Public Procurement & Government Contracts 2020

Last Updated April 06, 2020

Netherlands

Law and Practice

Authors



Eversheds Sutherland (Netherlands) B.V. is a firm of legal advisers with offices in Amsterdam and Rotterdam and part of Eversheds Sutherland, an organisation with 69 offices spread over 34 countries and more than 3,000 expert legal professionals. Eversheds Sutherland Netherlands is home to around 100 employees offering a wide range of expertise advising mid-level, large and publicly quoted companies, both nationally and internationally. Clients also include a number of government bodies, public authorities and non-profit organisations. The firm's core activities are employment and labour law, pensions, banking, securities and finance law, litigation and dispute management, competition and regulatory, restructuring law, notarial corporate law, corporate law (M&A and private equity), IP/IT/data, trade marks, and real estate (including rental law).

On 1 July 2016, the amended Dutch Public Procurement Act (DPPA) entered into force. The amended DPPA implements the latest EU procurement directives (2014/23/EU, 2014/24/EU and 2014/25/EU). The DPPA applies to national and European procurement procedures.

The structure of the DPPA has changed since the implementation of the latest EU procurement directives. On 1 July 2016, Part 2a (the award of concession contracts) was added to the DPPA, which now consists of the following sections:

  • Part 1 – general provisions;
  • Part 2 – procurement procedures that meet EU thresholds;
  • Part 2a – award of concession contracts;
  • Part 3 – award of special sector contracts; and
  • Part 4 – final provisions (including legal review).

Some provisions of the DPPA are further elaborated on in the Public Procurement Decree. The Works Procurement Regulations 2016 (mandatory for contracts below the EU threshold), the European Single Procurement Document and the Proportionality Guide form parts of the Public Procurement Decree.

In the Netherlands, public procurement law is enforced through litigation. The Dutch Public Procurement Experts Committee (PPEC) accepts complaints about procurement procedures, but the PPEC’s advice is non-binding.

Central government authorities and bodies governed by public law that meet the following cumulative criteria are considered to be contracting authorities: established for the specific purpose of meeting need in the general interest, not having an industrial or commercial character; legal personality; and financed, for the most part, by the state, regional or local authorities, or by other bodies governed by public law, or subject to management supervision by those authorities or bodies, or have an administrative, managerial or supervisory board, more than half of whose members are appointed by the state, regional or local authorities, or by other bodies governed by public law.

Public contracts are subject to procurement regulation and the threshold is as stipulated in EU Directive 2014/24, which is as stated below.

Government authorities:

  • works contracts, concessions for works or services contracts – EUR5,350,000;
  • supplies and services contracts for local government – EUR214,000; and
  • supplies and services contracts for central government – EUR139,000.

Contracts awarded by contracting authorities operating in the field of defence and special services:

  • works – EUR5,548,000; and
  • supplies and services – EUR428,000.

In cases where the threshold as stipulated in the EU regulation is not met, the Proportionality Guide provides for grounds that need to be considered:

  • the size of the contract;
  • the transaction costs of the contracting authority and economic operators;
  • the number of potential economic operators;
  • the desired outcome;
  • the complexity of contract; and
  • the type of contract or sector.

Regulated contract award procedures are open to participants from the EEA internal market and to participants from member states of the WTO that have negotiated the Agreement on Government Procurement (GPA). In doing so, the basic EU treaty principles of non-discrimination, equal treatment, transparency, mutual recognition and proportionality apply.

Contracting authorities need to assess whether a contract for works, supplies or services needs to be submitted to a tendering process.

Principles apply as to equal and non-discriminatory treatment, transparency, proportionality and reasonableness in selection standards with regard to the subject matter of the contract.

Advertisement is mandated under the regulation.

Contracts that exceed the EU thresholds must be advertised in the Official Journal of the EU and on the Tenders Electronic Daily website. The DPPA also requires that the procurement contracts are advertised on the Dutch electronic publication system, TenderNed (https://www.tenderned.nl/tenderned-tap/aankondigingen), also if these (national) procurement contracts do not exceed the EU thresholds but are tendered on a voluntarily basis.

The requirements set out in the advertisement must be limited to economic and financial standing, technical ability and/or professional ability. The grounds for exclusion (both facultative and mandatory) are specified in the DPPA.

The DPPA makes a reference to market consultations but is silent in terms of a specific provision that sets out special rules for contracting authorities engaging in the market. However, the EU directive allows such a consultation and requires that in doing so, the principles of equal treatment and transparency must be respected and must not cause a conflict of interest.

The legislation mandates the tender procedure and sets out the principles of equal treatment and transparency for general and European tenders.

Contracting authorities are free to choose between an open and restricted procedure for the award of a contract. In doing so, the authority can choose to apply (i) the competitive dialogue, (ii) the innovation partnership, (iii) the competitive procedure with negotiations, (iv) the design contest and (v) the negotiation procedure.

The contracting authority is required to make an announcement, assess if a tenderer is covered by exclusion grounds, verify whether a non-excluded tenderer meets the suitability requirements, assess the tender’s compliance with technical requirements, assess a valid tender based on set award criteria, report such an assignment, communicate the award decision, conclude the agreement and, lastly, announce such awarded contract.

Negotiations are allowed; however, it is imperative to make an announcement of a contract, while notice is optional.

Furthermore, the contracting authority is restricted from entering into negotiation that is likely to distort competition or cause discrimination. There is a need to ensure equal treatment. Thus, a negotiation with a preferred bidder is restricted unless it is of minimal effect.

In general, open or restricted procedures are used by contracting authorities in the Netherlands. Under specific circumstances the competitive dialogue, the competitive procedure with negotiation, the innovation partnership or the negotiated procedure without publication is applied. With regard to special sector procurement procedures, the negotiated procedure is most commonly used. The choice of the process is at the discretion of the contracting authority; however, it is based on the fulfilment of certain conditions and criteria as stated in the legislation.

The legislation mandates that prior information notice is sent for publication 52 days and not more than 12 months prior to the date of dispatch of the contract notice.

Further, the legislation provides for the contracting authority to set appropriate time limits for submitting the requests to participate or tenders; such deadlines vary from procedure to procedure and are set out in the regulation.

The legislation regulates the time limit for submission of tenders as listed below.

  • Open procedure:
    1. time limit to submit request to participate – n/a;
    2. time limit to submit tenders – 45 days from date of dispatch of notice;
    3. where prior announcement has been made – 22-29 days to submit registration; and
    4. in urgent situations, tenders must be submitted within 15 days of dispatch of contract notice.
  • Restricted procedure:
    1. time limit to submit request to participate – 30 days from date of dispatch of contract notice;
    2. time limit to submit tenders – 40 days from date of dispatch of notice;
    3. where prior announcement has been made – 22-29 days to submit registration; and
    4. in urgent situations, requests must be submitted within 15 days of dispatch of contract notice; tenders within ten days of dispatch of invitation to tender.
  • Competitive procedure:
    1. time limit to submit request to participate – 30 days from date of dispatch of contract notice;
    2. time limit to submit tenders – 40 days from date of dispatch of invitation to tender;
    3. where prior announcement has been made – 22-29 days to submit registration; and
    4. in urgent situations, requests must be submitted within 15 days of dispatch of contract notice; tenders within ten days of dispatch of invitation to tender.
  • Competitive dialogue/innovation partnership: time limit to submit request to participate – 30 days from date of dispatch of contract notice.

A different time limit can be agreed upon by the contracting authority and selected candidates, provided a set of conditions are met. Where they fail to agree, it shall be at least 40 days from the date of dispatch of the invitation to tender.

The legislation mandates the criteria that interested parties must meet to be eligible for participation in a procurement process, which are broadly economic and financial capacity, technical competence and/or professional ability. These grounds, however, have to be objective and proportionate.

The legislation provides the possibility to restrict participation in the procurement process to a small number of qualified suppliers when applying a restricted procedure, a competitive dialogue, a competitive procedure with negotiation and an innovation partnership procedure provided there are a sufficient number of suitable candidates.

The shortlist is determined on the basis of the suitability of the candidates for the contract, which could range from tenderers’ technical and/or professional abilities to their economic and/or financial position. The shortlist must be objective and non-discriminatory, using the rules or selection criteria outlined in the announcement.

The contracting authority is required to state the number of candidates it intends to invite in the contract notice. In any case, it shall not be fewer than five in a restricted procedure and at least three in a competitive dialogue, a competitive procedure with negotiation and an innovation partnership procedure.

The number must ensure an effective competition.

Further, tenderers may be excluded in situations specified by the DPPA; for example, criminal conviction, or where such exclusion grounds are explicitly announced in the tender document.

In the Netherlands, contracting authorities may choose from three award criteria:

  • best quality-price combination;
  • lowest price using a cost-effectiveness approach (life-cycle costs or total cost of ownership); or
  • lowest price.

Contracting authorities must publish the award criteria (including weighting factors) in the publication of a contract notice. The choice for the second and third criteria must be substantiated in the tender documents. Published award (sub) criteria must be transparent and proportional. The criteria cannot be changed after publishing.

There is an obligation to disclose the criteria or other elements of the evaluation methodology on the basis of which bidders are selected, and tenders are evaluated. Such disclosure must be made in the publication of a contract notice.

There is a requirement to notify interested parties who have not been selected. Such a notification must include the relevant reasons for the decision, which include the characteristics and relative advantages of the selected registration, the name of the parties selected and a precise description of the standstill period. The idea behind this is to let the unsuccessful tenderer know why he or she was not selected and what made the winner stand out.

This notice shall be sent electronically or via fax.

There is an obligation to notify bidders about the award decision (see 3.2 Obligation to Notify Interested Parties Who Have Not Been Selected).

There is a requirement for a standstill period and the minimum standstill period is at least 20 calendar days. However, such a requirement is not applicable in cases where:

  • there is no requirement to publish a contract notice through an electronic procurement system;
  • the only tendered concerned is the person receiving the contract; and
  • the assignments are based on a framework agreement or a dynamic purchasing system.

In the Netherlands, there is no specialised court for procurement cases. Civil courts may rule on claims for infringements of public procurement law. The competent court is the court of the place where the contracting authority resides. Parties may also choose to submit a dispute to arbitration.

Under Dutch civil law, violation of procurement law constitutes a "wrongful act". Therefore, damages can be claimed for such a breach. However, since most of the public procurement litigation is conducted in interim procedures where the measures are provisional, the remedies can vary on a case-by-case basis.

Interim measures are available, but they exclude contract annulment by the court or the possibility to claim damages. However, an advance payment claim is still possible.

Any person who has sufficient and urgent interest in the matter has the standing to challenge such a decision.

A bidder can successfully ask for suspension of a procurement procedure of review of an award decision in interim procedures within 20 days of the announcement of the winner (standstill period; Article 2.127, DPPA). The deadline for appeal against an interim judgment is four weeks.

The duration of interim procedures is approximately one or two months. Regular proceedings may take up to 18 months.

The Dutch courts deal with approximately 200 review applications every year.

The fee for a judicial complaint can be up to EUR5,517, depending on the type of procedure, the value of the matter and whether or not it is an appeal case. As civil courts rule on claims for infringements of public procurement law, objectors need to engage a lawyer to have the matter examined and argued before a court. It is very difficult to estimate the total costs involved in the litigation proceedings, as they differ widely from case to case and depend on whether a party appeals, but they can be costly.

Contracts and framework agreements may be modified without a new procurement procedure in accordance with Chapter 2.5 of the DPPA (Articles 2.163a–2.163g), in any of the following cases:

  • where the value of the modification is below the EU thresholds, 10% of the initial contract value for service and supply contracts, and below 15% of the initial contract value for works contracts;
  • where the modifications have been provided for in the initial procurement documents in clear, precise and unequivocal review clauses;
  • for additional works, services or supplies by the original contractor that have become necessary and that were not included in the initial procurement;
  • the need for modification has been brought about by circumstances that a diligent contracting authority could not foresee;
  • where a new contractor replaces the one to which the contracting authority had initially awarded the contract; or
  • where a modification of a contract or a framework agreement does not render the contract materially different in character from the one initially concluded.

The Proportionality Guide permits direct contract awards for small contracts up to EUR33,000. A direct contract award may also be possible in a case where no valid bids were received, if only one company is capable of executing the contract or in the case of urgency. However, the contracting authority needs to demonstrate the necessity for direct contract awards.

No landmark judgments have been delivered by the Dutch Supreme Court in the past year. However, in general, a slight shift has been noticeable in judgments from courts in the Netherlands with regard to the Grossmann defence (forfeiture of rights). Historically, this has always been a very effective defence for the contracting authority. Courts generally went along with the argument that the tenderer had not been proactive enough in pointing out the relevant mistake by the contracting authority and had thereby forfeited its rights. In the past year a number of judgments have been rendered by Dutch courts in which the Grossmann defence was rejected and a more in-depth analysis was made regarding the tender process organised by the contracting authority. While the Grossmann defence is still an effective way for contracting authorities to challenge a complaint by a tenderer, some courts seem to be less inclined than previously to accept this defence and take a more critical stance towards the contracting authority.

Currently it is contemplated that an amended version of the Proportionality Guide will enter into force as of 1 July 2020. This amendment will not bring about major changes in the Dutch public procurement legislation, but it will be of relevance for the interpretation of the principle of proportionality.

Eversheds Sutherland (Netherlands) B.V.

De Cuserstraat 91
1081 CN Amsterdam
P.O. Box 7902
1008 AC Amsterdam
The Netherlands

+31 20 5600 600

+31 20 524 1204

michelchatelin@eversheds-sutherland.nl www.eversheds-sutherland.com
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Law and Practice

Authors



Eversheds Sutherland (Netherlands) B.V. is a firm of legal advisers with offices in Amsterdam and Rotterdam and part of Eversheds Sutherland, an organisation with 69 offices spread over 34 countries and more than 3,000 expert legal professionals. Eversheds Sutherland Netherlands is home to around 100 employees offering a wide range of expertise advising mid-level, large and publicly quoted companies, both nationally and internationally. Clients also include a number of government bodies, public authorities and non-profit organisations. The firm's core activities are employment and labour law, pensions, banking, securities and finance law, litigation and dispute management, competition and regulatory, restructuring law, notarial corporate law, corporate law (M&A and private equity), IP/IT/data, trade marks, and real estate (including rental law).

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