RICERCA ITALIANA     

Research program

THE RELATIONSHIP BETWEEN EUROPEAN ADMINISTRATIVE LAW AND GLOBAL ADMINISTRATIVE LAW

University Co-ordinator

Università degli Studi del MOLISE - SCIENZE GIURIDICO-SOCIALI E DELL'AMMINISTRAZIONE - ()

Research Unit Leader

Hilde Caroli Casavola

Description

This research project has the aim of analysing the increase, the interaction and its consequences of international rules and standards for public procurement. European Union, international institutions and informal international networks take decisions directly relevant in national legal orders. As result of this development, public contractors are increasingly subject to the application of non-domestic rules of contract. To a varying extent in different countries, national public procurement legislation has broadened from its traditional concerns with ensuring public institutions act in accordance with the empowering supranational provisions. These provisions seek to promote transparency, to increase accountability in the exercise of administrative discretion and to improve the efficiency of administration.
This project proposes that much of European and international public procurement regulations be understood as a general development of administrative action. In analytical terms, this conceptual framework will help to conceive of many isolated elements as part of a common phenomenon, with mutual learning and exchange between the different parts (rule-making, decision-making etc.). Practically, this shift can help to identify instruments and structures for realizing better normative systems in accordance with existing domestic administrative law and emerging wider needs.
The field of public purchasing has been concerned mainly with national processes for procurement and other aspects of the traditional theoretical scheme of “public contract”. European Union and some international institutions and networks provide mechanisms of wider scope, such as the Government Procurement Agreement (GPA) and the World Bank procurement procedures, but these developments have been separated and have yet to be integrated and theorized. Even though the European Union today has integrally connected much national administrative action with broader intergovernmental or trans-national processes, public procurement domestic regulations continue to deal with conceptual frameworks that emerged in the context of the autonomous nation-state.
The choice to study this subject has at least four different reasons.
1. The relationship between the European regulation of the contracts signed by public administrations and the emerging international standards of public procurement is not yet well analized in the European administrative law literature. The evolution of international and supranational legal orders is a crucial phenomenon to understand how the institute of contract has been modified in the last century. The main problems arising from this issue are: does it exist a common theoretical scheme of public contract in European countries? How is it applied within the supranational legal order?
2. Modern juridical sciences focuses on the relationships between different regulating levels. In this perspective, problems of conflict arise. Could international rules and standards prevail on different European substantive legislation? Yet, how should international and supranational public procurement guidelines, pacts and agreements be conceived? Since the final relevant acts are national, should those guidelines and agreements be thought as binding acts for domestic authorities?
3. Finally, such hybrid cooperative structures of procurement regulation express the need of balancing flexibility and uniformity. To what extent global mechanisms can effectively fulfil the general interests affecting the particular values of the autonomous regional systems, such as the European legal order, and thus achieve the best development of global procurement systems?
International standards and rules go beyond the national traditional legislative frameworks of the contract and the domestic public procurement regulations. These usually involve two general principles of national legal orders. First of all, contract is subject to the national law. Secondly, the nature of “public powers” as contractor does not always allow (because incompatible with) the application of legal system other than the domestic one.
The “de-nationalization” of public purchasing activities has three main drivers.
The first driver is the effort to achieve value for money. On 1997, a scientific research showed that, over 99,5% of public contracts signed in Great Britain with companies established in England, only the 64% of contracting companies were British companies (H. Gordon, S. Rimmer, S. Arrowsmith, “The Economic Impact of the European Union Regime on Public Procurement: Lessons for the WTO”, The World Economy, 1998, p. 63, spec. p. 184).
In many countries, the growth of free trade and international relationships concerns with obtaining economy in procurement, that is, acquiring goods and services from an external entity on the best possible terms. This valuable consideration can include the lowest price or the best financial and technical capability to fulfil the contract on the agreed term or the support of more strategic industrial objectives. Public procurement systems are strategic since public expenditure often accounts for a high proportion of national economic output. To create free trade, central governments adopt international agreements that normally require to modify the domestic legislations on public procurement. Thus, national legal systems have often to concern with external procurement rules. International trades encourage contractual relationships between foreign entities and these relationships contribute to open up national procurement regulations.
The main problem related to this aspect is to clarify if a new public procurement model exists. European and international contracting rules and standards could not only limit the application of the described traditional principles of domestic regulation, but also define an integrated set of different principles.
The second driver is the European Union. Discriminations in public procurement against firms and products from other Member States are prohibited by the general EC Treaty provisions on free movement. The economic integration of different territorial areas includes the definition of rules, procedures and practices for access and participation to public procurement. The evolution towards supranational regulation from a free trade perspective has come largely from developments at a regional level. Community directives provides criteria not only to select economic operators, but also to allow the demonstration that they satisfy the required conditions for procurement. Most countries sign bilateral and multilateral agreements that can also provide contracting rules and standards for public institutions. These agreements or other cooperative administrative arrangements shape multi-level relationships. Contractors may include entities from a range of State and sub-State governments.
The research approach to this topic will focus on provisions of contract regulation, such as the principles of information disclosure (transparency), non discrimination, competition and the standards of environmental and social character. The new public procurement directives (nn. 2004/17-18) establish coordination mechanisms of contracting and signing procedures in a few public utilities sectors (water, energy, transport and mail services). In some cases, European law requires Member States and the competent national authorities to take part in trans-national cooperation bodies, empowered to set binding technical standards (like Joint Aviation Authorities – JAA). In some other cases, European Union directly draws up bilateral agreement that have to be performed by its Member States (as the bilateral agreements with Korea, Israel and Switzerland).
Also concerning this aspect, there is the possibility of a conflict between European procurement law and international contracting rules and standards. One example of such a conflict is provided by the Value-Added Tax case, investigated by the Wto Committee on Government Procurement, on 1984 (Panel on Value-Added Tax and Threshold, GPR/21 – 31S/247, report adopted on 16 may 1984). The United States argued that the EEC practice of deducting payable Vat charges in determining wheather contracts met or exceeded the WTO Procurement Agreement’s Threshold for coverage was contrary to the obligations of the Agreement. The Panel found that the term contract value in art. I.1(b) of that Agreement should be interpreted to be the full cost to the procuring entity, «taking into account all the elements that would normally enter into the final price, and would therefore include any VAT payable». It suggests that global law can prevail over European law, but, as a matter of fact, both regimes needs to take into account the interpretation and application of their respective rules.
Both elements of World Bank development policies and the need of private contractors to obtain guarantees against unfavourable State decisions, represent the third driver of a new public procurement regime.
In the view of World Bank action, public purchasing and contracting is a strategic instrument to promote economic development and rationalization of exploitation of global resources. The World Bank Consultancy and Procurement Guidelines are internal rules not subject to any formalized review mechanism. Originally these documents mean to ensure primarily the conformity of individual decisions with the specific procedures of the Bank. For States depending on aid or vulnerable to reduced financial flows, these rules, anyway, are binding decisions. Global institutions, thus, use financial decisions that most of the times are unbinding acts, for their purpose.
As second element, private parties seek to protect themselves against national protectionist decisions. Governments traditionally use procurement to promote domestic industry. This means, for example, that States can change its internal fiscal legislation and unilaterally adopt measures less favourable to foreign private party, or can modify the juridical framework of the contracting public body, after signing contract.
In these cases, the problem deals with national sovereignty. Some administrative functions classically fall within the State tasks and extra-State administrations, by contrast, cannot limit such a competence. International institutions are thought to be accountable primarily to the States creators. Neither cooperative structures might be regarded as accountable, because of their informal and consensual character. Domestic public procurement procedures and domestic administrators implementing European and international rules and standards, can hardly be portrayed as fulfilling a merely national tasks. Which mechanism then could allow to control traditional national powers that can influence the regulation of interests and problems of extra-State scale?