Two recent cases on transparency & access to documents in EU Institutional procurement (II) (T-164/15)


Two recent General Court judgments have addressed different aspects of transparency duties and access to documents requirements in EU Institutional procurement [for discussion, see A Sanchez-Graells, 'Transparency in Procurement by the EU Institutions' (2017)]. A previous post discussed the Judgment of 14 December 2017 in Evropaïki Dynamiki v Parliament (T-136/15, EU:T:2017:915), which concerned access to procurement documents under Regulation 1049/2001. This post discusses the second Judgment, also of 14 December 2017, and also involving European Dynamics Luxembourg and Evropaïki Dynamiki v Parliament (T-164/15, EU:T:2017:906, not available in English), which addresses issues concerning the duty to provide reasons under the applicable (2012) version of the EU Financial Regulation

A Kafka-esque case concerning the justification of the Substitution or (re)Classification of tenders within cascade mechanisms?

The dispute in European Dynamics Luxembourg and Evropaïki Dynamiki v Parliament (T-164/15, EU:T:2017:906) concerned one more instance of classification of the tenderers within a cascade mechanism for the purposes of the award of a framework contract divided into several lots. The case is interesting because it concerns an instance of substitution, rather than (strict) reclassification, of one the economic operators included in the framework.

In the case at hand, the Parliament tendered a framework agreement divided into lots for the provision of several types of IT services. The framework contract for each lot was to be concluded with the three economic operators offering the most advantageous tenders, which were to be ranked in a cascade mechanism. European Dynamics' tender was initially rejected (or rather, not retained) for not being amongst the three strongest submissions. Upon being notified of the award decision, European Dynamics required additional details and the Parliament sent debriefing materials justifying the relative advantages of the retained three offers by comparison to European Dynamics'. After European Dynamics received this information, 'the Parliament informed all the tenderers that one of the participants had detected an error in the parametric formula established in the tender documentation for the calculation of the overall price of the tenders. However, [the Parliament] clarified that, after verification, this error was purely material and had no impact on the ranking of the tenders' (T-164/15, para 9, own translation from French). However, this issue does not seem to have much relevance in the analysis by the GC.

After that initial debriefing exchange, including the clarification on the applicable formula for the assessment of the overall price, European Dynamics raised with the Parliament an objection to the cascade classification for the relevant lot on the basis that the economic operator ranked first had also been engaged (as part of a consortium) for the provision of services of a different lot, and that multiple engagement in several lots was not allowed by the tender documentation. The Parliament eventually decided to exclude that economic operator from the relevant lot, and to add European Dynamics to the framework agreement, assigning it the third position in the cascade mechanism.

At this stage, European Dynamics informed the Parliament that it interpreted the decision to (re)classify them as third in the cascade mechanism as the simple result of the exclusion of the economic operator initially ranked first, and that they therefore assumed that 'thus, the awarding phase was conducted on the basis of the initial evaluation, the points awarded and the justifications remaining the same as those' covered in the previous debriefing letter (T-164/15, para 12, own translation from French). In view of this interpretation, European Dynamics asked for additional debriefing of any new information concerning the exclusion of the tenderer previously ranked as first. 'Parliament confirmed ... that the exclusion of the tenderer whose tender had initially been ranked in the first position had no impact on the evaluation of the other tenders and that, consequently, the information already provided to the applicants ... remained relevant and included all the information required' (T-164/15, para 13, own translation from French).

European Dynamics challenged the Parliament's decision to (re)classify their tender as third within the cascade mechanism, mainly on the basis that the duty to provide reasons incumbent upon Parliament was not properly discharged with the simple explanation that their tender would have substituted the one initially first-ranked upon its exclusion. Given that the GC decided to quash that decision, it is interesting to assess the details of the shortcomings found by the GC in the course of action taken by Parliament.

It is also worth noting that the GC starts its reasoning by reiterating the general principles and limits of the duty to provide reasons. It is framed by reference to the 2012 version of the EU Financial Regulation (see T-164/15, paras 25-28), but the general framework is common to that under the 2014 Public Procurement Package. It is also important to stress that the GC frames the analysis of the dispute on the premise that European Dynamics' request for additional details following its reclassification as third in the cascade as a result of the substitution of the excluded tender, constituted a fresh request for debriefing details that engaged the transparency obligations of the Parliament in full (paras 29-34). In my view, while this is relevant regarding the disclosure of information concerning the financial evaluation (which seems to have changed after the exclusion of the initially highest ranked tender due to the relative comparison of the overall price of the tenders, as mentioned below), this is not relevant concerning the disclosure of information related to the technical evaluation, which is the main issue discussed in this post. However, the reader may want to keep this in mind when reading the case as a whole.

Need for detail--still short of full disclosure of the evaluation report?

At this stage, it may be useful to describe the debriefing that had been initially carried out by Parliament--when European Dynamics had had its offer rejected--which was as follows: 'Parliament's [initial debriefing] letter ... specified the names of the three tenderers initially selected. It also included a table showing the marks obtained by those tenders' and the applicants' tenders in the technical evaluation, extracts from the evaluation committee's comments on the strengths and weaknesses identified in those four tenders in the context of their technical evaluation, a table giving the scores obtained by the four tenders in the financial evaluation, as well as a table giving the overall marks awarded to the same four tenders' (T-164/15, para 39, own translation from French). European Dynamics challenged this as insufficient because the debriefing did not offer specific comments for each of the technical criteria, but solely in relation to those criteria related to the relative strengths and weaknesses.

In finding fault with the level of detail provided by the Parliament in that initial debriefing, the GC considered that '... even if the marks awarded by the Parliament offered the applicants the opportunity to compare, under each technical award criterion, the points which had been awarded to their tender with those obtained by the tenders ranked first and second in the cascade, they did not allow them to know the reasons why those marks had been attributed to those offers. In that regard ... a cross-reading of the comments relating to the three tenders [initially] retained in the cascade, combined with the figures, did not make it possible to make up for the lack of any information concerning the reasons for the attribution of certain marks. Indeed, in addition to the general assessment of the quality (good, very good or satisfactory) of the offers, each comment related to a specific technical award criterion. In addition, some of these comments were of a very general nature' (T-164/15, paras 44-45, own translation from French, emphasis added).

This comes to establish an extremely high debriefing burden, and one that should be criticised for the excessive transparency it can create. Moreover, it is difficult to find a clear boundary between the insufficiency of the overall comparison of tenders that was disclosed by the Parliament in this case, and the more general principles that derive from the ECJ case law. Indeed, as the GC itself reiterated in this occasion (para 28), 'it is apparent from the case-law that the [contracting authority] cannot be required to communicate to an unsuccessful tenderer, first, in addition to the reasons for rejecting its tender, a detailed summary of how each detail of its tender was taken into account when the tender was evaluated and, second, in the context of notification of the characteristics and relative advantages of the successful tender, a detailed comparative analysis of the successful tender and of the unsuccessful tender ... Similarly, the contracting authority is not under an obligation to provide an unsuccessful tenderer, upon written request from it, with a full copy of the evaluation report' (see Evropaïki Dynamiki v Commission, C‑629/11 P, EU:C:2012:617, paras 21-22).

Disappointingly, the GC did not seem to give much weight to this general principle, when it established that

... the corollary of the Parliament's margin of appreciation in the area of public procurement is a duty to state the factual and legal grounds on which it based its assessment. It is only in the light of these elements that the applicant is really able to understand the reasons for which the marks were awarded ... In that regard, the fact ... that the contracting authority cannot be required to carry out a detailed comparative analysis of the tenders retained, and that it is not required to disclose the evaluation report in full, cannot lead to the comments sent to the applicants not showing clearly and unequivocally the reasoning of the institution, so as to enable them to know the justifications for the classification of their offer in the third position of the cascade mechanism ... Indeed, only such motivation enables them to assert their rights and allows the Tribunal to exercise its control (T-164/15, para 51, references omitted, own translation from French and emphasis added).

So, in the end, the GC is forcing a round peg into a square hole, and creates a large area of uncertainty concerning the intensity of the debriefing duties for contracting authorities subjected to EU Institutional procurement rules (and more generally). I find this quite problematic, as it continues to put pressure on contracting authorities to engage in excessive disclosure, and it creates significant uncertainty as to how to operationalise fuzzy requirements, in particular if the threshold of disclosure changes with the specific circumstances of the case, as discussed below.

Moving goal posts in dynamic (re)classification or substitution decisions

Indeed, in addition to the issue of the level of detail just discussed, the GC created additional uncertainty by subsequently engaging in a reasoning that can only be described as moving the goal posts in situations where the exclusion of the highest-ranked tender compresses the differences between the tenders eventually retained in the framework agreement--or, even further, in situations where the overall score obtained by the tenderers does not show significant spread of marks. The GC seems to hang its reasoning on the presumption that the closer the final scores, the higher the risk of mis-evaluation and/or likelihood of successful litigation. This does not make sense, in particular where the overall score is constructed by clearly separate sets of (technical and financial) evaluation exercises. Moreover, it could create a perverse incentive for evaluation teams to artificially create a larger spread of marks in order to reduce litigation risk, which would be clearly undesirable.

As I will explain in a moment, the establishment of higher standards of disclosure where the overall scoring of the tenders reflects smaller (overall) differences between the tenders can only create problems, in particular where the initial evaluation and ranking is later used for decisions on reclassification or substitution of tenders. Given that technical and financial evaluation are carried independently, imposing a higher or lower duty of motivation of the technical evaluation dependent upon the results of the financial evaluation is very problematic. By not acknowledging this, and simply assuming that there will always be a wealth of information on qualitative comments justifying specific technical assessments that the contracting authority can decide to disclose or not depending on the outcome of the financial and overall scoring of the tenders is both impractical and can result in excessive formalism in the completion of technical evaluation reports.

Returning to the case, and in simple terms, the situation that the GC considered problematic results from the fact that the tender was evaluated through technical criteria weighting 70%, and financial criteria weighting 30% of the total points (para 3)--with the financial aspects of the tender evaluated through the parametric formula mentioned above, which carried out a relative analysis based on maximum points awarded to the lowest price (para 5). In that regard, it seems clear that (globally), technical criteria were more important than financial criteria, and that there was a relative comparison of financial aspects that depended on the values of the tenders received (NB: this is discussed in detail by the GC in a separate ground of appeal, which I will not comment on this occasion--see paras 54-66).

On the basis of those award criteria, the initial technical scoring awarded to the (eventually excluded) best tender was 54.39 out of 70, and this was more than 4 points higher than European Dynamics' scoring, and more than 3 points higher than the score of the second-ranked tender (para 47). Implicitly, this placed all tenders eventually retained in the framework (including European Dynamics') within a bracket of approximately 1 technical point (ie, somewhere between 49 and 51 points). This narrow distribution of technical scores necessarily had an impact on the final overall marks of the tenders, which were also rather close.

As the GC stressed, 

the decision to classify [European Dynamics'] tender in third place came at the end of the final evaluation, that is to say after the evaluation of the price-quality ratio of the tenders. However, the difference between the overall scores attributed to the successful tenders was low or very low. In that regard, it should be noted that the exclusion of the tenderer whose tender had initially been ranked first had a minor impact on the financial evaluation of the tenders, which was reflected on the overall scoring of the offers. In fact, in the light of the rectified overall marks attributed to the three tenders finally accepted as a result of that assessment ... it must be stressed that the tender which was finally classified in the first place was awarded an overall mark of 79.11 points, the tender which was finally ranked second obtained an overall score of 77.67 points, and [European Dynamics'] offer was given the overall score of 77.64 points. It follows from those overall scores ... that only 0.03 points separated the tender which was finally ranked second from [European Dynamics']' (T-164/15, paras 48-49, own translation from French).

From this narrow difference in overall final scores, the GC infers that

Given the small or very small difference in score between the tenders of the three successful tenderers, [European Dynamics'] interest in obtaining a clear and comprehensible explanation as to the technical evaluation of their tender in order to verify the absence of error in the attribution of results was particularly high (sic) ... That interest was all the more important since, despite the fact that the price of the tender which was finally ranked first was higher than that of [European Dynamics'] tender, the Parliament considered that the first offer presented the best value for money and was thus economically the most advantageous. It therefore appears that the assessment of the quality of the services with regard to the qualitative award criteria has played an important role (T-164/15, para 50, references omitted, own translation from French, emphases added).

Once more, this is rather problematic. Not solely for the moving target implicit in the conditionality of the debriefing obligations upon the difference in scores obtained by the different tenderers, but also because it fails to recognise the limits set out as general principles by the ECJ (see above) and because it loses sight of the function that debriefing should serve and of the complex trade-offs between procedural guarantees and risks derived from excessive transparency at this stage. Moreover, as mentioned above, the GC seems to be less trusting of close scores than widely diverging ones, and also shows a clear bias against the evaluation of non-price criteria. While the underlying concerns may be understood from a pure judicial review perspective, they can be rather harmful and certainly go against the grain of the 2014 revision of the EU procurement rules (which reflected earlier tendencies) in its effort to discourage price-only procurement and to embed mechanisms for the assessment of quality and other relevant factors. On the whole, this sort of reasoning by the GC seems to act as a relevant deterrent for more sophisticated procurement efforts, which will necessarily carry a large (or excessive) risk of litigation, and which will be vulnerable to such risk. Whether this advances procurement practice can be doubted.

Final note

On the whole, the GC Judgment in European Dynamics Luxembourg and Evropaïki Dynamiki v Parliament (T-164/15) leaves the impression that the only way in which contracting authorities can avoid claims of insufficient motivation is by disclosing the entirety of the evaluation report--and make sure that there are extremely clear and fully-articulated rationales for each of the scores and sub-scores given to each specific element of each tender (and regardless of the ECJ case law indicating that this is not the applicable standard).

However, contracting authorities, even if willing, cannot do engage in that level of disclosure because they have positive duties to withhold certain information where its release would impede law enforcement, would be contrary to the public interest or would prejudice the legitimate commercial interests of economic operators or might distort fair competition between them (and this is common to EU Institutional procurement and to procurement covered by the 2014 Public Procurement Package). Therefore, contracting authorities find themselves in the perfect catch 22 and open to abuse by litigation-prone tenderers. This cannot be considered a satisfactory state of affairs, but the GC does not seem to be aware of this, or willing to curve this trend.

Therefore, the more cases I read on the duty to state reasons in the context of procurement debriefing, the more I am persuaded that the current strategy of relying on tenderers' justiciable transparency rights as a mechanism for the oversight of the procurement function is rather inadequate. I cannot but reiterate my conviction of the need to create some asymmetrically opaque review mechanisms that allow for proper scrutiny of procurement decisions in a way that does not jeopardise competition in the market or anyone's legitimate business and commercial interests.