EC demands answers on alleged procurement rule breaches

5 October 2011

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9 October 2011 | Angeline Albert

The European Commission has accused an Italian authority of breaching EU procurement rules by awarding IT contracts to a company it co-owns.

The EC has asked the Italian government to explain how IT deals, worth more than €4 million (£3.4 million), which were awarded by the Region of Molise, comply with EU procurement law.

Under EU rules, public authorities can award contracts directly to companies they own, but only under strict conditions. The European Court said authorities can only do this where they have the same amount of control over a company as they do over their own administrative departments. The Commission said the conditions were not met in this case.

The EC claims that since 2006, IT services contracts were awarded, with no tender procedure, to a company co-owned by the authority. “As a result, other IT service companies were denied the opportunity to seek this business and Italian taxpayers were denied the opportunity to get value for money by awarding the contracts to companies prepared to offer better services for less money,” it said.

The EC's action against Molise takes the form of a reasoned opinion, the second stage of its infringement procedure. This requires the national government to inform the EC within two months of its steps to comply with EU law or risk the Commission referring the case to the European Court of Justice.

The Region of Molise has not yet commented on the action.

The two other infringement notices published this month are reasoned opinions sent to the Netherlands and to Germany. The Commission said the Netherlands breached EU procurement rules by allowing two authorities to award public contracts directly for used paper processing and transportation without following open and competitive tendering procedures.

In Germany, when the districts of Sangerhausen and Mansfelder merged to become Mansfeld-Südharz, it owned three quarters of the company operating its waste disposal contracts. When the newly formed region sold its shares in the company to another business, the EC said the change of ownership constitutes a new contract award and should prompt a new tendering process.

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