Public procurement: Commission refers Spain to Court of Justice over
Valencia town planning law

Reference: IP/07/921 Date: 27/06/2007

Brussels, 27 June 2007

Public procurement: Commission refers Spain to Court of Justice over
Valencia town planning law

The European Commission has decided to refer Spain to the European Court of
Justice over its laws on land-and-town planning that apply to the Valencia
Community (known as "LRAU" and "LUV").

The Commission has already sent a letter of formal notice and reasoned
opinion (IP/05/1598, 14 December 2005) to Spain regarding law 6/1994 on
land-and-town planning ("LRAU") of Valencia. In these, the Commission took
the view that the award of integrated action programmes (Programas de
Actuación Integrada � "PAI") constitute public works and/or service
contracts that should be awarded in accordance with Directives 93/37/EEC and
92/50/EEC (now consolidated and amended by Directive 2004/18/EC). PAI are
contracts awarded by local authorities that include the provision of
services and performance of public infrastructure works by property
developers ("agentes urbanizadores") selected by the local authority. The
LRAU was revoked by law 16/2005 ("LUV"), which entered into force on 1
February 2006.

The Commission sent a second letter of formal notice on 4 April 2006
(IP/06/443, 4 April 2006) and a second reasoned opinion on 12 October 2006
(IP/06/1370, 12 October 2006), asking the Spanish authorities for their
observations on several provisions of the LUV and on their compliance with
previous warnings regarding the continued award of contracts and in breach
of the EU procurement Directives.

The Commission considers that, although the LUV streamlines the procedure to
select property developers, it still contravenes the EU procurement
Directives in several respects. These include the position of bidders who
request contracting authorities to open a procedure to award a PAI, the
contents of contract notices and tender documents, some of the criteria for
the award of the contract, and the possibility to make various amendments to
the contract at the time of the award or during its performance. The
Commission further considers that the Spanish authorities did not comply
with their EU obligations, by failing to adopt measures to prevent the award
of contracts and in violation of EU legislation. Finally, there is still a
difference of opinion as regards the core issue of whether PAIs are public
contracts subject to the EU procurement rules. The Spanish authorities
maintain that PAIs are not public contracts, and therefore, that neither the
LRAU nor the LUV contravene the EU Directives. The Commission holds the
opposite view.

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