Public procurement subcontracting: requiring contractor to execute main part of contract is, in principle, unlawful

As you will recall, the Court of Justice ruled in a judgment of 14 July 2016 (C-406/14) that a contracting authority is not allowedto require, by a general stipulation in the tender specifications of a public contract, that the future contractor of that contract perform a certain abstract percentage of the works covered by that contract itself.

Similarly, the Court of Justice ruled in a recent judgment of 5 April 2017 (C-298/15) that a provision of national law which states that, where subcontractors are invited to carry out a public contract, the main part, as defined by the contracting entity, must be performed by the successful tenderer itself (and thus not by the subcontractor) is in principle not admissible because it breaches EU law. Interestingly, this was despite the fact that the contract in question had a value below the threshold for the relevant EU Directive, the Utilities Directive (2004/17/EC).

However, such a restriction may, according to the Court of Justice, be justified if it pursues a legitimate objective in the public interest (like ensuring that the works are properly executed) and but on ly to the extent that it complies with the principle of proportionality. This requires an assessment on a case-by-case basis.

In the same judgment, the Court of Justice ruled on the legality of a provision, contained both in the national (Lituanian) procurement la and in the tender specifications, which, in circumstances in which a tender is submitted by a consortium, requires that the contribution of each member of the consortium, in order to satisfy the requirements for professional capacities, corresponds proportionally to the share of the works they will actually carry out if the relevant contract is awarded to them.

This is interesting, as under Belgian public procurement law a similar provision (for subcontractors) can be foreseen (Art. 12 of the Royal Decree of 14 January 2013).
In the present case, the contracting authority in question wanted to avoid a situation in which, in order to win the contract, a tenderer attempts to rely on capacities that he does not intend to use or, conversely, that a tenderer would be awarded a contract and perform part of the works without having the capacities and resources necessary for the proper performance of those works.

On this issue, the Court of Justice ruled that it was possible, taking account of the technical nature and size of the works to be performed, that their proper performance requires, in cases in which a consortium bid, that each one of them performs specific tasks corresponding to its own professional capacities. However, the requirement here was for there to be an arithmetic correspondence between the contribution of each member needed to satisfy the requirements for professional capacity and the share (of value) of the works that each was to undertake. The Court observed that such a requirement does not take account of the nature of the tasks to be carried out or to the technical capacities specific to each of the members of the consortium.

Following the AG opinion, the Court held that a consortium should be free to satisfy collectively the requirements relating to professional capacity (including experience), and then be entitled to specify how the various tasks under the contract are to be performed, which the authority can then seek to verify. The more general “arithmetic” requirement use here was held to be an unjustified restriction on freedom to provide services and freedom of establishment.

Also, and importantly, as the requirement was unrelated to the specific works or services required to be performed, it did not prevent one member of the consortium from carrying out specific tasks for which it did not have the experience or capacities required.