What is a public contract?

Verified 15 December 2023 - Legal and Administrative Information Directorate (Prime Minister)

A public contract is a contract concluded for pecuniary interest between a public or private purchaser and one economic operator . It may concern works, supplies or services.

Public contracts are contracts awarded by a public person (called a ‘public purchaser’) with a public or private person (called an ‘economic operator’) to meet its needs for works, supplies or services.

These are contracts entered into “for consideration”, that is to say in exchange for remuneration.

Public procurement rules are laid down in the Public Procurement Code.

There are several types of public procurement:

  • Public works contracts for the execution of building, civil engineering or infrastructure works.
  • Public supply contracts necessary for the operation of the administration with purchase of products, equipment, or rental
  • Public service contracts for the performance of tangible services (e.g. cleaning of premises) or intangible services (e.g. intellectual services such as project management)

Each of these markets can be innovative. This means that they relate to new works, supplies or services or significantly improve a marketing method (promotion, pricing of a product, etc.), organization, practice or relations. workplace or external relations. They address new or improved administrative needs. They also address the need to develop a prototype or a new concept.

The applicable rules vary according to the type of contract. For example, the amount of the contract determines the implementation of one procedure rather than another. This amount shall be different in the case of a supply, service or works contract.

Contracts concluded may take the following forms:

  • Fixed quantity market (or ordinary market). It is used when the market drivers (duration, quantity, technical characteristics, etc.) are known. The pace and time of performance of the services and the quantities can already be fixed (for example: for a contract on the acquisition of an official vehicle, the delivery date and the quantity are known).
  • Purchase Order Market. In this case, the technical characteristics of the services are specified in the specifications but there is uncertainty about the exact quantities the buyer will need and/or the pace of performance of the services. The contract is therefore executed as purchase orders are issued.
  • Fractional contracts (or framework agreements). The buyer cannot define the requirement precisely. The framework agreement shall lay down the contracts to be awarded during a given period, together with the prices and, where appropriate, the quantities envisaged. For example, the contract is for the purchase of computer hardware for a period of 3 years, with several suppliers. The incumbents will be re-tendered before each contract.

Public procurement must respect 3 key principles, regardless of the amount. These are freedom of access to public procurement, equal treatment of candidates and transparency of procedures.

Adherence to these principles ensures that public procurement is effective and that public funds are well spent.

Freedom of access to public procurement

The buyer must allow all persons interested in a public contract to apply.

This principle presupposes that sufficient publicity is given to the needs of the buyer. It must take measures to publicity which vary according to the subject matter of the contract, its amount and the degree of competition in the economic sector concerned.

In addition, the contract documents must be accessible to all interested applicants.

Equal treatment of candidates

All candidates for a public contract must receive the same treatment and must therefore receive the same level of information.

Respect for the principle of equal treatment shall prohibit any discrimination and shall extend to the entire procedure.

The drafting of the specifications must be objective and not guide the choice of the purchaser.

All offers received within the requested deadline must be examined, regardless of the nationality or location of the candidate.

All applicants must have equivalent information. If one of them asks a supplementary question, the buyer must send his answer to all the candidates.

Transparency of procedures

The principle of transparency of procedures implies, in particular, traceability of the conduct of the public procurement procedure (traceability of minutes of judgment, hearing, negotiation, etc.), the drafting of clear and precise specifications and the retention of documents for a certain period.

Candidates shall be informed as soon as the criteria are published which will enable the buyer to choose the most economically advantageous tender. Similarly, any applicant whose tender is rejected must be informed of the reasons for the rejection.

There are 2 main categories of public purchasers:

  • Contracting authorities. These are public persons, i.e. the State, local and regional authorities and national public institutions (e.g. museums, universities, hospitals). They are also certain foundations and associations set up to meet needs in the general interest and which are financed for the most part or whose management is controlled by a contracting authority.
  • Contracting entities. These are contracting authorities or public companies which are active as network operators (e.g. water, gas, electricity, transport, postal services).

FYI  

Mixed economy businesses and local public businesses award public contracts and must respect the principles of public procurement.

Some public contracts are open to all candidates while others are reserved for certain structures.

Markets open to all

In principle, any company can apply, regardless of its legal form (individual entrepreneur or business) or size (micro-entrepreneur, VSE, SME). Several companies may also join forces to respond to a public contract, for example in the context of a group of companies (co-contracting).

The company must meet several conditions to be eligible to run as a candidate if she has not been convicted in the last 5 years, if she is up to date with her tax and social security obligations and that it is not in bankruptcy proceedings.

Persons eligible to respond to a public contract shall be appointed as follows:

  • When the competition process is at its beginning, we are talking abouteconomic operator.
  • The candidate is an economic operator who requests to participate or is invited to participate in the procedure.
  • The tenderer is an economic operator who submits a tender in the context of a procedure for the award of a public contract.

Reserved Contracts

Certain public contracts or lots are reserved organizations employing persons with disabilities, disadvantaged persons (also known as ‘inclusive companies’), prisoners or persons who are out of work to a greater extent than traditional companies.

The minimum proportion of disabled, disadvantaged or detained workers employed by such structures shall be 50%.

The structures concerned by these contracts are:

  • Adapted companies (EA) and establishments
  • Establishments and labor support services (ESAT)
  • Structures for integration through economic activity (SIAE) accompanying disadvantaged people
  • Companies in prisons: production of goods and services is carried out in prisons by prisoners
  • Social and Solidarity Economy (SSE) companies

The eligibility criteria for companies are specified in the consultation regulation (RC) of the contract and in the Special Administrative Clauses (CCAP).

Competition only takes place between the integration structures.

Example :

A commune launches a public cleaning contract urban spaces. In that contract, it provides for a lot so-called "cleaning insertion" that only an insertion company (such as an ESAT or a SIAE for example) can apply for.

Allotment fosters competition between companies and enables them, regardless of their size, to access public procurement. This is an obligation for public purchasers, but there are several exceptions to this principle.

Allotment obligation

The public purchaser has the obligation to allocate, i.e. to divide the market in separate and autonomous lots.

The buyer determines the number, size and purpose of the lots.

The cutting can be carried out in technical batches (by trades, by purchasing categories), in geographical lots, or in batches technical and geographical.

Example :

A public works contract for the construction of a building may be divided into several lots: electricity (lot 1), windows (lot 2), insulation (lot 3), masonry (lot 4), painting (lot 5).

Where the contract comprises several lots, the estimated value of all the lots in the contract shall be taken into account in determining the procedure applicable to all the lots.

Warning  

The practice of so-called salting, which consists in passing several small-value procedures one after the other in order to remain below the thresholds of formalized procedures, is prohibited.

Derogations from the allotment rule

The public purchaser shall have the possibility of not allotting the market where it is in any of the following cases:

  • It is not in a position to carry out the tasks of organization, piloting and coordination on its own.
  • Separate lots may restrict competition or may make it technically difficult or more expensive to perform the services.
  • For contracting entities, the division into separate lots may lead to an unsuccessful procedure by making the performance of the services technically difficult or more expensive.

Moreover, global contracts, which are contracts awarded in one single lot, derogate the allotment principle.

It exists different types of global markets:

  • Design-realization contracts. It is a works contract allowing the public purchaser to entrust a single contractor with a task covering both the preparation of studies (design) and the execution of works (realization).
  • Global Performance Markets. They enable purchasers to associate operation or maintenance with the realization or design-realization of services (works, supplies or services), in order to meet quantified performance objectives. This may be an energy performance target, or any measurable performance target (level of activity, quality of service, environmental impact).
  • Sectoral global markets. They enable purchasers to entrust a global task for the design, construction, fitting-out, maintenance and/or maintenance of the works built. These include buildings for the national police, the national gendarmerie, the army, prisons, detention centers and transit zones.

FAQ