REUTERS | Jason Lee

Public procurement case digest (January 2016)

January’s case digest includes two ECJ decisions concerning the interpretation of Directive 2004/18 (Public Contracts Directive), and a High Court ruling on automatic suspension under the Public Contracts Regulations 2015.

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.

ECJ ruling on direct award of contracts for medical transport services to voluntary associations (Consorzio Artigiano Servizio Taxi e Autonoleggio and others v Azienda Sanitaria Locale di Ciriè, Chivasso e Ivrea)

The ECJ has published a ruling on questions referred from an Italian court relating to the compatibility with EU law of an Italian law authorising regional health authorities to entrust certain voluntary associations with the provision of medical transport services, without prior advertising. In answering these questions, the ECJ assumed that Directive 2004/18 did not apply to the contracts at issue, but that there was a potential cross-border effect such that the general principles derived from Articles 49 and 56 of the TFEU applied.

The ECJ ruled that Articles 49 and 56 do not preclude national legislation which allows local authorities to entrust the provision of medical transport services by direct award, without any form of advertising, to voluntary associations. However, the legal and contractual framework governing the activities of those associations must actually contribute to the social purpose and the pursuit of the objectives for the good of the community and budgetary efficiency.

The ECJ also ruled that, when making such direct award, the local authority is not required to compare proposals of various associations beforehand. It is for member states to set limits on the extent to which the voluntary associations may engage in commercial activities. Those limits must, however, ensure that those commercial activities are marginal, having regard to all the activities of such associations, and must support the pursuit of their voluntary activity.

ECJ preliminary ruling on whether Directive 2004/18 precludes tender specifications which require bidders to enter into legal agreements with entities it relies on to perform contract (Ostas celtnieks SIA v Talsu novada pašvaldība)

The ECJ has handed down its preliminary ruling on a reference from a Latvian court relating to the interpretation of Articles 47 and 48 of Directive 2004/18.

Talsu novada pašvaldība (the Latvian local authority for Talsi) had published a call for tenders for a contract for road infrastructure improvement works in order to facilitate access to Talsi. The specifications provided that, in the event that the contract was awarded to a tenderer that relied on the capacities of other contractors for its performance of the contract, the tenderer had to enter into co-operation agreements or partnerships with those contractors before the contract could be awarded. Ostas celtnieks SIA (Ostas celtnieks) is a Latvian construction company that submitted a bid for the contract, but contested the tender specifications relating to co-operation and partnership agreements as proof of its ability to perform the contract.

The ECJ agreed with the Advocate General that such an obligation seems contrary to Directive 2004/18, noting that Articles 47(2) and 48(3) of Directive 2004/18 recognise the right of every economic operator to rely upon the capacities of other entities, regardless of the nature of the links which it has with them, provided that the economic operator proves to the contracting authority that it will have at its disposal the resources necessary for the performance of the contract.

High Court refuses to lift suspension of award to NHS Foundation Trust of contract for substance misuse services (Counted4 Community Interest Company v Sunderland City Council)

The High Court has refused an application under regulation 96(1) of the Public Contracts Regulations 2015 to lift the suspension of the award to an NHS Foundation Trust of a contract for substance misuse services by Sunderland City Council. The action to challenge the contract award had been brought by the incumbent provider of the services. The High Court considered that the claimant had raised serious issues to be tried about the conduct of the procurement process, including an alleged failure to prevent a conflict of interest and alleged errors and unfairness in the scoring of bids.

The High Court concluded that damages would not be a relevant remedy for the claimant. The claimant had been established with the sole purpose of providing the services to the council. If the suspension were lifted, the claimant would lose its work force and also its main source of income. The High Court did not consider that the public interest in awarding the new contract outweighed this prejudice to the claimant. In particular, it did not accept arguments that the current services were, as claimed by the council, causing a risk to the lives of substance misusers. Although the services could possibly be better, with the continuation of the existing contract there would remain in place protection and support for substance misusers.

The High Court, therefore, concluded that the balance of convenience lay in favour of maintaining the automatic suspension of the award of the new contract until the expedited trial.

Advocate General opinion regarding application of Articles 47 and 48 of Directive 2004/18 and national laws (Pippo Pizzo v CRGT, AG’s opinion)

Advocate General Sánchez-Bordona has handed down his opinion on a preliminary reference from an Italian court regarding the application of Articles 47 and 48 of Directive 2004/18.

The Port Authority of Messina (the contracting authority) launched a call for tenders in November 2012 relating to the waste management at the port. This service was previously provided by CRGT. The contract was subsequently awarded to Pippo Pizzo and Onofaro Antonio after other companies were excluded from the procedure for not having transferred contributions due to the Italian public contract authority under Italian law. This contribution was one of the admissibility conditions specified in the tender specifications. The incumbent provider, CRGT, appealed the contracting authority’s decision and the Regional Administrative Court of Sicily decided to suspend proceedings and refer questions to the ECJ.

The Advocate General considered that Articles 47 and 48 of Directive 2004/18 do not prevent national laws that allow divided reliance upon the capacities of other entities in respect of services. Also, the principles of EU law do not prevent national laws which allow undertakings to be excluded from contract award procedures where the undertakings were obliged to pay an amount in order to participate in the procedure, even where the obligation was not expressly set out in the tender specifications, but is set out in national law that has been upheld by the national courts and which is known to reasonably diligent and well-informed undertakings.

Practical Law Practical Law Public Sector

Leave a Reply

Your email address will not be published. Required fields are marked *