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Presentation by Aleksandra Melesko, public procurement reality and challenges of post COVID, SIGMA 26 January 2021

The document summarizes 11 cases from the Court of Justice of the EU related to public procurement law. Key issues addressed include: - Whether a tender of EUR 0.00 can be automatically rejected or requires further assessment. - Whether subcontractors' exclusions can result in the main contractor's automatic exclusion. - The conditions under which in-house contracts are permitted. - Whether software transfers between public authorities fall under cooperation rules. - Whether modifications can be reviewed ex officio after time limits have expired. The Court provided interpretations balancing principles like proportionality, equal treatment, and legal certainty.

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© OECD
REALITY AND CHALLENGES OF POST
COVID (1/3)
Case-law of the Court of Justice of
the EU
Aleksandra Melesko
26 January 2021
C-367/19 Tax-Fin-Lex d.o.o.
• Interpretation of Article 2(1)(5) of Directive 2014/24 and the notion of “contracts
for pecuniary interest”
• Rejection of a tenderer’s bid at a price of EUR 0.00
• Key issue: whether the sole fact that receiving the public contract is itself of
economic value to the economic operator may be sufficient for the contract to be
characterised as a contract for pecuniary interest?
• Court: No, but Article 2(1)(5) does not permit the automatic rejection of such a
tender. Since a tender at a price of EUR 0.00 could be classified as an abnormally
low tender within the meaning of Article 69, where a contracting authority is
presented with such a tender, it must follow the procedure provided for in that
provision and ask the tenderer to explain the amount of the tender.
1
C-395/18 Tim
• Interpretation of optional grounds for exclusion under Article 57(4)(a) of Directive
2014/24
• Key issue: national legislation obliging to automatically exclude an economic
operator from the contract award procedure where the ground for exclusion is
found in respect of one of the subcontractors mentioned in the tender
• Court: Article 57(4)(a) does not preclude such legislation, however contracting
authorities must pay particular attention to the principle of proportionality.
Economic operator may provide evidence to show that the measures it has taken
are sufficient to demonstrate its reliability despite the existence of the ground for
exclusion
2
C-395/18 Tim
• Automatic exclusion in a general and abstract manner, irrespective of
the circumstances, and without leaving the contracting authority the
option of assessing, on a case-by-case basis, the particular
circumstances of the case and ability of the economic operator to
demonstrate its reliability infringes the principle of proportionality
3
C-285/18 Irgita
• Interpretation of Article 12(1) of Directive 2014/24 (in-house contracts)
• Key issue: national legislation imposing the requirement that in-house transactions
may only be concluded in exceptional circumstances, when the continuity, good
quality and availability of services cannot be ensured if they are purchased
through public procurement procedures
• Court: Article 12(1) cannot deprive the Member States of the freedom to give
preference to one means of providing services, performing work or obtaining
supplies to the detriment of others. That freedom implies a choice.
4
C-285/18 Irgita
• However, that freedom cannot be unlimited (due regard to the fundamental
rules of the FEU Treaty, in particular the free movement of goods, the freedom
of establishment and the freedom to provide services as well as the principles
deriving therefrom, such as equal treatment, non-discrimination, mutual
recognition, proportionality and transparency)
• Within those limits, it is open to a Member State to impose on a contracting
authority conditions, not laid down in Article 12(1), if it is to conclude an in-
house transaction, including conditions to guarantee the continuity, good
quality and availability of the service.
5

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Presentation by Aleksandra Melesko, public procurement reality and challenges of post COVID, SIGMA 26 January 2021

  • 1. © OECD REALITY AND CHALLENGES OF POST COVID (1/3) Case-law of the Court of Justice of the EU Aleksandra Melesko 26 January 2021
  • 2. C-367/19 Tax-Fin-Lex d.o.o. • Interpretation of Article 2(1)(5) of Directive 2014/24 and the notion of “contracts for pecuniary interest” • Rejection of a tenderer’s bid at a price of EUR 0.00 • Key issue: whether the sole fact that receiving the public contract is itself of economic value to the economic operator may be sufficient for the contract to be characterised as a contract for pecuniary interest? • Court: No, but Article 2(1)(5) does not permit the automatic rejection of such a tender. Since a tender at a price of EUR 0.00 could be classified as an abnormally low tender within the meaning of Article 69, where a contracting authority is presented with such a tender, it must follow the procedure provided for in that provision and ask the tenderer to explain the amount of the tender. 1
  • 3. C-395/18 Tim • Interpretation of optional grounds for exclusion under Article 57(4)(a) of Directive 2014/24 • Key issue: national legislation obliging to automatically exclude an economic operator from the contract award procedure where the ground for exclusion is found in respect of one of the subcontractors mentioned in the tender • Court: Article 57(4)(a) does not preclude such legislation, however contracting authorities must pay particular attention to the principle of proportionality. Economic operator may provide evidence to show that the measures it has taken are sufficient to demonstrate its reliability despite the existence of the ground for exclusion 2
  • 4. C-395/18 Tim • Automatic exclusion in a general and abstract manner, irrespective of the circumstances, and without leaving the contracting authority the option of assessing, on a case-by-case basis, the particular circumstances of the case and ability of the economic operator to demonstrate its reliability infringes the principle of proportionality 3
  • 5. C-285/18 Irgita • Interpretation of Article 12(1) of Directive 2014/24 (in-house contracts) • Key issue: national legislation imposing the requirement that in-house transactions may only be concluded in exceptional circumstances, when the continuity, good quality and availability of services cannot be ensured if they are purchased through public procurement procedures • Court: Article 12(1) cannot deprive the Member States of the freedom to give preference to one means of providing services, performing work or obtaining supplies to the detriment of others. That freedom implies a choice. 4
  • 6. C-285/18 Irgita • However, that freedom cannot be unlimited (due regard to the fundamental rules of the FEU Treaty, in particular the free movement of goods, the freedom of establishment and the freedom to provide services as well as the principles deriving therefrom, such as equal treatment, non-discrimination, mutual recognition, proportionality and transparency) • Within those limits, it is open to a Member State to impose on a contracting authority conditions, not laid down in Article 12(1), if it is to conclude an in- house transaction, including conditions to guarantee the continuity, good quality and availability of the service. 5
  • 7. C-285/18 Irgita • Cooperation between entities belonging to the public sector, which is excluded from the scope of the Directive, should not result in a distortion of competition in relation to private economic operators. • In this case, it is particularly the task of the referring court to assess whether, by concluding the in-house transaction, the contracting authority has not acted in breach of its contractual obligations, and of the principle of transparency; whether it had to be established that the contracting authority failed to define its requirements sufficiently clearly, in particular by not guaranteeing the provision of a minimum volume of services to the party to whom that contract was awarded, or, further, whether that transaction constitutes a substantial amendment of the general structure of the contract concluded with Irgita. 6
  • 8. C-796/18 (ISE) v. Stadt Köln • Interpretation of Article 12(4) of Directive 2014/24 (cooperation between contracting authorities) for the first time • Key issue: transfer of software to another contracting authority free of charge and within the framework of a cooperation agreement. Does Article 12(4)(a) authorise contracting authorities to establish cooperation relating to public service tasks which they do not provide jointly? • Court: it is a contract for pecuniary interest (consideration in the form of future software update) 7
  • 9. C-796/18 (ISE) v. Stadt Köln • It does not seem essential for the public service activity to be provided in common by public entities participating in the cooperation • Article 12(4)(a) must be interpreted as indiscriminately authorising the participating contracting authorities to carry out a public service task, either jointly or each individually, provided their cooperation makes it possible to achieve objectives they have in common • Cooperation between public entities can cover all types of activities related to the performance of services and responsibilities assigned to or assumed by the participating authorities, potentially including an activity ancillary to a public service 8
  • 10. C-796/18 (ISE) v. Stadt Köln • Article 12(4) fails to mention that, in the context of cooperation between contracting authorities, a private provider may not be placed in a position of advantage vis-à-vis its competitors • In the present case, the economic interest lay not in the acquisition or sale of the base software but at the later stage of the adaptation, maintenance (which costs EUR 100 000 per year) and development of the software • In the event that the contracting authorities organise a public procurement procedure for the maintenance, adaptation or development of that software, they should guarantee that economic operators interested in the award of the contract in question are treated in a transparent manner, equally and without discrimination 9
  • 11. C-496/18 HUNGEOD • Key issue: does EU law permit reviews of modifications of public contracts to be initiated ex officio by public authorities after the expiry of the time limits laid down for that purpose by the national legislation? • The principle of legal certainty vs. the requirement for effective and rapid remedies against decisions by contracting authorities and protection of EU financial interests • Court: the Remedies Directives (including the preamble!) neither oblige Member States to provide for ex officio reviews initiated by public authorities in the public interest, nor prevent them from doing so. They only require Member States to provide for reviews on the initiative of affected undertakings 10
  • 12. C-496/18 HUNGEOD • The principle of legal certainty precludes the application of national provisions allowing for ex officio review of infringements of public procurement rules, in a situation where the time limits laid down under the previously applicable national legislation have already elapsed • The fact that an infringement of public procurement rules concerns a project partly financed by EU funds does not require Member States to reopen time limits to investigate that infringement. Even if they do so in the name of the protection of the Union’s financial interests, Member States must still respect the EU general principle of legal certainty. 11