Irish Centre for European Law
Procurement Conference
Royal Irish Academy
28 June 2012
James Kinch, Solicitor, Dublin City Council
Secondary Policies and Clarifications
• Overview of the scope for pursuing secondary
policies in the EU procurement regime, practical
issues that arise, including reference to state aid
considerations.
• Clarifications - governing principles – compliance
with equal treatment and transparency – review of
recent case law
Secondary Policies in Public Procurement
•
Primary objective of procurement is economic:
• ‘The acquisition of goods or services fulfilling a
particular function on the best possible terms’
(Arrowsmith)
• Secondary policies enter the framework where it is the
government objective to promote public interest
policies:
for
example
industrial,
social
or
environmental – this is interpreted broadly to include
SMEs and other disadvantaged groups in society.
Legal bases for the pursuit of secondary
policies in procurement
•
Secondary policies embraced within concept of
‘sustainable development’
Article 11 of TFEU: ‘Environmental protection requirements must be
integrated into the definition and implementation of the
Community policies and activities … in particular with
at view to promoting sustainable development.’
(Emphasis added)
Legal bases for pursuit of secondary policies in
procurement (cont’d)
Article 3 (3) of the Treaty on European Union:
‘ …[The Union]’ shall work for the sustainable
development of Europe based on balanced economic
growth and price stability, a highly competitive social
market economy, aiming at full employment and social
progress, and a high level or protection and improvement
of the quality of the environment… It shall promote
economic, social and territorial cohesion, and solidarity
among Member States.’
Legal bases for pursuit of secondary policies
(cont’d)
Public Sector Directive states that the procurement rules
aim at clarifying :
‘how the contracting authorities may contribute to the
protection of the environment and the promotion of
sustainable development, whilst ensuring the
possibility of obtaining the best value for money for
their contracts’
(Recital 5)
And that: -
Legal bases for pursuit of secondary policies in
procurement (cont’d)
(Public Sector Directive, cont’d)
•
‘nothing in this Directive should prevent the imposition or
enforcement of measures necessary to protect …..health,
human and animal life or the preservation of plant life, in
particular with a view to sustainable development,
provided that these measures are in conformity with the
Treaty.’
(Recital 6)
•
See also recitals 29, 44 and Articles 23 (3) (b), 23 (6), 27
(1), 48 (2) (f) and 53 of the Public Sector Directive.
Evolution of secondary policies in EU law
• Characterised
by
a
‘clash’
between
cost
effectiveness view of Commission and more flexible
approach of the Court of Justice
• Court of Justice has ‘pulled’ the Commission
towards an increasingly broad admission of
secondary policies.
Development of secondary policies by the Court
of Justice of the EU
• Beentjes (Case C-31/87): ruled that a condition relating
to the employment of long – term unemployed persons is
compatible with the
procurement of public works
directive, if it has no direct or indirect discriminatory
effect on tenderers from other member states.
•
Commission v. France (Case C-225/98): ‘that provision
[Art.30(1) of Dir. 93/37] does not preclude all possibility
for the contracting authorities to use as a criterion a
condition linked to the campaign against unemployment
…’
Development of secondary policies by the Court
of Justice of the EU (cont’d)
• Concordia Bus Finland (Case C-513/99): concerned a public contract for the provision of
urban bus transport services
• In order for the reduction of nitrogen oxide
emissions or the noise levels of vehicles to be
admissible as award criteria, the environmental or
social considerations should be linked to the
subject matter of the contract (at para. 59)
Development of secondary policies by the Court
of Justice of the EU (cont’d)
EVN AG v Wienstrom (Case C-448/01):
‘[EU law] does not preclude a CA from applying, in
the context of the assessment of the most
economically advantageous tender for a contract for
the supply of electricity, an award criterion … which
requires that electricity supplied be from renewable
energy sources.’
Context for secondary polices has changed as a
result of the new economic landscape
•
“2010 must mark a new beginning. I want europe to emerge
stronger from the economic and financial crisis”
M. Barroso, President of the EU Commission
(‘Europe 2020 – A strategy for smart, sustainable and
inclusive growth’)
•
‘Europe 2020’ strategy includes initiatives such as
“innovation union”, “an industrial policy for the
globalisation era” and “resource efficient Europe” - in all
of which procurement has a significant role.
Examples of Secondary Policy initiatives in
Dublin City
•
Dublin Wi-fi: supply of free public wireless broadband in
certain spots of the city: facilitating tourism and economic
activity
•
Johnstown Park Pavilion: water segregation, waste water
harvesting: sustainable use of resources
•
“Dublinked” (www.dublinked.ie): sharing public data initiative
to spur creativity and innovation
Examples of Secondary Policy initiatives in
Dublin City (Cont’d)
•
Energy efficiency: installation of solar panels on top of various
buildings including sports changing room facilities
•
Habitat mapping and Green Infrastructure Strategies (for
the Heuston and Pelletstown Candidate Local Area Plans)
•
Proposed initiative - based on report entitled ‘Built to last:
Dublin City Heritage Plan: the sustainable re-use of
buildings’: retention and rehabilitation: analysis of costs of reusing buildings with the cost of replacement. In 4 out of the 5
case studies the re-use option generated lower whole life costs.
Identification of the legal vehicle to achieve the
secondary objective
Example: Tender for the management and installation of
‘green’ widgets in various prime parts of the City: identification
of legal form to achieve objective sought?
(1)
Procurement of services / works contract by
advertisement, seeking tenders;
(2)
Use of a services / works concession;
(3)
State Aid issues?
(4)
Service of general economic interest (Altmark)?
Identification of the legal vehicle to achieve the
secondary objective (cont’d)
(1)
Advertising & seeking tenderers – capable of cost
analysis, funding issues?
(2)
Concession: - falls outside procurement directives defined as being ‘similar to a normal public contract for
services or works ‘except for the fact that the
consideration .. consists either solely in the right to exploit
the service or in this right together with payment’:
Concession definition is based on Telaustria (Case C-324/98)
which has also added that the concessionaire must bear all, or a
significant share, of the risk of operating the service.
Identification of the legal vehicle to achieve the
secondary objective (cont’d)
(3)State Aid: Art. 107 (1) of TFEU:
“Save as otherwise provided in the Treaty, any aid
granted by a Member State or through State resources in
any form whatsoever which distorts or threatens to distort
competition by favouring certain undertakings or the
promotion of certain goods shall, in so far as it affects
trade between member States be incompatible with the
internal market”.
Identification of the legal vehicle to achieve the
secondary objective (cont’d)
(3) State Aid (Cont’d)
•
If subsidised by CA, could come within rules on State Aids.
•
Further, mere availability of public lands in prime areas of the
city for the green widgets may constitute a form of state aid –
access to infrastructure that would be difficult to quantify.
•
But no state aid if: (a) there is no effect on trade between member states, or
(b) the proposed arrangements are not selective
State Aids (cont’d)
•
Test for effect on trade between member states: if an industry
as a whole is exposed to international competition, a subsidy to
one part of the industry is capable of affecting trade between
Member States (Case C-148/04) Unicredito.
(4)
Alternatively, structure the arrangement as a ‘service of
general economic interest’ along the lines of Altmark (Case
C-280/00)?
State Aids (cont’d)
(4) Altmark: (Cont’d)
•
Payments were not an ‘advantage’ and so fell outside the State
Aid rules if they merely compensated an undertaking for
carrying out an obligation to provide specific services in the
public interest [paras 85 et seq.]
•
Principles codified in Commission Decision 2012/21/EU:
certain services of a general economic interest need not be
notified to the Commission and are deemed compatible with
the State aid rules, if they meet the conditions therein.
State Aid (Cont’d)
•
Decision 2012/21/EU:
Transparency issues – amount of compensation to be paid to
the provider of the service is required to be transparent.
Difficulties where there is a non - cash consideration.
•
Suggested solution: advertise as a concession – no selectivity,
therefore no state aid.
Summary of matters for consideration of legal form to
achieve secondary objective
•
•
•
•
•
Clarity as to overall objective and availability of funding
Is there a public contract?
Concession requirements – is there actually a ‘risk’ for a
potential concessionaire? Will there be ‘users’?
Research and Development proposals - if it is true R & D it
may be excluded under Article 16 (f) of the public sector
directive: but if state aid need to assess compliance with
Regulation No.800/2008
State Aid compliance: form of aid may be subtle – for example
the undertaking’s association with the initiative to the exclusion
of other undertakings – market advantage in terms of corporate
profile and PR.
Clarifications
Consideration as to whether to seek clarification may arise in
the following cases:
(1) ‘Obvious’ clerical errors
(2) Errors of omission
(4) Insufficient information is provided
(3) Ambiguity in tenders submitted
Depending on the terms of the particular competition, any of
the above deficiencies may result in a tender being deemed
‘non –compliant’. When should a tenderer be given the
opportunity to ‘clarify’ a tender?
Clarifications - Case Law
Adia interim [1996] 3 CMLR 849
•
Involved an error in calculation of price – not a particularly
obvious error
“any contact between the institution and the tenderer after
tenders have been opened is prohibited save
exceptionally “if some clarification is required in
connection with a tender or if obvious clerical
errors in the tender must be corrected. In those
cases, the institution may take it upon itself to contact the
tenderer;
Clarifications - Case Law (cont’d)
•
Adia Interim (Cont’d)
•
Opportunity to ‘clarify’ could have resulted in the adjustment of
other factors:
“…In those circumstances, any contact made by the
Commission with the applicant in order to seek out jointly
with it the exact nature of the systematic calculation error
would have involved a risk that other factors taken into
account in order to establish its tender price ….might
have been adjusted, and this would have entailed an
infringement of the principle of equal treatment to the
detriment of the other tenderers …”
Clarifications - Case Law (cont’d)
•
Tideland Signal Limited v Commission Case T-211/02
•
Ct found that a tender document was ambiguous with regard
to the period in which the tender document remained valid
– whether this ambiguity should be clarified:
“In cases where the terms of a tender itself and the
surrounding circumstances known to the Commission
indicate that the ambiguity probably has a simple
explanation and is capable of being easily resolved, then,
in principle, it is contrary to the requirements of good
administration for an evaluation committee to reject the
tender without exercising its power to seek clarification. “
Clarifications - Case Law (cont’d)
•
Tideland (cont’d)
‘It would be .. contrary to the principle of equality … for an
evaluation committee to enjoy an unfettered discretion to seek
or not seek clarification of an individual tender regardless of
objective considerations and free from judicial supervision…”
‘…[T]he principle of proportionality requires that measures
adopted by Community institutions do not exceed the limits of
what is appropriate and necessary in order to attain the
objectives pursued and that where there is a choice between
several appropriate measures recourse must be had to the
least onerous… ‘
Clarifications - Case Law (cont’d)
•
Hossacks (a firm of solicitors) v. the Legal Services
Commission [2011] EWHC 2700 (Admin) Queen’s Bench
LSC Guidance set out what constituted a completed tender –
applicants required to reply to all of the questions in order to
respond to the PPQ and ITT, even if they had previously
provided that information or thought that the LSC was aware of
it. Guidance also stated that failure to comply with the terms
and conditions entitled the LSC to reject a bid.
Hossacks mistakenly submitted a tender for Northamptonshire
on a form headed ‘Wiltshire’ and failed inter alia to include the
location of its office, as required.
Clarifications - Case Law (cont’d)
•
Hossacks (cont’d)
Hossacks contended that it was unreasonable or
disproportionate for the LSC not to seek to clarify its tender
given the nature of the mistake made and that the LSC had
acted inconsistently in refusing to permit amendments of its
tender while performing clarification in other respects of the
tendering process
•
Held that LSC was entitled to reject Hossacks’s application as
its approach to assessing the eligibility of bids accorded
with the guidance.
Clarifications - Case Law (cont’d)
Hossacks (Cont’d)
•
Hossacks had deliberately failed to provide an address in
Northamptonshire because it was adopting the same approach
for all the areas in which it was bidding. Having premises in the
relevant contract area was an important part of the criteria.
•
The clarification Hossacks sought went beyond
clarification of an ambiguity and extended to
reconstructing the essence of the application made.
Clarifications – Case Law (cont’d)

Clinton v Dept for Employment and Learning [2012] NIQB 2
- Tender for publicly funded training and apprenticeship
programmes in Northern Ireland. Clinton contended that: (1)
its elimination - due to a failure to provide ‘data in respect
of achievement, success rates or destinations into
positive outcomes’ was due to a non-disclosed or
ambiguous selection criterion in breach of principles of
transparency and equal treatment, and
(2)
In its solicitation of “clarification” from thirteen other
bidders the Dept. acted in breach of its duty of equal
treatment
Clarifications – Case Law (cont’d)
Clinton (cont’d)
•
McCloskey J. noted that the Dept’s witness gave evidence that
Clinton’s tender included ‘some information, albeit limited,
about the quality of previously delivered programmes’
•
Therefore, not a case where there was an outright failure to
provide information: rather, insufficient information had been
provided
•
In those circumstances the panel had had a discretion to
request further information.
Clarifications – Case Law (cont’d)
Clinton (Cont’d)
•
In an equality of treatment challenge, comparability was the
central consideration. The fundamental issue was whether, had
the panel asked Clinton to provide the data, that request
would have been sufficiently comparable with its requests
to other bidders to provide information. Although the two
scenarios were not identical, they were not materially different.
•
As Clinton could have supplied the required data in a format
acceptable to the department the resultant detriment to Clinton
was obvious (paras. 44 – 46). The Dept’s failure to request the
further information was also disproportionate.
Clarifications – Case Law (cont’d)
Clinton (cont’d )
•
By failing to appreciate the existence of that discretion, the
panel had materially erred.
•
To have requested further information would not have infringed
the principle of equality of treatment and would have complied
with the principles of legal certainty and good administration
[Tideland]
Clarifications – Case Law (cont’d)
Clinton (Cont’d)
•
More generally, in relation to the SIAC & Mayo County
Council test, that tenders ‘must be capable of being uniformly
interpreted by reasonably informed and normally diligent
tenderers’, McCloskey J stated that:
‘The Siac hypothetical tenderer is a terrestrial, rather than
celestial, being, hailing from earth and not heaven’
[at para. 38]
•
Standard to be applied should focus on the meaning to
tenderers operating in the relevant industry concerned.
Clarifications:
Summary
Decisions regarding whether or not to seek clarifications must
comply with the principle of equal treatment of tenderers and
the principle of transparency: Clinton demonstrates however
that treating tenderers equally does not mean treating them the
same: what matters is that the request is sufficiently
comparable with the requests to other bidders.
More generally, the measures taken by the CA should comply
with the principle of proportionality: are the measures
contemplated by the CA proportionate, that is, they should not
exceed the limits of what is appropriate and necessary in order
to attain the objective However, where documentation is very
clear as to requirements, tender may be rejected (Hossacks).
Clarifications – Additional Cases
•
JR Jones v Legal Services Commission [2010] EWHC 3671
(HC) (Tideland distinguished as error not apparent until appeal
process – opportunity to amend tender accordingly lost)
•
Deane Public Works Ltd v. Northern Ireland Water [2009] NI
Ch 8 (plaintiff provided information on an out -of -date project
which was different to the other two clarification scenarios –
entitled not to raise clarification)
•
R v. Minister of Agriculture, Fisheries and Food (Case C331/88) (Proportionality of measures)
Clarifications – Additional Cases (Cont’d)
•
Allan Rutherford LLP v Legal Services Commission [2010]
EWHC 3068 (Equal treatment and proportionality)
•
CAS Succhi di Frutta (Case C-496/99) (Equal treatment
implies that tenderers must be subject to the same conditions)
•
Dynamiki v. Commission (Case T-387/08) (Limited role of
court - contracting authority has broad discretion as to the
factors to be taken into account for the purpose of deciding to
award a contract following invitation to tender – Ct’s review
therefore limited to checking compliance with the procedural
rules …’
Clarifications – Additional Cases (Cont’d)
•
R
(on the application of British American Tobacco
(investments Ltd) v. Secretary of State for Health (Case C491/01) (Proportionality)
•
Azam & Co. Solicitors v Legal Services Commission (strict
application of conditions of tender - all candidates had equal
opportunity - time barred from process)
Thank you !