EC steps up pressure on Bulgaria over Information Services

Brussels is stepping up pressure on Bulgaria over the controversial 2019 Electronic Governance Act. For years, it has allowed IT contracts to be awarded directly to the state-owned company Information Services AD, circumventing competition and transparency rules.

Now the European Commission is taking a second step in the infringement procedure against the country and has officially sent it a reasoned opinion on the violation of public procurement rules, which favors the national system integrator.

According to Brussels, the Bulgarian law contradicts Directive 2014/24/EU, which has special requirements for public procurement above a certain threshold – it must be awarded in accordance with the principles of transparency, equal treatment, and non-discrimination. The EC considers that the direct award of the activities of "Information Services" took place without the conditions justifying such an approach being met.

Therefore, in December 2024, an infringement procedure was officially launched with the sending of a letter of notification to Bulgaria. Brussels' main argument is that the direct award of contracts to the company, even though it is majority state-owned (editor's note: – 0.5% of the capital is held by individuals with several shares) is equivalent to unlawful state aid and violates the principles of equal access to the market. Specific reference is made to Article 18 of the Public Procurement Directive, which requires contracting authorities to treat economic operators on an equal footing and without discrimination, acting in a transparent and proportionate manner.

The next stage of the procedure is to bring the case before the Court of Justice of the European Union. This could result in financial penalties.

The roots of the problem

The controversial model was introduced in 2019 by Boyko Borisov's third cabinet, which turned "Information Services" into the sole IT service provider for a significant part of the state administration. Amendments to the Electronic Governance Act designated the company as a National System Integrator with exclusive powers.

This move, although presented as a rationalization of IT services, quickly drew criticism both in Bulgaria and from the European Commission.

As a result of these changes, the administrative bodies specified in government decisions are required to award system integration activities exclusively to Information Services. The company was also given other key functions, ranging from processing election results to coordinating cybersecurity.

Critics of the model point out that it creates a lack of transparency in the procurement process. The law provides that everything is to be awarded to a single company, which can then subcontract to other contractors, but without any guarantees of fair competition.

Translated with DeepL.