Greece breaches EU tender rules

3 December 2010

7 December 2010 | Angeline Albert

The European Commission has rejected a claim by Greece that it has not breached EU procurement rules by favouring homegrown supply for a defence contract.        

The Greek Ministry of National Defence launched an open tendering procedure in 2009 for the supply of six submarine battery kits, but its criteria stated that 35 per cent of the material used must be made in Greece.

The commission has called on the country to amend its “discriminatory” tendering process, following a complaint from a supplier in another EU member state. It also requested that Greece ensure full compliance with European procurement rules in relation to the award of the €22 million (£18.4 million) deal.

“The discriminatory requirements in the call for tenders precluded interested companies that could not offer material produced in Greece from participating. By disrespecting the principle of equal treatment enshrined in the EU public procurement rules, the Greek authorities have distorted competition and may have wasted taxpayers’ money,” said the commission.

The Greek authorities claimed the contract’s tendering process is exempt from EU buying rules because of national security.

European public procurement law directive 2004/18/EC states public contracts above a certain value must be awarded via an EU-wide tender procedure. However, the directive provides for an exemption where the contracting authority buys specific military material and a public tender would put security interests of the member state at risk.

The commission said the Greek authorities failed to provide a “detailed and reasoned argumentation clearly evidencing that using the standard EU public procurement rules would endanger Greek security interests”. It has now issued a formal request in the form of “a reasoned opinion”.

EU procurement law specialist Ruth Smith, partner at Pinsent Masons, said: “Unless Greece can justify its position it is likely the matter will be referred to the European Court of Justice (ECJ). Should the ECJ agree with the commission’s arguments it could require Greece to set aside the contract and impose a lump sum or daily penalty fines while Greece’s breach of procurement law persists. Recently we have seen fines imposed of €150,000 per day.”

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