Article 20 of Directive 2014/24 provides that “Member States may reserve the right to participate in public procurement procedures to sheltered workshops and economic operators whose main aim is the social and professional integration of disabled or disadvantaged persons or may provide for such contracts to be performed in the context of sheltered employment programmes, provided that at least 30 % of the employees of those workshops, economic operators or programmes are disabled or disadvantaged workers”. According to the directive, this is justified by the fact that the workshops and operators concerned might not be able to obtain contracts under normal conditions of competition.
That provision raises the question of whether Member States are authorised to narrow the pool of operators eligible for the granting of such reserved contracts, by means of defining conditions beyond those already laid down in Article 20.
This issue was addressed by the Court of Justice of the European Union in the Spanish case C-598/19, Conacee. According to Spanish law, certain public contracts are reserved for specific operators, including “social initiative special employment centres”. The criteria for an operator to qualify as being such a centre include the following: more than 50% of its shares must be held by non-profit or social undertakings; its profits must be reinvested for the creation of employment opportunities for persons with disabilities; it must be staffed by as many disabled workers as the nature of the production process allows and, in any case, at least 70% of the employees must be disabled.
Conacee is a non-profit-making association, the members of which are federations and associations of special employment centres. It contested the Spanish legislation before national courts, on the grounds that this legislation excludes employment centres which satisfy the conditions laid down in Article 20 of Directive 2014/24, but do not satisfy the stricter national criteria, from the reserved procurement procedures. This led a Spanish High Court to refer a question to the Court of Justice on the interpretation of Article 20 of Directive 2014/24.
In its judgment of 6 October 2021, the Court of Justice ruled that Member States may indeed impose additional criteria beyond those laid down by Article 20 of Directive 2014/24, thereby excluding from reserved public procurement procedures certain economic operators which satisfy the criteria laid down in that provision. The Court stressed in particular that Article 20 pursues a social policy objective relating to employment and that Member States have a wide margin of discretion in defining the measures likely to achieve a given social and employment policy objective.
However, the Court also underlined that where a Member State makes use of the possibility to define additional criteria beyond those laid down in Article 20 of Directive 2014/24, it must respect the fundamental rules of the TFEU, in particular those relating to the free movement of goods, the freedom of establishment and the freedom to provide services, as well as the principles deriving from them, such as the principles of equal treatment and proportionality.
In this respect, the Court of Justice ruled, in substance, that the referring court should determine whether the social initiative employment centres satisfying all the criteria laid down in the Spanish legislation actually find themselves in a different situation, as regards the objective of Article 20 of Directive 2021/24, to other centres which also employ persons with disabilities but which do not satisfy all of these criteria and, therefore, are not eligible for the granting of reserved contracts. Moreover, the referring court should verify that the additional conditions imposed by Spanish law do not go beyond what is necessary to ensure the main purpose of the social initiative employment centres, i.e. the integration of disabled or disadvantaged persons, as required by Article 20 of Directive 2014/24.
This case law demonstrates that contracting authorities should carefully verify whether, in the context of reserved contracts, the exclusion of certain types of operators can be justified, pursuant to national law, in the light of the social policy objective of Article 20 of Directive 2014/24 and the general principles of EU law. Conversely, this provides a potential argument for tenderers seeking to challenge their exclusion from reserved procurement procedures according to national law. However, the “wide margin of discretion” enjoyed by the Member States should be taken into account in this respect.
Please contact Peter Teerlinck or Raluca Gherghinaru for further information about this case and/or for general legal advice relating to public procurement law.