REPORT ON COMPETITING BIDDING FOR PUBLIC TENDERS (Advisory opinion)
PRESS RELEASE
PRESS RELEASE
Report on public tenders
The Competition Authority has submitted a report on public tenders to the Presidents of the Regional governments, mayors, Presidents of the ‘Mountain Communities’, general managers of hospitals, and general managers of the Local Health Boards.
After examining numerous tender notices, the Authority has ascertained that competition is being distorted widely by public entities, interfering with market forces, with negative repercussions on the formation of the public demand and hence on the cost of the goods, services or works tendered for. In order to ensure that the terms and conditions of invitations to tender are not in conflict with the principles of competition as enshrined in the Competition Act to the detriment of government agencies and third parties, the Authority holds the view that the following must be done:
a) competitive bidding should only be waived in the exceptional cases expressly provided for in the law. Even when competitive tendering is optional, public competitive procedures should preferably be used because this makes it possible to make periodic comparisons between several providers, thereby holding down public expenditure and encouraging the pursuit of corporate productive and organizational efficiency;
b) invitations to tender should not comprise several activities which, taken individually, have an economic or technical function and can therefore be put out to tender as separate items;
c) projects should not be broken down into individual batches in order to evade Community legislation on public tenders in cases where some of the batches do not have their own economic or technical function;
d) no specifications should be set which favour certain bidders to the detriment of other bidders and are irrelevant to the technical capacities of the bidders, such as indicating certain trademarks or brands or requiring bidding companies to have previously supplied the administration with similar activities to those forming the subject-matter of the tender;
e) tendering should not be conditional upon having a turnover that is disproportionately high in terms of the value of the tender or upon a turnover calculated solely on the geographic benchmark market;
f) particularly in the case of less complex goods or services, bidders should not to be required to have reached a certain turnover level over a period of years that is disproportionately long in terms of the subject-matter of the tender;
g) the requirement to form temporary joint ventures should only be used when it is strictly necessary in order to increase, and not to reduce, the number of bidders for the tender;
h) in the case of temporary joint ventures, the technical and financial capacity of the bidders should be determined by the capacity of the whole group of companies taken together, and not by individual members of the joint venture;
i) the company objects of the semi-public companies referred to in section 22 of law no.142 of 8 June 1990 should be restricted in order to ensure that the successful bidder is not put in the position whereby it is able to provide other services, outside the rules of competition, which do not form part of the essential core of the public service commissioned to it and which could be provided by other companies selected by public bidding;
j) the legislation governing the award of public tenders for the supply of work and services by semi-public companies should be applied where the latter can also be deemed the adjudicating agency.
Rome, 20 December 1999