61986CC0027_EN
Opinion of the Advocate-General
Opinion of the Advocate-General
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Mr President,
Members of the Court,
In Joined Cases 27, 28 and 29/86, the Conseil d' Etat of the Kingdom of Belgium has submitted to the Court three questions on the interpretation of Council Directive 71/305/EEC of 26 July 1971 ( 1 concerning the coordination of procedures for the award of public works contracts .
That directive was adopted on the same day as Council Directive 71/304/EEC ( 2 ) concerning the abolition of restrictions on freedom to provide services in respect of public works contracts and on the award of public works contracts to contractors acting through agencies or branches . Directive 71/304 requires Member States to abolish in particular restrictions which prevent persons covered by the Community provision (" beneficiaries ") from providing services under the same conditions and with the same rights as nationals, those existing by reason of administrative practices which result in treatment being applied to beneficiaries which is discriminatory by comparison with that applied to nationals, and those existing by reason of practices which, although applicable irrespective of nationality, none the less hinder exclusively or principally the professional or trade activities of nationals of other Member States ( see Article 3 of Directive 71/304 ). I cite those provisions because they circumscribe the underlying objectives of the Council' s legislation in this field .
Directive 71/305/EEC, to which these proceedings relate, provides both for the abolition of restrictions and the coordination of national procedures for the award of public works contracts .
According to the second recital in the preamble to the directive, that coordination must take into account as far as possible the procedures and administrative practices in force in each Member State .
Accordingly, Article 2 provides that : "In awarding public works contracts, the authorities awarding contracts shall apply their national procedures adapted to the provisions of this directive ".
It should therefore be borne in mind from the outset that any matters not dealt with by Directive 71/305 fall to be determined under the national law of each Member State ( provided, of course, that there is no discrimination between Community nationals ).
The questions submitted by the Conseil d' Etat relate to Title IV of the directive, entitled "Common rules on participation", and in particular Chapter I thereof relating to criteria for qualitative selection . The text of Articles 25, 26 and 28, to which those questions relate, is set out in the Report for the Hearing .
Article 25 enumerates the documents which may be submitted in order to establish a contractor' s financial and economic standing . Those documents are termed "references ".
Article 26 sets out the documents which may be used to establish a contractor' s technical knowledge or ability, while Article 28 stipulates the effect which must be given to the official lists of recognized contractors which exist in certain Member States .
In the Commission proposal ( 3 ) those provisions were followed by an article with the following wording :
"The authorities awarding contracts shall determine the standard of the references to be submitted by contractors pursuant to the last subparagraph of Article 20 and Articles 22 to 25 on the basis of the nature, scale and value of the works to be carried out and having regard to the financing and payment rules laid down under Articles 14 and 16" ( Article 26 of the proposal; emphasis added ).
At that time evidence of financial and technical standing was to be governed by Article 23 and evidence of technical knowledge and ability by Article 24, both of which therefore came under the terms of the provision just cited .
That provision, however, was not incorporated in the final text of the directive adopted by the Council .
On the other hand the concept of the "standard of references" is now to be found in another form in Article 16, which reads as follows :
"In open procedures, the notice shall include at least the following information :
...
( l ) the minimum economic and technical standards which the authorities awarding contracts require of contractors for their selection; these requirements may not be other than those specified in Articles 25 and 26;
...".
The corresponding wording in the Commission proposal for the directive ( Article 14 ) was as follows :
"In open procedures, the notice shall include at least the following information :
( i ) the documentation which must be enclosed with the tender in order to establish the contractor' s technical qualifications and economic standing as provided for in Articles 20 to 26 ."
It therefore seems to me that the Council probably took the view that the Commission proposal left a lacuna in not requiring the notice of call for tender to specify the minimum standards or the standard of the references required of contractors in order to be able to submit tenders for a specific contract . Accordingly, the Council supplemented the article relating to notices of tender with a provision requiring publication of minimum standards and omitted the proposed Article 26 as unnecessary . Unfortunately, in drawing up the new Article 16 ( l ), which provides that those requirements may not be other than those specified in Articles 25 and 26, the Council forgot that the remainder of the provisions no longer refers to the standard but merely to the types of references . Logically the Council should therefore have used a form of wording such as "fulfilment of those requirements may not be established otherwise than as provided for in Articles 25 and 26 ".
Even if my speculation as to what happened at the time of the drawing up of the directive is not altogether accurate, the fact remains in any event that Article 16 ( l ) does require publication of the "minimum economic and technical standards which the authorities awarding contracts require of contractors ". Yet the simple presentation of a bank statement or balance sheet or a statement of turnover can never be regarded as meeting a minimum standard; otherwise, to take an extreme case, it would suffice for a contractor to prove that he had 1*000 ECU in the bank in order to establish that he was suitable for the execution of works of whatever magnitude .
It may therefore be inferred that Articles 25 and 26 enumerate only methods of proof and that it is for the authority awarding contracts to determine in each call for tender what needs to be established, namely the standard of references required . That interpretation is in keeping with the general scheme of the directive, which is solely intended to coordinate the procedures for the award of public works contracts and even for that purpose seeks as far as possible to take account of national procedures . It follows a*fortiori that the standard of economic and technical qualification required of contractors must be laid down by the national authorities .
The answers to the questions submitted by the Conseil d' Etat follow in large measure from that conclusion .
I - Question 1 in Case 27/86
Question 1 is worded as follows :
"Are the references enabling a contractor' s financial and economic standing to be determined exhaustively enumerated in Article 25 of Directive 71/305/EEC?"
It is no longer in serious dispute between the parties to the main action that that question must be answered in the negative, and that is my view as well .
The first paragraph of Article 25 provides that "proof of the contractor' s financial and economic standing may, as a general rule, be furnished by ... the following references ".
The second paragraph provides that the authorities awarding contracts must specify "what references other than those mentioned under ( a ), ( b )
or ( c ) are to be produced ".
Finally, the third paragraph of Article 25 provides that "if, for any valid reason, the contractor is unable to supply the references requested by the authorities awarding contracts, he may prove his economic and financial standing by any other document which the authorities awarding contracts consider appropriate ".
The clear and unambiguous meaning of those provisions was confirmed by the Court in its judgment in Transporoute ( 4 ) at paragraph 9 of the decision :
"Thus Article 27 states that the authority awarding contracts may invite the contractor to supplement the certificates and documents submitted only within the limits of Articles 23 to 26 ( 5 of the directive, according to which Member States may request references other than those expressly mentioned in the directive only for the purpose of assessing the financial and economic standing of the contractors as provided for in Article 25 of the directive ."
I therefore propose that the Court answer Question 1 as follows :
The references enabling a contractor' s financial and economic standing to be determined are not exhaustively enumerated in Article 25 of Directive 71/305/EEC .
Nevertheless, authorities awarding contracts which wish to have submitted to them references other than those mentioned in Article 25 ( a ), ( b ) and ( c ) must specify them in the notice or the invitation to tender .
II - Question 2 in Case 27/86
In Question 2 the Conseil d' Etat asks :
"can the value of the works which may be carried out at one time be regarded as a reference enabling a contractor' s financial and economic standing to be determined within the meaning of Article 25 of the directive?"
I should point out immediately that "the value of the works which may be carried out at one time" cannot in any event constitute a reference within the meaning of Article 25 . It is quite clearly a criterion of evaluation, and the question which needs to be examined is whether it can legitimately be applied having regard to the provisions of the directive .
On the other hand, the list and the value of the works which a contractor will have in hand at a particular time do constitute references . For that reason in Case 27/86 the awarding authority was in fact asking for a reference when it requested the contractors who submitted tenders to "forward the list and corresponding values of both public and private works which you have or will have to carry out at the same time having regard to the state of progress of the contracts in the course of completion in the event of the contract ( for works on the Chênée-Grosses Battes link ) being awarded to you ". ( 6 ) The information requested related to facts which a contractor had to submit in the form of a written document .
It remains to be considered whether such a reference may be regarded as being of the type provided for by Article 25, namely references enabling a contractor' s economic and financial standing to be evidenced or proved .
Under the terms of Article 20 of the directive, an awarding authority must check "the suitability of contractors ... in accordance with the
criteria of economic and financial standing and of technical knowledge or ability referred to in Articles 25 to 28 ".
We have seen that ( like Article 26 ) Article 25 does not actually lay down criteria but rather enumerates the appropriate methods of proof . Article 16 ( l ), however, requires the publication of the "minimum economic and technical standards which the authorities awarding contracts require of contractors for their selection ".
It is clear from that provision that of all those contractors not excluded automatically under Article 23 ( bankruptcy, etc .) only those who meet the prescribed minimum standards are eligible to have contracts awarded to them .
Those minimum standards obviously relate primarily to the size of the undertaking as defined by its turnover in the three previous financial years, its balance sheet, and the sums held in its bank accounts or the credit which banks are willing to extend to it .
Nevertheless, the significance of the fact that an undertaking has had a high turnover in the past or that its financial reserves are at a particular level is not the same when it has undertaken five large-scale projects at one time as when it has undertaken fifty .
Whatever the nature of the undertaking, a contractor' s financial standing cannot be determined in the abstract; it must be examined in the light of its debts and short-term liabilities ( wage-bills, supplies, equipment purchased on credit, etc ).
The total value of the works to be carried out by a contractor at a given time is a factor which must logically enter into the evaluation of his suitability to take on an additional project of some size .
It is therefore consonant with the spirit of Articles 20 and 25 for an awarding authority to wish to be informed of that total value and it is legitimate for such an authority to take the view that an undertaking of a given size in economic and financial terms cannot safely undertake works above a certain total value .
The plaintiff in the main action argues, however, that the criterion of the total value of the public and private works which may be carried out at one time serves a number of additional objects which have nothing to do with a contractor' s intrinsic merits . As the Conseil d' Etat itself has stated, its aim "is to avoid any monopoly and to permit a rational allocation of work and to avoid any unbridled competition or speculation on the part of contractors resulting in their incurring commitments beyond their means ". ( 7 )
In order for that criterion to comply with Article 25, however, it is enough in my view if the aim of preventing contractors from undertaking commitments beyond their means was one of the objectives which prompted the Belgian legislature to adopt it . That aim is in fact a legitimate and plausible one and, if applied without discrimination, does not constitute an obstacle to the freedom of undertakings in other Member States to provide services .
Moreover, it must be acknowledged that the other objectives pursued by reference to that criterion are not contrary to the provisions of the EEC Treaty and that they fall within spheres of competence which Directive 71/305 was not intended to affect .
CEI further argues that the total value of the works which may be carried out at one time constitutes a "criterion external to the contractor" and bears no relation to the contractor' s intrinsic economic and financial strength . In fact the criterion constitutes a disqualification rule comparable to those laid down in Article 23 .
However, it is clear from what I have already said that the situation in this regard is no different from that regarding the other references provided for by Article 25 . Accordingly that argument cannot be accepted .
Banking statements, balance sheets, statements of turnover, and the total value of works in progress are references which give an indication of a contractor' s intrinsic circumstances . On the other hand the thresholds laid down by the awarding authority, namely a minimum amount of own funds or assets, minimum balance-sheet figures, minimum turnover and the maximum value of the works which may be carried out at one time, constitute criteria external to the contractors which are determined in the light of the nature and scale of the works to be awarded . We have seen that the adoption of such criteria is not only legitimate but indispensable .
They must enable the competent authorities to reject tenders which may be low, but are from contractors who lack the economic and financial standing necessary for the proper performance of the works in question or who have taken on so many large-scale works that their ability to complete them satisfactorily is questionable despite their considerable resources .
I therefore propose that Question 2 be answered as follows :
The total value of the works which a contractor would be carrying out at one time if the works put out to tender were awarded to him constitutes a reference which, taken together with the other references required, enables his financial and economic standing to be determined . An authority awarding contracts is entitled to take the view that if that total value exceeds a particular level which it has determined on the basis of objective criteria, the contractor' s financial and economic standing is insufficient .
Clearly, by virtue of Article 25, the awarding authority must specify in the notice that that reference is to be produced .
It will be for the Belgian Conseil d' Etat to establish whether that requirement was fulfilled in this instance .
It seems to me that it may have been . The notice of call for tender specified the class in which contractors had to be recognized in order to be eligible to tender . In Belgium that class automatically determines the maximum value of the works which may be carried out at one time . A notice requiring contractors to be recognized in a particular class may therefore be taken to imply that a reference relating to the total value of works in progress must be produced and that the criterion of the maximum value corresponding to that class will be applied .
The plaintiff in the main action further argues that three of the four requirements which must be satisfied in order for the competent Belgian authorities to ask the Recognition Committee for an exemption from the maximum total value of works themselves constitute criteria external to the tenderer or his undertaking ( see part B, paragraph 10, of the plaintiffs' observations ).
That is certainly true . In my view, however, it is of no concern to the Court in what circumstances a Member State will grant exemptions from its own legislation in regard to the value of the works which may be carried out at one time provided that the relevant rules do not create any discrimination between nationals of different Member States .
For the present the Conseil d' Etat has merely asked the Court whether, in principle, a criterion based on the total value of works may be applied . I have proposed that the Court answer that question in the affirmative .
III - The question submitted in Cases 28 and 29/86
In the two actions brought by Bellini, the Belgian Conseil d' Etat has submitted to the Court two identical questions, which are worded as follows :
"Does Directive 71/305/EEC of 26 July 1971 concerning the coordination of procedures for the award of public works contracts, and in particular Article 25 and Article 26 ( d ) thereof, permit a Belgian awarding authority to reject a tender submitted by an Italian contractor on the grounds that the undertaking has not shown that it possesses the minimum amount of own funds required by Belgian legislation and that it does not have in its employ on average the minimum number of workers and managerial staff required by that legislation, when the contractor is recognized in Italy in a class equivalent to that required in Belgium by virtue of the value of the contract to be awarded?"
I have already made it clear that an awarding authority is entitled to lay down minimum standards as regards both the amount of own funds and the manpower of tenderers, including both managerial staff and workers .
This third question asks in substance if those standards may no longer be required where a contractor is recognized in his own country in a class which enables him to carry out works in that country on the same scale as those put out to tender .
In other words, where a contractor may carry out works in Belgium for
a value of BFR*130 million only if his undertaking has own resources of BFR*30 million and a workforce of 100 workers and 4 managerial staff, must he be regarded, by virtue of Article 28 of the directive, as being suitable to carry out such works because the legislation of his own country authorizes him to carry out works up to BFR*142 million even if his undertaking' s own resources and manpower are less than those required in Belgium for that kind of contract?
The question is therefore what is covered by the presumption of suitability referred to in Article 28 ( 3 ) of the directive .
As the Court stated at paragraph 13 of its decision in Transporoute, cited above, registration in such a list constitutes an alternative means of proof .
Like the Belgian Régie des bâtiments, the Confédération nationale de la construction, the Belgian State, the Kingdom of Spain and the Commission, I take the view that the effect of the presumption of suitability established by Article 28 of the directive is that a certificate of registration in a list of recognized contractors in a Member State replaces, for the purposes of another Member State, the presentation of a balance sheet and a statement of turnover ( Article 25 ( b ) and ( c )*) and also a statement of manpower ( Article 26 ( d )*).
However, the fact that this is a mere presumption of suitability means that it is rebuttable . Only "information which can be deduced from registration in official lists may not be questioned" ( second subparagraph of Article 28 ( 3 )*). It is protected by an irrebuttable presumption .
The alternative means of proof constituted by the certificate of recognition does not in my view limit the awarding authority' s discretion with regard to the requirement of detailed references or the determination of the contractor' s financial and economic standing and technical ability for the purposes of Articles 25 and 26 of the directive ( for example, the minimum number of workers and managerial staff ).
This, I think, is proved by the second sentence of Article 28 ( 2 ), which provides that "this certificate shall state the references which enabled them to be registered in the list and the classification given in this list ".
The inclusion of those references in the certificate of recognition cannot have any practical value unless the awarding authority is able to deduce from it objective information on the evidence provided by the certificate of recognition . The corollary of the competent authority' s freedom to determine the level of financial and economic standing and technical ability which it requires is its power not to award a public works contract to tenderers who cannot establish that they are of that minimum standing . The "references which enabled them to be registered" are the basis on which an awarding authority in Member State "A" must decide, without calling them into question, whether the recognition granted in Member State "B" proves that the contractor has the standing and ability required for the contract in question .
It may therefore evaluate the information deducible from a certificate of recognition which is covered by the presumption of suitability and decide at its own discretion that the contractor' s own funds and average manpower do not satisfy the minimum requirements of standing and ability thought necessary for the public works contract in question . In that way it rebuts the presumption . Since the same minimum standing and ability is required of Belgian contractors, there is no discrimination .
For all those reasons I propose that the Court answer the Conseil d' Etat' s third question in the terms suggested by the Commission, namely :
The second subparagraph of Article 28 ( 3 ) of Directive 71/305/EEC of 26 July 1971 concerning the coordination of procedures for the award of public works contracts prohibits a Member State from questioning the information deducible from a contractor' s registration in an official list of recognized contractors but does not affect its power to ascertain whether the criteria for registration in an official list are equivalent in number and severity to the criteria required for the recognition of contractors established within its own territory . The first subparagraph of Article 28 ( 3 ) defines the limits of the presumption of suitability created by registration in such lists and an awarding authority continues to enjoy a discretion outside those limits .
Articles 25, 26 ( d ) and 28 of the directive do not preclude an awarding authority from requiring a contractor from another Member State to furnish proof that he has at his disposal the minimum amount of own funds and number of workers and managerial staff which its national legislation requires of all tenderers for a public works contract, provided that there is no discrimination even if the contractor established in another Member State is recognized in that State in a class corresponding to the class required by the said national legislation having regard to the value of the works to be awarded .
(*) Translated from the French .
( 1 ) Official Journal, English Special Edition 1971 ( II ), p.*682 .
( 2 ) Official Journal, English Special Edition 1971 ( II ), p.678 .
( 3 ) Published by the Economic and Social Committee in the preamble to its Opinion 65/187/EEC, Journal Officiel No 63, 13 April 1965, p.*929 ( no official English version ).
( 4 ) Judgment of 10 February 1982 in Case 76/81 Transporoute v Minister for Public Works (( 1982 )) ECR 417 .
( 5 ) The French text of the judgment wrongly uses the word for "and ". Article 27 reads "23 to 26 ".
( 6 ) Extract from a letter cited by the Conseil d' Etat in its order of 15 January 1986 in the CEI case, at p.*2 .
( 7 ) In attributing that purpose to the criterion, the Conseil d' Etat had in mind the commentary in the preparatory report on the Decree-Law of 3 February 1947 published in Pasinomie, 1947, p . 72, and cited by the Fonds des routes at p.*9 of its observations .