After taking a break for August, due to lack of published cases, we start autumn with a flurry of interesting cases on imposing the national minimum wage on contractors in other member states, invalid VEAT notices, the perils of checking the accuracy of what your bidders say, and reference projects in assessing technical capability.
Please feel free to submit a comment below or send us an Ask query if you have any views on the cases covered or think that we have missed a case that should be brought to the attention of public procurement practitioners.
Imposing national minimum wage on sub-contractors in other member states unlawful (Bundesdruckerai GmbH v Stadt Dortmund (C-549/13))
The European Court of Justice (ECJ) has held that a requirement for suppliers to require their sub-contractors to pay the minimum wage of one member state to workers in another member state was capable of constituting an unlawful restriction on trade. In this case, a tender by a German company was rejected because it could not confirm that its sub-contractor, based in Poland, would pay the minimum wage of the German region in which the contracting authority was based.
The ECJ held that while the requirement may be justified by the objective of protecting employees, it will not be appropriate if there is no information to suggest that employees working in the private sector need the same wage protection as those working in the context of public contracts. The minimum wage in one member state may bear no relation to the cost of living in another member state, and the requirement to pay that wage may prevent sub-contractors established in that second member state from deriving a competitive advantage from the differences in respective rates of pay.
Invalid VEAT notices (Italian Interior Ministry v Fastweb SpA (C-19/13))
In this case, the ECJ largely confirmed the Advocate General’s Opinion that a national review body must be able to declare a contract ineffective, even where a VEAT notice has been published, if the conditions set out in Article 2d(4) of Directive 2004/18/EC (contained in regulation 47K(3) of the Public Contracts Regulations 2006 (SI 2006/5)) are satisfied. For a discussion of this case, see Opinion, (In)valid VEATs: the European Court of Justice’s judgment in Italian Interior Ministry v Fastweb SpA.
Checking up on bidders (Flying Holdings and Others v Commission [2014] EUECJ T-91/12)
On 26 September 2014, the General Court ruled in a case concerning the knotty problem of fact-checking a bidder’s submissions. The case concerned a contract for non-scheduled passenger transport services by air for EU officials. The contract notice required participants to submit detailed information to demonstrate their technical capacity, in particular in relation to safety and security. The claimants had submitted some information but the European Commission requested additional information, reminding the claimant that the contract notice required them to provide, among other things, annual audit reports of health and safety. The claimant sent the annual audit of safety and security for 2011 stating that no report of safety and security had been conducted by the authorities of Luxemburg Civil Aviation for 2009 and 2010. However, the Commission sought further information direct from Luxemburg Civil Aviation which stated it had in fact carried out general audits in 2009, 2010 and 2011 and these general audits also considered safety and security matters.
The Commission rejected the claimant’s application to participate stating their application was not accurate, sincere and complete as they had not supplied all the documents required by the contract notice. They also rejected the application under Article 94(b) of the Financial Regulation (the rules applicable to public contracts financed from the EU budget, largely based on the EU public procurement directives) which excludes candidates who, during a procurement procedure, are guilty of providing false information or of failing to provide information. The claimant responded saying it had understood the requirement was to provide safety audits not general audits. They also argued that in seeking information directly from Luxemburg Civil Aviation and relying on it without communicating it to the claimant, the Commission had breached the claimant’s rights of defence.
Although the General Court agreed that the Commission should have respected the claimant’s rights of defence, it held that even if the claimant had seen the correspondence and explained their statement that the lack of reporting was due to a misunderstanding, the Commission could only have found that the statement was incorrect and rejected the application to participate. Therefore, the Commission’s failure to disclose the information to the claimant would not justify an annulment of its decision to reject the application.
This case is interesting, coming at a time when there is much speculation about how regulation 57 of the draft Public Contracts Regulations 2015, which will, among other things, provide for the discretionary exclusion of applicants for poor performance on prior contracts, will work in practice (see Opinion, Excluding poorly performing bidders).
Evidence of technical capability: use of reference projects (B&S Europe v Commission (T-222/13))
In another ruling on technical capacity, the General Court considered a challenge to a rejection of an application to participate in a tender for short-term services for countries benefitting from aid from the European Commission on the grounds that the reference projects put forward by the claimant as evidence of its capability did not satisfy the Commission’s requirements. The General Court held that the Commission was correct to conclude that the reference projects advanced by the claimant did not satisfy its requirements because they were not completed by the deadline, or, if they were carried out in phases, the particular phases put forward had not been finalised.
The claimant also argued that the requirement that the reference projects be completed within three years before the deadline did not ensure a candidate had not lost its skills and still had the capacity required. The General Court disagreed, finding that the requirement established that a candidate had recent and relevant experience to perform its duties in the areas concerned.
The case is a useful reminder of the importance of setting out the parameters for reference projects very clearly to ensure all parties understand which projects can be submitted as evidence of technical capability.
De-brief requirements do not extend to providing evaluation report (Evropaiki Dynamiki v Commission [2014] EUECJ T-498/11)
In this case, the General Court made some useful comments about the requirements to debrief unsuccessful bidders, holding that a table listing the respective scores awarded in relation to each criterion and an extract from the evaluation report commenting on the strength and weaknesses of the claimant’s and successful tenderer’s tender was sufficient to fulfill the Commission’s legal obligations to state reasons. It was not required to make a detailed comparative analysis of the two bids. The comments needed to be sufficiently precise to enable the unsuccessful tenderer to ascertain matters of fact and law on the basis of which the contracting authority rejected its tender and accepted those of other tenderers.
The claimant also challenged the inclusion of an award criterion of “overall quality and relevance of the tenderer’s response to the specific tender”. However, the General Court held that the presentation of a tender cannot be disassociated from its content. Further, this criterion was justified by reference to the subject of the contract, which was for revamping the European Anti-Fraud Office website.