How do we deal with cross-border interest in public procurement? (II)
Interview with Piotr Bogdanowicz, assistant professor in European law at the University of Warsaw. Piotr is also a legal adviser and has authored more than 40 articles on European Union law and public law. As with the previous podcast, the main topic for my conversation with Piotr is once more cross-border interest in public procurement, particularly the complex cross-border interest test created by the Court of Justice in the early 2000s.
Piotr, welcome to the PPP.
Good morning, Pedro.
It’s great to have you here, I’m really, really thankful that you were able to make yourself available for the podcast, especially at such an early hour in the day.
I would like to start this podcast as I did the last one, to talk about cross-border interests in public procurement. So in your view, why do you think that cross-border interests is important in EU public procurement law?
Starting from the beginning in fact, cross-border interest is important in EU law because if we don’t deal with the cross-border interest then we have a so called purely internal situation. So we cannot use, for instance, freedoms of internal market, and as far as EU public procurement law is concerned, the situation is the same - it limits the scope of EU public procurement law and in principle if we deal with a cross-border interest then EU public procurement directives have to be followed. Moreover, all the general principles of EU public procurement law have to be followed as well. And that’s the main problem, because if we apply EU public procurement directive then the situation in principle, in theory is very simple. We follow public procurement directives if some certain thresholds are exceeded. But if we don’t exceed these thresholds then the situation is more interesting because according to the European Court of Justice we should follow EU public procurement rules like non-discrimination, equality or transparency even if in such cases. And that’s the problem of the definition of cross-border interests.
In the last podcast I was talking with Andrea Sundstrand about the same topic, and one of the things that we discussed was that for contracts about the financial threshold of the directives that justified application of the directive, there’s no assessment whatsoever of the cross-border interests of those contracts. You just apply EU law because they have a value over that threshold. The cross-border interest only applies for contracts below the threshold or that have been excluded from the scope of application of the directives. So in theory what you’re saying makes sense and it’s logic, in practice there’s been some concessions to that principle.
Yeah, but the fact that we use, that we follow EU public procurement directives because thresholds are met is based on assumptions that such contracts, might interest the contractors from other Member States. And as you said, is only principles because I can clearly imagine a situation when we deal with the contract, which is above the threshold but still it doesn’t mean that it has to have a certain cross-border interest. And quite the contrary, I clearly can imagine the situation when we deal with the contract, which is below the financial threshold and it has a certain cross-border interest.
This is the question whether thresholds are good factors to decide whether we deal or not with cross-border interests. Of course the Court of Justice in its case law said something about cross-border interest, I mean whether there are some factors to rise the cross-border interests. And they related not only to significant value of the contract but also to the, for instance, place where the work or services are to be carried out or technical characteristics of the market. But still this depends on the case law of the Court of Justice. In one case the Court can say that, “Due to the fact that the place are to be done somewhere, there is a cross-border interest,” and in the second case the Court can say that, “There is no cross-border interest,” and that’s the problem
I find that fascinating, that defining the application of the legal regime would, for many contracts, the contracts would depend on these almost hypothetical analogies or theoretical scenario that a contractor or authority needs to go through before they launch a procedure. So before they decide if they’re going to actually comply with EU principles, because a contractor has the cross-border interests, they need to reach the conclusion that the contract has cross-border interests, which is almost a catch-22 situation because it’s impossible for you to do without doing it. So how can you be certain that there is cross-border interest if you haven’t advertised the contract and if you have not allowed companies outside your own member state to participate in the procedure?
I do agree with you, that’s the main problem, that in theory everything looks good, so we need to follow some equal treatment, some competition, the more open contracts are the better. In theory the notion of cross-border interests and the case of cross-border interests is ok. But when we deal with it, when we look at practical things that’s the problem, the problems might arise. And for me even more fascinating is that we base our analysis on the case law of the Court of Justice because what you said, it’s absolutely true but from my point of view the problem is not only the fact that the notion of cross-border interests is hypothetical but also that these rules are being created by the Court of Justice. So the main problem is that these rules, why we should deal with cross-border interests, etc., in principle are not written in the secondary law, in directives, but are created by the Court of Justice acting as a political actor. And we deal sometimes with the situation where the judgments that are being delivered on the same day are different, like in the case of Comune di Ancona and Belgacom as far as cross-border interest is concerned. And from my perspective this is even the bigger problem apart from the fact that this is hypothetical notion, hypothetical situation.
Yeah, I agree with you because effectively it’s almost like every time that the Court of Justice produces a decision about cross-border interest it comes up with a slightly different answer to the problem. And I remember when I was doing some investigation on this topic a couple of years ago that instead of seeing any consistency in the approach, what I saw was a very characteristic way to try to solve things. So the Court of Justice will say, “Oh, on this case we think that cross-border interest means this, in another case cross-border interest means something else,” and so on and so forth. So it makes life really difficult for petitioners that want to apply public procurement rules or at least the principles to be sure that they are doing the right thing. Now, moving on to the second question, that is the situation that we have now. If you could improve the tests, what do you think that should be done?
It’s a very good question because, frankly speaking, I think that I don’t know the exact answer, but there are some potential solutions. The one that could be was proposed some time ago by AG Sharpston in her opinion, leaving the decision, how to deal with cross-border interest, to national authorities. So, national authorities should decide whether they for instance cut thresholds to the very minimum, or whether they apply some quantitative test. This of course would be in line with the principle of subsidiarity, but the problem is that it wouldn’t resolve the question of certainty. I can clearly imagine the situation where we deal with a different law in each Member State. So there is other solution, which is, in my opinion, a very radical one, but it’s very interesting and it was proposed as far as I’m concerned by you, to cut thresholds and to cut them to the very minimum. Then, we will open a public procurement market for almost all the procurement cases. In general I do agree with such approach but I have one doubt. This is a solution, which is good for experienced procurement markets and if I look at Polish market I would be very afraid whether some Polish contracting authorities would deal in a good manner with all the public procurement cases. For instance, if we have some thresholds then we can deal below the thresholds with, let’s say, some easier procedures, that is for contractors a good way. And then if we cut thresholds and we have to apply the whole procedure, even if new directives are more flexible (so also domestic law should be more flexible), then I am afraid that a lot of contracts will be finished or that a lot of contractors decide not to start in such procedures cause they don’t want to follow all these rules, which are set in the Directives. This is my only fear as regards this second solution.
It can be said that those contracts now, they need to be tendered anyway, so the contracting authorities also have the capacity issue of having to do it in the best way possible, even if the contracts are not subject to EU law.
Yes, but the rules are in such cases easier, yes. Of course you have to advertise or publicise the contract, you have to deal with some competitive rules and there should be judicial protection. Nonetheless, the rules are not so very specific, and it depends on the contracting authorities, how they deal with the tender, and if they decide to give some flexible solutions they can do it. If we are under directives and under law implementing directives we have to deal precisely in line with them.
It’s very interesting what you say because my experience in other member states is actually that below the thresholds, to a certain extent, what tends to happen is that the practice that the contracting authorities develop above the thresholds just comes down without adaptions, have you seen that happening in Poland?
The below threshold Polish market is rather flexible, so the problem is rather whether we should deal with some more general principles or not because I would say that I can even divide three categories of procurements in Poland. One of them, which is in line with public procurement law and in line with directives. The second, which is in line with principles because it has a cross-border interest and it is clear that it has cross-border interests. And the third one, which is the most interesting, when we are not sure whether we deal with cross-border interests or not. We are sure that we are out of the scope of public procurement directives but we are not sure whether we are out of the scope of general principles. And in such case in general in Poland the approach is rather more flexible than conservative.
Moving on the next topic, you work both in academia and outside academia as a legal adviser, or as a lawyer. What is your experience doing that kind of work, because it’s not very common in the UK, and what are the advantages and the disadvantages that you see on that?
That’s always a challenge, because you have to deal both with expectations of academia and expectation of the clients. As regards advantages, I am dealing with public procurement cases as a lawyer, and I can use it in my academia. For instance, when I am teaching classes I can give the students practical cases, practical information, I can say them that, “In theory the provision says that, but in practice it looks like that.” On the other hand my clients sometimes say that for them also there is a good point that I’m an academic and I know the case law of Court of Justice. For instance, once more, looking at the provisions they can say that, “We have nothing to do with EU law if we are below threshold,” and then I can say them, “No, no, no, no, no, we have to follow some rules because Court of Justice says that such contracts also can have a cross-border interest.” Disadvantage is, as I already mentioned, that in principle I’m a part time academic and a part time lawyer, and always in such cases something can lose in a specific time. And this also, the question I have to answer shortly, which way I should go.
So you think that in the near future you’re going to go one way or the other?
Yeah, I can relate to your problems. When I was a lawyer I was trying to do my Masters at the same time, it just didn’t work out, so I couldn’t make it work. I had to make a decision and in the end I made a decision to move to academia. But even to this day I still maintain the very analytical and very practical mind-set that comes with the fact that I was a lawyer for four or five years, which pretty much sets me apart from most of my colleagues. And in your case it’s going to be even more than that because you’ve been a lawyer for longer. So what do you think that you can bring, if you move to academia full time in the future, let’s say that’s the scenario on the table, what are you going to bring from your experience as a lawyer into your academic work?
I think that the most important thing would be focussing on some practical issues. Of course all the theoretical debates are interesting but in my opinion public procurement law is a very interesting academic discipline, and what we are seeing now as regards the case law of the Court of Justice is pretty interesting as we also deal with the issue of, for instance, codification of case law. So these are real important legal theoretical issues. But for me, public procurement law first and foremost is a practical discipline and when we are dealing with some solutions we should focus on practical implications of our research, not only the general discussion on theoretical grounds.
We still have a few minutes and I have a final question for you. What do you think is the next frontier for public procurement? For example, what are we not talking about that we should?
For me something, which can or should be discussed in the future is the Transatlantic Trade and Investment Partnership, TTIP, ie the agreement to be concluded between the United States and the European Union. And it is for us, I mean public procurement lawyers interesting because it relates to public procurement. Public procurement is the area, which is discussed now between the United States and the European Union. And the aims of these agreements are interesting for us because in general the European Union wants to enable EU firms to bid for a larger market, larger share of the products and services, which US public authorities buy. In my opinion behind that is that the European Union would expect that public tendering mearkets in the United States will be as open as the European Union is seeing an EU market, or that the US market will be based on the same transparency, or maybe not the same but similar transparency and non-discrimination rules. And to be perfectly frank I am not so sure whether the US public authorities are prepared for that because of course they, I’m pretty sure that they follow non-discrimination transparency rules and so on. But as we were discussing, transparency and non-discrimination rules are interpreted by the EU institutions and the Court of Justice and the commission in particular in a very expansive way. And in my opinion it’s going to be an interesting catch between the United States and the European Union in this area.
I think that’s a very good way to finish the podcast, thank you very much for your time, Piotr.
Thank you very much, Pedro.
You can find me at my blog telles.eu or on Twitter where I use two handles, @Detig for general discussion and @publicprocure for public procurement related topics. As ever I am very grateful to the British Academy for sponsoring this programme, and I’ll see you next time.