Statutory Orders no. 1624 and no. 1625 of 15 December 2015 implements Directive 2014/23/EU on the award of concession contracts and Directive 2014/25/EU on the award of contracts by entities operating in the field of utilities in Denmark. Furthermore, Statutory Order no. 892 of 17 August 2011 implements Directive 2009/81/EC on the award of contracts in the fields of defence and security.
Being a part of the EU, Denmark has entered into the GPA which establishes the general principles and procedures for public procurement.
What types of public procurement / government contracts are regulated in your jurisdiction and what procurement regimes apply to these types of procurements?
Public procurement law sets out procedures which must be followed before awarding a contract regarding the execution of works, the supply of products or the provision of services.
Public procurement laws apply to ´contracting authorities’, which not only covers state, regional or local authorities but also bodies governed by public law. In Denmark there are a number of bodies governed by public law e.g. PostNord (postal services), DSB (train operation) and Sund & Bælt (bridge and tunnel links).
The procurement regimes are in principle the same for all contracting authorities. However, the Utilities Directive only applies to contracting authorities operating in the water, energy, transport and postal services sectors and the Defence Directive only applies to contracting authorities in the fields of defence and security.
Are there specified financial thresholds at which public procurement regulation applies in your jurisdiction?
Every second year, the European Commission revises the thresholds of the different directives governing public procurement. The financial thresholds also apply in the Danish jurisdiction.
These financial thresholds depend on different factors. First, the financial thresholds depend on whether the contracting authority is a central government authority or a regional / municipal authority and body governed by public law. Second, the financial thresholds depend on the nature of the procurement. The current thresholds for 2020-2021 are listed below.
The Danish Public Procurement Act
Central government authority
Regional / municipal authority and body governed by public law
Services and supplies
Social and other specific services
Services and supplies
Social and other specific services
Security and Defence Directive
Services and supplies
Are procurement procedures below the value of the financial thresholds specified above subject to any regulation in your jurisdiction? If so, please summarise the position.
The Danish Public Procurement Act includes provisions for the award of service contracts and supplies contracts below the financial thresholds.
Furthermore, the Danish Tender Act, Act no. 1410 of 7 December 2007, as amended, regulates the award of works contracts below the threshold.
The provisions distinguish between public procurement with or without certain cross-border interest. According to these acts, the contract must be advertised by the contracting authority and carried out under simplified tender processes if the public procurement has certain cross-border interest, i.e. if foreign suppliers would bid for the contract if given the opportunity.
If the contract does not have certain cross-border interest or if it is a works contract below the financial threshold of DKK 300,000 (about EUR 40,000), the contract is not subject to advertising, but must be awarded in accordance with administrative law principles on impartiality, financially sound administration, prohibition against protection of irrelevant interests and the principle of proportionality.
For the procurement of complex contracts*, how are contracts publicised? What publication or journal is used for these purposes?
‘Complex contracts’ are not a defined term in Danish legislation. Complex contracts are generally understood as contracts for which it is necessary to a higher degree to make individual adjustments given the specific purchase situation.
For complex contracts – as for all other contracts that exceed the financial thresholds – a contract notice must be published in the Official Journal of the European Union via TED (www.ted.europa.eu).
The time limit for receipt of requests for participation is minimum 30 days if the procedure chosen includes an initial selection stage. However, a longer time limit may be required when dealing with a complex contract as the time limit must always be appropriate.
For the procurement of complex contracts, where there is an initial selection stage before invitation to tender documents are issued, what are typical grounds for the selection of bidders?
A typical ground for the selection of bidders is references. The contracting authority may ask for references from previously completed contracts to determine to what extent the economic operator has relevant experience in relation to the contract.
When references are requested, it is important that the contracting authority specifies what will be considered when evaluating the references. When dealing with complex contracts, it is particularly relevant to consider the experience of the potential bidders with works similar to the specific parts of the contract that are complex.
Does your jurisdiction mandate that certain bidders are excluded from tendering procedures (e.g. those with convictions for bribery)? If so what are those grounds of mandatory exclusion?
The Danish Public Procurement Act contains mandatory and discretionary grounds for exclusion.
The mandatory grounds for exclusion are:
Conviction or fine by final judgment for the following offences: Participation in a criminal organisation, corruption, fraud, acts of terrorism or criminal acts related to terrorist activities, money laundering, financing of terrorism, child labour and other types of human trafficking.
Unpaid overdue debt of DKK 100,000 (about EUR 13,400) or more to public authorities with some exceptions.
A conflict of interest in relation to the specific bidder, which cannot be removed effectively by less intrusive means.
Distortion of competition as a result of the prior involvement of economic operators in the preparation of the procurement procedure, or if the candidate or the economic operator has provided incorrect information.
The discretionary grounds for exclusion are:
Breach of obligations in force in the fields of environmental, social or labour law.
Bankruptcy, insolvency etc.
Guilty of grave professional misconduct, which renders the economic operator’s integrity questionable.
The economic operator has entered into an agreement with other economic operators for the purpose of distorting competition.
Material breach of a prior public contract, a prior utility contract or a prior concession contract.
Interference with the decision-making process of the contracting authority or the grossly negligent provision of misleading information which may have a material influence on decisions on exclusion etc.
Unpaid debt of less than DKK 100,000 (about EUR 13,400) to public authorities.
If a contracting authority intends to apply one or more discretionary grounds for exclusion it must be stated in the contract notice, and if so, the contracting authority is obliged to exclude the economic operator if the exclusion ground applies.
However, even if a bidder is in one of the situations stated above which would initially lead to exclusion, the bidder has the possibility of proving its reliability and not to be excluded (self-cleaning). It is for the contracting authority to assess whether the documentation provided is sufficient.
Please describe a typical procurement procedure for a complex contract. Please summarise the rules that are applicable in such procedures.
The procurement procedure for a complex contract will typically be one of the flexible procurement procedures: Competitive procedure with negotiation, competitive dialogue or innovation partnership. In order to use one of the flexible procurement procedures, certain requirements as listed in the Danish Public Procurement Act must be fulfilled.
As seen in the timeline below for a competitive procedure with negotiation, the procedure consists of an announcement of the contract notice, an initial selection phase, a negotiation phase and an evaluation phase. The negotiations may be carried out in successive negotiations, which may be particularly relevant to complex contracts since the contracting authority will then be able to negotiate several times before the bidders submit their best and final offer.
If different from the approach for a complex contract, please describe how a relatively low value contract would be procured?
If the procurement concerns a low value and a simple contract it will often be relevant to choose an open procedure for the contract and the award criterion ‘price’ which ensures a simple evaluation.
An open procedure is a procurement without an initial selection phase, which makes the procedure suitable if the submission of bids and the evaluation does not require significant resources.
In contrast to an open procedure, a restricted procedure will generally be more relevant if the submission of bids and their evaluation are more resource-demanding, since it will then be possible to limit the number of bidders.
What is seen as current best practice in terms of the processes to be adopted over and above ensuring compliance with the relevant regime, taking into account the nature of the procurement concerned?
It is seen as best practice that the contracting authority chooses the least resource-demanding processes that are suited in relation to the specific procurement. This means choosing a procurement procedure and award criteria that ensure that the procurement is cost-effective.
Please explain any rules which are specifically applicable to the evaluation of bids.
A contracting authority is obliged to award the public contract to the bidder which has submitted the most economically advantageous bid. The most economically advantageous bid will depend on the award criteria applied by the contracting authority in the procedure. The award criteria can either be price, costs or best price-quality ratio.
When the award criterion ’cost’ is applied, all types of costs may be included, including prices and life cycle costs.
When the award criterion ’best price-quality ratio’ is applied, the evaluation must be based on sub-criteria such as qualitative, environmental and social aspects. It is also possible for the contracting authority to fix the price and make the bidders compete on quality only (a so-called “reverse tender”).
In the procurement documents, the contracting authority must state the award criteria, describe the evaluation method and describe the elements of importance to the evaluation of the bid.
Please describe any rights that unsuccessful bidders have that enable them to receive the reasons for their score and (where applicable in your jurisdiction) the reasons for the score of the winning bidder.
When awarding a contract, the contracting authority must inform all bidders involved simultaneously and in writing of the decisions made regarding the award of the contract.
The information that is to be provided to the bidders depends on whether the unsuccessful bidders have submitted a non-compliant bid or a compliant bid.
For bidders having submitted a non-compliant bid, the contracting authority must state the grounds that led to rejection of the bid.
For bidders having submitted a compliant bid, the contracting authority must state the characteristics and advantages of the winning bid compared to the unsuccessful bidder.
The adequacy of a justification depends on the specific circumstances of each tender. However, the contracting authority’s reasoning must always enable the bidders to ascertain whether the evaluation has taken place within the framework of the evaluation method described by the contracting authority in the tender documents. In general, this entails that the justification will often contain the reasons for the scores of the unsuccessful bidder and the winning bidder.
What remedies are available to unsuccessful bidders in your jurisdiction?
Unsuccessful bidders may file a complaint with the Danish Complaints Board for Public Procurement (hereafter the Danish Complaints Board) or bring the case directly to the national courts in Denmark, see the answer to question 18.
The Danish Complaints Board is competent to cancel an award decision or to declare a contract ineffective, for example if the contracting authority has signed the contract in contravention of the Danish Public Procurement Act or the EU Public Procurement Directive. Among other remedies available to the Danish Complaints Board are the possibility to suspend the contracting authority’s award decision or impose a financial penalty on the contracting authority.
The contracting authority is in general forced to terminate the contract if an award decision has been cancelled by final decision or judgment or if the contract is declared ineffective. However, certain exceptions apply.
Are public procurement law challenges common in your jurisdiction?
According to the Danish Complaints Board’s annual report for 2019 the number of complaints filed in 2018 was 106 and in 2019 the number was 93. Public procurement challenges seem to be declining and constitute less than 5 per cent of published contract notices today. There is no perception that bidders that make challenges against public bodies suffer reputational harm or harm to their prospects in future procurement competitions.
A complaint fee applies when filing a complaint. The complaint fee is DKK 10,000 (about EUR 1,300) or DKK 20,000 (about EUR 2,600) depending on the nature of the complaint. The fee will be repaid if the Danish Complaints Board finds in favour of the complainant.
The Danish Complaints Board may order the losing party to pay the successful party an amount to cover all or part of the latter’s costs of the complaints proceedings. The costs may not exceed DKK 75,000 (about EUR 10,000) unless specifically justified.
Typically, assuming a dispute concerns a complex contract, how long would it take for a procurement dispute to be resolved in your jurisdiction (assuming neither party is willing to settle its case).
The average processing time in 2018 for the Danish Complaints Board was estimated to be approximately 5 months. The processing time will often be longer than average if the dispute concerns a complex contract.
The procedure in general involves an exchange of pleadings. Furthermore, the case may be divided into different stages, i.e. the issue on a breach of the procurement rules may be dealt with before the issue of compensation. The Danish Complaints Board may decide that it is necessary that the case be heard as an oral proceeding.
The rulings of the Danish Complaints Board may be brought before the national courts.
What rights/remedies are given to bidders that are based outside your jurisdiction?
It is stated in the Danish Public Procurement Act that contracting authorities may not treat bidders based in the EU, the European Economic Area, or other countries to which Denmark or the EU is bound by international agreements, less favorably than bidders based in Denmark. In principle, the contracting authority is not obliged to open the procurement to bidders based outside these countries. To ensure transparency, however, the contracting authority must state in the contract notice if bidders from these countries are not allowed to participate in the procurement. This possibility of excluding bidders seems never to be used by contracting authorities in Denmark.
Where an overseas-based bidder has a subsidiary in your territory, what are the applicable rules which determine whether a bid from that bidder would be given guaranteed access to bid for the contract?
A subsidiary located in Denmark is considered a Danish legal entity and will be treated on equal terms as a nationally owned company regardless of where the parent company is located.
In your jurisdiction is there a specialist court or tribunal with responsibility for dealing with public procurement issues?
The Danish Complaints Board deals with complaints concerning breach of the Danish Public Procurement Act and the EU public procurement rules for public works, procurement of goods and services, etc., as well as complaints concerning breach of the Danish Tender Act.
It is possible to make a complaint to the Danish Complaints Board or to bring the case directly to the national courts in Denmark. However, complaints submitted in the standstill period (a period of minimum 10 days after the contract award and before the contract is signed) must always be referred to the Danish Complaints Board.
Are post-award contract amendments/variations to publically procured, regulation contracts subject to regulation in your jurisdiction?
The Danish Public Procurement Act includes provisions for post-award contract amendments/variations. It follows from the regulation that in order to make a ‘material change’ to a contract, the contracting authority must carry out a new procurement procedure. A change to a contract is deemed to constitute a ‘material change’ where it renders the contract materially different in character from the one initially concluded. For some of the changes to a contract which are not deemed to be material changes and therefore do not require a new procurement procedure the contracting authority is obliged to publish a notice of the change in the Official Journal of the European Union.
Changes to the identity of the supplier may be permitted if i) the replacement is carried out as a result of a clear, precise and unequivocal amendment clause or option, or ii) if the replacement is carried out as a result of full or partial adoption of the rights of the original supplier as a result of a reorganisation of the original supplier, including in the form of take-overs, mergers, acquisitions or insolvency etc., where the original criteria of qualitative selection are fulfilled, and where the replacement does not result in other fundamental changes to the contract and does not serve to circumvent the application of the Danish Public Procurement Act.
How common are direct awards for complex contracts (contract awards without any prior publication or competition)?
A contracting authority may use direct awards if works, supplies or services can only be supplied by one particular economic operator because of the following reasons:
The procurement procedure is performed for the purpose of creating or acquiring a unique work of art or a unique artistic performance;
Lack of competition for technical reasons; or
The protection of exclusive rights, including intellectual property rights.
Potential bidders may challenge a decision about a direct award claiming that the above-mentioned reasons are not met. The burden of proof lies with the contracting authority.
Direct awards for complex contracts are not very common.
Have your public procurement rules been sufficiently flexible to allow contracting authorities to respond to the COVID-19 pandemic? What measures have been most used and in what areas have any difficulties arisen? Is it likely that lessons learned from procurement during this period will give rise to longer term changes?
The Danish Public Procurement Act (DPPA) allows for several measures which have been used in connection with COVID-19. Contracting authorities may:
Extend time limits in ongoing tender procedures.
Make changes to existing contractual relationships.
Make purchases without a prior call for tenders (the so-called emergency purchases).
Extension of time limits in ongoing tender procedures
COVID-19 can make it difficult for all parties in a tender procedure to comply with the time limits originally set in a tender procedure. The DPPA recognises and tries to solve this problem in section 93(4) by allowing contracting authorities to extend time limits for submitting applications and bids when this is justified by objective grounds and complies with the principles of proportionality and equal treatment.
The Danish Competition and Consumer Authority (DCCA) has stated that COVID-19 may constitute an objective ground for extending time limits in ongoing tender procedures. An extension of time limits in ongoing tender procedures is a way of providing potential bidders with enough time to hand in an actual bid and this way secure effective competition. If a contracting authority extends a time limit, it must make sure that the extension does not exceed what is necessary for bidders to finalise their bids.
Changes to existing contractual relationships
Both contracting authorities and contractors may face difficulties in meeting their contractual obligations due to COVID-19. It is possible under certain conditions to make changes to existing contractual relationships under the DPPA.
Firstly, it is possible to make changes to existing contractual relationships under section 180 of the DPPA where these changes do not exceed (i) 10 percent of the contract’s value in regard to contracts for services or goods, or (ii) 15 percent of the contract’s value regarding contracts for construction works. Furthermore, the changes may not exceed the thresholds in section 6 of the DPPA or change the overall nature of the contract.
Secondly, section 183 of the DPPA allows changes to existing contractual relationships for up to 50 percent of the contract’s value if the change is necessary due to circumstances that could not have been anticipated by the contracting authority and provided that the overall nature of the contract does not change. The DCCA has stated that epidemics such as COVID-19 may constitute an external circumstance which a diligent contracting authority could not have foreseen. Section 183 of the DPPA may thus be applied in tender procedures heavily affected by COVID-19.
According to section 80(5) of the DPPA, contracting authorities may make purchases without a prior call for tenders where four conditions are fulfilled:
There must be a need for the purchase that is causally linked to an urgent situation.
It is impossible to comply with the time limits for tender procedures as laid down in law.
The occurrence of the need to purchase must be due to an unforeseeable event.
The purchase may not exceed what is necessary to fulfil the need occurred.
Epidemics such as COVID-19 may constitute an unforeseeable event that may create a need for a purchase without prior authorisation according to the DCCA. Section 80(5) of the DPPA may therefore be applied in tender procedures heavily affected by COVID-19.
Contracting authorities have used the possibility of emergency purchases when necessary in order to respond to the COVID-19 pandemic, and the public procurement rules have thus been sufficiently flexible. Also, the use of emergency purchases has not been challenged in court.
The DCCA is of the opinion that the DPPA provides enough measures to counter COVID-19 related procurement problems. It, therefore, seems unlikely that there will be long term changes in procurement legislation.
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