The European Commission has decided to send a formal request to Lithuania regarding the award of a works contract by Lithuania Railways for the modernisation of the railway radio communication system through the introduction of a GSM-R system.

The European Commission has decided to send a formal request to Lithuania regarding the award of a works contract by Lithuania Railways (Lietuvos gelezinkeliais) for the modernisation of the railway radio communication system through the introduction of a GSM-R system. In the Commission's view, the use by Lithuanian Railways of the negotiated procedure without a prior call for competition was contrary to EU public procurement rules. This formal request takes the form of a “reasoned opinion”, the second stage of the infringement procedure laid down in Article 226 of the EC Treaty. If there is no satisfactory reply within two months, the Commission may refer the matter to the European Court of Justice.

After publishing a contract notice on the launch of an open procedure for the award of the contract above, Lithuanian Railways decided to reject the two offers received, qualifying them as unsuitable, in view of certain incompatibilities with the technical requirements specified in the tender documents. It decided then to resort to the negotiated procedure without a prior call for competition for the award of the contract.

However, the Commission considers that the offers received could not be qualified as unsuitable since those offers were apt to meet the purpose of the contracting authority. Therefore, the contracting entity was not allowed to resort to the negotiated procedure without a prior call for competition. The correct qualification of a deficient offer under the provisions of Directive 2004/17/EC is of utmost importance since the legal consequences bear directly on the competition that takes place for the contract.

The Commission concludes thus that the above procedure breaches Article 40 (2) and (3) (a) of Directive 2004/17/EC which provides that contracting entities may use a procedure without prior call for competition when no tenders or no suitable tenders or no applications have been submitted in response to a procedure with a prior call for competition, provided that the initial conditions of contract are not substantially altered.

The contract above was awarded for a total price of EUR 59,578,199.96 and the project linked to it has been selected for co-funding by the EU Cohesion Fund (85% of the total cost).