ineffectiveness

Ineffectiveness is the toughest remedy in EU procurement law. A court or independent review body declares that a signed contract shall not stand, either from the date it was concluded or for the obligations still to be performed. It typically follows an illegal direct award, or a contract signed before competitors had the chance to challenge the award decision.

How does ineffectiveness work?

The rules are in Articles 2d to 2f of the Remedies Directive 89/665/EEC, as amended by Directive 2007/66/EC, and apply to contracts at or above the EU thresholds. A contract must be declared ineffective when:

• it was awarded without prior publication of a contract notice where this was required,
• the authority breached the standstill period or the automatic suspension, and this was combined with another breach that affected the bidder's chances of winning the contract, or
• a contract under a framework agreement or dynamic purchasing system was awarded in breach of the rules, where the member state has chosen to apply the standstill exception for such contracts.

There are two important exceptions. If the authority published a voluntary ex ante transparency notice and waited at least ten days before signing, the contract cannot be declared ineffective for lack of prior publication. And if overriding reasons relating to a general interest require the contract to be maintained, the review body imposes alternative penalties instead: an infringement fine or a shorter contract term.

Time limits are set nationally, within the directive's minimums: at least 30 days from the publication of a contract award notice or from informing the concerned tenderers, and in any case at least six months from the conclusion of the contract.

In Norway, the rules are in Sections 13 to 15 of the Public Procurement Act (anskaffelsesloven). Only the courts can declare a contract ineffective. The Norwegian complaints board KOFA can fine authorities up to 15 percent of the contract value for illegal direct awards, but cannot set a contract aside. The general time limit in Norway is two years from conclusion of the contract, longer than the directive's six-month minimum, and 30 days where the authority has published the award or notified the tenderers. To stop a contract before it is signed, the route is interim measures.

An example: a Norwegian municipality extends its IT operations contract by NOK 5 million without any notice. An IT supplier in the same market discovers it a year later. Since the two-year limit has not expired, it can go to court and ask for the contract to be declared ineffective. Alternatively, it can complain to KOFA, which can fine the municipality.

Why does ineffectiveness matter for suppliers?

It is your strongest card when an authority buys outside competition. The risk that the contract falls makes authorities take publication duties and the standstill period seriously.

The remedy also hits the supplier that got the contract. If you win work without competition, you risk it stopping halfway through delivery. Ask about the legal basis if an authority wants to buy directly from you. Tools like Cobrief help you follow contract notices in your market, so you notice early if contracts disappear from competition.

Frequently asked questions

Does it apply below the EU thresholds?

Not under the directive. Below the thresholds, national rules decide. In Norway, contracts below the EEA thresholds cannot be declared ineffective; the sanctions there are fines and shortening the contract.

Does the supplier that lost the contract get damages?

Not automatically. Damages are a separate claim with their own conditions.

Does fault on the authority's side matter?

No. The grounds for ineffectiveness are objective: the authority does not need to have acted negligently. It is enough that the breach occurred.

In short: ineffectiveness means a court sets aside a contract concluded in breach of the basic rules of the game, most often an illegal direct award above the EU thresholds.