July’s case digest includes an ECJ preliminary ruling on requirements for excluding bidders in relation to issues of technical capacity, an ECJ decision ruling that it is unlawful to require a contractor to directly perform a specified percentage of works, and two Advocate General Opinions.
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ECJ gives preliminary judgment on requirements for excluding bidders in relation to issue of technical capacity (Ambiente e Sistemas de Informação Geográfica SA v Associação de Industriais do Concelho de Pombal)
The ECJ has handed down a preliminary ruling relating to the way in which bidders can be excluded due to a failure to meet the minimum requirements for technical capacity. A bidder had been excluded from a procurement because it had failed to meet a requirement set out in the contract notice to provide a client’s declaration that the requirements for technical abilities had been met and it had also failed to demonstrate or argue that it was impossible or very difficult for it to produce such a declaration. The ECJ ruled that Article 48(2)(a)(ii) of Directive 2004/18:
- Allows a rule that does not allow an economic operator to provide evidence of his technical abilities by a unilateral declaration, unless he proves that it is impossible or very difficult to obtain a certification from a client.
- Does not allow a rule that requires a the client’s certification to contain authentication of the signature by a notary, lawyer or other competent entity.
The ECJ also held that the requirements of Article 48(2)(a)(ii) of Directive 2004/18/EC had direct effect, as they satisfied the necessary conditions to allow an individual to rely on it even if it was not transposed into national law.
While much of the case considered the way the procurement regime had been transposed by Portugal, the principles applied by the ECJ in the case will, potentially, be of relevance to disputes in the UK concerning the exclusion of candidates.
ECJ ruling that it is unlawful to require a contractor to directly perform a specified percentage of works (Wroclaw – Miasto na prawach powiatu v Minister Infrastruktury i Rozwoju)
In this case, the City of Wrocław had initiated a restricted procedure for the award of a public contract relating to the partial construction of a bypass. The project was co-financed by the EU Cohesion Fund and the ERDF. The tender specification contained a requirement that the economic operator was obliged to perform at least 25% of the works using its own resources and a contract was concluded on that basis. The City was subsequently subject to a claim for a financial correction of approximately, EUR 1,960,000, corresponding to 5% of the amount of costs borne by public funds, as a result of the alleged irregularity of that performance stipulation, in the light of Directive 2004/18.
The ECJ held that:
- Directive 2004/18 means that a contracting authority is not authorised to require, by a stipulation in the tender specifications of a public works contract, that the contractor perform with its own resources a certain percentage of the works.
- Articles 2(7) and 98 of Regulation No 1083/2006 mean that it constituted an ‘irregularity’ (within the meaning of Article 2(7)) to impose such a requirement in breach of Directive 2004/18 and that this irregularity justified the need to apply a financial correction under Article 98.
While the sub-contracting and related provisions in Directive 2014/24 provide contracting authorities with greater scope for monitoring and controlling the use of sub-contractors, the key principles underlying this ruling will remain relevant to procurements undertaken under the Public Contracts Regulations 2015.
ECJ rules against automatic extensions of authorisations or concessions for tourist and leisure-oriented business activities (Joined cases Promoimpresa srl v Consorzio dei comuni della Sponda Bresciana del Lago di Garda e del Lago di Idro, Regione Lombardia and Mario Melis and Others v Comune di Loiri Porto San Paolo, Provincia di Olbia Tempio)
The ECJ has ruled that:
- Article 12(1) and (2) of Directive 2006/123 on services in the internal market preclude a national measure that permits the automatic extension of existing authorisations of state-owned maritime and lakeside property for tourist and leisure-oriented business activities, without any selection procedure for potential candidates.
- Article 49 of the TFEU precludes national legislation that permits the automatic extension of existing concessions of state-owned property for tourist and leisure-oriented business activities, in so far as those concessions are of certain cross-border interest.
While concession contracts are now regulated by Directive 2014/23, with the result that there is greater clarity over the requirements for the award of a concession contract, the ECJ’s ruling in this case may have implications for concession contracts which fall outside the Concession Contracts Regulations 2016 (which implement the Directive in the UK). This ruling will need to be borne in mind when such contracts are being considered.
ECJ holds that an authority is not required to bring to the attention of potential tenderers the method of evaluation (TNS Dimarso NV v Vlaams Gewest)
The ECJ has ruled that Article 53(2) of Directive 2004/18, read in the light of the principle of equal treatment and of the obligation of transparency, does not require an authority to bring to the attention of potential tenderers the method of evaluation used by the contracting authority to identify the most economically advantageous tender, However, that method may not have the effect of altering the award criteria and their relative weighting.
TNS Dimarso NV (Dimarso) submitted a tender for a contract for housing surveys in Flanders. The contract documents referred to “50/100” when referring to the two criteria used by the contracting authority (quality and price). Dimarso submitted an action for annulment of the contract award decision, arguing that its tender had been evaluated using a method not referred to in the contract documents. The national court held that each of the two criteria was to be regarded as having the same value and each therefore determined half of the ranking of the tenders. However, the court referred a question to ECJ to query whether when the contract is awarded to the tenderer who submits the most economically advantageous tender from the point of view of the contracting authority, the contracting authority is always required to establish in advance, and indicate in the contract notice or contract documents, the method of assessment or the weighting rules, irrespective of their scope, predictability or commonness, in the light of which the tenders will be assessed in accordance with the award criteria or sub-criteria.
The ECJ concluded that an authority is not required to bring to the attention of potential tenderers the method of evaluation used by that contracting authority. However, that method may not have the effect of altering the award criteria and their relative weighting. Further, it appears likely that any contracting authority which adopts the approach applied in this case is at risk of being challenged.
Advocate General recommends that transfer of powers to a separate entity by public authorities is not a public contract (Remondis GmbH & Co. KG Region Nord v Region Hannover (AG’s Opinion))
Advocate General Mengozzi has handed down an opinion in response to a request for a preliminary ruling from the Higher Regional Court of Celle, Germany.
This case concerned a dispute between an undertaking that provides waste disposal services, Remondis, and the Region of Hannover, regarding the lawfulness of the transfer by the Region of waste treatment tasks that were its responsibility to another public body. The relevant body was a special-purpose association for waste management created by local authorities in the Region, which it formed for that purpose with the capital of the Land of Hannover (the City of Hannover).
The AG proposed that the ECJ hold that an agreement between two regional authorities on the basis of which they form an entity with separate legal personality, to which they transfer the powers for the performance of service tasks, which before were the responsibility of the regional authorities concerned, without providing for remuneration to be given for contractual services, does not constitute a public contract within the meaning of Article 1(2)(a) of Directive 2004/18/EC. The agreement constituted an act which is a matter of internal organisation of the member state concerned, which falls outside the scope of the EU rules on public procurement.
If the ECJ adopts AG’s proposed conclusions, it would appear that the court judgment will apply to similar arrangements entered into between public authorities and is opening the door to a “third way” for public authorities to organise the delivery of public services and extending beyond the existing possibilities first established by the Teckal and Hamburg in-house case law.
Advocate General proposes that it is lawful to apply proportionality when excluding tenderers (Connexxion Taxi Services BV v Staat der Nederlanden, Transvision BV and others (AG’s Opinion))
Advocate General Wathelet has delivered an opinion in a case responding to the questions referred to ECJ by the Supreme Court of the Netherlands. The AG proposed that:
- Article 45(2) of Directive 2004/18/EC does not preclude a national measure under which the contracting authority must apply the principle of proportionality for the purpose of excluding a tenderer who has been guilty of grave professional misconduct, even when that option is not expressly referred to in the descriptive document for the contract.
- Articles 1 and 2 of Directive 89/665/EEC are not compatible with legislation, or the usual practice, of a member state which limits the scope of the review procedures to a review merely of the reasonableness of the decisions of contracting authorities.
Given the flexibilities, and the self-cleaning provisions that now appear in Directive 2014/24/EU (and in the Public Contracts Regulations 2015), relating to selection and exclusion of economic operators, the issues arising in this case are less likely to arise going forward. This point would also apply to the issue of the availability of remedies given the provisions of Chapters 5 and 6 of the 2015 Regulations.