Source: https://whoswholegal.com/features/2b-or-not-2b-that-is-the-question1
Timestamp: 2019-09-22 06:38:24
Document Index: 65014867

Matched Legal Cases: ['CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ', 'CJEU ']

whoswholegal - Features - 2B, Or Not 2B, That is the Question…
Annex IIB services are services, according to recital 19 of directive 2004/18, which do not permit the full potential for increased cross-frontier trade to be realised and are therefore not subject to the full application of the directive “for a transitional period”. Annex IIB services include legal services, personnel placement and supply services, investigation and security services, education and vocational education services, health and social services, recreational, cultural and sporting services and the broad category of “other services” ie, services not listed in either Annex IIA or IIB of the directive. Despite the limited application of the procurement directives, Annex IIB services are still subject to general principles of EU law where they have “certain cross-border interest” (case C-507/03, Commission v Ireland).
General principles of EU law (which are derived from the free movement provisions contained in the Treaty on the Functioning of the European Union - TFEU) include the principles of equal treatment, transparency, non-discrimination, mutual recognition and proportionality. It is the extent to which those general principles of EU law impose procedural obligations on the award of Annex IIB services that has blurred the distinction between the award of contracts fully subject to the procurement directives, and those which are not.
Article 21 of directive 2004/18 provides that contracts which have their object services listed in Annex IIB shall be subject solely to article 23 (technical specifications) and article 55 (publication of a contract award notice). This means that the specific procedural obligations set out in the directive in relation to the type of procedure to be utilised, minimum timescales, use of selection and award criteria etc, do not apply to the award of Annex IIB services. However, following the Telaustria case (case C-324/98) which held that the principle of transparency “consists in ensuring, for the benefit of any potential tenderer, a degree of advertising sufficient to enable the services market to be opened up to competition and the impartiality of the procedures to be reviewed”, a debate was triggered as to the extent to which general EU law principles could be relied upon to impose similar procedural obligations on Annex IIB service contracts to those contained in the directive.
In the Contse case (case C-234/03), the Court of Justice of the European Union (CJEU) concluded that general EU law principles of non-discrimination and proportionality precluded a contracting authority in awarding an Annex IIB service contract from laying down admission and award criteria which favoured national service providers and which were not justified by imperative requirements in the general interest or suitable for attaining the objective pursued or went beyond what was necessary to attain it. Interestingly, the CJEU referred to the requirement for the evaluation criteria to be linked to the objective of the contract and that while contracting authorities have discretion in choosing the elements and the weightings of those elements for awarding the contract, they must enable an evaluation of the most economically advantageous tender (see paragraphs 68-71). While the judgment in the case was unsurprising, the language used by the CJEU appeared to indicate that general principles of EU law could be relied upon to impose obligations similar to those contained in the directive in relation to the choice of award criteria.
In two subsequent cases, the CJEU dismissed two sets of proceedings against Ireland for failure to advertise two Annex IIB service contracts on the basis that in one case (case C-507/03, Commission v Ireland), the Commission had failed to establish that the contract in question had a cross-border interest and in the other case (case C-532/03, Commission v Ireland), the Commission had failed to establish that there had been an award of a public contract. Notably, Advocate General Stix-Hackl in both cases considered that a failure to advertise the contracts had breached the principle of transparency.
In August 2006, the European Commission published an Interpretative Communication on the Community law applicable to contract awards not or not fully subject to the provisions of the public procurement directives (2006/ C179/02). In the Communication, the Commission noted that it was the responsibility of each contracting entity to decide whether an intended contract award “might potentially be of interest to economic operators located in other members states”. Contracts with relevance to the internal market must be awarded in conformity with basic standards derived from Community law. These basic standards would be achieved by ensuring:
• that there was adequate advertising;
• that the content of the advertising provided sufficient information for a non-national undertaking to make a decision on whether to participate;
• a fair and impartial award procedure was conducted ie, through a non-discriminatory description of the subject matter of the contract, equal access, mutual recognition, appropriate time limits and a transparent and objective approach to the procedure;
• that short listing of candidates was conducted in a transparent and non-discriminatory manner; and
• that the contract award decision complied with the procedural rules laid down at the outset.
The Communication therefore appeared to indicate that the distinction between the award of Annex IIB services and other contracts fully subject to the procurement directives was less pronounced than may have initially been considered.
Two recent cases have signalled a retreat from the thesis that general EU law principles could be relied upon to impose obligations similar to those contained in the procurement directives on Annex IIB service awards. In November 2010, the CJEU gave judgment in case C-226/09 Commission v Ireland, which involved the award of an Annex IIB service contract. In that case, the contracting authority had published a notice in the Official Journal of the European Union advertising a contract for the provision of interpretation and translation services. The contracting authority had set out the award criteria in that contract notice but had specifically stated that the criteria were not listed in descending order of importance. On the date of submission of tenders, the contracting authority circulated a suggested evaluation matrix to the evaluation committee, which allocated a weighting to each of the criteria. Following an initial tender examination, the evaluation committee decided to alter the weightings. The European Commission initiated infringement proceedings against Ireland alleging that it had infringed the principles of equal treatment and transparency by not attributing relative weightings to the award criteria until after the closing date for submission of tenders and by altering the relative weightings of the award criteria after the initial review of tenders.
In relation to the failure to attribute relative weightings to the award criteria, the CJEU held that the scope of the principles of equal treatment and transparency could not be extended to impose a specific obligation to publish relative weightings in advance. By publishing the award criteria, the CJEU considered that the contracting authority had provided more information than was required by the directive (in relation to Annex IIB service contracts) and that the criteria were not formulated in a way that could be held to be a difference in treatment to the detriment of undertakings located in other member states. In relation to the alteration of the relative weighting, the court held that by attributing a zero weighting to one of the award criterion published in the contract notice, the contracting authority had effectively altered the award criteria. This amounted to a breach of the principles of equal treatment and transparency.
The comments of Advocate General Mengozzi in his opinion in June 2010 are notable. He commented that: “it is necessary to steer clear of the automatic assumption that the principles in question have the same scope in relation to both contracts subject to the directive and contracts not subject to the directive (or, as in this instance, subject to the directive in part only). If, in fact, the transparency required in relation to contracts excluded from the scope of the directive were regarded as necessarily the same as that required in relation to contracts coming within the ambit of the directive, this would open the way for the directive to be covertly applied to a whole range of circumstances to which the legislature explicitly considered that it should not apply. To some degree, in fact, the purpose of the whole directive is to put into effect the fundamental principles of the treaty: if the procedure under the directive were the only way of achieving those principles in relation to public contracts, it would have to be applied to all cases with a cross-border interest.”
This sentiment was repeated in the recent judgment of the CJEU in Strong Seguranca (case C-95/10). The case concerned a preliminary reference from a Spanish court in relation to whether a contracting authority could refuse to permit a tenderer to rely on the technical and financial capacity of its parent company despite proffering a parent company guarantee. Article 47(2) of directive 2004/18 permits tenderers to rely on the capacities of other entities provided they can demonstrate that those resources are at their disposal. The European Commission intervened in the case and contended that the general principle of “effective competition” specific to Directive 2004/18 could create an obligation similar to that contained in article 47(2). However, the court disagreed and concluded that while effective competition was an essential objective of the directive, that objective could not lead to an interpretation that was contrary to the clear terms of the directive. As article 47(2) was not among the provisions which contracting authorities were obliged to apply when awarding Annex IIB service contracts, a general principle of “effective competition” could not be relied upon to impose that obligation on Annex IIB service contracts. Moreover, the principles of equal treatment and transparency did not impose an obligation similar to that contained in article 47(2). It was nevertheless open to member states and contracting authorities to provide for such an obligation in their national legislation or in tender documentation.
The recent comments from the CJEU reiterating the distinction between Annex IIA and IIB services is welcome. However, the distinction may in the future become academic given that the Commission has signalled in its recent green paper on the ‘Modernisation of EU Public Procurement Policy – Towards a More Efficient Procurement Market’ that the “most consequent solution” in relation to the difficulties and possible errors arising from the application of two different regimes to Annex IIA and IIB services would be to eliminate the distinction altogether. There may be merit in such a proposal given that contracting authorities awarding Annex IIB service contracts must engage in each instance in an evaluation of whether the contract being awarded has cross-border interest and the extent to which general principles of EU law impose procedural obligations. Moreover, there are examples in national case law where domestic courts have held that contracting authorities have made incorrect decisions in failing to impose certain procedural obligations (eg, Federal Security Services v Chief Constable for the Police Service of Northern Ireland (2009) NICh 3 where the High Court of Northern Ireland held that a failure to apply a standstill period constituted a breach of the principles of transparency, effectiveness of remedies and equality of treatment). The elimination of the distinction may therefore afford greater legal certainty for contracting authorities in the long term.
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