Regulation 17 – Public contracts and design contests involving defence or security aspects which are awarded or organised pursuant to international rules

Commentary

Regulation 17 transposes Article 17 of Directive 2014/24/EU and establishes what sets of rules are applicable to a public contract or design contest involving defence or security and have an international component of sorts. Similarly to the relationship between Regulations 4 and 16 regarding mixed procurement including elements of defence and security, Regulation 17 PCR2015 establishes rules especial to those in Regulation 9 for public contracts and design contests involving defence or security aspects which are awarded or organised pursuant to international rules.

Indeed, it should be reminded that Regulation 9(4) and Article 9(3) of Directive 2014/24/EU introduce an unnecessary cross-referral to the rules applicable to defence and security procurement for those cases in which the specific “international” procurement concerns goods, works or services covered by the special rules. Hence, once more, it will be interesting to try to identify to what extent the rules under Regulation 17 differ from those under Regulation 9.

In that light, it is worth reminding that Regulation 9 established three basic rules: 1) it creates space for compliance with international law obligations; 2) it creates a specific criterion that money rules, so that procurement funded by international organisations or international funders is subjected to their procurement processes; and 3) it allows for negotiated solutions to mix-funded projects, where the international organisations/funders only provide part of the funds.

Regulation 17 establishes the same three basic rules._. As such, first and in accordance with 17(1) the rules of Part 2 do not apply to procurement carried out under an international law framework, ie in compliance with the an international agreement or arrangement. This includes those for the stationing of troops and concerning the undertakings of a mMember State or a third country.

Second, as paragraph (2) replicates the criterion that money rules, so that procurement involving defence or security aspects that is funded by international organisations or international funders is subjected to their procurement processes.

Finally, in paragraph (3) it allows for negotiated solutions to mix-funded projects, where the international organisations/funders provide a majority of the funds. In this scenario their procurement rules do not apply automatically and the parties will still have to reach an agreement. Naturally the agreement can be for those other procurement rules to apply instead of Part 2.

It is interesting to note that in case the contract or design contest is not funded in the most part (ie, only 50% or less) by the international organisation or international financing institution, then Part 2 is still applicable and will have to be complied with, unless it is covered by the exception or Regulation 9. This may lead to some rough edges as said international organisations may have internal rules stating they can only disburse funds in case their own public procurement rules are followed.

The only difference between Regulations 9 and 17 is in the specific international law instruments that give rise to the exception under the first rule (ie recognition of international law obligations). While Regulation 9(1)(a) refers to “a legal instrument creating international law obligations, such as an international agreement, concluded in conformity with the Treaties,”, Regulation 17(1)(a) and (b) refer to “an international agreement or arrangement, concluded in conformity with the Treaties” and simply to “an international agreement or arrangement“, respectively.

Last modified: July 5, 2016 by Pedro Telles

17.—(1) This Part does not apply to public contracts, or design contests, involving defence or security aspects which the contracting authority is obliged to award or organise in accordance with procurement procedures which are different from those laid down by this Part and are established by any of the following:—

(a) an international agreement or arrangement, concluded in conformity with the Treaties, between a member State and one or more third countries (or subdivisions of such countries) and covering works, supplies or services intended for the joint implementation or exploitation of a project by its signatories;

(b) an international agreement or arrangement relating to the stationing of troops and concerning the undertakings of a member State or a third country;

(c) an international organisation.

(2) This Part does not apply to public contracts, or design contests, involving defence or security aspects which the contracting authority awards or organises in accordance with procurement rules provided by an international organisation or international financing institution where the public contracts or design contests concerned are fully financed by that organisation or institution.

(3) In the case of public contracts, or design contests, co-financed for the most part by an international organisation or international financing institution, the parties shall agree on applicable procurement procedures.