REUTERS | Vasily Fedosenko

Public procurement case digest (July 2017)

July’s case digest includes an ECJ judgment regarding the assessment of selection criteria relating to economic and financial standing, and two High Court judgments in the same procurement dispute, relating to disclosure of documents and the lifting of an automatic suspension respectively.

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 judgment on preliminary reference from Italian court on attribution of contract with procurement procedure (Malpensa Logistica Europa SpA v Società Esercizi Aeroportuali SpA (SEA))

The European Court of Justice (ECJ) has handed down its judgment on a preliminary reference from an Italian court regarding attribution of a contract without procurement procedure.

SEA, the state-owned operator of the Milan Malpensa airport, attributed to Beta-Trans Spa a warehouse located at Malpensa in order to allow Beta-Trans to carry out handling services at Milan Malpensa airport. Malpensa Logistica Europa (another handling company active at Malpensa) brought an action before a regional Tribunal challenging attribution of the warehouse to Beta-Trans on the grounds that no procurement procedure had been followed.

The ECJ considered that Directive 2004/17 did not apply in this case because SEA did not acquire a service provided by the bidder in return for remuneration, this being a matter for the referring court to verify. The ECJ considered that Article 16(2) of Directive 96/67 did apply, which provides that the space available for groundhandling at an airport must be divided among the various suppliers of groundhandling services and self-handling airport users, including new entrants in the field, to the extent necessary for the exercise of their rights and to allow effective and fair competition, on the basis of the relevant, objective, transparent and non-discriminatory rules and criteria (this also being a matter for the referring court to verify).

The ECJ added that the question referred should be answered that Article 7 of Directive 2004/17 should be interpreted as not opposing national legislation which does not require a prior public selection procedure to be conducted for every allocation, including temporary allocations, of areas within airports for the purpose handling activities.

ECJ judgment on reference from Slovak Supreme Court regarding assessment of selection criteria relating to economic and financial standing (INGSTEEL spol. s r.o.,Metrostav, as, v Úrad pre verejné obstarávanie)

The ECJ has handed down its judgment on a preliminary ruling from the Slovak Supreme Court regarding assessment of selection criteria relating to economic and financial standing.

A joint tender application by Ingsteel and Metrostav was rejected because the relevant authority did not accept as evidence of economic and financial standing a bank declaration that the tender fulfilled all relevant requirements (including a current-account credit facility exceeding EUR5 million), or a sworn statement given by those companies that they would have in their account, at the conclusion and throughout the period of the contract, a minimum amount of EUR3 million.

Ingsteel and Metrostav therefore brought an action seeking annulment of the decision excluding them from the tendering procedure and the Slovak Supreme Court referred certain questions to the ECJ.

The ECJ answered the questions referred by finding that Article 47(1) and (4) of Directive 2004/18 should be interpreted as not precluding a contracting authority from rejecting a bidder if the bidder fails to comply with the financial and economic criteria set out in the contract notice (in this case, a bank statement guaranteeing credit of a minimum amount of EUR3 million for the period of performance of the contract (48 months)). Further, the ECJ found that it was for the referring court to determine whether there was a valid reason, for the purposes of Article 47(5) of Directive 2004/18, precluding a tenderer from providing the references requested by the contracting authority. If that was the case, the referring court must also determine whether, in accordance with Slovak law, a sworn statement by the tenderer concerning its economic and financial standing was acceptable as an appropriate economic and financial guarantee.

High Court orders disclosure of documents in procurement dispute (Alstom Transport UK Ltd v London Underground Ltd and another)

On 6 June 2017, the High Court issued an ex tempore interim ruling in the case of Alstom Transport UK Ltd v London Underground Ltd and another.

The claimant, Alstom Transport UK Limited (Alstom), challenged the outcome of a tender process in which the defendants, London Underground Limited, (LUL) announced an intention to award to Bombardier a contract for the supply of a new traction system for its Central Line fleet.

On commencement of the proceedings, LUL’s ability to enter into the proposed contract was suspended. LUL applied to the court to lift that suspension. Alstom made an application for specific disclosure of a large number of documents and successfully sought a date for that application to be heard in advance of the suspension hearing.
The court ruled that a number of the items requested would not be disclosed because they were either encompassed in other documents or did not exist and to disclose whole sections of Bombardier’s bid and its contract programme would be going well beyond what was called for at this stage.

However, it held that given the number of apparent contradictions in the disclosed documents, the evaluators’ and moderators’ contemporaneous comments and score sheets should be disclosed. Further, in relation to a request for the records of the moderation meeting, LUL must disclose any document which evidenced the consideration of the reasoning behind that decision.

This decision is an interesting example of the practical application of the balancing exercise between ordering the early disclosure of those documents which were required to enable a claimant to understand why it had lost and to plead its case properly and falling into the trap of ordering the disclosure of documentation on a scale that would only be appropriate on subsequent standard disclosure, on the other.

High Court sets aside automatic suspension in procurement dispute (Alstom Transport UK Ltd v London Underground Ltd)

On 27 June 2017, following its earlier ex tempore interim ruling, the High Court issued its interim judgment in Alstom Transport UK Ltd v London Underground Ltd.

London Underground Ltd (LUL) applied to lift an automatic suspension on contract making imposed by Regulation 45G of the Utilities Contracts Regulations 2006. Alstom Transport UK Ltd (Alstom) was the claimant. As above, the dispute arose out of a procurement for the provision of traction motors for the defendant’s fleet of Central Line trains. The outcome of the procurement was that LUL decided that Bombardier Transportation (UK) Limited (Bombardier) should be the winning bidder, with Alstom coming second. By these proceedings Alstom challenged the validity of the procurement and its outcome; and in this application it opposed the lifting of the automatic suspension.

The High Court held that damages would be an adequate remedy for Alstom and that it was not unjust for it to be confined to its remedy in damages. Further, the balance of convenience was in favour of setting aside the automatic suspension so that the contract may be concluded with Bombardier sooner rather than a contract being concluded at the end of an uncertain process later.

Whilst the applicable principles examined in this judgment are now generally settled and well known, the outcome will depend upon the circumstances of each dispute. This case is of interest because it sets out the criteria and authorities that have to be balanced when a court is deciding whether damages would be an adequate remedy. It is also a reminder that detailed and credible evidence should be submitted to support an argument for maintaining a suspension.


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