MEP Peter Agius proposes new EU rules to end abuse of direct orders

MEP Peter Agius has proposed changes to EU rules that would require public authorities to justify their use of direct orders while also making it easier for SMEs to challenge public contract decisions.

The Maltese MEP made the submissions in the European Parliament’s Internal Market Committee, saying the changes would make public procurement more transparent while limiting abuse of the direct order system.

‘Direct orders by public authorities in Malta are becoming a systemic tool for hidden favours to people close to corrupt politicians. This is severely affecting our hardworking entrepreneurs, SMEs especially, who want to offer value for money and innovative products and services,” Agius said.

Agius said his proposals are designed to empower companies to challenge award decisions.

The first proposal would require public authorities to provide detailed reasons for awarding contracts by direct orders rather than through public bidding processes. Those reasons would also need to be published on authorities’ websites or a public noticeboard.

Under Maltese law, public authorities are technically only allowed to award contracts with a value of up to €10,000 by direct order, with larger contracts legally required to be opened up to public calls.

In practice, authorities ignore that rule and regularly carry out much larger, costlier projects through direct order provisions or through negotiated procedures - a mechanism which restricts bidding to firms handpicked by the contracting authority. They are not required to justify their reasons for doing so.

“When pressed during court proceedings, authorities frequently invoke urgency which is often self-induced. I am proposing that authorities systematically publish in advance the reasons for using direct orders. This would allow public scrutiny and lead to more transparency in the use of taxpayer money,” Agius said.

A second and separate proposal by Agius is to cap processing fees required to challenge decisions to award public contracts.

Currently, fees to kickstart an administrative review can run into the tens of thousansds of euro, Agius said, deterring small companies from contesting decisions they believe were unfair.

Agius’ proposal is to cap fees for contesting award decisions at 0.25% of the award value, not exceeding €25,000.

“This measure would subject public authorities to a real effective scrutiny of their decisions,” he said.

The two proposals will form part of discussions within the EP committee to draft a revised Public Procurement Directive. Those talks are scheduled to end in autumn, when the European Commission is expected to submit a revised Directive to address MEPs’ concerns and take into account the feedback from stakeholders in the public consultation held over the past months.