Is your procurement process going to be featured in Court?

Friday, June 21st, 2013

Communicaid Group Ltd v European Commission [2013] EUECJ T-4/13

Is your procurement process going to be featured in Court?  Appeals against contract awards continue unabated. This specifically relates to public sector procurements. A recent case heard in the Court of Justice of the European Communities, Case T-4/13 R was Communicaid Group Ltd v European Commission. The Application was for suspension of operation of decisions of the Commission rejecting the tenders submitted by the applicant in respect of several lots in a call for tenders relating to framework contracts for the provision of language training to staff of the institutions, bodies and agencies of the European Union in Brussels (Belgium) and, further, for an order prohibiting the Commission from entering into contracts for the lots at issue with the successful tenderer.

The contract at issue was subject to the restricted procedure and was to be awarded on the basis of MEAT. The applicant tendered for 8 lots and was successful on only one lot. CLL-Allingua were awarded the other lots. One of the concerns expressed by the applicant was that a former Commission member of staff – who has been employed in the human resources unit in the months prior to publication of the contract notice at issue and who had sat on evaluation committees for similar award procedures concerning contracts for language services to the institutions of the European Union in Luxembourg – was now employed by CLL-Allingua, and had played a role in the preparation of the latter’s tenders.

The applicant also called into question the economic and financial capacity of CCL-Allingua to perform the contract at issue. Since the successful candidate had regularly reported considerable financial losses, it did not satisfy the initial requirements of the contract notice.

The judgement (at para 20) includes a point that the applicant fears that it will suffer serious and irreparable damage to its reputation. The framework contracts are considered to be the largest and most prestigious contracts of that type at the European level.

The applicant “has indeed submitted a set of figures intended to demonstrate the scale of the fall in its turnover and its loss of business due to the loss of the contract at issue. However, it failed to provide, in the application for interim measures, full information on the structure of its undertaking. Thus, it omitted to clarify the implications, for its financial situation, of the fact, emphasised by the Commission and not challenged by the applicant, that it employed almost exclusively free-lance language trainers, and not salaried staff on contracts of indefinite duration. Such a structure appears, prima facia, to enable the applicant to adapt to a decline in its commissions without incurring substantial fixed costs, by simply dispensing with the services of free-lance staff during periods of reduced activity.”

In the judgement (at para 40) it says “In so far as the applicant also pleads damage to its reputation, suffice it to note that participation in a public tendering procedure, which is by nature highly competitive, involves risks for all the participants, and the elimination of a tenderer, under the tender rules, is not in itself in any way prejudicial.”

The judge had more to say (para 47) about the allegation of an infringement of the principles of transparency, non-discrimination and equal treatment. This is in regard to the alleged assistance of a Commission member of staff who, as an active member of the evaluation committee had exercised a decisive influence on the selection of that tenderer. The judgement states, “However, the applicant’s assertions in this context are considerably more vague, in that the applicant does no more than claim that the former staff member in question was employed in the Commission’s human resources unit prior to the publication of the contract notice at issue.

The application for interim measures was dismissed. It is an informative judgement, of interest to public sector procurement specialists. It reinforces the potential for challenges to contract awards and the need for robust procurement processes. Is your procurement process going to be featured in Court?  Dealing with the consequences of an appeal is a time consuming task, costly and potentially damaging to an organisation’s reputation.

So, how do you ensure your procurement process is NOT going to be featured in Court?   We, Brian Farrington Ltd, have a proven track record ensuring EU Procurement-compliance and delivery of commercially robust outcomes for ‘complex’ procurements – Open, Restricted, Negotiated and Competitive Dialogue, Frameworks, Dynamic Purchasing Systems and managing Challenges.

For advice from business case, to writing an OJEU contract notice through to evaluation models and tender detail (including contracts and KPIs), and beyond to contract management, please contact 01744 20698