Facts
The facts which led to the judgement of 3 October 2019 in case C-267/18 are as follows:
A contracting authority (hereafter “contracting authority n° 1”) terminated a contract early on the ground that the consortium (hereafter “consortium n° 1”) had used a subcontractor without contracting authority n° 1’s prior authorisation. Using the on-line platform known as the ‘Electronic public procurement system’ (hereafter ‘EPPS platform’), the contracting authority n° 1 lodged a report stating, firstly, that the contract had been terminated early on account of misconduct by consortium n° 1 and, secondly, that that early termination resulted in losses for the contracting authority amounting to approximately EUR 521,000.
Within the context of another public procurement procedure, a consortium (hereafter “consortium n° 2”) submitted a tender. One of the members of this consortium (Delta) was also the lead contractor of consortium n°1.
After having found the report on the EPPS Platform, contracting authority n° 2 requested clarification from contracting authority n° 1 and from Delta.
In the light of the replies obtained, contracting authority n° 2 concluded that Delta had failed to show that the report had been suspended or annulled. Furthermore, since consortium n° 2 had declared, in the European Single Procurement Document, that it did not fall within the scope of the exclusion grounds for grave professional misconduct and that it was not in a situation in which a previous public procurement contract had been terminated early, or damages or other comparable penalties had been imposed in connection with contract n° 1, contracting authority n° 2 excluded consortium n° 2’s tender.
Preliminary ruling
The referring court asked the Court of Justice, in essence, whether Article 57(4)(g) of Directive 2014/24 must be interpreted as meaning that subcontracting by an economic operator of part of the works under a previous public contract, decided upon without the contracting authority’s authorisation and which led to the early termination of that contract, constitutes a significant or persistent deficiency shown in the performance of a substantive requirement under that public contract, within the meaning of that provision, and justifies excluding that economic operator from participation in a subsequent public procurement procedure.
Firstly, the Court reiterated that the optional ground for exclusion stated in Article 57(4)(g) of Directive 2014/24, read in conjunction with recital 101 of that directive, is based on an essential element of the relationship between the successful tenderer and the contracting authority, namely the reliability of the successful tenderer, on which the contracting authority’s trust is founded.
The establishment of a relationship of trust between the contracting authority and the successful tenderer assumes, therefore, that that contracting authority is not automatically bound by an assessment conducted, in the context of an earlier public procurement procedure, by another contracting authority so that, in particular, it may be in a position to pay particular attention to the principle of proportionality when applying the optional grounds for exclusion. That principle requires the contracting authority to examine and assess the facts itself.
According to the Court, it follows that a contracting authority cannot automatically infer from the decision of another contracting authority to terminate a prior public contract early on the ground that the successful tenderer subcontracted part of the works without its prior authorisation, that significant or persistent deficiencies, within the meaning of Article 57(4)(g) of Directive 2014/24, on the part of the successful tenderer, have been ascertained with regard to the performance of a substantive requirement under that public contract.
Furthermore, the Court held that it is for contracting authority n° 2 to assess whether or not, in failing to inform it of the early termination of contract n° 1, consortium n° 2 displayed conduct as stated in Article 57(4)(h) of Directive 2014/24. That provision encompasses both active conduct such as falsification as well as omission, provided that the communication of false information or the concealment of true information is likely to have a bearing on the decision adopted by the contracting authority.
Lastly, the Court stated that if contracting authority n° 2 concludes that the conditions laid down in Article 57(4)(g) or (h) of Directive 2014/24 are fulfilled, it must, in order to meet the requirements of Article 57(6) of that directive, read in conjunction with recital 102 of that same directive, allow the economic operator in question to have the opportunity to provide evidence to the effect that the corrective measures it has taken are sufficient to prevent the irregularity that gave rise to the early termination of the previous public contract from being repeated and are therefore capable of demonstrating the operator’s reliability despite the existence of a relevant optional ground for exclusion.
Please contact Peter Teerlinck for further information about this case and/or for general advice on public procurement.