What are the criteria that allow public buyers to impose European localization?​

Response from the Ministry of the Economy, Finance and Industrial and Digital Sovereignty: The conditions of execution and the award criteria relating to the geographical location of economic operators are prohibited since they are likely to disregard the principles fundamentals of public procurement, in particular the principle of non-discrimination between candidates and freedom of access to public procurement.

By way of derogation, article L. 2112-4 of the public procurement code nevertheless offers the possibility for buyers to impose, in their specifications, the location of the means used for the execution of all or part of a public procurement in the territory of the Member States of the European Union (including for the maintenance or modernization of acquired products).

However, this provision must not prevent the implementation of the guarantee of equal access to public procurement granted by the European Union to certain third countries within the framework of trade agreements, recalled in Article L. 2153-1 of the public procurement code, nor excessively undermine free competition or the freedoms guaranteed by the single market.

Indeed, buyers can only use it if they demonstrate that it is justified by the subject of the contract, necessary and proportionate to the objectives of proper performance of the contract (CJEC, October 27, 2005, Commission of the European Communities c/ Kingdom of Spain, Case C-158/03; CE, January 14, 1998, Société Martin Fourquin, n° 168688). The implementation of article L. 2112-4 of the public procurement code must therefore be assessed on a case-by-case basis.

The buyer must be able to demonstrate that only a requirement for localization of all or part of the means is able to achieve its objectives, particularly in terms of security of information and supplies or taking into account social or environmental considerations.

It is therefore up to him to justify, for each contract, that this requirement alone constitutes a determining, adequate and effective condition for the proper performance of the services, to the exclusion of any other requirement of lesser effect. Only the means used for the execution of the contract are covered by this provision.

This may concern, in particular, the place of production or the warehouse where the parts or data are stored, subject to two reservations. On the one hand, the purpose of the implementation can only be imposed if it is the only means of meeting the objectives pursued. On the other hand, it is not possible to require a geographical location pre-existing the award of the contract: it can only be a condition of execution of the contract that an economic operator commits to its offer to be honored after award and signing of the contract.

Buyers may implement this provision in particular for specific markets, necessary for the proper functioning and continuity of their missions and activities.

In this context, the justifications may, for example, reside in the need to guarantee the security of supplies for health products essential to the continuity of the public hospital service or to the performance of urgent and vital care acts, in contexts health or international crises that could lead to shortages.

This could also be linked to requirements relating to the guarantee of information security which would involve, in addition to specific guarantees linked to compliance with the rules of general regulation 2016/679 on data protection, requiring the establishment of computer servers on the territory of the Union whose data could not be extracted remotely by companies established in third countries not providing the guarantees required by this regulation, to the availability within reasonable deadlines of spare parts within the framework of markets relating to the installation, servicing or maintenance of energy production installations, or even to respond to disruptions or exceptional unavailability in certain segments or industrial sectors under pressure.

In the event that the conditions for recourse to the requirement of location of the means of execution of the contract are met, it is possible to make it a minimum condition obligatory for all and to also provide an award criterion allowing the buyer to evaluate the quality (the technical value, relevance, adequacy, effectiveness, etc.) of the proposed measures and the associated guarantees with regard to the subject matter and the conditions of execution of the contract.

In this context, a better score would be given to the offer presenting the best level of guarantee of supplies and the least risk of the proper execution of the contract being thwarted by requisitions ordered by foreign authorities.

The legal affairs department of the Ministry of the Economy published on its website, in May 2023, a technical sheet relating to the mechanisms allowing offers from third countries to be excluded in matters of public procurement.

This sheet, accessible to all buyers, granting authorities and economic operators, includes detailed explanations on the provisions of article L. 2112-4 of the public procurement code. In line with these concerns, the French authorities actively support the draft European Union regulation for a “net zero” industry (NZIA), as well as that on heavy utility vehicles which, as it stands, impose in particular buyers to take into account, when they acquire “net zero” technologies or urban buses, a criterion of sustainability and resilience which makes it possible to guarantee diversification and thus security of sources of supply.

This article is originally published on lagazettedescommunes.com

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