The European Commission recently published its long awaited report on the effectiveness of the public procurement remedies directives [COM(2017) 28 final, 24.1.2017], which is accompanied by a much bulkier staff working paper [SWD(2017) 13 final, 24.1.2017]. The report provides an interesting general overview of the situation at Member State level after the last revision of the remedies directives 10 years ago and, by and large, offers the unsurprising conclusions that (1) the remedies directives have been transposed in all Member States in a relatively homogeneous manner, except in relation to institutional decisions--where there is a split between administrative and judicial first instance review procedures, (2) there is a general consensus that the remedies directives are relevant and that they enhance the effectiveness of the substantive public procurement rules, (3) the costs of compliance with the review system envisaged in the remedies directives is not necessarily higher than that derived from any alternative domestic system the Member States would have in place in its stead, (4) the remedies they create are generally in line with the right to an effective remedy as a general principle of EU law, and (5) that the remedies directives are generally fit for their purpose.
On the basis of that overall assessment, the report concludes that, generally, "the evaluation identified neither major nor urgent needs to amend the Remedies Directives, [so] it is decided to maintain them in their current form, without any further modification at this stage." This is not to say that the Commission does not recognise shortcomings in the remedies directives and their fitness for purpose going forward, but that it rather strategically decided to avoid a path of legal reform and rather aims to work on soft mechanisms to try and improve the situation (see below). In my view, this is a highly questionable regulatory strategy and the assessment that there is no major or urgent need for an amendment of the remedies directives does not really tail up with the difficulties in ensuring an improvement of the system by alternative means without a review of the remedies directives [for discussion, see A Sanchez-Graells, "'If It Ain't Broke, Don't Fix It'? EU Requirements of Administrative Oversight and Judicial Protection for Public Contracts", in S Torricelli & F Folliot Lalliot (eds), Administrative oversight and judicial protection for public contracts (Larcier, 2017, forthcoming].
Throughout the report, there are internal evaluative contradictions and clear indications that the Commission has not been ambitious in its assessment of the remedies directives, or even adopted a coherent approach to its overall evaluation, and that it has rather indulged in a complacent strategy that severely limits the ability of the remedies system to continue being fit for purpose in the future. Indeed, the main report itself indicates that
The evaluation revealed that certain aspects of the Remedies Directives could be made clearer. This is confirmed by the contributions received. This applies, for example, to matters such as the interplay between the Remedies Directives and the new legislative package on public procurement, and the development of criteria to be applied to lift the automatic suspension of the conclusion of the contract following the lodging of a legal action.
The Remedies Directives are in line with the rights and general principles laid down in EU primary law concerning fundamental rights. They lie at the core of public procurement legislation as they allow bidders to enforce their substantive rights. They were found to be generally aligned with the new 2014 legislative package on public procurement, in particular to cover the concessions subject to Directive 2014/23/EU. Nonetheless, as already mentioned, the interplay between these Directives and the new legislative package on public procurement could be further clarified.
... the Commission acknowledges that certain provisions of the Remedies Directives are not entirely clear. In particular, despite the update introduced by the new legislative package on public procurement, some additional needs for clarification have been identified. For instance, references to ‘contract notice’ in the Remedies Directives do not reflect the fact that new Directive 2014/24/EU permits the use of a prior information notice, instead of a contract notice, to call for competition in certain circumstances. It could also be clarified how the Remedies Directives apply to modifications of public procurement contracts and concessions, to the termination of such contracts and to the light procurement regime (footnotes omitted and emphases added).
In that regard, with little more detail, the Staff working paper indicates that
several stakeholders underlined that some provisions of the Remedies Directives could be more precise. In particular, more clarity would be welcome in a number of areas related to institutional aspects (for example, professional standards for members of an administrative review body), procedural aspects (for example, criteria for lifting the automatic suspension, for granting interim measures and to award damages) and the interplay between the Remedies Directives and the new Public Procurement Directives (for example, how the Remedies Directives apply to the modification and termination of public contracts and concessions and the so-called ‘light regime’) (p 43, emphasis added).
It is reported, however, that certain areas could be clarified by the Commission, for example, in the form of guidelines (e.g. fees, requirements for first instance administrative bodies and their work organisation). Following the adoption of the new legislative package on public procurement, more clarity would be welcome with regard to the interplay between the Remedies Directives and the new substantive rules (e.g. references to "contract notice" in the classic Remedies Directive does not reflect the fact that the new classic procurement Directive enables a prior information notice to be used, instead of a contract notice, to call for competition in certain circumstances; it could be clarified how the Remedies Directives apply to modifications of public contracts and concessions, termination of such contracts and the light regime for such contracts) (p. 68, emphasis added).
The Commission plans to provide such coordination between the remedies directives and the 2014 public procurement package without legal reform, and through "guidance on some outstanding aspects of the Remedies Directives in order to increase the understanding of some provisions and to guarantee their effectiveness. Aspects that could be covered include the interplay between the Remedies Directives and the new legislative package on public procurement and the development of criteria to be applied to lift the automatic suspension of the conclusion of the contract following the lodging of a legal action. Based on evidence gathered so far, the Commission will engage in a dialogue with Member States and stakeholders to identify other specific areas that require clarification."
I find this problematic for two main reasons: First, in my mind, it is not clear at all that the discoordination between the remedies directives and the 2014 public procurement package derives from lack of clarity, rather than from the limited scope of the remedies directives, which do not make provision for important issues such as the regulation of remedies for dynamic procurement mechanisms, or the rules applicable to excessive contractual modification or the improper avoidance of mandatory termination of contracts. They also completely fail to regulate situations that arise from the increased justiciability of interim decisions by the contracting authority (notably, on exclusion and the new possibility of self-cleaning). An adaptation of the remedies directives to these situations is not a matter of guidance, but rather of legislation--as there is no obvious way forward, there is no case law of the Court of Justice of the EU on which the Commission can rely to establish baseline proposals, and the competential limits of the EU can easily be exceeed, in particular regarding the interaction between the remedies directives and the new rules on contract modification and contract termination, where the development of EU rules keeps building on the flimsy residual competence of Article 114 TFEU.
Second, and more importantly, the issuance of guidance in this field strikes as a strange policy avenue and one that the Commission is avoiding in other areas (such as the provision of guidance on the interpretation of the 2014 public procurement package itself). It also strikes as an avenue of dubious effectiveness, in particular if/where the solutions proposed in that guidance are difficult to coordinate with domestic procedural and administrative requirements. In the report itself, the Commission indicates that "The evaluation also made it possible to identify problems that persist at national level. In particular, various stakeholders confirmed in the context of the public consultation that problems identified are rooted either in national legislation beyond the Remedies Directives or in national practices, and not in the Remedies Directives themselves"; and concluded (rather conveniently that) "Even if specific concerns are reported in some Member States, they usually stem from national measures and not from the Remedies Directives themselves".
This assessment should be carried to its ultimate consequences, and there are only two possible scenarios: (a) either the Commission plans to open infringement proceedings against the Member State where the domestic legislation and practices are incompatible with the Remedies Directive (which does not seem either the case, or a priority for the Commission), or (b) the only way to erode those national rules and practices is to create additional rules that make them incompatible with EU law (thus promoting legislative reform at Member State level, or creating the possibility for more clearly grounded infringement proceedings in the future). But this is not what the Commission suggests is the best way forward. Its proposal is, on the contrary, to suggest that there should be simple (soft) guidance and to hope that it will be voluntarily adopted in a way that demolishes contrary domestic rules and practices--if not voluntarily, then maybe as a result of the increased interaction between first instance review bodies it is also hoping to create as part of its future proposals.
I think any practitioner will agree that this strategy is very unlikely to create any meaningful change at Member State level. There are many reasons for that. It is not possible to rely directly on Commission interpretation before domestic courts, and it clearly does not trigger obligations of consistent interpretation as a revised remedies directive would. Commission guidance can, at best, be used as persuasive authority, but always under the risk of the Court of Justice eventually determining that the European Commission had gotten it wrong in its guidance and that domestic review bodies and courts should have asked for the proper interpretation of the Remedies Directives (but this is not an issue of lack clarity, as above), or else establishing that domestic rules breach some general principles of EU law. On that point, the general statement by the Commission that "The Remedies Directives are in line with the rights and general principles laid down in EU primary law concerning fundamental rights" can hardly provide any reassurance, because the difficulty is not in accepting that the remedies directives do not breach that general principle, but rather in establishing whether they do enough to uphold it in an effective manner going forward.
Overall, I find the Commission's decision not to review the remedies directives disappointing, in particular because it has some echoes that remind us of the difficulty of getting technical rules approved or reviewed at EU level, as well as the Commission's conformity with that situation. I can only hope that evidence on the unsuitability of the remedies directive in relation with the novelties of the 2014 public procurement package will emerge, to the point of prompting the European Commission to reconsider this strategy in the medium (or nearest possible) future.