The European Commission has formally instructed the Government to change current practice in awarding public contracts.
According to a statement from the Commission this morning, the request is in the form of a "Reasoned Opinion", the second stage of infringement procedures against a named country.
In the statement, the Commission says the Government awarded a contract for the extension of social welfare payments to An Post without opening the contract to public competition.
In a separate case, arrangements for Dublin City Council Fire Brigade to provide emergency ambulance services to the Eastern Regional Health Authority were also not subject to competition.
"These cases are not specifically covered by the detailed procedural requirements for the advertising and award of contracts laid down in the Directive on the public procurement of services," the statement said.
"However, the Commission considers both cases are covered by the general provisions of that Directive, by general EU law obligations such as non-discrimination, equal treatment and transparency and by the principles covering the free movement of services laid down in the Treaty."
"The Commission's view is that in both cases, the Irish authorities concerned should have ensured, for the benefit of any potential tenderer, a degree of advertising necessary and sufficient to ensure competition."
Under EU legislation, the scope and form of the advertising for a public contract depends on the nature of the services in question and the extent to which the contract is of interest to purely regional, national or EU-wide potential providers of the service.
The contract to An Post, the statement concludes, amounts to around €40 million and would have interested a number of suppliers outside Ireland. In such a case the advertising, it says, would have to be more than national.
In the absence of a satisfactory response to a "Reasoned Opinion", the Commission has the discretion to refer the member state in question to the European Court of Justice.
Italy and Finland have also been issued with "Reasoned Opinions."