UN WG on business and human rights' report on AI procurement -- key findings and recommendations

Last week, the UN working group on business and human rights officially presented its thematic report on the procurement and deployment of artificial intelligence systems by States and businesses (A/HRC/59/53, 14 May 2025 — note there is also an executive summary infographic).

The report focuses on actions to be taken to facilitate alignment of AI procurement and deployment with the UN’s Guiding Principles on Business and Human Rights and addresses organisations procuring rather than developing AI. The report approaches procurement in broad terms by encompassing both public and private procurement, and by taking into account the position and responsibilities of States, business and stakeholders. The report contains a series of findings and recommendations.

findings on the Regulatory landscape

One of the report’s key findings is that ‘States are increasingly shifting from voluntary guidelines to binding legislation on AI and human rights, such as through the European Union AI Act and Council of Europe AI Convention. However, there are significant gaps in terms of rights-respecting procurement and deployment of AI systems, including a lack of a human rights-based approach, no consensus on key definitions, insufficient integration of the perspective of the Global South, the provision of broad exceptions and limited involvement of civil society. Further, enforcement gaps and loopholes are weakening human rights protections in existing legislation on AI and human rights.’ This requires a closer look.

The report highlights that ‘Globally, there are over 1,000 AI-related standards and over 50 AI governance initiatives based on ethics, responsibility or safety principles’. Although unsurprising, I find this interesting and speaks to fragmentation and duplication of regulatory efforts that create a complex landscape. Given the repeated recognition that AI challenges transcend borders and the calls for international collaboration (eg here and here), there is clearly a gap still to be addressed.

In that regard, the report stresses that ‘The lack of consensus on key concepts such as “AI” and “ethics” is leading to inconsistencies in the regulation of AI systems and is particularly problematic given the transnational nature of AI’, and highlights UNESCO’s Recommendation on the Ethics of Artificial Intelligence as the sort of document that could be used as a blueprint to promote policy coherence across jurisdictions.

Although the report identifies a recent shift from voluntary guidelines to legally binding rules for AI systems, such as the EU AI Act or the Council of Europe Framework Convention on AI, it also highlights that ‘there is still uncertainty regarding how to address certain loopholes in the EU AI Act’ and that the Framework Convention creates similar challenges in relation to the significant exemptions it contains, and the way it gives signatory States discretion to set its scope of application. Although the report does not take an explicit position on this, I think it takes a small step to conclude that legislative action needs to be far more decisive if the challenge of upholding human rights and fundamental values in AI deployment is to be met.

Another key finding of the report is that ‘States are largely procuring and deploying AI systems without adequate safeguards, such as conducting human rights impact assessments as part of human rights due diligence (HRDD), leading to human rights impacts across the public sector, including in relation to healthcare, social protection, financial services, taxation, and others.’ This results from the limited emerging approaches to AI procurement.

Indeed, focusing on the regulation of AI public procurement, the report highlights a series of approaches to developing legally binding general requirements for AI procurement and deployment, such as in Korea, Chile, California, Lithuania or Rwanda, as well as efforts in other jurisdictions to tackle specific aspects of AI deployment. However, the report also stresses that those regimes tend to have exemptions in relation to the most controversial and potentially harmful areas for AI deployment (such as defence and intelligence), and that the practical implementation of those regimes still hinges on the limited development of commonly understood standards and guardrails and, crucially, on public sector digital skills.

On the latter, the report clearly puts it that ‘Currently, there is an imbalance in knowledge and expertise between States and the private sector around what AI is, how it works and what outcomes it produces. There is also little space and time for procurers to engage critically with the claims made by AI vendors or suppliers, including as they relate to potential and actual human rights impacts.’ Again, this is unsurprising, but this renewed call for investment in capacity-building should make it abundantly clear that with insufficient state capacity there can be no effective regulation of AI procurement or deployment across the public sector (because, ultimately, as we have recently argued procurement is the infrastructure on which this regulatory approach rests).

The report then covers in detail business responsibility in relation to AI procurement and deployment and covers issues of relevance even in contexts of light-touch self-regulation, such as due diligence, contextual impact assessments, or stakeholder involvement. Similarly, the report finds that ‘Businesses are largerly procuring and deploying AI systems without conducting HRDD, risking adverse human rights impacts such as biased decision making, exploitative worker surveillance, or manipulation of consumer behavior.’

The final part of the report covers access to remedies and, in another of its key findings, stresses that ‘Courts are increasingly recognizing the human rights-related concerns of AI procurement and deployment, highlighting the urgent need for transparency and public disclosure for public and private sector procurement and deployment of AI systems, and the fact that existing remedy mechanisms lack resources and enforcement power, leaving communities without effective recourse for AI-related human rights abuses. Stronger legal frameworks, public reporting obligations, and independent oversight bodies are needed to ensure transparency, accountability and redress.’

The report thus makes the primary point that much increased transparency on AI deployment is required, so that existing remedies can be effectively used by those affected and concerned. It also highlights how existing remedies may be insufficient and, in particular, new ‘mechanisms will also need to be set up, creating integrated approaches that recognize the intersectional nature of AI-related harms and their disproportionate impact on at-risk groups. Effective redress for AI-related harms requires both strong institutional frameworks and deep understanding of how technology intersects with existing patterns of human rights violation and abuses, both of which are currently missing’ (this largely chimes with my view that we need a dedicated authority to oversee public sector AI use, and that preventative approaches need to be explored given the risks of mass harms arising from AI deployment).

recommendations

In order to address the unsatisfactory state of affairs document in the report, the working group formulates a log list of recommendations to States, businesses and other actors. In the executive summary, the following are highlighted as key recommendations to States.

  1. Establish robust legal, regulatory and policy frameworks on AI: Develop and implement AI regulations following a human rights-based approach that are aligned with international human rights law, ensuring transparency and accountability in AI procurement and deployment and legal certainty for all.

  2. Mandate HRDD: Require public disclosure, HRDD, and safeguards for AI systems procured and deployed by private and public sector actors, including AI systems used in high-risk sectors like law enforcement, migration management, and social protection.

  3. Prohibit Harmful AI Systems: Ban AI technologies incompatible with human rights, like mass surveillance, remote real-time facial recognition, social scoring and predictive policing.

  4. Ensure Access to Remedy: Strengthen judicial and non-judicial mechanisms to address AI-related human rights abuses, shifting the burden of proof to businesses and authorities, and ensuring adequate resources.

  5. Promote AI Governance Collaboration: Build global cooperation to establish common AI standards, fostering interoperability and ensuring the representation of Global South perspectives.

However, it is worth bringing up other recommendations included in the much longer list in the report, as some of them are directly relevant to the specific task of AI procurement. In that regard, the report also recommends that, with regard to AI procurement and deployment, States:

  • Provide specific guidance to public sector procurement actors on a human-rights based approach to the procurement of AI systems; including specific limitations, guidance and safeguards for AI systems procured and deployed in high-risk sectors and areas such as justice, law enforcement, migration, border control, social protection and financial services, and in conflict-affected areas;

  • Provide capacity-building for all stakeholders to understand the technical and human rights dimensions of AI, and ensure accessible, explainable and understandable information about the procurement and deployment of AI systems, including by mandating public registration of AI systems deployed by both public and private entities;

  • Ensure independent oversight of AI systems and require the provision of clear documentation on AI system capabilities, limitations and data provenance;

  • Promote meaningful stakeholder consultation and participation in decision-making processes around AI procurement and deployment;

These recommendations will resonate with the maim requirements (in principle) applicable under eg the EU AI Act, or proposals for best practice AI procurement.

Final comment

The report helpfully highlights the current state of affairs in the regulation of AI procurement and deployment across the public and private sectors. The issues it raises are well-known and many of them involve complex governance challenges, including the need for levels of public investment commensurate to the socio-technical challenges brought by the digitalisation of the public sector and key private market services.

The report also highlights that, in the absence of adequate regulatory interventions, States (and businesses) are creating a significant stack of AI deployments that are simply not assured for relevant risks and, consequently, are creating an installed base of potentially problematic AI embeddings across the public sector and business. If anything, I think this should be a call for a renewed emphasis on slowing down AI adoption to allow for the development of the required governance instruments.

Procurement as Infrastructure

In a new paper co-authored with Nathan Davies (Oxford Internet Institute), we revisit the theoretical conceptualisation of procurement and make the claim that it is infrastructure.

We argue for a fundamental shift in how public procurement is understood: not just as a regulatory or transactional tool, but as a foundational form of infrastructure that shapes state capacity and digital transformation.

This is very much a work in progress — we welcome comments, critiques, and collaboration as we develop it further!

The abstract is as follows:

Public procurement constitutes a fundamental governance mechanism through which states interact with markets. It is a vast and consequential function of government, accounting for approximately one-third of public expenditure in most economies. Existing public management scholarship has predominantly conceptualised procurement through legal-regulatory, economic, or administrative perspectives. Whilst valuable, these approaches insufficiently theorise procurement's role in structuring governance possibilities and enabling or hindering state capacity. This paper advances a novel theoretical intervention by reconceptualizing procurement itself as infrastructure rather than merely as a mechanism for acquiring or outsourcing it. Drawing on Susan Leigh Star's influential work in infrastructure studies (Star, 1999), we systematically analyse how procurement systems—comprising legal frameworks, administrative routines, professional practices, and technological platforms—function as embedded socio-technical infrastructures that enable and constrain governance. Supported by an examination of illustrative UK cases, including the Carillion collapse, Post Office scandal and COVID-19 PPE procurement failures, we argue that these are not isolated implementation failures but manifestations of infrastructural breakdown resulting from systemic overload coupled with maintenance neglect. This reconceptualization bridges public management scholarship with anthropological and socio-legal perspectives and outlines avenues for future research. For policymakers, our analysis emphasises that procurement requires sustained investment and attention, and appropriate use, rather than superficial regulatory adjustments that neglect its foundational capacity to structure governance outcomes.

The full paper is freely downloadable on SSRN: Davies, Nathan and Sanchez-Graells, Albert, Procurement as Infrastructure (June 16, 2025): https://ssrn.com/abstract=5297077.

Image credits: Elise Racine & The Bigger Picture / https://betterimagesofai.org / https://creativecommons.org/licenses/by/4.0/.

GenAI in the public sector: two interesting default prohibitions (Ireland and the Netherlands)

Nadia Piet & Archival Images of AI + AIxDESIGN / https://betterimagesofai.org / https://creativecommons.org/licenses/by/4.0/. A red-toned illustration shows a man's head surrounded by swirling AI icons, with small, mischievous witch-like figures flying around him. The man's expression appears disoriented and fatigued, symbolizing the mental overload caused by the overwhelming flood of AI tools and news. The witches represent the chaotic, cackling nature of rapid AI developments, adding to the sense of dizziness and confusion.

We are getting so used to the hype around generative AI (GenAI) that it may seem like we are on the verge of it being used for all purposes, everywhere, all the time. There is significant pressure on public sector organisations, in particular, not to miss the opportunity to reap its (expected, presumed) benefits.

However, GenAI comes with many challenges and risks, especially when we talk about free to use, generally available GenAI models. This is not sufficiently understood or recognised and most of the conversations I have on GenAI use with public sector leaders and procurement officials tend to quickly reach an awkward moment where I pop the bubble by stressing those risks and ranting about why I think GenAI should not just be used as is offered off the shelf (or at all, for public sector activities that need to comply with strict requirements of good administration and factuality).

In the context of public sector AI adoption, the widespread availability of these tools poses a significant governance challenge and I think we are just a bad decision away from a potentially very significant scandal / problem. The challenge comes from many directions, but especially through the embedding (or slipstreaming) of AI tools into existing systems and software packages (AI creep) and access by civil servants and public sector employees through free to use platforms (shadow AI).

Given this, I have been glad to see that two recent pieces of guidance on public sector AI use have clearly formulated the default position that non-contracted / generally available GenAI should not be used in the public sector and that exceptional use should follow a careful assessment and many interventions to ensure compliance with rightly demanding standards and benchmarks.

The Irish Guidelines for the Responsible Use of AI in the Public Service (updated 12 May 2025), building on an earlier 2023 recommendation of the Irish National Cyber Security Centre recommend “that access is restricted by default to GenAI tools and platforms and allowed only as an exception based on an appropriate approved business case and needs. It is also recommended that its use by any staff should not be permitted until such time as Departments have conducted the relevant risk assessments, have appropriate usage policies in place and staff awareness on safe usage has been implemented” (p 39).

In very similar terms, but perhaps based on a different set of concerns, the Dutch Ministry of Infrastructure and Water Management’s AI Impact Assessment Guidance (updated 31 Dec 2024) has also stated that the provisional position for central government organisations is that GenAI use is in principle not permitted: “The provisional position on the use of generative AI in central government organisations currently sets strict requirements for the use of LLMS in central government: “Non-contracted generative AI applications, such as ChatGPT, Bard and Midjourney, do not generally comply demonstrably with the relevant privacy and copyright legislation. Because of this, their use by (or on behalf of) central government organisations is in principle not permitted in those cases where there is a risk of the law being broken unless the provider and the user demonstrably comply with relevant laws and regulations.”” (p 41).

I think that these are good examples of responsible default positions. Of course, monitoring and enforcement a general prohibition like this will be difficult and more needs to be done to ensure that organisations put in place governance and technical measures to seek to minimise the risks arising from unauthorised use. This is also a helpful default because it will force organisations that purposefully want to explore GenAI adoption to go through the necessary processes of impact assessment and careful and structured consideration, as well as place a focus on the adoption (whether via procurement or not) of GenAI solutions that have appropriate safeguards and are adequately tailored and fine-tuned to the specific use case (if that is possible, which remains to be seen).

Bordering the irresponsible: Commission's Q&A on third country access to EU procurement post-Kolin/Qingdao

Hanna Barakat & Archival Images of AI + AIxDESIGN / https://betterimagesofai.org / https://creativecommons.org/licenses/by/4.0/. The image depicts a series of stone-like hands, fractured and cracked, reaching out in various directions from a chaotic mass of tangled wires. Some hands display broken fingers, while archival tags on others suggest anonymity and erasure. The juxtaposition of human forms and technological wires evokes themes of labor, exploitation, and the often unseen physical work behind the tech industry.

In the aftermath of the CJEU’s Judgments in Kolin (C-652/22, EU:C:2024:910) and Qingdao (C-266/22, EU:C:2025:178), there was much anticipation about a guidance document being prepared by the European Commission to address some of the many, complex, consequential issues left open by the Court (see comment here).

The Q&A-type guidance document was published by the Commission late last week. The document has already been the object of analysis and deserved criticism, eg by Marko Turudić and Pedro Telles. They both comment on most aspects of the document in detail, and make good points.

In this post, I focus on two issues arising from the document and link them to first principles of procurement, as well as the broader layers of regulation beyond the EU.

two Extremely problematic assertions

In the Q&A document, the Commission makes two extremely problematic assertions. First, on the level of transparency to be afforded to decisions on participation and, if applicable, differential treatment of third country operators. Second, on the ‘severability’ of EU, national (and international) principles-based requirements.

Transparency requirements

The Q&A document states as follows:

Contracting authorities may indicate in advance in the tender documents their decision to accept or not participation of non-covered third country economic operators and, if they admit them, the arrangements applicable to their tenders.

They may also decide not to make this known in advance. In the absence of any reference to this matter in the contract notice / tender specifications, the contracting authority / entity still has the possibility to accept or to reject a tender from an economic operator from a non-covered country at any moment during the procurement process (answer to Q5.3, emphasis added).

‘Severability’ of legal principles by their ‘origin’

The Q&A document also states that:

Economic operators from non-covered countries do not enjoy any rights deriving from EU public procurement law, including requirements for transparency and proportionality enshrined in EU law and transposed into the national legal order. It is open to competent national authorities to identify other national provisions (not transposing EU public procurement law) on which such economic operators might rely (answer to Q6.2).

And that, in ensuring compliance with the principle of the rule of law ‘Contracting authorities/ entities may base themselves on national legislation that does not transpose EU law’ (answer to Q6.4) and, further, that ‘any possible issue of compliance with the ECHR would concern national law only and would be unrelated to any instance of implementation of EU law by a Member State’ (answer to Q6.5, emphasis added).

Overall position

Combined, this sets out the combined position that (i) contracting authorities can make decisions based on undisclosed criteria at any point in the procurement process and that (ii) any transparency, etc requirements in relation to those criteria or those decisions can only stem from domestic legislation not transposing EU public procurement law / unrelated to any instance of implementation of EU law.

The CJEU benchmark

A first issue is that, in my view, the Commission’s assertions only partially follow from the Kolin and Qingdao judgments. It is thus worth recalling what the CJEU said. In Kolin, the Court established that:

‘While it is conceivable that the arrangements for treatment of such operators should comply with certain requirements, such as transparency or proportionality, an action by one of those operators seeking to complain that the contracting entity has infringed such requirements can be examined only in the light of national law and not of EU law’ (C-652/22, para 66).

In Qingdao, the Court stated that:

‘While it is conceivable that those treatment arrangements should comply with certain principles and requirements, such as the principle of protection of legitimate expectations and of legal certainty, an action raising a complaint that the contracting authority has infringed those principles can be examined only in the light of national law and not of EU law’ (C-266/22, para 66).

an alternative (less questionable?) interpretation

As we can see, the CJEU did not establish any hard boundary on the relationship between the national and EU law rules containing reference to the principles of protection of legitimate expectations and of legal certainty, or (the requirements) of transparency and proportionality. The CJEU said that the principles as enshrined in EU law could not be relied on. An alternative, domestic source would be needed. The CJEU was (almost) clear in accepting that (it is conceivable that) arrangements for the treatment of third country economic operators had to comply with transparency, proportionality etc requirement, but not as a matter of EU law.

A modestly and sensibly creative interpretation of the CJEU judgments would thus seek not to exclude protection afforded by homonymous principles and requirements, whether they are enshrined in the exact same domestic rules or not, as long as the applicability of the principles had a justification in a legal source other than EU law. This is not the same as demanding that an entirely separate (formulation of the) principle (to the same effect) exists. It simply requires that there is an alternative source of the requirement to abide by the given principle or requirement.

And there are at least two such general sources. First, the United Nations’ Convention Against Corruption (UNCAC) offers one such source in requiring that ‘Each State Party …, in accordance with the fundamental principles of its legal system, take[s] the necessary steps to establish appropriate systems of procurement, based on transparency, competition and objective criteria in decision-making, that are effective, inter alia, in preventing corruption’, with a requirement for such systems to explicitly address issues of transparency, establishment in advance of conditions for participation, and access to an effective system of domestic review’ (Art 9.1). Second, the ECHR provides the right to fair trial (Art 6).

Such an approach would have allowed some space for Member States to continue complying with basic requirements of administrative law and procurement regulation while the mess created by the Kolin and Qingdao judgments gets sorted out through EU procurement legislation. Any arguments that such course of action would detract from the effet utile of EU law would seem destined to fail, given that the CJEU had already accepted that participation by third country operators was possible and that equal treatment was also possible—just not as a matter of EU law. The Kolin/Qingdao could have been bracketed as an issue of competence and the true effectiveness of the case law been pushed to the reform of the directives in a much less disruptive manner.

Conversely, the Commission’s extreme interpretation seeks to wipe out such space for manoeuvre in requiring that the source of law demanding certainty, protection of legitimate expectations, transparency or proportionality has nothing to do and is entirely unrelated with the transposition of EU law. This is an impossible threshold to cross, as there will be no jurisdiction that has a set of procurement legislation to implement EU law, another one to comply with UNCAC, another one to comply with the ECHR, etc.

In fact, as EU procurement law is itself adjusted to those international standards and requirements, the transposition of the EU directives has been the mechanism to ensure compliance with all these layers of procurement regulation. This is a situation that is simply impossible to unbundle. Suggesting otherwise verges on the irresponsible, as it places contracting authorities in a position to breach a wide array of international and domestic rules, as well as creating significant corruption risks.

Corruption risks

Setting issue of legal interpretation aside for a moment, perhaps the most problematic part of the Q&A document is the second paragraph of the answer to question 5.3, where the Commission indicates that contracting authorities may ‘decide not to make [their decision to accept or not participation of non-covered third country economic operators and, if they admit them, the arrangements applicable to their tenders] known in advance. In the absence of any reference to this matter in the contract notice / tender specifications, the contracting authority / entity still has the possibility to accept or to reject a tender from an economic operator from a non-covered country at any moment during the procurement process‘. Crucially, the European Commission forgot to open (or close) the sentence with the all important caveat that this is (at best) the position solely for the purposes of EU law.

In my view, there is no question that a contracting authority that decided to operate in this manner would be in breach of UNCAC and a variety of constitutional level provisions (regardless of the specific EU jurisdiction we want to focus on).

And, more importantly, a contracting authority that decided to behave in this manner would be exposing itself to potentially significant corruption risks. Lack of transparency and not formulating the criteria to be applied in procurement decision-making at the point of launching the procedure not only reserves the contracting authority unlimited discretion and thus triggers the risk of arbitrariness in decision-making. More problematically, it exposes key decision-makers to pressure and to risks of corruption — either by the ‘covered’ entities seeking to persuade it to exclude the tender/s by the third country operator/s, or by the latter seeking the opposite, or both.

the bigger picture

Ultimately, the Kolin/Qingdao saga and this Q&A show that we are at risk of losing sight of the bigger picture. Procurement rules are not only, or even primarily, about trade liberalisation. They are essential tools of good governance and a source of discipline and integrity in the expenditure of public funds. Given their importance, multiple layers of procurement regulation are overlaid and, while they vary in their details, they all share the same core principles and fundamentals. Seeking to deviate from these, or to limit them to one and only one of those layers of regulation can simply not work.

It should also be clear that, as a matter of bigger picture, the inconvenience that sometimes comes from complying with the rule of law and other constitutional-level guarantees should possibly create constraints and difficulties in the implementation and rollout of EU (common) policy, as it does at national level. The Kolin/Qingdao saga and this Q&A can only be read as a prioritisation of the common commercial policy over good administration and rule of law considerations. It does not paint a pretty picture and it does not signal a particularly strong commitment to one of the fundamental values of the Union, to be frank.

The bigger picture is too that the CJEU had (at least) two ways of addressing these issues. One would be to impose a full ban on participation by non-covered third country operators. The other would be to have been more accepting of the limitations of ‘policy-making by judgment’ and to have openly stated that, once a third country operator has not been excluded, legal protections follow. By setting such shaky foundations as the Kolin/Qingdao case law, the CJEU enables the European Commission to make unhelpful interventions such as this one. The other part of the bigger picture is, as well, that the European Commission is willing to take exactly zero risks and that, in this extreme risk aversion, it can come to exacerbate problems arising from the case law.

Lucky dip from a mixed bag? Summary results of the consultation on the evaluation of EU Procurement rules

Janet Turra & Cambridge Diversity Fund / https://betterimagesofai.org / https://creativecommons.org/licenses/by/4.0/. The image features a silver meat grinder. Going into the grinder at the top are various culturally symbolic, historical, and fun icons – such as emojis, old statutes, a computer, newspapers, an aeroplane. At the other end of the meat grinder, coming out is a sea of blue and grey icons representing chat bot responses like 'Let me know if this aligns with your vision' in a grey chat bot message symbol.

The European Commission has published a Factual Summary report on the public consultation on Evaluation of the Public Procurement Directives (the Summary). While we await for the Commission’s fuller analysis of the responses to the consultation (which officials have publicly acknowledged to be processing with AI tools, at least in part) after the summer, it is worth taking a look at the numbers on their face value.

And even before that, it is worth reflecting on the value of a consultation that largely seeks input on the ‘lived experience’ of procurement but sidesteps the critical issue that respondents will provide views based on the specific implementation of the EU rules in their jurisdiction. Barring ‘pure copy-paste’ approaches (such as the good old UK approach), this already creates a significant methodological and analytical hurdle because the underlying reasons for any views expressed cannot without more be attributed to the EU directives—but are rather by necessity mediated by domestic implementation decisions, as well as by domestic procurement culture, legal context and technical infrastructure. The latter is perhaps the easier to grasp. Questions around e-procurement will elicit very different responses depending on the level of functionality, reliability, and sophistication (costs, etc) of e-procurement systems put in place in each of the Member States. Given the broad variation in that regard, it is hard to meaningfully extrapolate the feedback and attribute it to the minimalistic rules on e-procurement in the directives. The same applies across the piece.

Moreover, even setting that aside and taking the statistical summary as provided by the Commission, it is hard to know what to make of it. In short, in my view, the picture that emerges is very much a mixed bag. This further supports the emerging (?) view that the priority should not be the reform of the legal framework, but rather the much more complicated (and expensive) but potentially more impactful work on ensuring procurement practice maximizes use of the flexibility within the existing framework (as discussed in the recent conference held at the University of Copenhagen by Professor Carina Risvig Hamer — see the key conclusions here). Here is why.

(small) majority and (large) minority views

Let’s take a few headline figures and statements:

  • 49% of respondents believe that the Directives did not make the public procurement system flexible enough and 54% think that they did not establish simpler rules for the public procurement system.

  • most of respondents (48%) think that the rules aiming at increasing procedural flexibility (e. g. the choice of available procedures, time limits for submitting offers, contract modifications) are no longer relevant and adequate.

  • the same percentage of respondents (48%) consider the Directives’ rules on transparency (e.g. EU-wide publication via Tenders Electronic Daily 'TED') to be still relevant and adequate.

  • most respondents (53%) believe that the Directives ensure the equal treatment of bidders from other EU countries in all stages of the process and the objective evaluation of tenders.

  • almost half of respondents (49%) consider that the rules on eProcurement are still relevant and adequate to facilitate market access.

  • there is some agreement that the Directives’ rules that aim for environmentally friendly procurement (e.g. quality assurance standards and environmental management standards) and for socially responsible procurement (e.g. reserved contracts, requirements on accessibility for people with disabilities and design for all users) are still relevant and adequate. 39% and 43% of respondents say so, respectively.

  • Most respondents (39%) believe that the objectives of the three Public Procurement Directives are coherent with each other. However, EU legislation relating to public procurement (e.g. sectoral rules such as the Net Zero Industry Act or Clean Vehicles Directive) are not thought to be coherent with the Directives by the largest part of respondents (37% vs 11% who think that sectoral files are coherent).

  • Most respondents (49%) disagree that the Directives are fit for purpose to contribute to the EU’s strategic autonomy (including the security of EU supply chains). 42% think that the Directives are not fit for purpose in urgent situations. 44% consider that they are not fit for purpose in case of major supply shortages (e.g. supply-chain disruptions during a health, energy or security crisis). 38% think that the Directives do not ensure that security considerations are properly addressed by the contracting authorities.

The figures above, even if phrased in terms of majority of respondents, hardly show a clear majority view on any of those issues. At best, the majoritarian view reaches a figure just above the 50% threshold and, in most instances, the majoritarian view is in reality a large minority view (and sometimes not even that large at all). Constructing the figures to reflect ‘truly’ majority views to potentially influence the direction of reform proposals would require ‘appropriating’ the neutral space (which hovers between 15-28%, depending on the issue in the list above). This raises some questions on methodology itself (should neutral answers be allowed at all?), as well as on ways of treating data that stems from a non-representative and tiny sample (given the figures around number of public buyers, companies tendering for public contracts, and other stakeholders across the EU).

‘Consultation assessment by numbers’ is clearly not going to work. This should push our hopes to the qualitative analysis of the responses, which however raises no smaller questions on the relevance and reliability of the insights provided by this approach to public consultation. Moreover, it can be concerning that the qualitative analysis is being supported by AI tools, as this creates all sort of risks — from technical issues (such as confabulation and the simple making up of ‘insights’) to methodological issues (especially, if the AI is seeking to extract trends, which then largely replicates the problem of ‘assessment by numbers’). It would be very important for the Commission to publish a methodological annex in the future report explaining how AI was used, so that we can have a good sense of whether the qualitative analysis is robust or (use)less.

expert (?) views

To put it mildly, some trends in the Summary run directly against expert insights on the operation (and shortcomings) of the Directives.

This is perhaps most starkly shown in the responses around transparency. There is to my mind no question whatsoever that the expert community considers that there is insufficient procurement transparency and that the TED system is unfit to enable for the collection, publication and facilitation of re-use of procurement data in ways that lead to helpful data insights and, potentially, AI deployment. However, 48% of respondents have said otherwise. What to make of this? What is the point of asking this sort of question in an open consultation? Will this be used as a justification (aham, excuse) not to decidedly revisit the issue of procurement data in a way that promotes the development of an adequate data infrastructure fit for current policy challenges, as the expert community keeps advocating for?

Similarly, though 53% of respondents consider there is no issue of equal treatment of non-domestic bidders, what is the evidence for that? Given how relatively little cross-border tendering there is, on what grounds is this view formed? If the answers are based on a point of principle, what weight (if any) should be given to this set of answers? How does this square up with expert insights (and the Court of Justice’s occasional reminder) that fragmentation of requirements can create de facto unequal treatment (eg where domestic tenderers are more familiar with requirements arising from a broad array of administrative law provisions)?

Jarringly, the outcome of the consultation on the trends in competition for public contracts reflect that: ‘No significant conclusion could be drawn on whether competition had increased, remained the same or decreased over the last 8 years: 25% of respondents think that it decreased, 21% that it remained the same, and 25% that it increased’. However, from the European Court of Auditors’ report, we know that (by available metrics) competition has been on a constant reduction over the last decade. What was the point of asking this question and what to make of this outcome?

sectoral bias

Moreover, the qualitative analysis will require taking into account the specific position (and agenda) of respondents. Clearly, for example, the (declared) perception of aspects of the procurement system will be massively different depending on which side of the policy table respondents sit at.

This is most starkly shown around strategic procurement, where the public/private sector split is clear: ‘Public authorities agree that the Directives have encouraged contracting authorities to buy works, goods and services which are environmentally friendly (56%), socially responsible (55%), and innovative (45%). However, all other respondent groups are less positive. For instance, companies/businesses disagree that the Directives have encouraged contracting authorities to buy works, goods and services which are environmentally friendly (46%), socially responsible (50%), and innovative (54%).’ However, more importantly, and even with problems in the data, we know that uptake of green, social and innovation procurement is woefully low. Again, the European Court of Auditors has clearly documented this. What was the point of asking this question and, more importantly, how will this sort of outcome help inform policy going forward?

What next?

It will be interesting to see what comes out of the fuller analysis of the responses to the public consultation. However, it seems to me that this piece of information gathering will result in a relatively wide variety of views and thus likely have very little meaningful value in informing the direction of travel for the formulation of a proposal for revised rules. More importantly, I think this exercise shows the limited value in trying to obtain this sort of general views on high level questions around issues that are by definition complex, multi-layered, and in some cases politically contested.

As the conclusions to the Copenhagen conference show, there was broad general agreement (in that context) that three elements need to be at the core of the process of review of the EU rules: digitalisation, a clarification of the purpose/s of EU procurement rules, and practical simplification of legal requirements. Given the push to reform, we can hope that the Commission will take a path along those lines going forward. However, the Commission’s own statement of priorities included digitalisation, simplification and EU preference/strategic procurement. That is in itself showing a potentially big clash in approaches and the likely impossibility of achieving a set of goals that cut across each other.

Moreover, I think it is not too late to stop and reconsider whether we are falling in a legocentric trap. During the conference, ‘an element raised several times … was whether it was the procurement rules or the procurement practices that needed to change?’. I think there is a lot value in considering this in detail. We should not delude ourselves thinking that just because something is written in the procurement Directive, reality follows… It would also be helpful to consider whether it is possible to take a staged approach and truly prioritise efforts, so that we can move forward in relation to a single priority (which in my view should be digitalisation) before attempting the more complex and contested aspects of a reform.

Simplifying the aim and goals of procurement law

Thanks to Prof Carina Risvig Hamer, I had the opportunity to participate in the conference ‘EU Public Procurement anno 2025 - Are the rules fit for purpose?’ at the University of Copenhagen.

This was an interesting couple of days with plenty food for thought — but also worryingly reminiscent of discussions already had back in 2011 during the previous round of review of the EU directives (plus ça change).

I think there was a fair amount of support in the room for the position that the issues with the (in)effectiveness of EU procurement law do not stem from the rulebook, but rather from challenges in implementation and organisational and capacity shortcomings. However, this did not pre-empt discussions on how the rulebook could be improved.

My topic was, perhaps unsurprisingly, the need to simplify the aims and goals of competition law (my presentation is available here). This gave me an opportunity to revisit the (old and newer) arguments for stripping procurement of regulatory gatekeeping functions by offloading market-shaping rules and norms to general legislation, not procurement-specific mandatory requirements (eg on sustainability, see also Halonen (2021)).

In short, my conclusions / main points were that, in relation to the increasing use of procurement as a policy delivery tool:

  • Simplification can only be achieved in a pro-competitive manner if the regulatory burden is placed elsewhere (EU-level legislation applicable across the economy)

  • Explicitly changing goal/s and principles is likely to only have a marginal effect

  • Only investment in capacity and development of active market intelligence strategies can start to make a difference in practice

Expanding the Scope of EU Public Procurement Law

The annual meeting of the European Procurement Law Group a few weeks ago was a good excuse to find focused time to think about the ongoing process of review of the EU public procurement rules—as we are working on an edited book with a series of recommendations and reform proposals. My draft chapter focuses on the scope of application of EU procurement law.

In the draft, I argue that the cornerstone of procurement regulation--what actually constitutes a 'public contract'--is not clear, despite decades of ECJ case law. This undermines the coherence and effectiveness of EU internal market law.

Against the background of the ongoing review, I focus on the scope of application of Directive 2014/24/EU to highlight some aspects of the interaction between the EU procurement rules and other instruments of EU internal market law, including new and proposed tools seeking to (further) leverage procurement as a policy delivery instrument—such as the International Procurement Instrument or the Foreign Subsidies Regulation, as well as the increasing range of mandatory (sustainability) requirements focused on procurement.

After a review of recent trends in the interpretation (and narrowing) of the scope of application of Directive 2014/24/EU, I sketch an alternative functional approach that, in my view, would provide conceptual consolidation, realign EU procurement rules with their internal market logic, and potentially improve their fit as a policy delivery instrument.

I make two key reform proposals:

  • New definition of 'procurement' to step back from current focus on 'acquisition' and 'choice' by the contracting authority, and to include preparatory activities with potential negative impacts on the internal market

  • New definition of 'public contract' to eliminate the requirement of 'pecuniary interest'

As always, I would be very interested in any feedback.

The draft can be freely downloaded from SSRN: Sanchez-Graells, Albert, Expanding the Scope of EU Public Procurement Law -- Realigning the Procurement Directive with Its Internal Market Logic while Improving Its Fit with Strategic Procurement? (April 11, 2025). Available at SSRN: https://ssrn.com/abstract=5213497.

Procurement in the EU's AI Continent Action Plan

The EU has published its ‘AI Continent Action Plan’ (COM(2025)165).

The Plan aims to enhance the EU’s AI capabilities by promoting initiatives around five key areas. One of those key areas concerns the promotion of AI in strategic sectors and, in particular, in the public sector and healthcare.

The Plan includes some high level initiatives that are, however, not new.

  • The Plan refreshes the expectation for the public sector to provide a source of funding and experimentation for AI development: ‘EU public procurement, accounting for over 15% of our GDP, could create an enormous market for innovative products and services.’ This has been a long-standing aspiration (eg Fostering a European approach to Artificial Intelligence, COM(2021)205).

  • In that regard, the Plan reiterates the goal of the Competitiveness Compass to promote ‘European preference in public procurement for critical sectors and technologies in the context of the forthcoming review of the EU rules’, and clearly places AI amongst them. We will have to wait for details, but the compatibility of an EU preference with international procurement law escapes me.

  • The Plan also refers to the upcoming ‘Apply AI Strategy’ which should ‘address adoption by the public sector, where AI in areas like healthcare can bring transformative benefits to wellbeing’.

    The Plan also includes a reference to:

  • a call for funding of up to four pilot projects aimed at accelerating the deployment of European generative AI solutions in public administrations; and

  • the fact that the ‘GovTech Incubator initiative will, over the period 2025-2029, support 21 GovTech actors from 16 countries to co-pilot and develop, as a first step, AI solutions for public procurement, evidence processing and accessibility assistants.’

    Overall, while it is interesting to see procurement being highlighted as part of the Plan, it seems that the Plan is not at the right scale to promote the sort of system-level change required for extensive adoption of AI in the public sector (at Member State level).

    What is more, without a clear strategy on how to address the issues of digital skills within the public sector, and without specific practical tools or guidance on how to procure AI (and the model EU clauses are definitely not an adequate tool, see here), it is hard to see how there can be much movement outside pilot projects. Perhaps the ‘Apply AI Strategy’ will provide some developments on those fronts.

New UK report on Use of AI in Government contains exportable lessons

The UK House of Commons Public Accounts Committee has published a new report on ‘Use of AI in Government’ (2024-25, HC 356).

The report focuses on the specific situation in the UK and addresses issues closely related to the UK Government’s current ambitions to quickly roll out AI across the public sector.

However, most recommendations target general obstacles and pitfalls for AI deployment, acquisition, and assurance, and will thus be of interest in other countries.

The key conclusions of the report — which I would bet are largely applicable to most countries — include:

  • Out–of–date legacy technology and poor data quality and data–sharing is putting AI adoption in the public sector at risk.

  • Public trust is being jeopardised by slow progress on embedding transparency and establishing robust standards for AI adoption in the public sector.

  • There are persistent digital skills shortages in the public sector and current plans to address the skills gap may not be enough.

  • There is no systematic mechanism for bringing together learning from (failed) pilots and there are few examples of successful at–scale adoption across government.

  • There is a a long way to go to strengthen government’s approach to digital procurement to ensure value for money and a thriving AI supplier market.

  • Realising the benefits of AI across the public sector will require strong leadership.

The key recommendations in the report focus on the need to:

  • Deal with legacy technology and ICT systems before AI is overlaid on it.

  • Address the risks resulting from barriers to data–sharing and poor data quality.

  • Boost compliance with algorithmic transparency and disclosure requirements.

  • Strengthen spend controls for high–risk AI use cases to support safe and ethical roll–out.

  • Put effective plans in place to boost public sector digital skills sustainably.

  • Set up a mechanism for systematically gathering and disseminating intelligence on pilots and their evaluation.

  • Set out how to will identify common and scalable AI products and support their development and roll–out at scale.

  • Develop an effective procurement strategy that leverages buying power to the possible extent.

  • Ensure those taking procurement decisions across government have access to the right digital skills and knowledge.

  • Develop effective governance, leadership and ownership within central government.

Somehow, I am glad to see that these recommendations directly map onto the same areas of concern I have been highlighting in my recent research (eg here, here and here) and talks about these issues. The big question now is whether the (UK) government will find ways to meaningfully address (and fund!) the changes required if AI readiness in a real, practical sense is to be brought closer to the aspirations surrounding public sector AI use.

No meaningful progress on EU model clauses for AI procurement

An updated version of the EU AI model contractual clauses was published on 5 March 2025. Unfortunately, the update is really minor and almost solely focused on tightening the cross-referrals to the EU AI Act after its official publication, and marginal issues on clarity. The updated version is now accompanied by a Commentary on the model clauses. Regrettably, the Commentary does not shed light on the operationalisation of the model clauses beyond minimal aspects of internal consistency and consistency across with the EU AI Act.

The Commentary is not particularly helpful in explaining how its model clauses need to be integrated with broader contractual documentation for the acquisition of AI solutions. After recognising that the model clauses ‘do not constitute a full contractual agreement’, the Commentary indicates that ‘a contractual relationship of which the [model clauses] form part could take the following structure:

This is not helpful guidance.

Regarding the content of the model clauses, nothing has really changed. The example I keep returning to concerns the all important contractual regulation of accuracy, robustness and cybersecurity (Article 8).

The revised model clauses for high-risk AI still indicate the following in Article 8 (with only para 8.4 added to cross-refer to the EU AI Act):

Article 8 is but an empty shell and all substantive requirements are left to Annexes G and H.

Annex G is however blank:

Annex H is also almost blank:

Unfortunately, the Commentary on Article 8 is equally limited.

So, despite the update of the model clauses and the addition of the Commentary, the guidance remains extremely limited — not going beyond a relatively structured skeleton of ‘things to think about and deal with’ in the procurement of an AI solution.

Public buyers’ hopes for ‘plug and play’ guidance are thus bound to be disappointed. More importantly, it is hard to see how model clauses can meaningfully move beyond this initial stage without significant investment in the development of a library of meaningful and sufficiently developed options in relation to each of the relevant Annexes. A lot more needs to be done if the exploding pressure for the procurement of AI is not to result in botched AI acquisitions.

Public procurement during emergencies

A year ago, I was instructed to work on an expert report for the UK Covid-19 Inquiry, which was set up to examine the UK’s response to and impact of the Covid-19 pandemic, and learn lessons for the future.

The report ‘Public procurement in emergencies’ covers the key principles, legal frameworks and relevant guidance with respect to public procurement by the UK government and devolved administrations and how this may be improved in the future.

While some core parts of the report focus on specific issues that arose in the UK’s procurement response to the pandemic—such as the creation of the ‘VIP Lane’ for offers referred by politically-exposed persons or the ‘Ventilator Challenge’ that sought to develop new ventilator prototypes as part of the emergency response—other parts focus on principles of procurement regulation, as well as compared international experiences of emergency procurement during the pandemic. I thus hope the report will be of interest beyond the UK.

The report can be freely downloaded here: Public procurement during emergencies.

Yesterday, I had the opportunity and privilege to present the report and discuss key issues at the Inquiry’s public hearings for the procurement module. The recording of the session is available below.

More on the Commission's duty to assess State aid measures' compatibility with EU procurement law -- AG Medina Opinion in Paks II (C-59/23 P)

The extent and limits to the Commission’s duty to assess the compatibility of State aid measures with other rules of EU internal market law, and public procurement rules in particular, continues to heat up (see earlier comment here). According to the Court’s press release, today’s Opinion of AG Medina in Austria v Commission (Centrale nucléaire Paks II), C-59/23 P is bound to push for further clarification — or give another opportunity to the Court to fudge the issue.

The dispute arose in the context of Hungarian aid for the renovation of a nuclear plant, which resulted in the direct award of a contract to a Russian supplier in accordance with an agreement between Russia and Hungary on cooperation on the peaceful use of nuclear energy—and in a context where Russia also agreed under that agreement to provide Hungary with a State loan in order to finance the new reactors.

So this is very much a case of a procurement offset and against a clearly sensitive geopolitical background, but the point of law at its core is of broad significance for more ‘run of the mill’ State aid + procurement cases.

As the press release stresses,

According to [AG Medina], … the Commission, when assessing the aid at issue, should have examined whether the direct award to [the Russian supplier] of the contract for the construction of the new reactors is compatible with the European Union’s provisions on public contracts.

That award was in fact an aspect of the aid which had an inextricable link with that aid. According to the Advocate General, an inextricable link of that kind exists with regard to factors or conditions which are necessary for the attainment of the object of the aid or for its functioning, without which the planned State intervention cannot achieve the objectives that it pursues. In such a situation, the Commission is required to take into account, in assessing the compatibility of State aid with the internal market, a possible infringement of provisions of EU law other than those relating to aid.

Let’s see what the Court makes of this, and how a circle is squared if it decides to move beyond the confused and confusing stance it has taken on the issue so far.

Further confusion on duty of the European Commission to assess State aid measures' compatibility with other rules of EU internal market law (C‑490/23 P)

The Court of Justice has been recently presented with some cases where a State aid measure was argued to have (not) infringed EU internal market law and should thus (not) have been authorised by the European Commission. These cases raise the common issue of the Commission’s duty to assess proposed State aid measures for compliance with other rules of EU internal market law, and the effects of the relevant approval decisions.

One such case was NFŠ (C-28/23, EU:C:2024:893), where the Court was asked to confirm that consideration of compliance with the EU procurement rules as part of the analysis of the legal structure of the State aid measure should be binding on national courts, where the Commission included a paragraph on such compliance that, at the very least implicitly, indicated that the Commission had been satisfied that there was no breach.

As I criticised (see here, including the relevant disclaimer), despite the AG Opinion stressing that, having been presented with the relevant information on the approach to complying with the applicable procurement rules, ‘the Commission could not have failed to examine whether the form in which the public aid granted … was structured masked the existence of a public contract which should have been put out to tender’ (and thus breached the applicable procurement rules), the ECJ fudged its answer. The ECJ simply stated that implicit assessments of compatibility with EU internal market rules (in that case the procurement rules) could not be binding on national courts.

(Un)surprisingly, it seems that this was not a one-off situation, or the end of the issue.

In the more recent Judgment of 23 January 2025 in Neos v Ryanair (C‑490/23 P, EU:C:2025:32), the ECJ was confronted with arguments on whether the European Commission was obliged to explicitly assess (and provide reasons for its views on) the compatibility of a State aid measure with Art 56 TFEU.

It is worth reproducing the relevant paragraphs in full:

56 … as is clear from the case-law …, the procedure under Article 108 TFEU must never produce a result which is contrary to the specific provisions of the FEU Treaty. Accordingly, State aid which, as such or by reason of some modalities thereof, contravenes provisions or general principles of EU law cannot be declared compatible with the internal market.

57 In the present case, it must be found, first, that while the decision at issue … includes a detailed examination of the compatibility of the minimum remuneration requirement solely in the light of Article 8 of the Rome I Regulation, that nevertheless does not show, as Neos has correctly observed, that that is the only provision of EU law which the Commission considered as relevant for that examination. Indeed, in … the decision at issue, the Commission concluded that the minimum remuneration requirement was prima facie compliant with the Rome I Regulation and that it did not ‘constitute a breach of other provisions of Union law’.

58 Second, … the Commission’s obligation to state reasons does not in any event mean that it must in every case justify the absence of an explicit examination of the compatibility of an aid measure in the light of certain provisions or certain principles of EU law other than the State aid rules and, therefore, give its view on their relevance for the purpose of such an examination.

59 Indeed, given the extremely large number of provisions and principles of EU law that may be infringed by the grant of aid, the Commission cannot be required, without undermining the effectiveness of the procedure under Article 108 TFEU, or even the possibility to take a decision in favour of aid after the preliminary examination phase referred to in Article 108(3) TFEU, and thus without initiation of the formal investigation procedure, to provide specific reasoning concerning each one of them, and, in the present case, as far as concerns Article 56 TFEU.

60 In that respect, it should be held, having regard to the necessity to take account of the context for the purpose of assessing the obligation to state reasons … that a decision declaring an aid measure to be compatible with the internal market in the framework of a procedure under Article 108 TFEU means, in particular if it is apparent, as in the present case, from the Commission’s statement of reasons that it has assessed the aid measure concerned in the light of those provisions or principles, that the latter institution has taken the view that those provisions and principles were either not relevant with respect to that measure or, in any event, had not been infringed.

61 It follows from the foregoing that the General Court also erred in law in finding … that the Commission had infringed its obligation to state reasons in that it had not explained why the only relevant provision, other than Articles 107 and 108 TFEU, in the light of which it had to examine the compatibility of the minimum remuneration requirement, was Article 8 of the Rome I Regulation and not, in particular, Article 56 TFEU.

Prof Nicolaides has already astutely criticised this approach by the ECJ, stressing that

The statements of the CJEU in paragraphs 58 to 60 did not cite any case law. Indeed it seems that it was the first time that the CJEU dealt with the extent of the examination by the Commission of other provisions of EU law. The CJEU missed an opportunity to provide more detailed guidance on what the Commission ought to examine, given the absoluteness of the principle that State aid may not be declared compatible with the internal market if it infringes other provisions of EU law.

It would be unreasonable to expect the Commission to scan the whole of EU law whenever it assesses the compatibility of State aid. But that is certainly not necessary. In this sense, the CJEU performed a logical trick by setting up an irrelevant benchmark to justify why the Commission was not obliged to carry out an exhaustive examination of EU law. The CJEU could have laid down general criteria or could have identified the aspects and modalities that may be considered to be indissoluble from an aid measure, without laying down airtight rules.

I would add that this creates a very strange approach to the effects of implicit assessments by the European Commission of compatibility of State aid measures with the EU internal market rules. On the one hand, implicit assessments suffice for the Commission to discharge its duties to ensure that ‘the procedure under Article 108 TFEU must never produce a result which is contrary to the specific provisions of the FEU Treaty’ (Neos v Ryanair, para 56) while, at the same time, ‘assessments which might implicitly follow from a decision of that institution relating to State aid cannot, in principle, be binding on the national courts in a dispute … which is unrelated to the compatibility of that aid with the internal market’ (NFŠ, para 59).

Quite how this can be squared with legal certainty and doctrines on the protection of legitimate expectations is hard for me to see, especially as it is hard for me to understand what the Court means (in different judgments) by compatibility with the internal market (which seems to sometimes be a broad and sometimes a very narrow concept).

More to follow?

Learning digital procurement's hard lessons before jumping in at the AI deep end

Hanna Barakat & Cambridge Diversity Fund / Better Images of AI / Turning Threads of Cognition / CC-BY 4.0.

In quick succession after the UK Government published its AI Opportunities Action Plan, the National Audit Office (NAO) released its report ‘Government’s approach to technology suppliers: addressing the challenges’ (the NAO digital procurement report). Reading both documents in relation to each other paints a picture of the difficulties and pitfalls in the acceleration of public sector AI adoption desired by the UK Government.

More generally, I think this reflects the tensions faced in most jurisdictions yet to find ways to adapt their procurement practices and programmes to the digital environment and to ‘data first’ approaches, and how important but expensive interventions in ensuring continued investment in procurement skills and systems can have large knock-on effects on the broader functioning of the public sector for better and for worse (an issue I am researching with Nathan Davies).

In short, the AI Opportunities Action Plan seeks to ‘push hard on cross-economy AI adoption’ and places AI procurement at the forefront of that effort. As I highlighted in my hot take on the plan, one of its main weaknesses is the lack of detail on the measures to be put in place to address the large digital skills gap in the public sector— while the extent to which that gap is reduced will be determinative of how far AI procurement can go in contract design, contract and performance management, and other crucial tasks to deliver the plan (see full comments here).

This built on my earlier research, where I have stressed how a risk-based approach to the design and implementation of AI procurement requires advanced digital skills, and how shortcomings in digital skills compound key risks, such as data governance, technological and operational dependency, and system integrity risks (see here ch 7, and here).

My research, and that of others such as the Ada Lovelace Institute (see here and here), has also stressed how current guidance and best practices are insufficient to support the procurement of AI, and how this compounds the issues arising from shortfalls in digital skills. It is also clear that these issues are bound to especially affect particularly resource-constrained areas of the public administration, and that local authority procurement is in a uniquely challenging situation (which I am researching with colleagues at Careful Trouble).

All this research raises significant questions on the deliverability of plans to accelerate AI adoption in the public sector in ways that align with the public interest and do not generate unacceptable risks of mass harms (see here) and, in my view, advocates for a different approach that focuses on putting regulatory stopgap solutions in place while investment in the required fundamentals (data, skills, processes) is addressed, and provides a source of independent oversight of this high stakes process of public sector digital transformation. There are also environmental and other reasons to favour a ‘frugal AI’ approach (see eg here).

The main issue with such cautious (or I would say, realistic) approaches is that they do not convey a politically popular message, and that they are exposed to criticism for being excessively pessimistic or over-prudent, or/and for slowing down the adoption of AI-based solutions that (with the right technosolutionist lenses on) will unlock massive changes in resource-starved public service delivery.

In my view, the NAO digital procurement report makes for grim reading, but it is a strong endorsement of the need for such alternative, slower approaches.

As summarised in its press release, based on its recent investigations into different aspects of government digital transformation programmes, the NAO extracted the following lessons for the UK government to consider:

At central government level

  • There are not enough people with digital commercial skills in government.

  • Government procurement guidance does not address all the complexities of digital commercial issues.

  • Government struggles with the breadth of issues that affects its ability to engage effectively with suppliers.

At department/ministerial level

  • Departments do not make full use of their digital expertise when procuring for technology-enabled business change.

  • Digital contracts are awarded with insufficient preparation.

  • Approaches to contract design can negatively impact successful digital delivery.

This leads the NAO to formulate related recommendations

‘The NAO is recommending that the centre decides who should take ownership for addressing the problems identified in our report. It should produce a sourcing strategy to include improvements in how it deals with ‘big tech’ and strategic suppliers. It should also create a digital skills plan to plug recruitment shortfalls and to better equip and train decision-makers responsible for digital commercial activities.

For departments, the NAO recommends departments strengthen their ‘intelligent client function’. They need to identify and develop key requirements before tenders and bid processes commence, and improve how policymakers and technical specialists work together with procurement specialists. Departments should also improve their capability to collect and use data to inform a pipeline of supply and demand. This would help the centre of government build a more strategic approach to suppliers.’

In my view, the NAO’s findings and recommendations stress the crucial importance of addressing the public sector digital skills gap (both at central and departmental/contracting authority level), so that shortcomings in procurement guidance and in subsequent procurement planning and design, and contract management, can take place. They also stress the urgency in creating workable sets of guidance that provide much more detail and support than the existing generic documents.

What is worth further highlighting is that, unless and until these issues are addressed, digital procurement cannot be successful and, what is more troublesome, in the current context, an acceleration of AI procurement is a very bad idea because it will aggravate the problems identified in the report and potentially create situations that will be impossible or exceedingly costly to fix later on.

In my view, the NAO report should be a wake up call to the UK Government — and to other governments operating in comparable contexts — to do things more slowly and to find ways to fix technological debt, skills shortcomings, and lock-in and other problems associated with high concentration in digital markets. It is difficult to fix them now, but it will be more difficult to do every year from now. Given the nascent state of AI procurement, it seems to me that there is still a window of opportunity to change tack. I am not optimistic that this will happen, though.

Is it Irrelevant whether a Procurement Review Body is Judicial in Character? Case C-303/22, CROSS Zlín

I have uploaded on SSRN a case comment on CROSS Zlín, C-303/22, EU:C:2024:60.

In the case comment, I reflect on the CJEU’s position that, for the purposes of suspending the effectiveness of contract award decisions and preventing the conclusion of public contracts, it is irrelevant whether a procurement review body is judicial in character or not. Given the difficulties I find in systematising (or fully understanding) the rules on administrative and judicial review bodies in the Remedies Directive, I reiterate the call for its review.

The paper is freely downloadable and, as always, I would warmly welcome any comments.

Nadia Piet and AIxDESIGN & Archival Images of AI / Better Images of AI / Limits of Classification / CC-BY 4.0.

The UK's AI Opportunities Action Plan -- a procurement view

The UK Government has today published its AI Opportunities Action Plan, focused on “Ramping up AI adoption across the UK to boost economic growth, provide jobs for the future and improve people's everyday lives”. The plan heavily focuses on public sector AI adoption and formulates a series of recommendations to boost AI procurement. In this post, I highlight some aspects from a procurement perspective.

The action plan has three goals: (1) invest in the foundations of AI;
(2) push hard on cross-economy AI adoption; and (3) position the UK as an AI maker, not an AI taker.

The second goal further details that “The public sector should rapidly pilot and scale AI products and services and encourage the private sector to do the same. This will drive better experiences and outcomes for citizens and boost productivity”, and thus foresees a significant role for the adoption of AI by the public sector. The plan stresses that “AI should become core to how we think about delivering services, transforming citizens’ experiences, and improving productivity. … government should also focus on its role as a major user and customer of AI and how it uses its powers to catalyse private sector adoption”.

Coupled with the current budget and expectations of public sector productivity gains, the action plan will put AI adoption top of the agenda for public sector organisations (if it wasn’t there already…).

The plan also formulates a series of core principles underpinning those goals, which include the need to “Invest in becoming a great customer: government purchasing power can be a huge lever for improving public services, shaping new markets in AI, and boosting the domestic ecosystem. But doing this well is not easy - it will require real leadership and radical change, especially in procurement.”

Focus on AI procurement

In more detail, under section 2 of the plan, the public sector should adopt a “Scan > Pilot > Scale” approach with several implications for procurement — which the plan considers will need to be thought of differently. The procurement implications will mainly concern the pilot and scale phases of the proposed approach. The plan sets out the following:

Pilot - rapidly developing prototypes or fast light-touch procurement to spin up pilots in high-impact areas, robust evaluation and publishing results. This will require:

34. Consistent use of a framework for how to source AI - whether to build in-house, buy, or run innovation challenges - that evolves over time, given data, capability, industry contexts and evaluation of what’s worked. Where appropriate, the government should support open-source solutions that can be adopted by other organisations and design processes with startups and other innovators in mind.

35. A rapid prototyping capability that can be drawn on for key projects where needed, including technical and delivery resource to build and test proof of concepts, leveraging in-house AI expertise, together with specialists in design and user experience.

36. Specific support to hire external AI talent. Creation of a technical senior civil servant stream, benchmarking of internal AI-related role pay to at least 75% of private-sector rate and a technical AI recruitment screening process.

37. A data-rich experimentation environment including a streamlined approach to accessing data sets, access to language models and necessary infrastructure like compute.

38. A faster, multi-stage gated and scaling AI procurement process that enables easy and quick access to small-scale funding for pilots and only layers bureaucratic controls as the investment-size gets larger. Multi-staged “Competitive Flexible Procedures” should be encouraged, and startups compensated for the rounds they make it through.

Some of these proposals go to the current weaknesses in public sector AI procurement, such as the absence of a clear and consistent framework for the procurement of AI, limited use of open source solutions, limitations in accessing public sector specific data (on which section 1.2 includes more recommendations), or, notoriously, a large digital skills gap in the public sector. Implementing measures to address these issues would clearly make a difference. However, the plan does not contain any details on the level of public finance available to make the required investments — especially in public sector digital skills — and the press release accompanying the plan solely mentions investments committed by private companies seeking to develop data centres or a consultancy tech hub. The government’s response to the plan does not provide details either. Without a dedicated and ambitious investment plan, these recommendations cannot be implemented.

Moreover, some of the other proposals around prototypes and light-touch procurement processes can be problematic when coupled with the Procurement Act 2023 (soon to enter into force).

First, it is worth highlighting that the procurement of prototypes and their development is susceptible of direct award under the Procurement Act 2023, even where the benefits do not accrue exclusively to the contracting authority for its use in the conduct of its own affairs (as still the requirement under PCR2015, reg.14), and without this necessarily requiring the output of the development/prototype to be transferred to the contracting authority (s.41 PA23 and Sch.5 paras 2 and 3). Moreover, under current guidance on Intellectual Property Rights (IPR), the preferred option is to leave IPR under supplier ownership “where the creation of any New IP created cannot easily be separated from the (Supplier’s) Existing IP. For example, where suppliers provide software as a service solutions (SaaS), New IP (principally code) cannot be separated from the supplier’s Existing IP because it all resides as a single entity on a remote server.” In that case, the contracting authority is advised to acquire licenced rights.

In my view, the combination of these two aspects could result in the use of public contracts to subsidise the development of prototypes that remain in private ownership and, importantly, this would be done through non-competitive procedures. Moreover, this could also lead to the subsequent direct award of contracts to scale up the deployment of the prototype on grounds of the IPR exclusivity thus generated (s.41 PA23 and Sch.5 para 5). In my view, this approach would be problematic and create a potential loophole in competitive procurement of AI solutions. It would thus be highly advisable to revise guidance on IPR, specifically in relation to the development of AI prototypes, to avoid this situation — perhaps with a default position being to retain IP under Crown ownership in these cases. It would also seem that there is a broader reflection to be had on the interaction between R&D grants and procurement contracts, as procurement approaches to prototyping can create other difficulties (eg on liability to third parties, etc).

Second, the use of competitive flexible procedures (CFPs) should be considered in more detail. Under the Procurement Act 2023, CFPs are a ‘DIY’ procedure because each contracting authority can come up with its own design and requirements, thus making each CFP unique. This would significantly raise participation costs and be prone to litigation and other problems. In that regard, it would be desirable to create a single ‘AI CFP’ to be used across the board, to save AI companies (and specially the tech start-ups targeted in the AI action plan) from having to spend resource ‘learning’ the rules of the relevant CFP, but also to reduce the need for specialist knowledge at contracting authority level. Given the extremely limited experience with competitive dialogues and innovation partnerships to date, expecting contracting authorities to develop very tailored approaches to CFPs seems excessively optimistic in any case.

The plan then moves from piloting to scaling up and sets out the following:

Scale - identifying successful pilots that can be applied in different settings to support citizens (e.g. to reduce waiting lists or minimise time and cost to complete paperwork) and rolling them out beyond organisational boundaries. Scale is essential if AI is to have a meaningful impact on productivity, effectiveness and citizen experience, as well as maximising government spending power. Moreover, doing this well and procuring in a way that benefits innovators is a powerful lever for upending the cliché that the UK is good at invention, but poor at commercialisation. It will require:

39. A scaling service for successful pilots with senior support and central funding resource. The government should support a select number of proven pilots to scale - with central finance and tools available to avoid fragmentation across systems and budgets - and achieve up to national level reach.

40. Mission-focussed national AI tenders to support rapid adoption across de-centralised systems led by the mission delivery boards. An example of tendering to enable scale is the NHS’s AI Diagnostic Fund allocating £21 million to twelve imaging networks, covering 66 NHS trusts across England, significantly speeding up the roll out of AI diagnostic tools nationwide. However, these tenders should be designed to encourage new entrants, avoiding reliance on commercial frameworks where possible.

41. Development or procurement of a scalable AI tech stack that supports the use of specialist narrow and large language models for tens or hundreds of millions of citizen interactions across the UK.

42. Mandating infrastructure interoperability, code reusability and open sourcing. The AI infrastructure choice at-scale should be standardised, tools should be built with reusable modular code components, and code-base open-sourcing where possible.

As above, this section also includes recommendations that would focus on key areas of current weakness, such as the need to provide additional support to scale up successful pilots, as well as taking a more decided approach to interoperability and open source.

However, this approach also raises some questions, as it seems very central government focused. It is unclear whether the same type of approach would be helpful in the context of local AI procurement, or how to avoid significant levels of procurement centralisation in the rollout of scaled-up solutions. The issue of “commercial frameworks” (or vehicles) is also intriguing, as it seems counterintuitive that commercial vehicles should be avoided at the point of scaling-up, when the solutions should be sufficiently standardised and volume could be a significant driver of cost for the public sector. It can well be that each scaling-up context is different and, in that case, avoidance of commercial vehicles might not always be the way forward. More generally, a reflection on whether to use (open) frameworks or dynamic markets also seems necessary, and there are good reasons to think that in fast-moving markets, (open) frameworks are not the way to go.

The plan contains a further procurement-related recommendation to enable public and private sectors to reinforce each other: “Procure smartly from the AI ecosystem as both its largest customer and as a market shaper. Innovative AI suppliers from the UK and around the world should be engaged to support demand and encourage investment. Procurement contract terms should set standards (e.g. quality), requirements, and best practice (e.g. performance evaluations). “Contemplation” clauses should be included in contracts to ensure the government remains agile to a rapidly changing AI ecosystem by mandating that contractors regularly assess and adopt newer technologies.”

At this level of generality, it is hard to disagree with the recommendation. However, as mentioned above, the extent to which the public sector digital skills gap is reduced will be determinative of how far AI procurement can go in contract design, contract and performance management, and other crucial tasks. I am also not sure whether ‘contemplation’ means technological update requirements, or rather rights to curtail, modify or terminate the contract for the contracting authority on technological (or other?) grounds. Some further thinking also seems required here.

Overall impression (aka hot take)

My overall impression is that the plan targets central government and specific types of AI, and that it contains recommendations that will be difficult and expensive to implement. Without a clear view of the level of public investment that will be available to implement the plan, it is hard to assess its likely impact — although issues such as overcoming the public sector digital skills gap and the compounded complexity of AI procurement and procurement under new rules seem to me to pose a significant challenge. I think it will be difficult for contracting authorities outside of central government, and in particular at the local level, to finds way to implement the plan in their own operations, despite the clear push for local level public sector AI adoption.

Linked to this, I think the procurement-related proposals in the action plan merit some further discussion and consideration. In that regard, they can be the basis for more focused thought, especially in relation to non-central government AI adoption, such as work carried out under the National Taskforce for Procurement of AI in Local Government proposed by the Ada Lovelace Institute,

Adapting to a Changing World, not without Difficulties: Kolin (C-652/22) -- Guest post by Prof Roberto Caranta

Untitled (Entry) (c.1917) - Amadeo Souza Cardoso (1887-1918).

It is pleasure to host the views of Prof Roberto Caranta on the controversial Kolin case. Over the years, I have learned a lot and developed my thinking thanks to debates with Roberto. When we agree, his views always have interesting nuance and, when we disagree, his views offer strong intellectual challenge for me. This is a case where we have quite different views on the big picture, but also converging views on the challenges ahead. I hope reading Roberto’s thoughts and contrasting them with mine (here) will help push the debate more generally. Roberto’s views were first published as an Op-Ed for EU Law Live on 7 Nov 2024.

Adapting to a Changing World,
not without Difficulties: Kolin (C-652/22)

Trade has been an essential component in the international economic and legal order built following the fall of the Berlin Wall, but it cannot be taken for granted anymore. As recently indicated by D.L. Sloss, the ‘rules-based international order confronts significant challenges, but it is not unravelling—at least, not yet’. A few days ago, the Centre for International Governance Innovation indicated that ‘The global order is under strain, propelled by the complex interplay of numerous trends and impacts. Converging factors are redefining the contours of the international system, necessitating significant adaptation by states.’ (Scenarios of Evolving Global Order).

This Op-Ed is based on the assumption that public procurement law is not and cannot be insulated from these changes – veritable seismic shifts – and from recent policy and normative actions taken by EU institutions. What was ‘historically’ the position of those same institutions may indeed be passé.

The Court of Justice judgment in Kolin Inşaat Turizm Sanayi ve Ticaret (C-652/22) (‘Kolin’), which addresses  for the first time the legal position of third country economic operators wishing to bid for a procurement contract in one of the Member States, must in my view be read in this changing context.

This assumption leads me to diverge on some points from the assessment of the Kolin judgment by Albert Sanchez-Graells.

Is the Court of Justice running wild?

Before going into the merits of the judgment, a few words are warranted in relation to Albert Sanchez-Graells’ assertion that the Court of Justice went out of its way to ‘answer a question it had not been asked’. In my view, the Court of Justice did not answer a different question but, following the Opinion of Advocate General Collins, declared the question inadmissible. With reference to this specific procedural aspect – as is the case with other aspects – EU law follows the French approach, considering questions of admissibility as moyens d’ordre public. As a consequence, as indicated by Lasok in his European Court Practice and Procedure, ‘The Court’s lack of jurisdiction is something which the Court must raise of its own motion’.

The Advocate General having raised an issue of inadmissibility, in my opinion, the Court of Justice had no choice but to address it. Not that the Court of Justice has never been accused – in a more or less veiled way – of running wild. In the past, however, the indictment targeted the Court of Justice for its assumed power grabbing to the detriment of the Member States. Just think of Hjalte Rasmussen On Law and Policy in the European Court of Justice. The competence of the EU with reference to international trade law is not so much disputed in this case, even if some of the Member States engaged in arguments claiming some residual powers that were so disparate as to  point only to much legal uncertainty.

This uncertainty is further compounded by a shift in policy preferences at EU level that was made manifest with the adoption of both the International Procurement Instrument (IPI) and the Foreign Subsidies Regulation (FSR). Needless to recall that this shift in policy was called for by the Council – i.e. the Member States. In 2019, it was indeed the Council deciding that ‘the EU must also safeguard its interests in the light of unfair practices of third countries, making full use of trade defence instruments and our public procurement rules, as well as ensuring effective reciprocity for public procurement with third countries’. The Council also called ‘for resuming discussions on the EU’s international procurement instrument’ (see here). ‘Reciprocity’ is the key word in the present EU approach to the international dimension of public procurement markets.

Of course, one might question the wisdom of this policy shift. But a power grab must be excluded here, and having a judgment on the matter cannot, in and of itself, be a bad thing. Of course, the problem may be the quality of the judgment, which  may be measured by the number and gravity of issues that a judicial decision leaves open – or opens and leaves unanswered.

No EU rights for economic operators from third countries which are not party to a trade agreement with the EU

To assess whether economic operators from third countries not benefiting from reciprocal trade agreements may participate in public procurement procedures in EU Member States, the reasoning of the Court of Justice first analyses  the relevant legal provisions in Directive 2014/25/EU, and then the competence concerning international trade (commerce in EU parlance rooted in a time when English was not dominant).

According to the Court of Justice, Article 43 of Directive 2014/25/EU ‘reflects’ the EU’s international commitments to give equal participation rights to economic operators hailing from third countries benefiting from international commitments signed by the EU (paragraph 43, referring to Recital 27 of the Directive). The Court’s reference is first and foremost to the GPA. This understanding is in line with the existing literature (Annamaria La Chimia) and, as pointed out by Albert Sanchez-Graells, does not add anything to the already pre-existing international obligations. However, the Court of Justice reads more into Directive 2014/25/EU. According to the Court, in the absence of exclusion measures adopted by the EU, although the Directive does not preclude third country economic operators not benefiting from market access rights

from being allowed to participate in a public procurement procedure governed by Directive 2014/25, it does, however, preclude those economic operators from being able, in the context of their participation in such a procedure, to rely on that directive and thus to require that their tender be treated equally to those submitted by tenderers from Member States and by the tenderers from third countries referred to in Article 43 of that directive (para. 45).

Reasoning otherwise would indeed mean that the same benefits reflected in Article 43 would be accorded to economic operators from all third countries, regardless of whether they are covered by an international agreement (paras. 46 and 47). The reasoning is further supported by reference to the IPI Regulation, which confirms that economic operators not benefiting from international commitment may be excluded for public procurement procedures in the EU (para. 49). This conclusion is hardly disputable. There would be no incentive for third countries to negotiate agreements to gain reciprocal access if participation was already allowed (Annamaria La Chimia).

To rebut the argument advanced from some of the Member States to the effect that Directive 2014/25/EU does not stand in the way of national law according access to economic operators from all third countries, even those not bound by international agreements, the Court of Justice widened the reasoning to include the EU exclusive competence in matters of international trade. The Court held that only the EU is competent to decide which economic operators have access to the European procurement markets. These decisions take place through the negotiation and conclusion of international agreements. This exclusive competence of the EU is grounded on Article 3 TFEU, wherein Article 3(1)(e) lists ‘common commercial policy’ among the areas of EU exclusive competence. Article 3(2) further indicates that ‘The Union shall also have exclusive competence for the conclusion of an international agreement when its conclusion is provided for in a legislative act of the Union or is necessary to enable the Union to exercise its internal competence, or in so far as its conclusion may affect common rules or alter their scope’. This policy is further articulated in Articles 206 and 207 TFEU. According to the Court of Justice,

Any act of general application specifically intended to determine the arrangements under which economic operators from a third country may participate in public procurement procedures in the European Union is such as to have direct and immediate effects on trade in goods and services between that third country and the European Union, with the result that it falls within the exclusive competence of the European Union (…) (para. 57).

The Court again refers to the IPI Regulation to strengthen its conclusion about the exclusive competence of the EU  in relation to the adoption of ‘measures of general application that may be taken with regard to economic operators of a third country which has not concluded an international agreement with the European Union’ (para. 59).

Here again the lack of competence of the Member States to legislate on the matter can hardly be disputed, as the IPI gives  the Commission, and  the Commission alone, the power to take measures to exclude participation of economic operators from specific third countries in order to force their hand in negotiating reciprocal access to the respective procurement markets.

An unavoidable limitation

Some critics argue that there is incoherence in the reasoning of the Court of Justice where it stops short of simply declaring that economic operators of a third country which has not concluded an international agreement with the EU cannot participate in public procurement procedures in the Member States.

Indeed, the Court of Justice restricts the competence of the EU – and the correlative lack of competence of the Member States – to the adoption of ‘acts of general application’ concerning participation in public procurement procedures in at least three paragraphs of the judgment (paras. 57, 59 and 61). Instead, the Court of Justice concedes that individual contracting authorities and entities may well allow the participation of third country economic operators not benefiting from market access agreements in individual procurement procedures (e.g. paras. 45, 47 and 63 ff).

Here again it is in my view doubtful whether the Court could have gone further than it went. The possible participation in public procurement procedures of such economic operators is implied in both in Article 86 of Directive 2014/25/EU and in the IPI Regulation (paras. 58 and 59). The latter would be made moot if no participation at all was possible. It would make no sense to exclude them if they had no possibility to participate in the first place.

Additionally, under Article 2(1) TFEU, ‘When the Treaties confer on the Union exclusive competence in a specific area, only the Union may legislate and adopt legally binding acts, the Member States being able to do so themselves only if so empowered by the Union or for the implementation of Union acts’. This clearly applies to ‘acts of general application’. The decision to allow participation in individual procurement procedures is not such an act and arguably does not even amount to a ‘legally binding decision’. There is some similarity here with the distinction between ‘regulation’ and ‘buying decision’ (or between ‘market regulator’ and ‘market participant’) that defines and limits the application of the US Commerce Clause in the area of public procurement as discussed by Jason Czarnezki in his comparison of EU and US procurement law.

A total exclusion might be problematic in case no EU or other economic operator benefiting from the right to market access is available. Unavoidably, contracting authorities or entities are left to

assess whether economic operators of a third country which has not concluded an international agreement with the European Union guaranteeing equal and reciprocal access to public procurement should be admitted to a public procurement procedure and, if it decides to admit them, whether provision should be made for an adjustment of the result arising from a comparison between the tenders submitted by those operators and those submitted by other operators (para. 63).

A patently insufficiently defined regime

Where I cannot but side with Albert Sanchez-Graells is in lamenting the gravely insufficient guidance given by the Court of Justice concerning the rules applicable to those individual cases of participation in public procurement of economic operators from third countries not benefiting from market access.

The Court of Justice places on individual contracting authorities and entities the heavy burden of designating the regime applicable to that participation. The indication is in any case to treat those economic operators differently. They may be excluded and if not, provisions might be made ‘for an adjustment of the result’ of the award procedure (paragraph 63). The choice between outright exclusion and ‘adjustment’ is consistent with Article 6(6) of the IPI Regulation, indicating that the Commission may decide to ‘restrict the access of economic operators, goods or services from a third country to public procurement procedures by requiring contracting authorities or contracting entities to:

(a) impose a score adjustment on tenders submitted by economic operators originating in that third country; or

(b) exclude tenders submitted by economic operators originating in that third country’.

It is, however, uncertain how delegating this power to individual contracting authorities and entities might be coordinated with the competence the IPI Regulation vests in the Commission. The risk of dissonance and confusion is big, and contracting authorities and entities will have to closely watch IPI measures taken to make sure that they make the necessary adjustments or exclude the relevant economic operators as the case might be.

Furthermore, the contracting authorities and entities are empowered to reflect, in the procurement documents, ‘the objective difference between the legal situation of those operators, on the one hand, and that of economic operators of the European Union and of third countries which have concluded such an agreement with the European Union’ (para. 64). So much so that ‘national provisions transposing Directive 2014/25’ cannot be applied to those economic operators (para. 65). The same is obviously true of national provisions implementing the other public procurement and concessions directives. In the end, ‘While it is conceivable that the arrangements for treatment of such operators should comply with certain requirements, such as transparency or proportionality, an action by one of those operators seeking to complain that the contracting entity has infringed such requirements can be examined only in the light of national law and not of EU law’ (para. 66).

The problem here is that in most Member States there are no public procurement provisions different from those implementing EU law. Contracting authorities and entities are thus left in a normative vacuum.  It is true that in many Member States somewhat different purely domestic provisions apply to contracts below the threshold and not having a cross-border interest as well as to other excluded contracts. However, these rules tend to set alternative and lighter procedures. It is mostly impossible to manage an award procedure following two discrete sets of rules depending on who is the tenderer. The option again is between some form of preference, along with its drawbacks, or a discrete regime concerning qualification, e.g. by limiting acceptable references for previous experience to contracts awarded in the EU.

Another potential difference might be on remedies. Some data – admittedly old data – indicates that in some Member States remedies do not apply to contracts below the thresholds or excluded contracts (see here). One possible option might be to extend this lack of remedies to economic operators from third countries which have not concluded an agreement with the EU, but as was shown by Albert Sanchez Graells, this is just one of four options, and possibly not the one most used so far.  Moreover, it is doubtful how this could be squared with the right to a fair trial and an effective remedy flowing from Article 6 and 13 of the ECHR. As argued by Pedro Telles, the applicable regime of remedies is thus left unclear.

Looking forward to the reform of the 2014 directives

In my view, the case could have hardly been decided differently.  That said, contracting authorities and entities are left in a legal limbo. The Court of Justice clearly leaves the door open to future EU legislation on the matter. Contracting authorities and entities may allow such participation only ‘In the absence of acts adopted by the European Union’ (para. 63).

Article 43 of Directive 2014/25/EU – and its corresponding provisions in other texts such as Article 25 of Directive 2014/24/EU – needs being reformed to clearly reflect the fact that EU public procurement markets not only must be opened in some cases, but that they might be closed as well.

One option is complete closure. This, however, might leave us without sellers in some cases and would severely curtail the margin of manoeuvre the Commission currently enjoys under the IPI Regulation. This leaves us with a provision that better defines the power of ‘adjustment’ of contracting authorities and entities. The changes that lead to the adoption of the Net Zero Industry Act (NZIA) provide a cautionary tale. Article 19(2)(d) of the Commission Proposal provided for adjustments linked to ‘the tender’s contribution to resilience, taking into account the proportion of the products originating from a single source of supply’. This approach did not survive the trilogue. The use of contract clauses for the outright limitation of supplies from third countries has instead been preferred in what has become Article 25 NZIA.

On the occasion of the reform, to avoid economic operators not benefiting from a market access regime dodging the bullet by simply opening a shop in one EU country, extending the provision of Article 85(5) Directive 2014/25/EU across  all the directives could also be considered.

In the meantime, a revision of the Guidance on the participation of third-country bidders and goods in the EU procurement market would be welcome to help struggling contracting authorities and entities.