28 July, 2016
The Court of Justice of the European Union (CJEU) rules against contracting authority which tried to make it one step too hard for contractor to qualify in proving their technical capacity and meeting minimum requirements.
In the case of Ambisig v AICIP, a Portuguese administrative court referred the case to the CJEU regarding interpretation of the Public Procurement Directive 2004/18 (PPD).
The dispute at national level arose in 2013 when AICIP as a contracting authority launched a tendering procedure restricted by prior qualification to award a service contract for 'implementation of systems for environmental management, quality and technology platform'.
The contract notice provided that in order to be selected candidates must submit a declaration by a contractor on headed, stamped paper confirming implementation of the environmental and/or quality management system and implementation of management systems, use of an online technology platform etc. by each contractor. Both declarations required a signature certified by a notary, lawyer or other competent entity, specifying the capacity of the person signing.
AICIP approved the list of candidates selected excluding Amisig on the basis that it had failed to demonstrate its technical capacity as required by the contract notice and it had failed to demonstrate or argue that it was impossible or very difficult for it to produce such the declaration required. Ambisig challenged this and succeeded at first instance, although on appeal AICIP argued that the rules it had laid out in its contract notice were compatible with the PPD.
In response to AICIP's arguments, the Portugese court sent three questions for consideration to the CJEU:
The CJEU responded as follows:
The court recalled that where a State has failed to implement a directive in domestic law by the end of the period prescribed or it has failed to implement it correctly, provisions which appear unconditional and sufficiently precise may be relied on by individuals before national courts against the State. Having considered previous cases the relevant provision of the PPC was capable of having direct effect.
The Court than looked at whether it can be relied upon against any contracting authority. This of course is important due to the wide definition of contracting authority in public procurement. In this regard the Court recalled the judgment in Portgas C-425/12, which established that for directives to be capable of having direct effect includes not only a public entity but also a body where the State has given it responsibility for providing a public-interest under the State's control and that body has been given special powers. Considering AICIP's situation, though it fulfils the definition of a contracting authority the Court found that it constitutes a private-law association of undertakings and is unlikely to satisfy the test outlined for direct effect to apply to it but ultimately this was a question for the national court to determine.
As to the second question, the Court recalled that the relevant provision in the PPD states that evidence by a contractor is to be provided by the contractor's certification or, failing this, by a declaration by the economic operator. The question raised asks as to the relationship between the two means of evidence; whether they are on an equal footing or does EU law establish a hierarchy so that an operator can only have recourse to a unilateral declaration where he is unable to obtain certification.
In relation to this the Court said that the provision as it has been formulated leaves no room for any reasonable doubt that the relationship is not one of equivalence but one of subsidiarity between the means of evidence. As such it must be understood that an economic operator or contractor may be authorised to provide evidence of technical ability only if he cannot obtain the private purchaser's certification.
Allowing contractors to choose which method to use would undermine effectiveness since each contractor would opt for the declaration. Also having such a system in place is consistent with the principles of transparency, non-discrimination and equal treatment because preferring a private purchaser's certification guarantees more transparency and legal certainty as to the reality of the contractor's technical ability. At the same time by allowing economic operator's to make a unilateral declaration if he finds it impossible to comply, this also shows that the provision is proportionate because it does not go beyond what is necessary to achieve the objectives of the PPD.
The Court held that the relevant provision provides for a closed system limiting the possibility for contracting authorities to introduce new formalities which would change the nature of conditions for ways in which evidence is to be provided. Introducing a requirement for the purchaser's certification to be authenticated amounts to a new formality and a substantive change.
Bearing in mind that the procurement rules aim to simplify and modernise national procedures for awarding public contracts to facilitate free movement and in particular the involvement of SMEs in the public contract market permitting such a measure would have the opposite effect. This was found to be especially the case due to the short time limits set for submission of applications and due to the divergences between national laws for authentication, which may result in contractors being dissuaded from submitting their tender.
While the judgment considers the relevant provisions relating to exclusion criteria under the old public procurement directive, it does offer insight into the court's approach to these issues.
The new Public Procurement Directive 2014/24/EU retains the possibility for contracting authorities to outline selection criteria including for technical and professional ability providing that such criteria is related and proportionate to the subject-matter of the contract. In addition, contracting authorities may require contractors to demonstrate they have sufficient experience by suitable references from contracts performed in the past. For works this is to be demonstrated through a list of works carried out over at the most the past 5 years accompanied by certificates of satisfactory execution. Whereas for services a list of the principal delivered effected over at the most the past three years is the usual basis for selecting references in CCS standard PQQ document.
The Public Contracts Regulations 2015 (PCR) contain similar provisions in particular that contracting authorities may require economic operators to demonstrate they have sufficient level of experience by providing references from contracts performed in the past and that such requirements should be indicated in the contract notice . In addition, economic operators may be called on to provide proof of their technical capacity by providing for works a list of works or for services a list of the main services provided. This includes references and certificates of satisfactory performances.
With these changes and the latest judgment it is arguable that contracting authorities do not have a lot of room to impose extra requirements on contractors to prove their technical capacity. As such contracting authorities should take care when drafting their contract notices and setting out the methods of proving technical capacity. If not, what might feel like a belt and braces approach may result in a wardrobe malfunction.
Forbes Solicitors regularly advises a range of contracting authorities in relation to the public procurement regime. If you have any questions relating to the PCR please contact Daniel Milnes.