Recent Case Law on EU Institutional Procurement under the Financial Regulation (II): Abnormally Low Tenders


Before the summer recess, the General Court adopted two interesting decisions on public procurement carried by the EU Institutions. One concerns the debarment of tenderers that have been found to breach EU procurement rules and negatively affect the financial interests of the Union (T-151/16). The other concerns the obligation to state reasons in the context of allegations that a tender is abnormally low (T-392/15). The first case was discussed in a previous post, while this blog now discusses the second case.

In its Judgment of 4 July 2017, European Dynamics Luxembourg and Others v Agence, T-392/15, EU:T:2017:462, the GC assessed once more the limits of the obligation incumbent upon contracting authorities to state reasons in the context of an assessment of an apparently abnormally low tender. The case is decided under the rules of EU Institutional Procurement (ie the Financial Regulation and Rules of Application), but its basic principles seem to me to be also of relevance for procurement covered by the 2014 Public Procurement Package and, in particular, Article 69 of Directive 2014/24/EU.

The distinctive peculiarity of the case is that the challenge concerns the retendering of lots of a previous procedure that had been partially cancelled. As a result of the cancellation of the original procedure post-evaluation and the disclosure of information in the debriefing linked to that tender, participants in the retendering had the advantage of availability of substantial pricing information concerning their competitors (which is certainly one more reason to take confidentiality of information in these processes very carefully, in particular where disclosure of information allows for a 'reverse engineering' of the prices offered by other tenderers--see the discussion in A Sanchez-Graells, 'Transparency in Procurement by the EU Institutions' (August 16, 2017). As a result of having that information, one of the tenderers challenged the award decision in the retendering on the basis that some of the values of the preferred tenders were 'excessively low' and that the contracting authority, having access to that information, was under a duty to provide explicit reasons why it did not consider the tenders received in the second run abnormally low (see paras 68-69) .

In order to decide on the dispute, the GC first recasts the existing provisions and case law on the duty to provide reasons as part of the right to good administration under Article 41 of the Charter of Fundamental Rights of the EU (paras 72-80) and stresses that 'the obligation to state reasons for an act depends on the factual and legal context in which it was adopted' which in the specific requires that 'account ... be taken of the ... regulatory framework applicable in the present case governing abnormally low tenders' (para 81). The GC then discusses such regulatory framework (paras 82-90), stressing that previous case law 'has held that the contracting authority’s obligation to check the seriousness of a tender arises where there are doubts beforehand as to its reliability, bearing in mind that the main purpose of that [investigation] is to enable a tenderer not to be excluded from the procedure without having had an opportunity to explain the terms of its tender which appears abnormally low. Thus, it is only where such doubts exist that the evaluation committee is required to request relevant information on the composition of the tender, before, if necessary, rejecting it' (para 85, references omitted). This creates a two-stage approach to the analysis, where first the authority needs to assess if there is an appearance or suspicion of abnormally low values and,only in that case, engage in the inter partes detailed investigation that will trigger the need for additional justification of its final position on the abnormality or not of the tender. In the analysis of the GC, thus, whether there is a duty to investigate in detail and the extent to which reasons need to be given depend on whether 'there is evidence which arouses a suspicion that a tender may be abnormally low' (para 89).

Elaborating on this, the GC establishes that 'the contracting authority need, in the first stage, only carry out a prima facie assessment of the abnormally low character of a tender, that its duty to state reasons is limited in scope. To require the contracting authority to set out in detail why a tender does not appear to be abnormally low does not take into account the distinction between the two stages of the examination' (para 92). Thus, in even clearer terms, 'where a contracting authority accepts a tender, it is not required to state explicitly in response to any request for a statement of reasons ... [why] the tender it accepted does not appear to it to be abnormally low. If that tender is accepted by the contracting authority, it follows implicitly, although not necessarily, that the contracting authority considers that there was no evidence that that tender was abnormally low. However, such reasons must be brought to the attention of an unsuccessful tenderer which has expressly requested them' (para 93).

In my view, this test is helpful, as it sets a clear balance of duties between the contracting authority -- a duty to assess whether there is evidence to support a suspicion of abnormality, but no duty to justify why it does not consider that this is the case in each and every single instance -- and the tenderers -- which can express their concerns about the appearance of abnormality of competing tenders and demand that the contracting authority clarifies the reasons for its disagreement, where prompted to do so. In my view, this is a useful and practical approach generally applicable to procurement, both under the rules of EU Institutional procurement and that covered by the 2014 Public Procurement Package.