The curious case of the open envelope inside the envelope - a propos GC's Gfi PSF v Commission Judgment (T-200/16)

The General Court of the Court of Justice of the European Union (GC) has issued Judgment in case Gfi PSF v Commission, T-200/16, EU:T:2017:294 (available in French only). This is a curious case about the physical formalities imposed in a procurement procedure carried out by the European Commission (Publications Office), which required a set of envelopes to be enclosed in multiple layers so as to avoid their tampering prior to the official opening of bids. It is also interesting because it raises some issues around the difficulties in the fact finding of processes dominated by formal documentary evidence.

I am also afraid that the factual circumstances of the case are probably rather common in practice (they remind me of the submission of a tender for a multi-million concession contract that had to be submitted in suitcases locked with padlocks in Mexico some 10 years ago), and I guess that the case also reflects some of the advantages that could be gained by a proper migration to e-procurement (or at least to electronic submission of tenders).

In the case at hand, tenderers had to prepare their tenders in two separate envelopes. An envelope (a) containing their technical offer and an envelope (b) containing their financial offer. Both envelopes then had to be enclosed in a third envelope (c) marked as "Tender - not to be opened by the internal mail service" and placed in a fourth envelop (d), which had to be sent by registered mail or courier service, or be submitted in the offices of the European Commission as indicated in the letter of invitation to tender.

Gfi PSF prepared its tender in accordance with these instructions and sent it to the European Commission via UPS. However, t is worth noting that, inside envelope (c), Gfi PSF did not only include envelopes (a) and (b), but also several binders including additional information. The tender was submitted in time and there is an electronic receipt issued by UPS with a signature from a Commission official. However, an acknowledgement of receipt was also prepared by the mail service of the European Commission indicating that the offer had been received, but not in good state, and also including the following:

two headings, relating respectively to the "first container" and the "second container". In the section on the first container, the pre-printed indications "open" and "damaged" have both been checked. In the section on the second container, the same information was also checked. This last heading also contains the words "did not include the words "Do not open by the mail office"" and "there were no double envelopes", which were not checked (T-200/16, para 7, own translation from French).

After proceeding to the formal opening of the tenders, Gfi PSF's was rejected on the basis that the tender was already open when the contracting authority received it, which is a cause for rejection under Art 111(4)(b) of the Financial Regulation. After Gfi PSF challenged this decision and asked for additional details, the European Commission wrote a letter indicating that

even if the electronic receipt [issued by UPS] did not contain any remarks as to the status of the consignment containing the applicant's tender, this was because of the technical constraints of the terminal used by the courier acting for UPS. The [Commission's] note of receipt acknowledging the damage of the consignment was signed jointly by the same courier and a representative of the [Commission]. Copies of this note and a photograph of the said item were annexed to the" Commission's letter (T-200/16, para 13, own translation from French).

After inspecting the envelopes still in the custody of the Commission, counsel for Gfi PSF challenged the time, the content, and the probationary value of this acknowledgement of receipt issued by the Commission. It also sought to prove that the document had been issued unilaterally by the Commission because it was not clear that UPS had signed the note (which is however later proven wrong by the GC, see paras 53-54), and submitted that in any case the state of the offer resulted from improper handling by the Commission's mail services, rather than as a result of defective compliance with the physical requirements for the submission of the offer by Gfi PSF at the time of its expedition.

The Commission opposed this interpretation of the documents (in particular the lack of signature by a UPS representative) and the physical evidence (ie damaged envelopes), and provided additional evidence downloaded from UPS' tracking webpage, where the following remarks appeared from entries logged in the weeks following the delivery of the package to the Commission:

"[t] he goods are lacking. UPS will notify the additional details to the consignor / goods entrusted to the consignee "; and ... " [t]he damage to the contents of the packages has been reported [;] We will notify the consignor / We are investigating the claim for damages" (T-200/16, para 18, own translation from French).

Overall, then, the dispute concerns the factual circumstances of the delivery, the documentation of its receipt, as well as the ensuing investigation of the Commission's claim that the package was delivered by UPS. It is hard to imagine the physical state of the envelopes (it would have helped to have the pictures attached to the GC's Judgment), but it is certainly plausible that the envelopes where stacked in such a way that opening envelop (d) also ripped envelop (c) (particularly if they were of similar sizes). Be it as it may, the reasoning of the GC is interesting beyond the specific issues leading to the discrepancy in the state of the offer at the time of submission and of the formal opening of the tenders, which exonerates the Commission from any responsibility.

In the GC's view

... the acknowledgement of receipt is of significant probative value, since its content is attested by the signatures, on the one hand, of a person subject to the contracting authority and, on the other hand, by a third party not directly involved in the procurement tender, but rather acting indirectly on behalf of the tenderer whose tender is considered irregular by the contracting authority. However, the acknowledgement of receipt contains indications that both the first and second containers were both open and damaged, and that the second container displayed the words "Not to be open by the mail office" and contained a double envelope (T-200/16, paras 57-58, own translation from French).

This would create a difficulty in establishing the moment in which envelop (c) had been opened despite including the prescribed label against it. However, given the very peculiar circumstances of the case, where envelop (c) contained not only envelops (a) and (b)--which may not have been compromised--but also the binders including additional information, the GC found a way out by adopting a functional approach to the rules in Art 111(4)(b) Financial Regulation from the perspective of the integrity of the process. In that regard, it stressed that the submission instructions and Art 111(4)(b) aimed to ensure the confidentiality of all tenders until they are simultaneously open. From that perspective, the factual circumstances of the case led to the assessment that

On the one hand, the applicant does not claim that the binders were themselves placed in a closed envelope, the binders being visible in the photograph to which it refers, annexed to the letter of [the Commission sent during the debriefing and complaints procedure]. Furthermore, the fact that the binders were placed by the applicant in an envelope on which it indicated that it had affixed the words 'invitation to tender - not to be opened by the courier' [ie envelop (c)], which is established by the acknowledgment of receipt, shows that in the applicants' own view, the binders contained documents constituting its tender. Consequently, and due to the fact that it must be held that the outer envelope and the intermediate envelope of the item containing the applicant's tender had been presented open on the premises of the [European Commission], it must be found that certain data forming part of the applicant's offer were directly accessible. Consequently, it appears that the applicant's tender was submitted in such a way that its confidentiality, as required by Article 111 (1) of the Financial Regulation, was not guaranteed, as it was "already open" within the meaning of paragraph 4 (b) of that Article. Consequently, this offer was regularly rejected (T-200/16, paras 65-66, own translation from French).

This is important because the GC has no interest in (and probably no possibility to) establishing the way in which envelope (c) came to be open despite it being labelled as not to be open by the mail service. This fits with the burden of proof derived from a claim for damages based on Art 340 TFEU, which was the relevant underlying legal basis for this case. However, this leaves important questions unanswered, such as what would have happened if the binders were sealed in envelops, so that the opening of envelope (c) would not have made any of the contents of the offer directly accessible. In that case, the rejection of the offer on the basis that it had already been opened would be very problematic and would probably have required further investigation of how this came to be.

On balance, it seems that the GC places the burden of ensuring that the offers remain confidential on the tenderers, at least implicitly, by supporting a broad approach to the rejection of offers which confidentiality may have been compromised. As a matter of general trend, this seems preferable to the opposite. However, this also shows the unavoidable limitations of paper-based procurement procedures. Had the Commission been running an e-procurement (or at least electronic submission) process, this situation could have been easily avoided. It seems that, once more, the adaptation of procurement (and administrative activity, more generally) to new technologies cannot come quickly enough.