REUTERS | Sharif Karim

Public procurement case digest (October 2015)

October’s case digest includes an ECJ ruling holding that public authorities can be economic operators, to the extent that they have authorisation to offer certain services to the market, and a General Court ruling ordering OHIM to pay compensation to a tenderer due to errors in its assessment of bids during a procurement procedure.

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 rules on whether public authorities can be economic operators (Consorci Sanitari del Maresme v Corporació de Salut del Maresme i la Selva)

The ECJ has handed down a ruling on a reference from a Spanish court on questions relating to the definition of an “economic operator” in Directive 2004/18. The ECJ held that Article 1(8) of Directive 2004/18 must be interpreted as meaning that the term “economic operator” encompasses public authorities. Therefore, public authorities may participate in public tendering procedures provided they are authorised to offer certain services in return for remuneration.

The ECJ also held that, where the right to participate in a tendering procedure is only given to operators that are included on official lists or have obtained certification, Directive 2004/18 precludes national rules preventing national public authorities, that are authorised to offer the works, products or services covered by the contract notice, from being registered on such official lists or obtaining the required certification.

ECJ rules on compatibility with EU law of Italian court fees for procurement review procedures (Orizzonte Salute – Studio Infermieristico Associato v Azienda Pubblica di Servizi alla persona ‘San Valentino’ – Città di Levico Terme and others)

The ECJ has ruled on the compatibility of Italian court fees charged in proceedings to review public contracts with Directive 89/665 (the Remedies Directive). Under Italian law, higher court fees were charged to challenge decisions relating to the award of public contracts than in other civil proceedings. The ECJ concluded that the Italian system did not breach the principles of equivalence and effectiveness, and as such did not compromise the effectiveness of Directive 89/665.

Further, Directive 89/665 and the principles of equivalence and effectiveness do not preclude the charging of multiple court fees to an individual who brings several court actions concerning the same award of a public contract or who raises supplementary pleas concerning the same award of a public contract within ongoing judicial proceedings. However, multiple court fees should only be charged where the subject matter of those additional actions, or pleas, is separate to or amounts to a significant enlargement of the subject matter of the dispute that is already pending.

ECJ rules on location requirement in procurement procedure (Grupo Hospitalario Quirón v Departamento de Sanidad del Gobierno Vasco)

The ECJ has handed down a judgment on a preliminary reference ruling from a Basque court regarding a location requirement in a call for tenders for public health services.

The call for tenders related to two contracts for public health surgical services to be provided by public health surgeons, but carried out in private hospitals with the aim of reducing waiting times for patients in Bilbao. The tender specifications stated that the contract services must be carried out in within the city limits of Bilbao. A prospective tenderer, the Grupo Hospitalario Quirón, owns a hospital located in Erandio, a town located near Bilbao and accessible by Bilbao public transport systems, but outside the city limits.

The ECJ concluded that Article 23(2) of Directive 2004/18 precludes a requirement that medical services (that are the subject of the calls for tenders) must be provided by private hospital establishments situated exclusively within a given municipality, which is not necessarily that in which the patients concerned by those services reside, automatically excluding tenderers who are unable to meet a requirement.

ECJ rules on compatibility of national law with EU procurement rules on exclusion of tenderers (Impresa Edilux Srl and Società Italiana Costruzioni e Forniture Srl v Assessorato Beni Culturali e Identità Siciliana — Servizio Soprintendenza Provincia di Trapani)

The ECJ has handed down a ruling on a preliminary reference from an Italian court regarding the compatibility of national law with the EU procurement rules regarding the exclusion of tenderers. The contracting authority had awarded a contract relating to the restoration of Greek temples in Sicily. However, the successful bidders failed to submit a declaration that they accepted clauses contained in the legality protocol (which formed part of the tender specifications). Following a complaint, the contracting authority annulled the decision and instead awarded the contract to the complainant.

The referring court questioned whether EU law precluded national legislation under which contracting authorities may treat the non-acceptance of undertakings of commitments set out in legality protocols and, more generally, in agreements between the contracting authorities and participating undertakings, as legitimate grounds for excluding undertakings. The national provisions in this case were in place to prevent organised crime from infiltrating the public procurement sector.

The ECJ concluded that the general principles of the TFEU do not preclude this. However, where the legality protocol requires declarations that the tenderer is not in a relationship of control or of association with other tenderers, and will not sub-contract any type of tasks to other undertakings participating in that procedure, the lack of such declarations cannot lead to the automatic exclusion of the tenderer.

General Court orders OHIM to pay compensation due to errors in procurement procedure (European Dynamics v Office for Harmonisation in the Internal Market)

The General Court has upheld an appeal by European Dynamics against a decision by the Office for Harmonisation in the Internal Market (OHIM) in relation to the award of a framework contract. European Dynamics had been ranked third of the three successful bidders. The General Court found that the OHIM had made substantive errors in the assessment of the bids and had breached the principles of equal treatment and transparency by applying weighting to certain award sub-criteria that had not been disclosed. It had also breached its duty to state reasons for its decision.

The General Court held that European Dynamics was entitled to compensation. Although there was no causal link between the failure to state reasons and the claimed damage, the substantive unlawful conduct of the OHIM as part of its individual and comparative assessments of the bids was likely to have affected European Dynamics’ opportunity to be awarded the framework contract as the contractor ranked first. The General Court did not consider that it was able to quantify the compensation and ordered the parties to try to reach an agreement on this within three months, highlighting various issues to be taken into account.

General Court dismisses appeal by Secolux against Commission procurement decision (Secolux, Association pour le contrôle de la sécurité de la construction v Commission)

The General Court has dismissed an appeal by Secolux against a decision of the European Commission not to award a procurement contract relating to safety checks to be carried out at various buildings of EU institutions in Luxembourg.

Secolux claimed that the Commission had committed various procedural errors and errors in the assessment of the tenders. In particular, it argued that the amount bid by the successful tenderer was abnormally low and the Commission committed procedural irregularities in not investigating properly. Secolux also submitted that the Commission breached the principles of equal treatment and transparency, alleging that it took into account the quality of the services previously provided by the tenderer under earlier contracts when evaluating the tenders submitted in respect of the contract to be awarded.

The General Court dismissed the appeal in its entirety, finding that the Commission had not committed any procedural irregularities. In particular, the difference between the amount bid by the successful tender and the value of the contract amount given in the contract award notice was due to the fact that the Commission added 20% to cover indexation and unforeseen expenses. The General Court found that this budgetary reserve did not infringe the principles of transparency, equal treatment and non-discrimination and that the budgetary reserve was not excessive. The General Court also added that Secolux had not provided any evidence as to why it considered the winning tenderer’s bid to be abnormally low, nor had Secolux provided any information as to why it considered that its bid had been evaluated using different criteria from that of the winning bidder.

General Court rules that Commission erred in rejecting tender due to alleged conflict of interests (Intrasoft International SA v European Commission)

The General Court has handed down a judgment upholding an action by Intrasoft International SA to challenge a European Commission decision to reject its bid in a public tender. The consortium of which Intrasoft was part had been excluded from the tender on the basis of an alleged conflict of interests. The consortium had been involved in the drafting of certain documents used in another call for tenders and the Commission had decided to use the same documents in the context of this tender. The Commission went on to conclude that Intrasoft had access, before other tenderers, to relevant documents and that this gave it an unfair advantage.

The General Court concluded, however, that the risk of a conflict of interests had not been objectively established. The preparation of documents drafted in the course of another call for tenders could not be treated in the same way as involvement in preparatory works for the new tendering procedure (which would give rise to a conflict of interests), unless it could be shown objectively and specifically that those documents had been prepared in the light of the new tendering procedure and also that they had given Intrasoft a real advantage. This had not been established in this case. Further, the Commission had not conducted a specific assessment of Intrasoft’s tender to determine whether exclusion on the grounds of an alleged conflict of interests was justified.

General Court dismisses appeal against European Parliament procurement decision (Direct Way and Directway Worldwide v European Parliament)

The General Court has dismissed an appeal by Direct Way and Directway Worldwide (together Directway) against a decision of the European Parliament to refuse to award it a procurement contract relating to transport of members of European Parliament to Brussels.

The European Parliament had published a call for tenders relating to the transport of members of European Parliament to Brussels using the open procedure. Two bids were received, but the European Parliament subsequently decided to abandon the tendering procedure on the grounds that the bids received in response to the tender were unacceptable in view of the award criteria, in particular the proposed prices, which were too high compared to the value set out in the contract notice. In September 2012, the European Parliament invited the bidders to submit bids for a similar contract, this time using the negotiated procedure. The contract was awarded to TMS Limousine and Directway appealed the decision to close the open procedure and to award the contract to TMS Limousine.

The General Court dismissed the appeal in its entirety, finding that Directway’s appeal regarding closure of the open procedure was out of time and therefore inadmissible. As regards the award of the contract to TMS Limousine, the General Court found that the European Parliament had not infringed the principle of equal treatment as the two procedures were independent, autonomous procedures. Also, the original terms of the contract had not been substantially altered.

General Court annuls Commission procurement decision and awards compensation for procedural errors (Vanbreda Risk & Benefits v European Commission)

The General Court has handed down its judgment on an appeal by Vanbreda Risk & Benefits (Vanbreda) relating to a decision of the European Commission to award a procurement contract for insurance cover to another bidder, Marsh SA (Marsh). Vanbreda claimed that Marsh did not comply with the tender specifications. Vanbreda also brought an action for damages claiming that the General Court should order the Commission to pay EUR1 million in compensation for loss of an opportunity to win the contract, loss of references and for non-material damage suffered.

At the time of its appeal, Vanbreda had applied for interim measures to order the suspension of operation of the Commission’s decision awarding the contract, which the General Court had granted, finding that Vanbreda had established a serious prima facie case in support of its action, there being, at first sight, serious irregularities in the award of the contract to Marsh.

The General Court has now annulled the Commission’s decision awarding the contract to Marsh, finding that the Commission breached the principle of equality of treatment of tenderers by illegally awarding the contract to Marsh. As a result, Vanbreda is entitled to compensation. However, the General Court did not consider that it was able to quantify this. It has ordered the parties to try to reach an agreement on this within six months, highlighting various issues to be taken into account.

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