Commission calls on Czech Republic to respect public procurement rules for military aircraft

The European Commission has today acted to ensure fair access to public contracts by asking the Czech Republic to comply with its obligation to award public supply contracts on the basis of public tenders. The Commission is concerned that the Czech Republic has breached EU public procurement rules by not opening up to EU-wide competition a contract for four military tactical transport aircraft. These rules are designed to ensure fair competition for public contracts in Europe, thereby creating opportunities for European companies while ensuring best value for public money. If they are not properly implemented, there is a risk of a closed market and waste of public money. The Commission's request to the Czech Republic takes the form of a reasoned opinion. If the national authorities do not reply satisfactorily within two months, the Commission may refer the matter to the Court of Justice.

What is the aim of the EU rule in question ?

Public procurement is about how public authorities spend public money. It covers purchases of everything from coffee to computer systems, waste water plants, ship building or consulting services. Total public procurement in the EU is estimated at about 17% of the Union’s GDP. The open and transparent tendering procedures required under EU public procurement rules mean more competition, stronger safeguards against corruption, and better service and value for money for taxpayers.

How is the Czech Republic not respecting these rules and why are citizens and business suffering as a result ?

According to the European public procurement Directive 2004/18/EC, the award of public contracts must be made on the basis of an EU-wide tender procedure. However, the Directive provides for an exemption from this obligation in cases where the contracting authority buys specific military material and a public tender would put the essential security interests of the relevant Member State at risk.

In April 2008, the Czech Ministry of Defence directly awarded a public supply contract worth €132 million for four military tactical transport aircraft CASA-295M without organising a tendering procedure. The Czech authorities considered that no public tendering procedure would be necessary as the aircraft would be used mainly for military missions of the Czech Republic, i.e. for the protection of essential security interests of the State.

However, a Member State can elect not to carry out this procedure only if the tendering procedure as such would present a risk for its essential security interests. In the Commission's view, the Czech Republic prevented proper competition on the European market by awarding such a contract without a proper tender procedure and may have wasted taxpayer's money without requesting other competitive offers. As no satisfactory reply was provided on why launching a tender procedure would present a risk to the protection of essential security interests of the State, the Commission has decided to proceed to the second stage of the formal infringement procedure by issuing a reasoned opinion.

About infringement procedures

The European Commission has powers under Article 258 of the Treaty on the Functioning of the European Union (TFEU) to take legal action – known as infringement procedures – against a Member State that is not respecting its obligations under EU rules. These procedures consist of three steps. The first is that the Member State receives a letter of formal notice seeking information if the Commission has concerns that there may be a breach of EU law and has two months to respond. If the Commission's concerns about a breach of EU legislation are confirmed, the Commission sends a reasoned opinion requiring the Member State to comply with EU law within two months. If there is no satisfactory reply, the Commission can refer the matter to the Court of Justice in Luxembourg. If the Court rules against a Member State and the Member State does not comply with the Court's ruling, the Commission can also request that the Court impose a fine on the country concerned.

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