Quality assurance standards and environmental management standards under Reg. 62 Public Contracts Regulations 2015

Reg.62 of the Public Contracts Regulations 2015 (PCR2015) sets out substantive and documentary requirements linked to determining compliance with quality assurance standards and environmental management standards, in terms very close to Article 62 of Directive 2014/24. Pedro's short views are available here (I guess we'll have to wait for him to catch up, so that he can draw first on some issues soon!).

Reg.62 PCR2015 establishes three main rules: (1) when imposing compliance with quality assurance and/or environmental management, contracting authorities should refer to the relevant European standards and require certificates of compliance issued by accredited bodies; (2) contracting authorities shall recognise equivalent certificates from bodies established in other Member States; and (3) where economic operators have not had the possibility to obtain the required certificates within the time limits set by the contracting authorities for reasons not attributable to the economic operator concerned, contracting authorities shall accept other evidence of equivalent compliance, provided that the economic operator proves that the proposed quality assurance and/or environmental management measures comply with the required standards.

Reg.62 PCR2015 (and, originally, art 62 dir 2014/24) fundamentally consolidate the rules in Arts 49 and 50 of Directive 2004/18, with some updates to the standards referred to and with some changes in drafting, the only of which seems relevant is that contracting authorities must now only accept other evidence of equivalent quality assurance standards and environmental management standards where the economic operator concerned has no access to such certificates, or no possibility of obtaining them within the relevant time limits for reasons that are not attributable to that economic operator. This seems to reduce the scope for the submission of equivalent certificates in some instances and could be unduly restrictive of competition. However, this effect will largely depend on the interpretation given to this ‘waiver clause’, whereby the contracting authority can reject to take into consideration alternative means of proof. 

Once more, thus, I would submit that contracting authorities are bound to follow a possibilistic approach and be flexible when it comes to determining compliance with quality assurance and environmental management requirements [see also regs.44 and 60 PCR2015]. This is particularly important when the environmental management and/or quality assurance requirements are linked to processes and certificates that would impact the economic operator beyond the scope of the contract--ie, when certification exclusively for the purposes of the contract is not possible because the systems needed affect the whole of the undertaking's activities. 

This is an issue very closely related to the acceptable award criteria under reg.67 PCR2015. Given that such provision requires many other comments, I think it is worth anticipating now my views on this frontier issue. The following remarks are based on my Public Procurement and the EU Competition Rules, 2nd edn (Oxford, Hart, 2015) 387-88.

Restrictions Derived from Award Criteria that Result in de facto Exclusion of Tenders or the Advantage of Some Tenders over Others. Even if rules on qualitative selection and non-discrimination requirements are formally complied with in a given tender, the adoption of certain award criteria could generate the same results as an infringement of those rules. That could be the case if the award criteria or their weighting favoured tenders submitted by certain operators on the basis of conditions that could not have been used for the purposes of the qualitative selection of candidates or that automatically exclude de facto a significant number of tenders (or even restrict the number of compliant tenders to one).

For instance, they could do so by requiring the implementation of quality management systems for the purposes of the specific contract that would have proven excessive or irrelevant for the purposes of assessing the general suitability of the tenderer;[1] or that exclude certain operators because they focus on requirements whose implementation would be impossible for tenderers that did not comply with these or other requirements beforehand, or whose partial implementation would not be economically viable with regard exclusively to the specific contract.[2] These sort of requirements are now potentially covered by article 67(2) of Directive 2014/24, given that it allows contracting authorities to include award criteria that do not relate ‘to an intrinsic characteristic of a product, that is to say something which forms part of the material substance thereof’ and, consequently, can focus on factors involved in the specific process of production, provision or trading or a specific process for another stage of their life cycle, ‘even where such factors do not form part of their material substance’.

In these instances, it is still important to highlight that the adoption of such award criteria could generate significant distortions or restrictions of competition—without, it must be admitted, generating a substantial potential for discrimination and, currently, with an apparent legal coverage under article 67(2) of Directive 2014/24. Therefore, in view of the requirements of the principle of competition, such a strategy should be significantly restricted and contracting authorities should guarantee that the award criteria and their weighting ensure equality of opportunity of all tenderers and, consequently, should not focus on or advantage compliance with criteria not restricted to the tender itself—ie, criteria that undertakings would be in a position to comply with or not depending on previous or general conditions unrelated (or not specifically related) to the subject-matter of the contract.[3]

Drawing the line between, on the one hand, justified award criteria related to production processes or elements related to other stages in the life cycle of the products or services and, on the other hand, excessive and unjustified requirements that de facto advantage certain competitors over others will be difficult. In my view, it should be conducted on the basis of a strict proportionality requirement aimed at preventing unjustified distortions of competition.

These issues were recently analysed (in general terms) by the CJEU in relation to requirements concerning corporate social responsibility policies and, more specifically, with a focus on requirements of compliance with ‘criteria of sustainability of purchases and socially responsible business’. These are requirements that clearly affect tenderers as a whole and are remotely related to the specific scope of the contract (where contracting authorities can, however, avail themselves from the use of social labels).[4] In that regard, and in line with what is here submitted, it is important to stress that the CJEU rejected the possibility to consider such requirements as the establishment of minimum levels of professional or technical ability and emphasised that such type of considerations are incompatible with the rules of the procurement Directives when they are unrelated or go beyond the subject matter of the contract.[5]

Consequently, in order to avoid distortions of competition (and regardless of the creation of discriminatory situations), contracting authorities must refrain from setting such type of requirements as either selection or award criteria that result in de facto exclusion of tenders or the advantage of some tenders over others. In my opinion, the reasoning of the CJEU regarding those requirements at qualitative selection phase are transferrable mutatis mutandis to their introduction as award criteria under article 67(2) of Directive 2014/24. Otherwise, the use of this new provision would further erode and damage the distinction between selection and award criteria, which the CJEU has recently emphasised and which, consequently, should be respected in the detailed application of the rules concerning award criteria.[6]

[1] However, this has been accepted as a proportionate requirement by the GC in Case T-288/11 Kieffer Omnitec v Commission [2013] pub. electr. EU:T:2013:228. For criticism, see A Sanchez Graells, GC on quality assurance standards in public procurement: A knee-jerk reaction (T-288/11) (7 May 2013) howtocrackanut.blogspot.co.uk/2013/05/gc-on-quality-assurance-standards-in.html.
[2] In similar terms, rejecting the possibility of establishing general requirements that go further than required by the object of the contract, see PA Trepte, Regulating Procurement. Understanding the Ends and Means of Public Procurement Regulation (Oxford, Oxford University Press, 2004) 197–98.
[3] For instance, if certifying compliance with a given quality standard for the product required the previous certification of the general operations of the undertaking as being compliant with a more general quality control system, and the tender documents did not require tenderers to be certified under that standard—then, giving better evaluations to certified than to non-certified products would generate a distortion of competition by de facto excluding or reducing the chances of award to non-certified undertakings (which would not be in a position to get the products certified only for the purposes of the tender). Therefore, by indirectly advantaging or requiring compliance with a condition not imposed at the qualitative selection stage, which refers to more general conditions unrelated to the specific contract, the contracting authority would be distorting competition in a way that should be declared to run contrary to the directives.
[4] Case C-368/10 Commission v Netherlands [2012] pub. electr. EU:C:2012:284 98112.
[5] ibid 106–108.
[6] Case C-641/13 P Spain v Commission [2014] pub. electr. EU:C:2014:2264.