The Government Procurement Review: Greece
As Greece is an EU Member State, the relevant directives on public procurement apply. Thus, the Greek Law for Public Procurement evolves following the developments and pace of EU legislation. The Greek legislature has opted for a gold-plating method of transposing the directives into domestic law (i.e., repeating the terms and exact content of the directives, instead of rephrasing or exploring the margins available for adaptation or derogation). As an EU Member State, Greece is also a contracting party to the World Trade Organization (WTO) Agreement on Government Procurement (GPA).
Currently, the legislation concerning public procurement is mainly contained in Law 4412/2016, published in the Government Gazette of 8 August 2016. With this law, the 2014 Public Contracts Directive and the 2014 Utilities Contracts Directive were transposed into national legislation after the expiry of the period for implementation. The conduct of procurement procedures below the threshold is regulated in detail and unified with rules implemented to procurement governed by EU public procurement legislation. For procurements both under the threshold and with an estimated value of over €30,000 fundamentally similar rules typically apply.
The special rules set out in Law 3978/2011 concerning contracts in the field of defence and security still apply. The 2014 Utilities Contracts Directive is transposed into Book II of Law 4412/2016, where special rules are set wherever necessary, all the while maintaining extensive references in Book I, where the general rules are to be found.
In relation to the rules under 2014 Concession Contracts Directive, Law 4413/2016 was published at the same time. This law sets the relevant rules that apply to the award and execution of concession contracts.
In the Greek public procurement system, there is a plethora of statutory bodies that are involved in controlling and guiding the contracting authorities. Law 4013/2011 established the Hellenic Single Public Procurement Authority, which exercises both advisory and auditing powers. Its most notable powers include giving assent to negotiated procedures with a budgeted expenditure above the thresholds, as well as forming and issuing templates for bid documents and guidelines. Law 4412/2016 established an independent public procurement review authority, the Authority for the Examination of Preliminary Recourses (AEPP), with the responsibility of examining preliminary appeals filed against acts of contracting authorities and entities issued in the context of award procedures with an estimated value of more than €30,000. In addition, judicial review of the decisions of the AEPP is also available, conducted by either the Council of State (the Supreme Administrative Court of Greece) or the administrative courts of appeal, depending on the case. Finally, the Court of Auditors (the Supreme Financial Court) performs the pre-contractual audit before the signing of public contracts with a value exceeding €1 million. Bodies of centralisation of the procurement procedure are, in the case of public procurements, the General Secretariat of Commerce of the Ministry of Economy, which executes the public procurement programme, as well as the National Central Authority for Health Procurements, which executes central hospital procurement programmes for all the country's hospitals, especially in the form of framework agreements.
Finally, Article 18 of Law 4412/2016 repeats the provisions of European law on the applicable general principles: the principle of equality (equal footing of the economic operators), the principle of transparency, the principle of proportionality and the principle of mutual recognition. In addition, it established the principle concerning freedom of competition in the field of public procurement and introduced a rule stipulating that procurement procedures must not be designed with the purposes of circumventing the rules on public procurement or artificially restricting competition. Furthermore, the law also introduced rules on protecting the public interest, the principle of sound financial management and the protection of individual rights (with a view to preventing arbitrary interference in the contractual balance), as well as the principles of environmental protection and sustainable development.
Year in review
Over the past year, there have been legislative developments of both a contingent and a structural nature.
As mentioned in the previous two editions, legislation was issued to tackle the urgent needs arising in the health emergency resulting from the covid-19 pandemic. Those rules allowed extensive use of negotiated procedures for the supply of medical supplies and other equipment, items and services (e.g., information technology equipment) necessary for the continued operation of many contracting authorities and entities in adapting to the new situation. According to Law 4683/2020, a suspension of procurement processes and relevant deadlines (and the extension of those due to expire) may be introduced by ministerial decision and by sector, even during the execution of the contract. Despite concerns – some of which have been documented, regarding compliance with the transparency principle in contracting procedures concerning pricing, specifications and lack of control of entities entering into such contracts with a large number of contracting authorities – these extraordinary procedures are still being applied on a large scale. In 2021, a significant piece of such legislation remained in force until 31 March 2022 due to the persistence of the pandemic, according to Law 4876/2021.
In 2021 and following broad institutional dialogue, an extensive amendment of Law 4412/2016 was undertaken through Law 4782/2021 (published in the Government Gazette of 9 March 2021). The main topics of the reform may be summarised as follows:
- further flexibility when negotiated procedures are allowed;
- enhancement of the institutional framework for centralised procurement;
- more detailed regulation of performance and participation bonds;
- amendment of certain points on qualitative selection and exclusion grounds, taking into account recent case law;
- introduction of a workable blacklisting process;
- provision for optional reversal of the order of the bid review (i.e., starting from the financial offer);
- an increase of the free contracting threshold to €30,000; and
- simplification of the judicial review procedure.
Two major rulings of the Council of State may be mentioned. The first is Decision 91/2021 by the Plenary Session of the Court on the effect of the tacit rejection of the preliminary recourse by the AEPP. Under this decision, tacit rejection of the recourse equals unjustified rejection, the decision is suspended and the file sent back to the AEPP for an answer concerning the grounds of the recourse.. In the second, Decision 832/2021, the Council of State, in litigation during the procurement process for the new Athens Riviera Casino, found that the entity whose preliminary recourse challenging the validity of a competitor's bid was accepted by the AEPP is nevertheless entitled to pursue examination of all the grounds of this recourse. Thus, all claims and grounds are brought before the judge immediately after the AEPP's decision is finalised.
Scope of procurement regulation
For the provisions of Book I of Law 4412/2016 to apply, two conditions must be met. First, the contracting party is required to be a contracting authority (subjective condition) and, second, the contract must have as its object the acquisition of works, goods or services, regardless of whether the works, goods or services are intended to serve the public interest. Especially regarding the application of the provisions incorporated in compliance with EU law, it is required that the budgeted expenditure exceeds certain thresholds.
For the provisions of Book II of Law 4412/2016 to apply, the contracting party is required to be a contracting entity (subjective condition) and the contract must have as its object the acquisition of works, supplies or services, provided that these works, supplies and services are intended for the execution of activities in the public interest. Relevant thresholds also apply.
As of 1 January 2022, the thresholds – excluding value added tax (VAT) – for the implementation of the provisions of Book I are as follows:
- €5.382 million for public works contracts;
- €140,000 for public supply contracts, service contracts and contracts for studies, awarded by central government authorities;
- €215,000 for public supply contracts, service contracts and contracts for studies, awarded by non-central contracting authorities; and
- €750,000 for public service contracts relating to social and other special services.
The thresholds of budgeted expenditure – excluding VAT – for the application of the provisions of Book II (Utilities Contracts) are as follows:
- €431,000 for supplies and services, as well as for design competitions;
- €5.382 million for works; and
- €1 million for public service contracts relating to social and other special services.
To calculate the estimated value, rules similar to those under the previous legal framework are reiterated: in the event that the contracting entity consists of separate business units, the total estimated value for all units is taken into account.
When a tender that may lead to the award of contracts in the form of separate sections is held, the total estimated value is taken into account. Special rules are introduced for periodic supplies or services; for special services, such as insurance or banking and for indefinite contracts. Furthermore, the pre-existing exclusion of certain contracts – such as those related to, inter alia, the purchase or lease of land and existing buildings, arbitration services, legal services (albeit with a more precise definition), and loans – from the law is also reiterated.
Law 4412/2016 clarifies and significantly simplifies the status of amendments to contracts during their term, an issue for which there are even special provisions related to works contracts. Amendments are allowed in the following cases:
- when the amendments, regardless of their monetary value, are provided for in clear, precise and unequivocal review clauses in the original bid documents – such clauses may also include price review clauses or options;
- for additional works, services or goods that became necessary, with the limit set at 50 per cent of the value of the original contract;
- when the following cumulative conditions are met:
- unforeseen events;
- no change in the nature of the contract; and
- the price increase does not exceed 50 per cent;
- in the case of substitution of the initial contractor with a new one, as a consequence of an explicit review clause or universal or partial succession of the initial contractor due to corporate restructuring; and
- in the case of non-essential amendments.
The aforementioned conditions for amendment do not have to be met if the amending contract is of a value below the thresholds applicable under EU law and below 10 per cent of the initial value of the contract in the case of service and supply contracts, and below 15 per cent of the initial value of the contract in the case of works contracts.
In this context, the transfer of the contract to a different contractor is also addressed, without any further flexibility on this issue. Greek law remains strictly in accordance with the established jurisprudence that has been in place since the 1990s, which does not allow for changes of the bidder in the period between the submission of a tender and the award of the contract.
Special contractual forms
As special contractual forms, in the context of Law 4412/2016, we can cite the following.
The innovation partnership is a special form of award aiming at the award of an innovative product, service or work, as well as at their subsequent purchase by the contracting entity, provided that they meet the performance and maximum cost levels agreed between the contracting entities and the participants.
There are provisions that stipulate the use of dynamic purchasing systems for commonly used purchases, the characteristics of which, as generally available on the market, meet the requirements of the contracting entity.
Contracting authorities may resort to electronic auctions, in which new, reduced prices or new values, or both, are presented in relation to certain elements of the bids. The electronic auction is organised in the form of a repetitive electronic process, conducted after a preliminary full evaluation of the bids, allowing their classification on the basis of automatic evaluation methods.
With regard to subcontracting, it is expressly provided that the contracting entity shall ask the bidder to state in its bid the part of the contract that it intends to assign to third parties in the form of subcontracting, as well as the subcontractors it proposes.
Awarding a contract in the form of sections and limiting the sections for which a bid may be submitted or a contract may be awarded are both permitted. Contracting authorities must specify in the contract notice or the invitation to confirm interest whether the bids are submitted for one, more or all sections. Contracting authorities may also limit the number of sections that can be awarded to one bidder, even if the bids may be submitted for many or all of the sections, on the condition that the maximum number of sections per bidder is specified in the contract notice or the invitation to confirm interest.
Regarding public–private partnerships (PPPs), there is already a legal framework in place set out by Law 3389/2005, which determines the minimum content of PPP contracts. The applicable legal framework is clear and flexible, thus decreasing the need for aberrations and subsequently the need to appeal to Parliament for ratification (the partnerships are governed primarily by the provisions of the partnership contracts themselves and by the provisions of the Civil Code). A slew of problems, which in the past required special legal regulations (expropriations, issuance of permits, protection of the environment, etc.), are now dealt with by special provisions. However, this form of PPP has not been widely used. On the contrary, in any process of awarding a public service or public works, infrastructure or privatisation contract, special regimes have been introduced and, in the vast majority of cases, the process of selecting a partner or concessionaire from the private sector has been followed by the legal ratification of the relevant contract.
The rulings of the plenary session of the Council of State2 have provided a significant clarification of the status of contracts of companies in which a private entity has acquired a majority shareholding. In cases of this kind, and provided that a tender has been held for the selection of the private partner, the award procedures conducted by such a company are subject to public procurement rules and to the oversight of the relevant authorities, in particular the AEPP.
The bidding process
Contract notices include the information required in the form of standard documents, which are transmitted to the EU Publications Office for publication. Publication at national level is made through the Central Electronic Public Procurement Registry (KIMDIS). All communications and all information exchanges between the contracting authority and the economic operators, particularly the electronic submission of tenders, are done through the National System for Online Public Contracts. This rule applies to contracts with an estimated value of more than €30,000, excluding VAT.
The contracting entities may, for the purpose of selecting contractors, proceed with the following award procedures: open procedure; restricted procedure; competitive procedure with negotiation and previous tender notice; competitive dialogue; or innovation partnership. Contracting entities may engage in a negotiation procedure without prior publication in specific cases, which are explicitly and exhaustively described.
In the open procedure, any interested economic operator can submit a tender in the context of a contract notice. In the closed procedure, any economic operator may submit an application for participation in the context of a contract notice, providing information on the quality selection criteria. Only those economic operators invited by the contracting entity, after the evaluation of the information provided, may ultimately submit a bid. The contracting entities may limit the number of suitable bidders. In the competitive procedure with negotiation and previous tender notice, any economic operator may submit an application for participation in the context of a contract notice, providing information on the quality selection requested by the contracting entity. Only economic operators invited by the contracting entity are able to take part in the negotiations.
Negotiation without prior publication of a contract notice is allowed in the following cases:
- if a previous tender was fruitless;
- in the case of contracts aimed exclusively at research, testing, study or development and not seeking to make a profit;
- in the case of works, services and supplies that may be provided by a specific economic operator for the exclusively described reasons;
- in the case of an urgent need due to events unforeseen for the entity;
- for the purchase of goods or services on particularly favourable terms either from a supplier that permanently ceases its commercial activities, or by the liquidator of an insolvency procedure, a court settlement or a similar procedure;
- when the products are manufactured solely for the purposes of research, experimentation, study or development (however, the contracts that are awarded do not include quantity production to establish commercial viability or to recover research and development costs);
- for additional deliveries;
- for new works or services that involve the repetition of previous similar works or services; and
- for the purchase of goods from stock exchanges.
In the competitive dialogue, the process is similar to the procedure with negotiation with prior contract notice, but at the end there is a dialogue that aims at expanding and identifying the most appropriate means to satisfy the needs of the contracting entity.
For public contracts below the threshold, the contracting authorities may resort to, inter alia, direct award procedures for an estimated value equal to or less than €30,000 (recently increased).
iii Amending bids
In the case of procedures for the award of public supply or service contracts, the competent advisory board may propose, following a reasoned recommendation, that the contract be awarded in full or in a larger or smaller quantity in proportion to the percentage specified in the contract documents. This percentage cannot exceed 30 per cent in the case of tenders with a budget up to €100,000 including VAT and 15 per cent in the case of calls for proposals amounting to €100,001 or higher including VAT. To award part of the quantity below the percentage specified in the contract documents, prior approval by the supplier is required.
The jurisprudence recognises to a limited extent the ability of the nominated bidder to offer a discount at the award stage, without affecting the competition.
i Qualification to bid
Contracting authorities may establish and manage a pre-selection system for economic operators. This is a system corresponding to the supplier table. It must be ensured that the economic operators can apply for pre-selection at any time. When a contract notice is announced through the pre-selection system, either a closed tender is held or exclusively the economic operators included in the pre-selection table participate.
Another issue is regarding the grounds for exclusion: that is, the reasons that impose or allow the exclusion from participating in further proceedings for the sake of protecting the moral and legal integrity of the award procedure. At this point, the provision found in Article 73 of Law 4412/2016 is important. Article 73(1) provides for a known list of criminal offences justifying exclusion (e.g., participation in a criminal organisation, fraud) and states that a final (court) ruling that may not be irrevocable is required. According to the same article, grounds for exclusion may be sought for all members of the board of directors of the bidder. Candidates who have not acquired a tax certificate or a certificate of insurance are also excluded in accordance with the provisions of the country of establishment or national law.
Optional grounds for exclusion are also provided. The contracting authority may exclude any economic operator from participating in a public procurement procedure:
- if it can prove breach of its current environmental, social security and labour legal obligations;
- if the economic operator:
- is bankrupt or has been subjected to resolution proceedings or special liquidation;
- has its affairs and assets under compulsory administration by a liquidator or by the court;
- has entered into an arrangement with creditors or has suspended its business activities; or
- is in any similar situation resulting from a similar procedure;
- if the contracting authority has sufficient evidence to suggest that the economic operator has entered into agreements with other economic operators to distort the competition;
- if a case of conflict of interest cannot be effectively resolved using other, less intrusive, means;
- if a situation concerning the distortion of competition by the previous participation of the economic operators in the preparation of the procurement process cannot be effectively treated using other, less intrusive, means;
- if the bidder has shown serious or recurring misconduct in the performance of a substantive requirement under a previous public contract resulting in an early termination of the previous contract, compensation or other similar penalties;
- if the economic operator has been found guilty of serious misinterpretation in supplying the information required for the verification of the absence of grounds for exclusion or the fulfilment of the selection criteria, has withheld this information or is unable to provide the required supporting documents;
- if the economic operator attempts to unduly influence the decision-making process of the contracting authority in a fraudulent way, to obtain confidential information that may confer an unfair advantage or to negligently provide misleading information; and
- if the contracting authority can prove that the economic operator has been guilty of grave professional misconduct, which compromises its integrity (a right to counter-evidence is granted to the bidder).
It is also possible to exclude an economic operator from ongoing and future procurement procedures for a reasonable period.
ii Conflicts of interest
When members of the staff of the contracting authority that are involved in the procedure for signing public contracts have a direct or indirect financial or other personal interest that could be perceived as an element affecting their impartiality and independence, a conflict of interest arises.
With regard to the tenders carried out on the basis of Law 4412/2016, 'interests' may include the existence of a contract of employment, the execution of works, the rendering of services or the sale of products between a member of the board of the contracting entity and an economic operator involved in the procurement process, covering a period starting 12 months before the initiation of the procurement process and expiring on the date the contract is concluded.
The last resort in dealing with a conflict of interest is to exclude the participant associated with the person through whom the conflict of interest occurs. An exclusion issue would be raised if the remaining procedural guarantees were not met or it was proved that there was influence at any stage of the tender, including in the formulation of the issues of the declaration.
iii Foreign suppliers
Eligible to participate in procurement procedures regarding the contracts referred to in the WTO GPA Annexes are natural or legal persons established in an EU Member State, in an EEA Member State or (in third countries that have signed and ratified the WTO GPA. Especially in the latter case, the contracting entities reserve to the economic operators of these countries treatment equally favourable to that given to economic operators established in the European Union and in third countries that do not fall into this category but have concluded unilateral or multilateral agreements with the European Union concerning public procurement procedures. This provision also defines the circle of economic operators entitled to participate in procurement procedures and, accordingly, companies established in countries other than the aforementioned are excluded. In practice, this refers predominantly to China.
One question that arises is whether contracting authorities can expand the circle of those eligible to participate. The AEPP ruled that such an expansion, with reference to countries that are observers of the WTO GPA (such as China), is not prohibited. Of course, there has been no case law on the matter to date, nor has there been a case concerning the contracting authorities and the provisions of Book I of Law 4412/2016, as in the case of the latter the use of templates is mandatory and deviation from the aforementioned rule is not allowed.
i Evaluating tenders
The contracting authorities base the award of contracts on the most economically advantageous tender. The most economically advantageous tender is determined based on the price or the cost, using a cost-effectiveness approach method, and may include the optimal value for money. However, the award criteria do not result in the provision of unlimited freedom of choice to the contracting entities.
The award criteria are determined by the contract documents. The contracting entity specifies the relevant weighting, unless the criterion is solely the price. The grading of the criteria is fully and specifically justified, and includes, in addition to the grading, the wording of this reasoning per criterion.
The process of concluding a contract (submission, opening, evaluation of bids and applications for participation, selection of participants, submission of tender documents and contract, and determination of time limits for the completion of all or individual procedures) shall be carried out in accordance with the provisions of Articles 92 to 100, and 103 and 104 of Law 4412/2016.
Moreover, this law provides for the possibility of clarification or completion of supporting (and other) documents submitted within a reasonable time limit, which cannot be shorter than seven days. The feature described above applies to both the supporting documents and the technical bid. This option is precisely defined by law. The provision of the option of clarification or supplementation is obligatory for the contracting entity if the bidder is about to be excluded.
ii National interest and public policy considerations
As Greek public procurement law is largely in line with European directives, there is little room for national or local preferences. Nonetheless, social and environmental aspects are very important and particularly taken into account when determining or examining the grounds for exclusion.
The administration is, in principle, free to formulate at its discretion the terms of the declaration. Determining specific technical characteristics from a quantitative and qualitative standpoint, on the basis of its particular needs, and the establishment of specifications that the contracting authority deems appropriate or necessary to serve its needs cannot be construed as violating the provisions and fundamental principles of EU law, since by their very nature the specifications in question are supposed to limit the circle of economic operators able to fulfil the necessary requirements and participate in the public tender.
The provisions of Law 4412/2016 now explicitly provide that the technical specifications established by the declaration are formulated not only with reference to European, international or national standards (pursuant to the specific distinctions of the above provisions), but also with reference to performances or operational requirements. Contracting authorities enjoy broad powers in formulating technical specifications with additional features regarding the goods to be procured, in addition to those required to obtain the EU administrative CE marking, through a certificate issued by a certified body. This is also confirmed, from a legal point of view, by their power to set technical specifications by referring to performance and operational requirements, and not just by referring to standards such as the CE marking.
In any case, the contracting authorities are required to state in the declarations that it is permissible to accept products with equivalent characteristics, when there is a reference to a particular method or standard, and accept such products. However, the burden of proving that the products possess equivalent characteristics lies with the economic operator.
As almost all award procedures take place electronically, all bidders have access to the bids of the other participants and can even download them to inspect them in detail. However, bidders are entitled (and the tender system allows them) to have certain documents or items classified as confidential, provided that this is required for reasons of confidentiality protected by law, as is, for instance, trade secrecy in relation to certain cost components of the bid.
The obligation to provide information is also extensive, as it is necessary to notify the relevant acts by which the contracting authority promotes or completes the tender to those who have not been definitively excluded. In this context, exclusion is also definitive when the application for annulment of the act by which the economic operator was excluded is rejected.
Book IV of Law 4412/2016 sets out the procedure for challenging and reviewing acts (decisions) of the contracting authorities in which a particular bidder is harmed, either through being excluded or because an offer that should have been rejected was instead accepted. This book largely takes into account the rules concerning the transposition of the Remedies Directives that applied before the adoption of Law 4412/2016, but it also includes some important innovations.
The provisions of Book IV apply to disputes arising in the legal process of awarding contracts with an estimated value exceeding €30,000, excluding VAT, regardless of their nature.
The law provides for the filing of an appeal with the AEPP, from which the affected bidder is entitled to request interim protection, the annulment of an illegal act or omission on behalf of the contracting authority, or the annulment of a contract that has been illegally concluded.
The relevant time limits for the aforementioned appeal are, in the case of appeal against an act of the contracting authority:
- within 10 days of the date of notification of the contested act to the interested economic operator, if the act was notified by electronic means or facsimile, or within 15 days of the date of notification of the contested act to the interested economic operator, if other means of communication were used; or
- within 10 days of the full actual or presumptive knowledge of the act that harms the interests of the economic operator.
Especially in the case of an appeal against an invitation to tender, full knowledge of the invitation is presumed 15 days after its publication in KIMDIS. In the case of an omission, the time limit for lodging a preliminary appeal is 15 days from the day following the commitment of the contested omission.
Any interested party whose interests are affected is entitled to lodge an intervention before the AEPP within a mandatory time limit of 10 days of the notification of the appeal, presenting the reasons why the appeal in question must be dismissed.
The contracting authority must produce the file with the bid documents and relevant bids, as well as a memorandum on the merits of the recourse.
For the preliminary appeal to be admissible, a duty must be paid by the applicant to the state. The amount of the duty shall be at the rate of 0.5 per cent of the budgeted value (excluding VAT) of the relevant contract. The amount of the duty cannot be less than €600 or more than €15,000.
ii Grounds for challenge
Any infringement of the European or national legal framework, or of the invitation to tender, can be grounds for appeal. Furthermore, the challenged infringement is required to be detrimental to the economic operator.
Both the application for suspension of execution and the application for annulment before the competent courts are considered legal remedies against a decision issued by the AEPP on a preliminary appeal.
It follows from the above that, in the case of contracts with an estimated value above €30,000, the lodging of a preliminary appeal constitutes a requirement for the admissibility of the legal remedies that may follow.
The administrative court of appeal corresponding to the seat of the contracting authority has (territorial) jurisdiction to hear and rule on the application for suspension and the application for annulment. The Council of State has extraordinary exceptional jurisdiction in cases of procedures with an estimated value above €15 million and procedures governed by 2014 Concession Contracts Directive.
The law stipulates that claims for damages are heard and determined by the competent courts, depending on the nature of the contracting authority.
Law 4412/2016 has so far undergone a significant number of changes and amendments, which may be indicative of certain weaknesses in its initial processing or even a difficulty on the part of the contracting authorities to adapt to such a detailed framework. The introduction of Law 4782/2021 risks presenting contracting authorities and bidders with similar challenges, although for the purposes of a smooth transition, its main provisions are not immediately effective.
Another government policy goal that remains to be implemented is the centralisation of procurement through central procurement agencies and framework agreements, especially in sectors with massive external procurement and significant fiscal impact (for instance, pharmaceuticals and medical devices).
Law 4912/2022 proceeds with the merger of the AEPP and the Independent Authority for Public Procurement. Public procurement will be subject to the monitoring of a unified agency regarding both challenges of the acts and omissions of the contracting authorities and guidance to such authorities, including, inter alia, templates for bid documents, circulars and opinions on legislative proposals.