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#21 Modifying Construction Contracts from Contract and Procurement Law Perspective & Ole’s advice for Change

Jul 20, 2022

In this episode, Marta and Willem, along with their guest Prof. Ole Hansen discuss the modification of construction contracts. They explore why in practice, there is often a need for modification in construction contracts and how it is addressed with reference to principles of loyalty and reciprocity. They point out that the rules concerning modification of public contracts do not always represent the commercial reality but merely focus on what is promised in the tender. For the dessert, they argue contract law perspective in public contracts is welcomed.

Host(s)

The English episodes of Bestek – the Public Procurement Podcast are hosted by Marta Andhov, who is an Associate Professor in public procurement law at the Faculty of Law, the University of Copenhagen and a founding member of the Horizon 2020 Sustainability and Procurement in International, European, and National Systems (SAPIENS) project; and Willem Janssen, an Associate Professor in European and Dutch Public Procurement Law at the law department of Utrecht University, and a researcher at the Centre for Public Procurement and RENFORCE.

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BESTEK - The Public Procurement Podcast
BESTEK - The Public Procurement Podcast
dr. Willem A. Janssen and dr. Marta Andhov

Podcast about public procurement & law. Hosts: dr. Willem Janssen & dr. Marta Anhov

About This Episode

In this episode, Marta and Willem, along with their guest Prof. Ole Hansen discuss the modification of construction contracts. They explore why in practice, there is often a need for modification in construction contracts and how it is addressed with reference to principles of loyalty and reciprocity. They point out that the rules concerning the modification of public contracts do not always represent the commercial reality but merely focus on what is promised in the tender. For the dessert, they argue contract law perspective in public contracts is welcomed.

0:00 Entrée
0:03 Agenda and introduction
8:40 The Main
8:40 Contract modifications under the public procurement rules
11:10 Need for modification in construction contracts
16:54 Principle of loyalty in Nordic contract law
23:07 Principle of loyalty before the courts
28:47 Principle of reciprocity in modifications
33:27 Commercial reality vs public procurement
37:12 Dessert
37:12 Dream a little: Public contracts
38:24 Lack of contract law perspective in public contracts

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Episode Transcript

Willem Janssen 0:00 

Welcome to Bestek, the public procurement Podcast. Today, we’ll be talking about modification of construction contracts: A contract or procurement perspective?

 

About Bestek 0:15 

Welcome to Bestek, the public procurement podcast. In this podcast, Dr Willem Janssen and Dr Marta Andhov discuss public procurement law issues, their love of food and academic life. In each episode, Willem, Marta and their guests search for answers to intriguing public procurement questions. This is Bestek. Let’s dish up public procurement law.

 

Willem Janssen 0:40 

So quite an episode today again. It’s three of us again. Welcome Ole to the podcast.

 

Ole Hansen 0:46 

Thank you.

 

Willem Janssen 0:47 

Welcome Marta.

 

Marta Andhov 0:48 

Hello, hello.

 

Willem Janssen 0:49 

This is a very formal way of doing this. Let’s get started. At least all the listeners who have gotten used to our rambling and our voices. And it’s a pleasure actually to have Ole here today. We’re talking to Ole Hansen, he is the co-founder of the Centre for Private Governance, CEPRI[1], if I pronounced that correctly, at the University of Copenhagen where we’re still recording on-site here today and he’s conducting research within private law with a special focus on private actors undertaking public tasks. And we’re talking to him today, as a Danish construction law expert. I’m sure you do a lot more things but that was the reason partially why we invited you here today. So, it’s a pleasure to have you. And, we’ll be digging into modification of construction contracts and we’ll be looking at how EU public procurement law and the concept of modification can sometimes cause tension with national construction practices, but also construction law. So that’s what’s on the menu for today’s episode. And of course, we will also be looking at dessert. I think dessert’s a little bit different than what it is normally today, but I’ll leave that as a teaser. So, just to get you off to a good start, although, of course, Marta and I agree that public procurement is the nemesis, the starting point, the epicentre of the world; but in your research on contract and construction law, is public procurement the entree, the main or the dessert, or is it just an appetizer?

 

Marta Andhov 2:25 

Or something that you try to stay away as much as you can?

 

Ole Hansen 2:29 

Yeah. Well, as for my sake, I’ve been specialized in construction contract law. And of course, that’s about how transactions between employers and contractors are entered into and carried through during the construction process. That leaves out the question of actually how, what were the pre-contractual aspects and what was the pre-contractual regulation. This difference between public entities and private entities where private entities can enter into even major construction contracts as they want to, whereas public entities underlie the procurement law regime. The most tempting part for a construction contract lawyer is trying to avoid the question of whether there’s actually an interplay between the procurement law rules, the public law rules, and contract law rules. But you can’t really avoid it, can you? Because evidently, procurement law kind of frames or underlines the public contracts. So, you have, at least in my opinion, you have to some extent to consider whether there is in fact an interaction between public procurement law and private law.

 

Willem Janssen 4:08 

It sounds like we’re talking to someone that has had come to terms with the fact that you have to deal with public procurement law, whether you like it or not. I heard words of like, you can’t avoid it, or something like that. So that means that it’s kind of maybe perhaps a side dish, but not often the most delicious side effect. Is that a fair conclusion?

 

Ole Hansen 4:28 

If you can leave it out and not order it.

 

Marta Andhov 4:31  

You probably want to do that.

 

Willem Janssen 4:34 

Alright.

 

Ole Hansen 4:36 

At least from a theoretical point of view, I think the practitioners, the corporate lawyers see it another way.

 

Willem Janssen 4:44 

All right. Thank you so much for that. Let’s wait and we’ll see if we can make that dish a bit more tasty, I think, during the episode, right? So, let’s buckle down a bit more on content, but not before I actually introduced that a little bit in terms of the reason why we’re here with three of us today. Because Marta and you’re working on a research paper concerning the intersection between construction law, contract modification and procurement law. In today’s episode, we’ll be highlighting some of those topics that you’ll be addressing in the paper. So, it’s kind of like a teaser, right? It’s more of an appetizer, a teaser to whatever will come in the future. And on top of that, it’s also, I think, a lead-up to a project that Marta is leading, the PurpLE Project[2], in which I’m also involved, and Ole as well. So perhaps, why this topic? Maybe we can talk about relevance a little bit. Why did you start this research paper? And why are we, the three of us, endeavouring on this, this bigger research project?

 

Marta Andhov 5:49 

So, to give you context, PurpLE is Purchase Power, Sustainable Public Procurement through Private Law Enforcement.

 

Willem Janssen 5:56 

That was in one go!

 

Marta Andhov 5:58 

That was the long name. But to be honest, to be very honest, the idea for this came out of our many, many conversations with Ole over the years that we had the chance to collaborate. We always, so to speak, buckled heads a little bit in a very obviously friendly way. But pointing out that the contract seems to be such a defining moment because we care so much about what happens before the contract. Ole cares very much about what happens after the contract. Then time and time again starting with our first research project with Professor Steen Treumer and our first publication, we really saw that there are many, many aspects between private law and procurement law, that somehow are in conflict and are not really researched. That led to us being able to obtain the funding for this project and that we’ll be working on going forward. Then also having you of course, because the Netherlands is having the same approach, which is that public contract is regulated by private law after the contract is conducted. So that gives you a lot of contexts, I think, for our today’s podcast, but also going forward because it just first is just to kind of get everyone interested in what we will be doing for next two, three years. There’ll be many, many more on how all this pre-contractual process impacts and how it can impact, what are also the limitations of what you can do in the post-contractual stage when private contract law rules, the legal framework. But that is a broad context of the project.

 

Willem Janssen 7:39 

It’s a project that I’m very excited to be part of. One, because I think it’s so fundamental, right? It’s a bit of a, well, I wouldn’t say traditional because that starts to sound boring, but like, it’s this EU law of focus and the influence of EU law on national practices, right? And on national law. So, there’s really that dynamic there. Also, because it leads to real-world problems, right? There are problems that come up in construction sites where you bump into, and I think that’s also where the not-so-tasty side dish, introduction from Ole came from. So yeah, let’s see. So, like I said, a bit of a teaser. Today, we’ll be talking about modification of contracts, and particularly focusing on the Danish construction context, but I’m sure actually for those tuning in from other jurisdictions from Europe or from all over the world that these issues would arise in other member states as well. I know for sure that they arise in the Netherlands as well. So, if that’s a setup for other countries and relevance…

 

Marta Andhov 8:38 

…let us know.

 

Willem Janssen 8:38 

Yeah, for sure. So, let’s move on to our main.

 

Marta Andhov 8:42 

Yes.

 

Willem Janssen 8:43 

Contract modifications under the public procurement rules… Of course, we’ve talked about it a bit prior to recording, but let’s get our listeners in tune as well. We’re talking about the modification of the contract. We start with the Directive and maybe I can pass it to you then Marta.

 

Marta Andhov 8:56 

Sure. So, I will lay down in a couple of words the regulatory perspective of procurement and then we will ask Ole to tell us what is really the problem in practice and what are his thoughts on this conflict, somehow this tumultuous relationship. So, the modification of contracts is regulated under Article 72 of the Classic Directive, and we know from 72, which codifies broadly Pressetext case[3], and Finn Frogne[4] to a certain extent. The opportunity of modifying public contracts without the need to re-tender is fairly limited. We got a catalogue of modifications there are defined as non-substantial and these ones are the ones related to the existence of a very clear and unequivocal (that’s a difficult word in English) review clause. We need some additional work or services or supplies from the original contractor and there are terms and conditions we need to fulfil. We also have the force majeure. We have the so-called de minimis change and specific circumstances for the change of the contractor. I think those are all if I remember correctly, and then we have paragraph 4 of Article 72, which is a codification of Pressetext and specifically gives us a definition of what is a material change. So, this is the space in which we are existing, ultimately, leading to the fact that there is a fairly limited opportunity to modify contracts without the need for re-tendering. Ole, tell us from your perspective, from your experience, you also have a very broad experience of collaborating with practitioners, where this becomes a problem when we’re looking at the long, complex construction contracts and this modification. You were mentioning to us some examples before we started recording, maybe you could bring them on the record.

 

Ole Hansen 11:11 

Yeah, well, I mean, in construction practices, modifications and the need for them arise, it is a fact. I mean, in all complex commercial construction cases, there are plenty of modifications agreed to on the way during the contract period. And that’s not unusual nor problematic. Because I think that in the current standard contract terms used in Denmark, they’re called AB 18 standard conditions for construction, there are clauses which anticipate the need for variations underway, both for extra payment to the contractor, and extra time, all under specific circumstances stated within the contract. So as long as we are operating under these terms, I think it’s fair to assume that or, I think, at least the contract law theory in Denmark agrees that when we’re operating under these variation clauses in the standard contract terms, we are in line with the procurement law rules, we have them anticipated within the contract and need for specific variations. That’s perfectly alright. Looking at it from procurement law view, such variations could be a claim for extra time because you need it if you have been asked to do extra work or a need for payment for extra work. That’s perfectly okay. The situation that we’re interested in this context is actually where the employer is tempted to give extra time or even extra money to the contractor without a legal basis in the contract. This sounds, of course, really, if you’re not acquainted with the situation in big construction proxy project, really odd. Why should the employer be interested in giving anything away? Well, often it might occur that contractor has some sort of problem with delivering what he has promised, for instance, the agreed time and of course, the employer can choose to say, well, you have to deliver at the agreed time and if you’re in delay, I will claim liquidated damages in accordance with the contract. However, this might create even greater trouble for the contractor and because of the money invested in the whole project, it might also lead to a major loss for the employer. Because, if this specific contractor is in delay, he might delay other contractors and then kind of accumulate losses down the supply chain and losses which might be some that are bad in the end by the contractor. But if the contractor is unable to perform and the whole project is brought to a standstill, this will lead to considerable losses. We know that from several construction scandals. So, in some situations the employer will be tempted or will be motivated to give extra time or even extra money in situations where it is in fact not obliged to or not clearly obliged to under the contract and that’s interesting.

 

Marta Andhov 15:17 

So, we are talking about modifications that were not predicted in the review clause in the contract?

 

Ole Hansen 15:24 

 Yes.

 

Marta Andhov 15:24 

So, those would be the ones that would need to be assessed from a procurement perspective through the lens of this Article 72. Right? We would need to consider, if we do not have the review clause, is that change brought by unforeseeable circumstances. Is that the need for additional work? Or is that de minimis change? We skip the one about changing a contractor because that’s not within the scope of our interests. So, this is also coming from a perspective of our conversations before because from a procurement law angle, we want to make sure that we are not giving a competitive advantage that if known at the beginning of the tender process, could potentially lead to the fact that someone else would win the contract. Right? This is where our objective comes from. But the perspective that you have from all perspectives… Lots of perspective in my life, sorry, too many coffees in the morning… But the lens Ole, that you look at it is contract law. Up here also there is this Nordic concept of loyalty, which is similar to the general concept of good faith in a civil law contract. So, can you show us? Can you tell us in a couple of words, how this clash with this concept of loyalty, what we’re focusing on and how this is different, or might be problematic from a procurement law perspective?

 

Ole Hansen 16:54 

Yes, I’ll try at least. I mean, the principle of loyalty, contractual loyalty, is deeply embedded in all the contract law, and I think it accumulates general principles of good faith, as we know it from at least civil law nations. The problem or the interesting part here is that in some situations, even where a contractor is in delay due to his own fault for example, or cannot simply perform what he has promised, you might be under contractual obligation to help him. If we take an example: You want to build a platform for a helicopter. Perhaps you want to build it in Greenland or somewhere else where it’s really cold. You have in the design required a certain surface of this platform to be made with cement and it turns out that this specific cement is not able to stand the severe cold conditions, where the platform is to be used. Then the contractor has a problem because he has promised to deliver but he cannot. In this situation, the employer cannot simply lean back and say, solve the problem, I don’t care what you do just solve the problem. He needs to, according to a basic principle of loyalty, invest at least some time in trying to figure out whether you can change the design so that it’s actually possible for the constructor to deliver as soon as possible. So, he needs to take active steps and those active steps are really hard to determine in advance. It’s all concrete assessment in the given situation. Looking at the value is at stake, the risk of the whole project being bought to a standstill, and of course, what is actually needed to solve the problem, how much time and in that case, also, money the employer need… It doesn’t need to invest to help to solve the problem. It’s fairly difficult, but in this way, you can say that in the deep structures of contract law you will find legal principles which actually make it an obligation for the employer to help the contractor.

 

Marta Andhov 19:55 

This is interesting because from the perspective of procurement, I will be very keen on hearing your comment on this Ole, from the perspective of procurement law, we will say, well, but you should have figured it out at the very beginning, right? It’s your technical specification of your tender. How, and what is it to be used? You didn’t conduct your due diligence. It’s problematic from the perspective of modification. Because let’s say, I think in our discussions previously, although we were giving this example, some sort of sustainable cement that needs to be used, and then, later on, you realize it cannot be used due to, let’s say, weather conditions or there’s some issue with supply chain etc, but functionality-wise, the other cement would perform its function. Can you change that? From a procurement law perspective, Pressetext case provides us with this limitation on the modification because it says, well, if that change would be known from the very beginning, it might have attracted other competitors to bid, someone else actually could have won the contract. From that perspective, or even, we could maybe even argue that some of these elements change the overall nature of the contract. So, we look at it as a change that is not allowed or has a risk of not being allowed from a procurement law perspective. And, I wonder, when you look on the contract regarding this sort of procurement element, isn’t there also an argument used of this? Well, certainly care has not been put into drafting of the contract or investigating what really is needed for that project to be carried out. For example, you know, from a procurement perspective, we should have checked and it should be known that a particular type of material would not be performing, let’s say in those conditions. I wonder how that logic exists in your world.

 

Ole Hansen 21:54 

Actually, it does not. I mean, when we’re talking about this basic principle of loyalty, the duty is to help your contractual partner in a situation which is very problematic for him or her. I mean, in this situation, we don’t care about whether the contractor is in fault or if he could foresee the situation. It applies to all situations where there’s a risk that he cannot fulfil, and you could by spending or not spending a small amount of resources, actually help him out, change the terms of the contract, to make him fulfil the overall aim of the project.

 

Willem Janssen 22:46 

So how does this… Because I think it’s a fascinating concept, this concept of loyalty. Also, if I look at reasonableness and fairness or good faith, I think that’s how we translate, replicate and delegate in the Dutch context. But what does it? How does it …  Because I understand the way you’ve explained it there’s a need to help each other out. Right? You’re in a contractual relationship, we’re in it together kind of. So, say you would take this to court.  What do the courts do with this in terms of like, this principle of loyalty? How far do you actually need to go? In terms of…  Because I would say that a contractor that was supposed to build that helicopter platform, of course, that he or she would say that yeah, well, I mean, you needed to help us more, we needed more funds we could have never anticipated. Then, you know, it would have been that it would have gone minus 80. Right? You know, minus 10 would have been fine and so that’s why our sustainable, concrete doesn’t work. So how does that play out in terms of the intensity of the help required?

 

Marta Andhov 23:42 

And on the other hand, you know, as the other side of the coin, when we are protected as one of the contractual sides that someone else is just taking us for the ride, so to speak. Right? So, it’s just someone is sort of abusing the notion saying, oh, I just need more help, I need more money continuously, where this sort of borders, legally?

 

Ole Hansen 24:02 

That’s of course, extremely difficult. You got the court cases on this from the Danish Arbitration Court for construction cases. Basically, the whole principle of loyalty, the reason for its importance in this area of law is the investments involved. I mean, the investments in major construction projects are so significant that you would you have to. If those investments are threatened, because of a minor problem or a minor detail in the design for instance, then you as an employer, you will have to invest a fair amount of time to help the contractor solve it. And it’s, of course, a very, restrictive assessment. I mean, it’s not like the contractor can come anytime and say, well, this is getting difficult for me I need you to help me change the conditions so that I can actually fulfil the contract. Of course, this is a question of, it’s a very, very restrictive assessment, but it’s there. There must be a proportionality between the resources spent by the employee and what is actually security at the overall level.

 

Marta Andhov 25:37 

So here, actually, we bringing it back a little bit to the logic that I think we can also apply in the context of public procurement. Because proportionality being also one of the principles, but also this notion of what Ole is mentioning about investment and the economic element of it being extremely important. Because if we look at the majority of the national procurement act, so if we go level below the EU, usually as the objective of public procurement, obviously the open competition and internal market elements are there. But also, efficient spending of the money or the well-known achievement of value for money is usually included. So those will be similar considerations, that would be tied into it. So, I think this is very, very interesting in that lens.

 

Ole Hansen 26:24 

I’m just coming up with another quite interesting example of this and it goes not to the variations, but to the remedies of breach under construction contract law and the example is fairly simple. If you are obliged to construct something, and there’s a detail, which is not working, there’s definitely a defect in the works, then the main principle is that the contractor is obliged to remedy it, go out and fix it. But this obligation is sometimes modified if the costs to remedy the defect are considerably higher than the value of the actual defect to the employer. An example is, if the defect is of merely just about the looks of a building on the design, whereas as it doesn’t affect the functionality at all, then the court might say, well, there’s definitely a defect, but you’re not obliged as contractor to go out and fix it. Because that would cost you so much money compared to the actual benefit for exactly the same principle, actually underlying here.

 

Marta Andhov 27:58 

Very interesting

 

Ole Hansen 27:58 

So, in some situations under construction law, an employer, though he has clear-cut terms, he cannot actually enforce them.

 

Willem Janssen 28:10 

That’s a really interesting example, I think. So, thank you for adding that just because I’d like to also get to the reciprocity discussion because I think it’s also very important in this debate. That when we look at loyalty, what I take from it is we have conflicting obligations. You have the obligation to be loyal in a contractual relationship on the Danish national boots on the ground level but perhaps you cannot fulfil that obligation because you’re limited by EU law. Right? I think that’s a very interesting example. So, I look forward to your future thoughts on that in the paper that you’re writing. We had highlighted two reds, we said we would do loyalty and reciprocity. So, in what way does reciprocity play a role in this discussion that we’re having today?

 

Ole Hansen 28:55 

Yeah, well, that’s a good question. I mean, we’ve been stumbling all over as construction contract lawyers is de minimis rule, which allows modifications, which are under 15% of the value of the contract. That led us to the question of whether it’s in fact this de minimis rule gives the employee a possibility to waive obligations, waive the contractor’s obligations, up to a value of 15% or 14.9%. Or, put it in other words, if we are under the 15%, can the employer then simply give away obligations or giveaway values to the contractor saying you’re not obliged to fulfil 15% of your contract either whether it’s in the value of the works or its value of the time invested?

 

Marta Andhov 30:17

But those are things that are originally predicted in a contract, right? And, you waive those?

 

Ole Hansen 30:22 

Yes.

 

Marta Andhov 30:23 

Yeah. So, it’s, again, it’s important to underline because we’re not talking about something that has not been in the contract. And we’re thinking, can there be a change that is covered by de minimis? But we’re talking about circumstances, there is an obligation that from the beginning, it was in the draft of the public contract, and was included in public contract. So, we right now are changing that bit? The question is whether de minimis could be something that allows it.

 

Ole Hansen 30:47 

Yeah. What I’m wondering is whether, because if you give away something, it’s no longer a contract. It’s a gift, right? So, I would think that, too, as a starting point, at least. I would assume that even if you asked for a variation, which is less than 15%, you have to have something in return. That’s the principle of reciprocity, because if you don’t, then it’s a gift and not a contract anymore. It lies outside the scope of the contract, outside the deal which was originally entered into.

 

Marta Andhov 31:26 

What could be an example? So, we could waive the deadline, I guess, right?

 

Ole Hansen 31:30 

The best example is that a contractor because he has problems with his supply chain, he is getting delayed. He doesn’t get the material or the people he needs on-site to fulfil his obligations. So, he’s delayed, say, a month in a major construction contract. What he does is, he claims for a time extension, but the employer evaluates his claim and says, well, you don’t have that right because the reason for your delay is that you didn’t get the people on site that you needed, or you didn’t have the machinery in place. So that was your risk that it was there. That’s, of course, looking at it from a purely legal perspective. However, in some situations, because there’s a major investment at stake, an employer would actually choose to give a time extension without legal reason for it, and even to waive the employer’s right to liquidated damages. And this is simply not a question of law, it’s more a question of doing business in the way that you want to secure that your contractor is not going into bankruptcy…

 

Marta Andhov 31:37 

…that the job is done, right?

 

Ole Hansen 32:38 

..or to get the job done, avoiding him getting into economic problems, so he cannot pay his workers cannot get the material and so on. You want to lend him a hand from a business perspective and that’s the reality. But I assume that the position will be very different from where private employer will be able to do whatever he or she thinks is the right thing to secure the collaboration and the overall aim of the contract, whereas I would assume that the public entity would not, as the starting point, be allowed to give away something.

 

Marta Andhov 33:41 

Yeah, because we really coming into this culpability of the supplier, right? the contractor? And this is also the space which is very interesting, I think. Something that I look forward to working with both of you on more, because on the one hand side, as Ole mentioned, there’s this need of a realisation of commercial reality and the scale of the fault is also various, right? So of course, on the most extreme level, we are not from the perspective of procurement, allowing for a situation in which contractor bids really low wins the contract, and then sort of cries wolf and says, oh, I need more time I need this and that I had a problem with people and so on so forth. Because from a procurement perspective, we look at it as not our problem, you obliged yourself, you need to deal with it. But very much the commercial reality also is what Ole is pointing out. To what extent we can at some point say, well that’s not a fault of a contractor, the contractor does not have a control over, let’s say, its supply chain to such an extent? To what extent at some point, we can say, well, this is unforeseeable circumstance? So, if it is not culpable, can we then bring in the unforeseeable circumstances in the explanation? And so on, so forth… But there is a lot of space here to conduct more research and discuss that more that we’re hoping to do in upcoming two, three years.

 

Ole Hansen 35:07 

I think it’s really interesting what you’re seeing here Marta because this suggests that there actually is perhaps a very narrow space for it, but still a space for pursuing or business like aims within procurement law, securing the values at stake. Because if there are situations where you from a procurement law perspective would say that, well, the contractor hasn’t performed as he promised, but it was not his fault, then there might be room to give away something to help him out and to secure the overall values at stake.

 

Marta Andhov 35:48 

Absolutely. And just to conclude that, check that part of our podcasts I just want to point out that the controversial case here the really somehow guides us and limits of what we can do is really Finn Frogne, a Danish case. It’s really interesting because that case, in the first instance when it has been decided by the Danish Complaints Board for Public Procurement, the Complaints Board agreed that there was a need to settle the dispute under that contract and ultimately limit the scope of that contract. But at the same time, the case was later on appealed and the Danish Supreme Court issued a preliminary question to the Court of Justice. And the Court of Justice ruling in Finn Frogne, it’s really limiting and it’s controversial in many ways and has been broadly discussed. Whether this is really a case that is going forward in upcoming years, we will see somehow limitation of its applicability, we will see that this was one-off and that’s it, or whether it has a very broad application. What I mean by that is that the criticism really came from practice saying this type of judgment, this type of logic and ruling is really disregarding the commercial reality of the situation of how those contracts look like. So, we hope that we’re that we teased you into following the PurpLE Project and our work on interaction between public procurement law and private law. And I’m giving voice back to Willem.

 

Willem Janssen 37:26 

So, we’re up for dessert. I think that’s where it gets really tasty. Whether we can say that there’s a reciprocal relationship or loyalty towards dessert, I don’t know about. Let’s move towards that. I have one final question; I think to close up this podcast episode. We didn’t introduce it, we didn’t title it because it’s a bit of a different setting, right? With the three of us. But because we only have Ole here for this episode, we were really interested for you, we were hoping you would dream a little, if you would perhaps think out loud with us. And maybe you could take on the role of legislator or policymaker of academic or all of those or have a higher being that might be able to tell us… What would you do if you had, if you were responsible and you had the opportunity to change, say, one or two things in public procurement law in practice? And of course, in your case, maybe we can broaden it a bit right? We’ll be kind make a construction law. What would you change? What would be, if you would have a free hand, what would be the thing that you would fix, perhaps?

 

Ole Hansen 38:32 

Oh, that’s a really difficult question. I mean, I need to first answer it in a very vague way. I think that, in my view, also, in accordance with what I’ve done together with Marta earlier, the main problem is that the regulation of the pre-contractual phase in procurement law is based on terms that basically do not correspond, or at least to large extent, they do not correspond with the standard terms used in contract law. That’s peculiar because even from a procurement law perspective, one should be aware that once the contract is entered into, it’s governed by contract law, basic contract terms and principles. So that would be my wish. And of course, that’s, they will also take away the whole idea of a project. But if the current law in the future could consider terminology and consider to somehow align terminology on the terms used in the pre-contractual phase, and actually, when the contract is performed, that will solve some problems and clarify a lot of things.

 

Willem Janssen 40:15 

So does that mean ultimately that… We need just to follow up and then we’ll really come to a close. But does that mean that we need another directive on the EU level or further alignment? Do we need a public procurement directive and a public contract directive after the contract has been signed?

 

Ole Hansen 40:29

Well, I would say so, yes. Because, looking at from contract law perspective, a lot of the unclarity when it comes to this interaction between procurement law and contract law stems from the wording of the directives, so if the procurement lawyers could please consider…

 

Willem Janssen 40:48 

Are you taking notes, Marta?

 

Marta Andhov 40:50

I’m taking notes.

 

Ole Hansen 40:53 

..consider that there’s another system of rules governing the whole setting once the contract is entered into and it could be of great value if you could align your terms and cobble those two systems in a more clear way. That would definitely help out but I think that people will snap. It’s not likely in the coming in the near future.

 

Willem Janssen 41:19 

Well, let’s hope not because…

 

Marta Andhov 41:21 

We have years, we can work on that Ole.

 

Willem Janssen 41.23 

Exactly. Do we need to plug PurpLE again?

 

Marta Andhov 41:26 

No. I think we’re good. We’re good to go.

 

Willem Janssen 41:27 

We’re good. I think we’ve come to the end of this podcast episode but not we won’t close off before we thank you Ole for your time and your availability to record this with us today. It was a pleasure talking to you.

 

Marta Andhov 41:40 

Thanks for joining us.

 

Ole Hansen 41:41 

Thank you for inviting me. I think it’s really interesting to be a part of this project. I’m looking very much forward to do it and to finalize our coming article particularly.

 

Marta Andhov 41:52

Happening soon.

 

Willem Janssen 41:53 

I think the risky bit, and then we’ll come to a close this, is when you announce it on a podcast, you really have to write. So, thank you so much to everyone for listening. This was Bestek, the public procurement podcast.

 

About Bestek 42:07 

This was Bestek, the public procurement podcast. Do you want to contribute to today’s discussion? Then share your thoughts on LinkedIn or Twitter Do you have an idea for a future episode? Write to us at www.bestekpodcast.com

 

[1]https://jura.ku.dk/privategovernance/english/

[2] Purchase Power – Sustainable Public Procurement Through Private Law Enforcement(PurpLE) https://www.carlsbergfondet.dk/en/Forskningsaktiviteter/Bevillingsstatistik/Bevillingsoversigt/CF21_0317_Marta-Andhov.

[3] Case C-454/06 pressetext Nachrichtenagentur GmbH v Republik Österreich (Bund), APA-OTS Originaltext-Service GmbH and APA Austria Presse Agentur registrierte Genossenschaft mit beschränkter Haftung [2008] ECLI:EU:C:2008:351.

[4] Case C-549/14 Finn Frogne A/S v Rigspolitiet ved Center for Beredskabskommunikation [2016] ECLI:EU:C:2016:634.

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