Assessing proportionality in public procurement? The uncertainty remains
On 14 December 2016, the European Court of Justice ("ECJ") answered the Dutch Supreme Court’s ("DSC") preliminary questions regarding Article 45 (2) of the EU public procurement directive (Directive 2004/18/EC) and general principles of equal treatment and transparency (ECJ Case C-171/15). The ECJ ruled that an unambiguous clause in contract documents, stating that a tenderer who has been guilty of grave professional misconduct will be automatically excluded from the tender, prevails over an explanatory memorandum of a national law that requires contracting authorities to assess whether exclusion from the tender is proportional. As we explain below, the meaning of this ruling for contracting authorities and tenderers is unclear.
The ECJ addressed two preliminary issues:
First the ECJ held that Article 45 (2) of Directive 2004/18/EC allows Member States to determine the application of exclusion grounds, but that Member States must specify conditions for these exclusion grounds in accordance with EU law and national legislation. Further, the ECJ ruled that EU law does not preclude national legislation that requires a contracting authority to assess the proportionality of the intended exclusion of a tenderer which has been guilty of grave professional misconduct, because such proportionality assessment would make the application of the exclusion ground more flexible, which is allowed under EU law. Furthermore ECJ considered that the principle of proportionality applies, in general, to public procurement procedures.
Second the ECJ found that a contracting authority, with its wide margin of discretion to set conditions for public procurement awards, may take the view that a tenderer who has been guilty of grave professional misconduct must be automatically rejected from the award procedure (without assessing whether the exclusion is proportionate). However, if a contracting authority implements such a clause in unambiguous terms in the contract documents, the ECJ ruled that it is contrary to the principles of equal treatment and transparency to award the contract to a tenderer who has, in fact, been guilty of grave professional misconduct – even if the award was made after national legislation obliged contracting authorities to assess whether exclusion was proportionate.
The ECJ considered that any other approach could result in unequal treatment of tenderers who have been guilty of grave professional misconduct, since tenderers who are familiar with this exception under national legislation would likely tender in the hope that they may be exempted from exclusion on the basis of a subsequent proportionality assessment, while other tenderers, who are not familiar with this potential exemption may decide not to tender. The ECJ considers that the latter situation is more likely to concern tenderers from other Member States, especially if the obligation to assess the proportionality of the exclusion is derived from a non-binding explanatory memorandum to national legislation that must only be taken in to account for the interpretation of that provision, as is the case here.
The ECJ placed a lot of weight on the ambiguity between the clause in the contract documents and the interpretation of the explanatory memorandum which required the proportionality assessment. However, it is unclear whether this ruling is restricted to cases in which the interpretation for national legislation is described in the legislative history or whether this would also apply if the proportionality review would have been included in the national legislation itself, as it is nowadays in the Dutch public procurement law (Aanbestedingswet 2012).
We presume the relevance of this ruling is limited because the proportionality review is explicitly included in the new European public procurement directives. However, to avoid any uncertainty, we advise contracting authorities to include the proportionality review in the tender documents in unambiguous terms. In cases where the contract documents do not contain a clause regarding the proportionality review, we advise tenderers to contact the contracting authority for clarification.
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