Public procurement

The EU Procurement Directives have been implemented into Danish law by governmental orders referring to the Directives. The Directives apply to all procurement procedures initiated after 1 January 2005. The information in the following concerning the procedures set out in the EU Procurement Directives, relates to Directive 2004/18/EC on the coordination of procedures for the granting of public works contracts, public supply contracts and public services contracts. 

 

The procedures of the EU Directives are supplemented by procedures described in the Danish Act on the invitation to tender for certain public and publicly subsidised contracts, Act No. 338 of 18 May 2005 (as later amended) – later referred to as “the Act”. The Act lays down procedures for contracting authorities obtaining tenders for contracts not covered by the EU Directives (e.g. because the threshold values therein are not exceeded).

 

In short, the EU Directives and the Act only applies to procurement procedures initiated by a state authority, a local authority or local government or by a legal entity, which has been established for the specific purpose of meeting needs of public interest and which is financed or controlled by public authorities. Thus, as a principal rule procurement procedures initiated by private parties are not subject to the EU Directives or the Act.

As a principal rule, if a public supply contract or a public services contract entered into by a state authority has a value of more than EUR 133,000, the detailed procurement procedures of the EU Directives must be complied with. If such contract is entered into by a local authority or a local government, the detailed procedures must be complied with if the contract has a value of more than EUR 206,000. With regard to public works contracts, the threshold value is EUR 5,150,000.

 

Denmark has not adopted the EUR currency and therefore the threshold values in EUR are converted into Danish Kroner (DKK). The above mentioned threshold values currently are DKK 991,589; DKK 1,535,844; and DKK 38,396,109.

 

According to the Act, as a general rule, contracting authorities are to invite tenders for public works contracts if the value of the public works contract exceeds DKK 3 million. Secondly, if a public services contract or a public supply contract has a value of more than DKK 500,000 (but less than the threshold values in the EU Directives) the contracting authority must make public the intent to enter into the contract by way of advertisement in news papers or by similar means.

As a principal rule, if the threshold values are exceeded, the contracting authority must obtain tenders by using an open or restricted procedure. When using an open procedure, all interested parties may submit a tender. When using a restricted procedure, only parties which are pre-qualified by the contracting authority may submit an actual tender.

 

Particularly complex contracts (e.g. large computer network contracts) may be entered into on the basis of competitive dialogue, during which there is a closer dialogue between the contracting authority and the tenderer. Under certain circumstances, contracts may also be entered into on the basis of a negotiated procedure.

 

The contracting authority is, as a general rule, obliged to exclude tenderers owing to Danish public authorities an overdue amount in excess of DKK 100,000 (approximately EUR 14,000). Therefore, tenderers are usually asked to submit a solemn declaration regarding their debts to public authorities. Furthermore, tenderers convicted of participation in organised crime, money laundering, EU fraud or bribes are to be excluded from procurement procedures.

 

The public procurement rules are based on the general principles of equal treatment and transparency, which have explicitly been stated in the EU Directives. Among other principles implied in the procurement rules are the principles of proportionality and competition.

 

The contracting authority must, in particular, respect the principle of equality during procurement procedures. Consequently, any discrimination on the basis of nationality is forbidden. The tenders must be evaluated solely on their merits.

 

The contract shall be granted by applying one of the following criteria: i) the lowest price tender, or ii) the most economically advantageous tender. If the granting criteria is the most economically advantageous tender, the contracting authority shall define further criteria (besides the price) on the basis of which the tenders will be evaluated, e.g. quality, technical merit, aesthetic and functional characteristics, running costs, etc.

 

The contracting authority may cancel the procurement procedures (and decide not to grant the contract to any of the tenderers), however, only if there are good reasons for doing so.

If a contract includes provisions regarding its extension for a specified period of time, such extensions can be agreed on without invitation of tenders. With respect to contracts, which do not include such provisions, an extension is, as a general rule, subject to new procurement proceedings.

 

It is possible to agree to minor amendments of an existing contract (e.g. minor changes in the time schedule) without a new procurement procedure. However, it is assumed that the scope and contents of the contract should materially be the same after the amendments. Material amendments (e.g. concerning prices or terms of delivery) cannot be agreed on without a new procurement procedure.

According to case law from the Danish Complaints Board for Public Procurement (hereinafter “the Complaints Board”), a company which has obtained particular knowledge by participating in the drafting of the procurement documents and the granting criteria in particular cannot also participate as a tenderer in the procedure.

 

In case law the Complaints Board has stated that this prohibition is not absolute. The contracting authority has a wide discretion when assessing whether the involvement in the drafting of the procurement documents has given the company involved an undue advantage.

 

A previous supplier to the contracting authority (or the present supplier in case of an ongoing contract) is not prevented from participating in a new tender.

 

The Danish Supreme Court has confirmed that it may be contrary to the principle of equal treatment if a contracting authority hires advisors to assist during procurement procedures, if such advisors also assist one (or more) of the tenderers.

The Complaints Board is competent to rule on review applications regarding procurement procedures in Denmark. Review proceedings are initiated by filing a complaint with the Complaints Board.

 

A complainant may also choose to initiate judicial proceedings for review in the Danish courts. However, the complainant would normally benefit from filing the review application with the Complaints Board because the board as an administrative court is bound by the inquisitorial procedure, and the proceedings are generally quicker than in the courts. Furthermore, if the complainant claims compensation, the costs of the case would usually be lower before the Complaints Board due to the fact that in the court the complainant is to pay a court fee, which is dependent on the size of the compensation claim. Finally, the Complaints Board’s decisions can be appealed to the courts.

There are no time limits on either review proceeding or judicial proceedings.

 

Review proceedings before the Complaints Board would usually take around three to four months, and an additional two to four months regarding a possible claim for compensation.

 

Judicial proceedings before the courts in Denmark are usually lengthier and normally take around one to two years.

The Complaints Board is entitled to annul unlawful decisions, or order the contracting authority to bring the award process into conformity with the procurement rules. However, the Complaints Board cannot cancel or terminate a contract.

 

If the contracting authority has infringed the procurement rules, the contracting authority will usually be ordered to pay the costs incurred by the complainant in connection with the case.

 

In such cases, the Complaints Board can also order the contracting authority to pay compensation to the complainant for losses suffered as a result of the infringement.