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Public procurement case digest (April 2014)

After taking a rest in March, due to a lack of published decisions, our public procurement case digest is back.

In this month’s digest:

  • The General Court considers the obligation to provide debrief information, and the ability to reject a tender which does not comply with the contracting authority’s submission formalities.
  • The Advocate General issues two opinions in relation to whether a national court is precluded from declaring a contract ineffective if a voluntary ex-ante transparency notice is used, and whether a national law reserving certain contracts to non-profit making organisations was lawful.

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.

 European Parliament was not obliged to disclose the evaluation committee’s report for purposes of debrief (General Court) (Case T-488/12, Cit Blaton SA (CITEB) and Belgo-Metal v European Parliament)

The claimant challenged a decision of the European Parliament to award a contract for the renovation and extension of the Eastman building in Brussels.

The claimant argued that the Parliament should have disclosed the evaluation committee’s report as part of its obligation to debrief the claimant (under Articles 100 of the Financial Regulation, 149 of the Implementing Rules, and 296 of the TFEU). (Directive 2004/18 applies to member states only not EU institutions and was therefore not relevant to the proceedings.)

The General Court held that EU institutions were not obliged to disclose the evaluation committee’s report as reasoning for a decision. Disclosure of additional information as to the winning supplier’s pricing would have undermine their legitimate business interests and was protected from disclosure under Article 100(2) of the Financial Regulation.

 European Parliament entitled to reject tender received in torn envelope (General Court) (Case T-637/11, Euris Consult Ltd v European Parliament).

In this case, the General Court held that the European Parliament had been entitled to reject a tender which had not complied with its requirements that tenders be submitted under “double cover”, that is, in two sealed envelopes bearing specified information sealed with the signature of the sender and covered with adhesive tape.

The claimant’s tender was contained in individual sealed envelopes, signed and sealed as required, but then placed within the courier’s envelope which did not comply with those requirements. When the opening committee opened all six tenders, the claimant’s tender was rejected because:

  • The outer envelope failed to meet the requirements as to the sealing.
  • The inner envelopes were badly torn.

The committee therefore concluded that confidentiality was not guaranteed.

The General Court rejected the claimant’s argument that the Parliament should have sought its view before rejecting the tender, finding that the Parliament was obliged to reject the tender and any observations the claimant might have made would not have had any influence on that outcome.

 Minor infringement of procurement rules insufficient to annul award decision (General Court) (Case T0340/09, Evropaïki Dynamiki v European Commission)

In a challenge to the award of a contract by European Dynamics, the General Court held that the European Commission’s Publications Office:

  • Had, for the most part, complied with the Financial Regulation and Implementing Rules by providing debrief information that enabled the claimant to understand the reasons for the marks awarded to it and the characteristics and relative advantages of the successful tenders. In respect of two sub-criteria, the Publications’ Office had not supplied sufficient information and was therefore in breach of its disclosure obligations. However, even if the claimant had scored full marks in relation to those sub-criteria, it still would not have been successful.
  • Had been entitled not to seek clarification of an error in the claimant’s tender whereby it had attached the wrong document to a response.

Article 148(3) of the Implementing Rules permits the contracting authority to contact a tenderer after tenders are opened to correct obvious clerical errors, although such contact must not lead to any alteration in the terms of the tender. However, this is a power not a duty. A duty only arises where the tender has been drafted in ambiguous terms and the circumstances of the case suggest that the ambiguity probably has a simple explanation and is capable of being easily resolved.

In this case, the court found it was not clear that the claimant had made an obvious clerical error as the document referred to the title of the technical criterion in question. Further, it was not clear that the claimant would have been able to correct its error without altering the terms of the tender as it would have had to replace the document with another document which had been submitted with its tender for a separate lot.

 Contract can still be declared ineffective even where contracting authority complies with derogation (Advocate General) (Case C-19/13, Italian Interior Ministry v Fastweb SpA)

On a reference from the Italian State Council, the Advocate General considered whether a national court was precluded from declaring a contract to be ineffective where the contracting authority had awarded a contract under the negotiated procedure without prior publication of a contract notice, but where it had published a voluntary ex ante transparency notice and waited at least 10 days before concluding the contract (in compliance with Article 2d(4) of the Remedies Directive), even if it was established that there had been a breach of the procurement rules.

In this case, the breach was an unjustifiable use of the negotiated procedure without advertisement. The Italian Interior Ministry had awarded a contract directly to the incumbent supplier, Telecom Italia, due to the practical difficulties of changing supplier, rather than for technical reasons.

The Advocate General stated that review body must examine the conduct of the contracting authority, in particular whether it had acted in good faith and with the requisite diligence and whether its justification for awarding a contract without an advertisement was legitimate. The national court would then be able to determine the most appropriate sanction. There can be no legitimate reason for maintaining the effectiveness of a contract that constitutes one of the most important breaches of procurement law, that is, the direct award of a contract without advertisement.

For more information, see Practice note, New remedies in public procurement law.

 Contracts cannot be directly awarded to voluntary sector unless below threshold and not of cross border interest (Advocate General) (Case C-113/13- ASL No 5 “Spezzino” v San Lorenzo Società Cooperativa Sociale).

On a referral to the ECJ from the Italian State Council, the Advocate General opined that an Italian law, which required contracting authorities to entrust medical transport services in priority to voluntary organisations, the Red Cross and other authorised public institutions was unlawful.

The Advocate General stated that:

  • Neither the non-profit making nature of an organisation, nor the fact that their services may be provided in return for reimbursement of costs is capable of excluding the procurement rules.
  • The health and medical care sector cannot be considered to constitute a safe haven against the procurement rules, as reflected in the designation of services as Part A and Part B.
  • The new procurement directive gives member states further discretion by raising the threshold for healthcare services to EUR 750,000, as well as including specific rules for services provided by non-profit making organisations [by allowing for calls for competition for certain contracts to be reserved for non-profit making organisations].
  • The value of this contract and the fact that contracting authority bordered another member state suggested that some of the contracts caught by the Italian law may have cross border interest.
  • The aim of the Italian law, to ensure medical services are reliable, of good quality and represent good value, could not justify infringement of the Treaty, given that the procurement rules offer contracting authorities sufficient latitude to pursue social objectives through setting specification requirements and selection and award criteria.

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