The EU’s International Procurement Instrument – IPI

KEY POINTS

Application

The regulation applies to all public procurement procedures covered by:

• Directive 2014/23/EU on awarding concession contracts – see summary;
• Directive 2014/24/EU on public procurement – see summary; and
• Directive 2014/25/EU on public procurement in the utilities sectors (water, energy, transport and postal services) – see summary.

IPI measures can only apply to businesses, goods or services from non-EU countries that are not parties to the plurilateral World Trade Organization Agreement on Government Procurement or to bilateral or multilateral trade agreements concluded with the EU that include commitments on access to public procurement or concession markets, or to businesses, goods or services from countries that are parties to such agreements but only with respect to public procurement procedures for goods, services or concessions that are not covered by those agreements.

Investigations and consultations

On its own initiative, or following a substantiated complaint by an interested party in the EU or by an EU Member State, the Commission:

• may initiate an investigation into an alleged non-EU country measure or practice by publishing a notice in the Official Journal of the European Union, inviting interested parties and Member States to provide information;
• shall, upon initiation, invite the non-EU country concerned to submit its views, provide relevant information and enter into consultations to eliminate or remedy the alleged measure or practice;
• can suspend the investigation and consultations at any time if the non-EU country:
  • takes satisfactory corrective action to eliminate or remedy the measure or practice, or
  • commits to ending the measure or practice within 6 months.

The investigation and consultations must be concluded within 9 months (or 14 months in justified cases).

Upon conclusion of the investigation and the consultations, the Commission publishes a report that sets out the main findings and a proposed course of action. The Commission:

• shall terminate the investigation if the alleged measures or practices are not maintained or do not result in a serious and recurrent impairment of access by EU businesses, goods or services;
• shall adopt an IPI measure if the existence of the alleged measure or practice is confirmed.

IPI measures

If the investigation finds that such measures or practices exist, the Commission shall, if it considers it to be in the EU’s interest, adopt an IPI measure (a measure limiting the access of businesses, goods or services originating in non-EU countries to the EU public procurement or concession markets by means of an implementing act).

The EU’s interest will take into account all various interests taken as a whole, including the interests of EU businesses.

The IPI measure:

• may be designed as a score adjustment to tenders submitted by non-EU-country bidders or exclude tenders completely;
• applies to all public procurement procedures above a threshold of €15,000,000 (excluding VAT) for works and concessions, or €5,000,000 (excluding VAT) for goods and services, including dynamic purchasing systems and framework agreements;
• expires after 5 years but may be extended for a further 5 years.

Obligations for tenderers

For all public procurement procedures subject to IPI measures, successful tenderers (regardless of their origin):

• must not subcontract more than 50% of the total value of the services contract to non-EU businesses subject to an IPI measure;
• must not supply or provide goods or services originating in the country subject to an IPI measure that would represent more than 50% of the total value of the contract whose subject matter covers the supply of goods;
• must pay a charge, if the above obligations are not observed, of 10–30% of the total value of the contract.

Exemptions

The Commission may, following a request by a Member State, adopt a list of local contracting authorities in the Member State, based in areas with a population below 50,000 inhabitants, to be exempted from the application of this regulation.

No IPI investigation shall be initiated in respect of the least-developed countries.

Exceptions

Contracting authorities and contracting entities may on an exceptional basis decide not to apply an IPI measure if:

• there are only tenders from businesses originating in a non-EU country subject to an IPI measure; or
• it is justified for overriding reasons relating to the public interest.