An agreement between a contracting authority and a supplier may be considered ineffective by a court following an application from a supplier.
An action for ineffectiveness is brought at a general administrative court.
An agreement that was preceded by an illegal direct award of contracts may be declared ineffective. An illegal direct award of contracts may, for example, occur when an agreement is concluded with a supplier without this having been preceded by the publication of a contract notice under the requirements contained in LOU.
An agreement may also be declared ineffective if it has been concluded in contravention of:
- a standstill period
- an prolonged standstill period
- an interim decision
- a 10-day period,
- or if the agreement was concluded before an award decision has been issued.
Likewise, a contract within a framework agreement that has been concluded following the reopening of competition that has been conducted in an improper way, shall be declared ineffective if the supplier requesting the review has suffered or may suffer damage.
Contracting authorities may in certain situations, for example in the event of the direct award of contracts and in the case of call-offs under a framework agreement with the reopening of competition, avoid the possibility of an agreement being declared ineffective. By openly announcing their intention regarding the direct award of contracts in advance and observing a standstill period, through a notice for volontary ‘exante transparency’, contracting authorities can avoid the risk of a contract, which was awarded without prior contract notice, being considered ineffective.
When making a call-off under a framework agreement with the reopening of competition, the contracting authority can send a reasoned notification of the award decision to suppliers in the framework agreement and thereafter observe a standstill period. If the administrative court has not received an application for a review before the expiry of the standstill period, the agreement cannot subsequently be declared ineffective.
If there are overriding reasons relating to the public interest, a court may decide that the agreement may continue to apply even if the agreement was concluded through the illegal direct award of contracts or was concluded in contravention of one of the five different prohibitions on concluding agreements as referred to above.
As a general rule, the administrative court must have received a review of the effectiveness of an agreement within six months from the conclusion of the agreement. The consequence of an agreement being declared ineffective is that any award decision shall cease to apply and that the agreement will become invalid in civil law and that all performances between the parties to the agreement shall be returned.