review procedures but no accompanying breach of the main procurement rules. In this situation, alternative penalties (a financial penalty on the contracting authority or shortening the duration of the contract) will be available. This is implemented in regulation 47(11).

Regulation 48(15) provides that alternative penalties will be available where the Court has decided not to render a contract ineffective because there are good reasons for maintaining the contract.

Regulation 48(10) provides that, where an order for ineffectiveness is made, the Court must impose a financial penalty on the contracting authority. In this situation, it would not be meaningful to shorten the duration of the contract (ineffectiveness would already have shortened the contract to the maximum possible extent).

Member States may confer on the review body broad discretion to take into account all the relevant factors, including the seriousness of the infringement, the behaviour of the contracting authority and, in the cases referred to in Article 2d(2), the extent to which the contract remains in force.

In each instance, the draft Regulations specify that the Court must ensure that the penalty is effective, proportionate and dissuasive and must have regard to all relevant factors including the seriousness of the breach, the behaviour of the contracting authority and the extent to which the contract remains in effect.

The award of damages does not constitute an appropriate penalty for the purposes of this paragraph

Implemented in regulation 47(12).

Regulation 47(17) provides that any financial penalty imposed on contracting authorities must be paid into the Scottish Consolidated Fund.

Note that, to avoid any confusion with criminal fines, the terminology used in the draft Regulations is "financial penalty".

1. Member States may provide that the application for review in accordance with Article 2d(1) must be made:

(a) before the expiry of at least 30 calendar days with effect from the day following the date on which:

- the contracting authority published a contract award notice in accordance with Articles 35(4), 36 and 37 of Directive 2004/18/ EC, provided that this notice includes justification of the decision of the contracting authority to award the contract without prior publication of a contract notice in the Official Journal of the European Union, or

- the contracting authority informed the tenderers and candidates concerned of the conclusion of the contract, provided that this information contains a summary of the relevant reasons as set out in Article 41(2) of Directive 2004/18/ EC, subject to the provisions of Article 41(3) of that Directive. This option also applies to the cases referred to in Article 2b(c) of this Directive;

(b) and in any case before the expiry of a period of at least six months with effect from the day following the date of the conclusion of the contract.

The majority of respondents to the first consultation agreed that the minimum time limits for ineffectiveness claims outlined in the Directive should be implemented. These are implemented in regulation 48(3).

2. In all other cases, including applications for a review in accordance with Article 2e(1), the time limits for the application for a review shall be determined by national law, subject to the provisions of Article 2c.

As above, the Scottish Regulations currently require applicants to commence court proceedings "promptly" and in any event within 3 months unless the Court considers that there is a good reason for extending the period. Respondents to the first consultation considered that the current period for commencing court proceedings should be preserved. This is implemented in regulation 47(7)(b).

Article 2c states that applicants must have at least 10 or 15 days (depending on whether the contract award decision is communicated by fax or electronic means or by post) within which to commence court proceedings. Regulation 47(8) clarifies that the requirement for proceedings to be brought "promptly" can never mean less that 10/15 days.

1. The Commission may invoke the procedure provided for in paragraphs 2 to 5 when, prior to a contract being concluded, it considers that a serious infringement of Community law in the field of public procurement has been committed during a contract award procedure falling within the scope of Directive 2004/18/ EC.

No implementation required.

2. The Commission shall notify the Member State concerned of the reasons which have led it to conclude that a serious infringement has been committed and request its correction by appropriate means.

3. Within 21 calendar days of receipt of the notification referred to in paragraph 2, the Member State concerned shall communicate to the Commission:

(a) its confirmation that the infringement has been corrected;

(b) a reasoned submission as to why no correction has been made; or

(c) a notice to the effect that the contract award procedure has been suspended either by the contracting authority on its own initiative or on the basis of the powers specified in Article 2(1)(a).

4. A reasoned submission communicated pursuant to paragraph 3(b) may rely among other matters on the fact that the alleged infringement is already the subject of judicial or other review proceedings or of a review as referred to in Article 2(9). In such a case, the Member State shall inform the Commission of the result of those proceedings as soon as it becomes known.

5. Where notice has been given that a contract award procedure has been suspended in accordance with paragraph 3(c), the Member State shall notify the Commission when the suspension is lifted or another contract procedure relating in whole or in part to the same subject matter is begun. That notification shall confirm that the alleged infringement has been corrected or include a reasoned submission as to why no correction has been made.

The notice referred to in the second indent of Article 2d(4), the format of which shall be adopted by the Commission in accordance with the advisory procedure referred to in Article 3b(2), shall contain the following information:

(a) the name and contact details of the contracting authority;

(b) a description of the object of the contract;

(c) a justification of the decision of the contracting authority to award the contract without prior publication of a contract notice in the Official Journal of the European Union;

(d) the name and contact details of the economic operator in favour of whom a contract award decision has been taken; and

(e) where appropriate, any other information deemed useful by the contracting authority.

Implemented in regulation 48(6)(b). The form of the voluntary notice of intention to award is due to be published in the Official Journal of the European Union.