REUTERS | Dani Cardona

Public procurement case digest (November – December 2017)

November and December’s case digest includes an EFTA Court decision contradicting the test developed by the Supreme Court in Nuclear Decommissioning Authority v Energy Solutions, which may be of interest due to the fact that an EEA-style option under the jurisdiction of the EFTA Court is a possible outcome of the UK’s Brexit negotiations, and two Advocate General opinions.

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.

EFTA Court contradicts UK Supreme Court on test for procurement damages (Fosen-Linjen AS and AtB AS)

In a Norwegian procurement dispute, the European Free Trade Association (EFTA) Court has held that the award of damages (according to Article 2(1)(c) of Directive 89/665/EEC) did not depend on whether the breach of public procurement law was due to culpability and conduct deviating markedly from a justifiable course of action, or whether it occurred on the basis of a material error or whether it was attributable to the existence of a material, gross and obvious error. A simple breach of public procurement law was sufficient to trigger the liability of the contracting authority to compensate the person harmed for the damage incurred provided that the other conditions for the award of damages were met, including, in particular, the condition of a causal link.

This ruling goes against that of the UK Supreme Court in Nuclear Decommissioning Authority v Energy Solutions EU Ltd (now called ATK Energy EU Ltd) ([2017] UKSC 34) that a “sufficiently serious breach” is required to establish the liability of a contracting authority in such circumstances (see Legal update, Supreme Court decides that Remedies Directive requires a damages award only for sufficiently serious breaches of EU law).

The judgment of the EFTA Court (which is the equivalent of the ECJ for non-EU countries within the European Economic Area) is of interest given that a quasi-EEA option, including the EFTA Court’s jurisdiction, is a possibility in the UK EU exit negotiations.

Advocate General’s opinion on preliminary reference from Finnish court regarding what constitutes a public procurement procedure (Maria Tirkkonen in the presence of Maaseutuvirasto)

The Advocate General has  handed down an opinion on a preliminary reference question from a Finnish court regarding whether a procedure constituted a public procurement procedure within the meaning of Directive 2004/18.

In 2014, the Finnish Agency for Rural Affairs made a call for tenders for agricultural consultation services for the period 2015-2020. The framework agreement set out the main terms for the provision of services. Subsequent contracts would be concluded without a specific tendering procedure, such that a farmer could hire the services of a consultant that he deemed best suited to meet his needs. All tenderers fulfilling the requirements of the call for tenders in terms of training and of professional experience were admitted to the framework agreement, provided that they passed the examination described in more detail in the call for tenders.

The Advocate General recommended that the ECJ respond to the question referred by answering that Article 1(2)(a) of Directive 2004/18 must be interpreted to mean that when a contracting authority accepts all economic operators who satisfy the requirements of aptitude and pass an examination (instead of awarding the contract to one or more of these tenderers), this is not a public contract within the meaning of Directive 2004/18. The fact that the system had a limited period of validity, during which the accession of new operators was not accepted, is irrelevant.

Advocate General finds no objection in principle to correction of errors in tenders being subject to a payment by the bidder (MA.T.I SUD S.p.A v Societa Centostazioni S.p.A; and Duemme SGR S.p.A v CNPR)

This case concerned requests for a preliminary ruling in respect of which the Advocate General (AG) has handed down an opinion. Italian law had transposed Article 51 of Directive 2004/18/EC (which provided that a contracting authority could invite bidders to supplement or clarify submitted documents) to enable tenderers to remedy irregularities in their tenders. However, this law imposed on them a financial penalty. The referring court asked the ECJ whether the power to impose a penalty and the rules for fixing the amount of the fine were compatible with the provisions of EU law.

The AG proposed that the ECJ provide the following answer to the court:

  • Article 51 of Directive 2004/18/EC did not preclude a national provision making the remedying of irregularities committed by a tenderer subject to the payment of an amount, provided it complied with the principles of transparency and equal treatment, that it did not make possible the submission of a new tender and that the burden was proportionate to the objectives.
  • Article 51 of Directive 2004/18 did not allow the imposition of financial penalties which could not be less than 0.1% or more than 1% of the value of the contract, with a maximum ceiling of EUR50,000.

Paragraph 3 of Article 56 of Directive 2014/24/EU (and regulation 56(4) of the Public Contracts Regulations 2015 (SI 2015/102)) (PCR 2015) provide that where information or documentation submitted by bidders is incomplete, wrong or missing, authorities may request bidders to send, supplement, clarify or complete the information or documents provided this complies with the principles of equal treatment and transparency. These provisions do not appear to have changed the position under Directive 2004/18 and it will be interesting to see if the ECJ confirm that EU law does not preclude a provision making the remedying of irregularities subject to the payment of an amount of money. Because regulation 56 of the PCR 2015 does not contain a charging power, the ability of an authority to charge in this way may, subject to the ECJ’s judgment, remain an unknown quantity.

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