What level of transparency for award/call-off decisions within framework agreements?

During several recent conversations with participants at the Global Revolution conference, and particularly with my colleague Dr Marta Andrecka and some members of the European Institutions, I have been asked repeatedly about my views on the level of transparency that should apply to award/call-off decisions within framework agreements. 

There is no doubt that full transparency is mandated regarding the conclusion of the framework agreement itself and, subject to my general concerns about excessive transparency (here), I agree that this is the existing legal situation. However, there is significant uncertainty and an ongoing practical debate regarding the level of 'intra-framework' transparency that the EU rules require (as well as the applicability of rules on award criteria to those decisions, but that is a topic for another day).

There is no rule that expressly covers this issue from the perspective of the individual rights of information of contractors/tenderers either under Article 55 of Directive 2014/24 or reg.55 of the Public Contracts Regulations 2015 (PCR2015), which only make reference to transparency/debriefing obligations related to the conclusion (or not) of the framework agreement itself, but not the subsequent awards/call-offs within the framework. This creates uncertainty as to the applicability of these (or analogous) rights to be informed in relation to intra-framework awards/call-offs [for in-depth discussion, see S Arrowsmith, The Law of Public and Utilities Procurement. Regulation in the EU and UK, 3rd edn., vol. 1 (London, Sweet & Maxwell, 2014) 1153 and ff, esp 1156-57, and 1347].

More generally, when it comes to transparency of the awards/call-offs within framework agreements, the general transparency rules are clearly limited in Art 50 Dir 2014/24, according to which "[i]n the case of framework agreements... contracting authorities shall not be bound to send a notice of the results of the procurement procedure for each contract based on that agreement. Member States may provide that contracting authorities shall group notices of the results of the procurement procedure for contracts based on the framework agreement on a quarterly basis. In that case, contracting authorities shall send the grouped notices within 30 days of the end of each quarter." 

As I criticised in relation to reg.50 PCR2015 [see here], the drafting of this clause may make it susceptible of being interpreted as fully discretionary for Member States, which could opt  (like the UK) for not imposing any sort of transparency obligation (quarterly, or otherwise) connected to the results of the procurement procedure for contracts based on the framework agreement. I argued that such an approach could be an infringement of EU law and, more specifically, the requirements of the principle of transparency in Art 18(1) Dir 2014/24.

To my surprise (I should have known, though), the uncertainty seems to be much more limited when it comes to the draft new procurement rules for the European Institutions under the foreseen 2016 Financial Regulation (proposal available here), which Art 113 [equivalent to Art 55 Dir 2014/24] expressly excludes almost all 'intra-framework' transparency when it comes to award/call-off decisions. According to that provision,
2. The contracting authority shall notify all candidates or tenderers whose requests to participate or tenders are rejected of the grounds on which the decision was taken, as well as the duration of the standstill period referred to in Article 118(2). For the award of specific contracts under a framework contract with reopening of competition, the contracting authority shall inform the tenderers of the result of the evaluation.

3. The contracting authority shall inform each tenderer who is not in a situation of exclusion, whose tender is compliant with the procurement documents and who makes a request in writing of any of the following: (a) the characteristics and relative advantages of the successful tender and the name of the tenderer to whom the contract is awarded, except in the case of a specific contract under a framework contract with reopening of competition;
(emphasis added).
This comes to determine that there is no transparency obligation whatsoever for award/call-off decisions that do not follow a 'mini-competition' and, in even in the case of such reopening of competition, the transparency obligation is limited to the evaluation (likely of their own tender), but does not seem to cover other aspects of the award/call-off decision. 

The European Court of Auditors criticised this situation in its January 2015 Opinion on the draft revised Financial Regulation (available here) in the following terms: "The proposed wording of Article 113(2)(2) and (3)(a) would not require the contracting authority, in the case of specific contracts awarded under a framework contract with reopening of competition, to notify the contractors whose tenders have been rejected of the reasons for their rejection, the relative advantages of the successful tender and the name of the tenderer to whom the contract is awarded. This exception to the rules governing transparency and the obligation to state reasons cannot be justified" (para 37, emphasis added).

In my view, this is an indication that my previous assessment regarding the lack of compatibility with EU law of the total lack of transparency of intra-framework awards is not shared by the European Commission (unless that Institution is looking to impose stricter standards to Member States' procurement than to its own and that of the rest of European Institutions). It could also be that DG BUDGET has a more process-oriented (buyer) approach to procurement regulation than DG GROWTH, which would explain the difference in willingness to (self)impose transparency obligations. However, be it as it may, I still think that this is not a desirable regulatory option and I would like to see the proposal for a new Financial Regulation amended on this point.

I would not favour full transparency of intra-framework award decisions. However, I accept that contractors included in a framework agreement (and third parties) should be given information regarding the evolution of the intra-framework, at least of a 'historical' and overall nature, so that they can have a rough idea of how the implementation of the contract is being carried out. 

Moreover, there is no clear reason why frameworks would require being less transparent than dynamic purchasing systems (which are, in the end, open frameworks), particularly because the contracting authority is in a good position to identify any instances of intra-framework collusion in which the contractors could engage on the basis of the periodical reports they may get. 

Consequently, I would favour the creation of a system of delayed and grouped (quarterly) reporting of the intra-framework award/call-off decisions, along the lines of what Art 50(3) Dir 2014/24 and reg.50(5) PCR2015 establish for dynamic purchasing systems.

GC gets it totally wrong and pushes once more for excessive price transparency in public procurement (T-667/11)

The General Court (GC) recently issued Judgment in Veloss and Attimedia v Parliament, T-667/11, EU:T:2015:5, and annulled an award decision (actually, a ranking of tenderers decision) on the basis of the European Parliament's resistance to disclose the price of the highest ranking bid to the disappointed tenderer that was ranked second. 

In the GC's view, such deliberate omission of the price information requested during the debriefing phase amounts to a breach of Art 100(2) of the applicable Financial Regulation, which established that: "The contracting authority shall notify all candidates or tenderers whose applications or tenders are rejected of the grounds on which the decision was taken, and all tenderers whose tenders are admissible and who make a request in writing of the characteristics and relative advantages of the successful tender and the name of the tenderer to whom the contract is awarded" (emphasis added). 

Following its previous case law on this topic (criticised here, here, here and here), the GC shows no flexibility whatsoever and determines that
the Parliament was required to inform them of the price offered by the successful tenderer, which was one of the characteristics and one of the key advantages of the successful tender, especially since, in the circumstances of the present case, that criterion counted for 40% in the evaluation of tenders and the applicants’ tender was the first on the list of tenderers following the evaluation of the qualitative criteria.
That finding is not called into question by the argument put forward by the Parliament at the hearing that the applicants could have established the minimum price offered by one of the tenderers and the price offered by the tenderer ranked first on the basis of the information available to them and deducing it through working backwards on the basis of the [award] formula
suffice it to note that it is clear from settled case-law that, in order to comply with the obligation to state reasons enshrined in Article 296 TFEU, the reasoning of the author of the act must be shown clearly and unequivocally (see, to that effect, judgments in Koyo Seiko v Council, paragraph 42 above, EU:T:1995:140, paragraph 103, and Evropaïki Dynamiki v Commission, paragraph 42 above, EU:T:2010:101, paragraph 134). The Parliament’s argument that the applicants could, through working backwards, have deduced the minimum price offered by one of the tenderers and, therefore, the price offered by the tenderer ranked first cannot be accepted. It must be considered that, even if the applicants had made such a deduction, they would have had no certainty regarding the correct application of that formula and the accuracy of the result obtained. That finding is corroborated by the Parliament’s attitude, which raised the possibility of such a deduction being carried out only at the hearing and not during the written procedure. (T-667/11, paras 60, 64 & 65, emphasis added).
It is worth stressing, however, that the requirement to disclose the (exact) price of the highest ranking tender is not explicit in Art 100(2) of the Financial Regulation and, as argued repeatedly, it is not a desirable feature of any debriefing process because it creates excessive transparency [see A Sanchez-Graells, The Difficult Balance between Transparency and Competition in Public Procurement: Some Recent Trends in the Case Law of the European Courts and a Look at the New Directives (Nov 2013). University of Leicester School of Law Research Paper No. 13-11]. 

Hence, the fact that the GC reads an obligation to explicitly disclose the price offered by the successful tenderer and rejects an argument based on the fact that the disappointed tenderer could ascertain the relative advantage (in terms of price) on the basis of indirect information disclosed by the contracting authority (which, again, reinforces the obligation to disclose the price explicitly) is a very unwelcome development in the interpretation of Article 100(2) of the Financial Regulation (which can have a clear impact on the interpretation of Art 55 of Directive 2014/24, with further reaching consequences).

Moreover, it is shocking that there is no discussion at all about the second paragraph of Art 100(2) of the Financial Regulation, which expressly indicates that, notwithstanding the general obligation discussed above, "certain details need not be disclosed where disclosure would hinder application of the law, would be contrary to the public interest or would harm the legitimate business interests of public or private undertakings or could distort fair competition between those undertakings". This safeguard clause makes a lot of sense and their ineffective use (or its total disregard) must be lamented.

It is not clear whether the European Parliament expressly relied on this exception (from reading the Judgment, it would seem not), but it is unacceptable that the GC completely excluded such considerations in its Veloss and Attimedia Judgment. Disclosure of explicit prices can have clear negative impacts on competition and should be covered (always, or at least in the vast majority of cases, by the safeguard clause in Art 100(2) of the Financial Regulation, as well as by Art 55(3) Dir 2014/24]. 

Indeed, the problem of excessive pricing transparency and its negative effects for competition in public procurement markets is very important and the scholarly consensus is that transparency needs to be reduced, particularly when it comes to price signals in procurement settings [for a recent discussion, see C Estevan de Quesada, ‘Competition and transparency in public procurement markets’ (2014) 23 Public Procurement Law Review 229-244]. Consequently, the Veloss and Attimedia Judgment is a step in the wrong direction and it starts to be hard to believe that the case law on transparency can make a turn towards economic wisdom.

On a more positive note, another important point to stress focuses on the possibilistic approach adopted by the GC when it comes to deciding what sorts of procurement decisions are amenable to judicial review. In that regard, it bears some stress that the GC found that
according to settled case-law and having regard to the objective of effective and rapid judicial protection, in particular by interlocutory measures, the possibility of review cannot be subject to the fact that the public procurement procedure in question has formally reached a particular stage. On the basis of the consideration that compliance with the procurement rules must be ensured in particular at a stage at which infringements can still be corrected, it must be concluded that an expression of the will of the contracting authority in connection with a contract, which comes in any way whatever to the knowledge of the persons interested, is amenable to review, provided that that expression has passed the stage of acts which constitute a mere preliminary study of the market or are purely preparatory and form part of the internal reflections of the contracting authority with a view to a public award procedure and is capable of producing legal effects (see, to that effect and by analogy, judgment of 11 January 2005 in Stadt Halle and RPL Lochau, C‑26/03, ECR, EU:C:2005:5, paragraphs 38 and 39) (T-667/11, para 47, emphasis added).
This, the GC got right.

Three recent cases on EU Institutions' procurement and one common theme: good administration and confidential information (T-498/11, T-91/12 & T-199/12)

Within the last week, the General Court has ruled on three disputes concerning public procurement activities of the European Commission to which the Financial Regulation was applicable. All cases involved the rejection of tenderers/tenders (at different stages of the procurement procedures) and challenges against the immediate rapport established between the Commission and the disappointed tenderers, which involved some sort of (discretionary) management of confidential information by the contracting authority. Remarkably, all cases have been decided in favour of the European Commission.

Reading them together, a common theme emerges from the Judgments in Evropaïki Dynamiki v Commission (OLAF), T-498/11, 
EU:T:2014:831Flying Holding and Others v Commission, T-91/12, EU:T:2014:832; and Euro-Link Consultants and European Profiles v Commission, T-199/12, EU:T:2014:848. Functionally, all these Judgments are concerned with the duty of good administration, some of its more specific requirements (such as the duty to provide reasons, or the duty to protect confidential information), and its boundaries--which is a topic of increasing relevance in EU public law and, particularly, in EU public procurement law [see J Mendes, ‘Good Administration in EU Law and the European Code of Good Administrative Behaviour’, EUI Working Paper Law 2009/09, and some related comments here].
In my view, these three Judgments clearly indicate that despite the increasing complexity and detail of the public procurement rules, most decisions end up being assessed on the basis of the reasonableness, objectivity and proportionality of the decisions taken by contracting authorities as implicit requirements of the principle of good administration. The following is a closer discussion on why I think this is so.
(1) Evropaïki Dynamiki v Commission (OLAF) is concerned with the rejection of an offer submitted for the services contract concerning the revamping of the website of the European Anti-Fraud Office (OLAF). More specifically, Evropaïki Dynamiki challenges the withholding of information regarding the technical aspects of the winning offer, which the Commission justified on the basis that it 'might affect the successful tenderer’s legitimate business interests ..., or might distort fair competition between the undertakings concerned' (which follows what is established in art 100(2) Financial Regulation, as discussed here, here and here). In the applicant's view, this amounts to a violation of the duty to state reasons and, ultimately, of the principle of good administration.
The GC engages in a detailed assessment of the duty to state reasons and the balance with the protection of the confidential information and business interest of other tenderers (and, particularly, the awardee of the contract) (paras 28-50). In my view, the argument is ultimately concerned with compliance with these two conflicting requirements of the more general duty of good administration. It is worth highlighting that the GC clarifies that
in order to fulfil its obligation to state reasons, the [contracting authority] was required to communicate to the applicant the reasons for the rejection of its tender, the characteristics and relative merits of the successful tender, and the name of the successful tenderer (order of 29 November 2011 in Case C-235/11 P Evropaïki Dynamiki v Commission, not published in the ECR, paragraph 46). By contrast, it does not follow from those provisions or from the judgment of 10 September 2008 in Case T-59/05 Evropaïki Dynamiki v Commission, not published in the ECR [...] that the [contracting authority] was required to provide the applicant with a complete copy of the evaluation report (see, to that effect, order of 20 September 2011 in Case C-561/10 P Evropaïki Dynamiki v Commission, not published in the ECR, paragraph 25) (T-498/11 at para 43).
It is also important to stress that the GC finds no shortcoming based on the principle of good administration in the use of relatively generic justifications for the withholding of information:
It is thus apparent that the [contracting authority] fulfilled its obligation to state reasons [...] regardless of the fact that the wording of those letters was stereotypical in nature as regards the reasons for the removal of some information (see, to that effect, judgment of 24 April 2012 in Case T‑554/08 Evropaïki Dynamiki v Commission, not published in the ECR, paragraph 141). Such wording is permissible in light of the fact that it may be impossible to state the reasons precisely justifying the confidentiality of each of the pieces of information concerned without disclosing them and therefore negating the effectiveness of the second subparagraph of Article 100(2) of the Financial Regulation (T-498/11 at para 45, emphasis added).
In my view, this Judgment is important in that it should reinforce the message that the principle of good administration requires a careful balance of the duty to state reasons against the duty to protect propietary and confidential business information, which should allow contracting authorities to give more importance to the second element and be less afraid of litigation on the basis of alleged shortcomings in the duty to state reasons. Generally, it may contribute to a better balance between transparency and competition in the public procurement setting, which should be welcome [for discussion, see A Sánchez Graells, Albert, 'The Difficult Balance between Transparency and Competition in Public Procurement: Some Recent Trends in the Case Law of the European Courts and a Look at the New Directives' (2013) University of Leicester School of Law Research Paper No. 13-11].
(2) Flying Holding and Others v Commission (not available in English) concerned the hire of aerotaxis for the President and other members of the EU Institutions and was organised as a two-stage restricted procedure. In this case, Flying Holding and its subsidiaries were not invited to the second phase of the tender due to the incompleteness of the documentation supporting their expression of interest and, in particular, certain security audits.

The dispute revolves around the (lack of) clarity of the documentary requirements included in the call for expressions of interest, as well as the Commission's unwillingness to accept the belated submission of those documents by Flying Holding due to a previous false declaration that they did not exist. The arguments of the challenger fundamentally rely on alleged breaches of the principles of proportionality, right to defence, and good administration. Interestingly, the GC has upheld the initiative taken by the Commission to directly contact the relevant aviation authorities to enquire about the safety of the operations of Flying Holding and its subsidiaries in the absence of documentation in the expression of interest. Furthermore, the GC has considered that even if the way in which such contact was carried out may have amounted to a violation of the right of defence, that would not have altered the outcome of the procedure due to the automatic application of the exclusion grounds based on falsity of (self)declarations in the public procurement setting (under art 94 Financial Regulation).
The reasoning of the GC is riddled with very technical points (see paras 41-50) but, in my opinion, the ultimate functional reading is that contracting authorities that proactively seek to clarify the (in)existence of a ground for exclusion/qualitative selection of tenderers are adequately discharging their duties under the principle of good administration, even if they contact third parties or authorities [for discussion of the new rules under Directive 2014/24, see A Sánchez Graells, 'Exclusion, Qualitative Selection and Short-listing in the New Public Sector Procurement Directive 2014/24', in F Lichere, R Caranta and S Treumer (ed) Novelties in the 2014 Directive on Public Procurement, vol. 6 European Procurement Law Series, (Copenhagen, Djøf Publishing, 2014)]. The requirements of the right of defence in that case are limited to communicating the result of such enquiries to the candidate or tenderer concerned, as well as providing it with an opportunity to comment.
It is also interesting to stress the reasoning the GC undertakes in relation to false or inexact (self)declarations and their relationship with the right to defend against the imposition of administrative sanctions (paras 51-79), which in my view are bound to trigger significant litigation in non-institutional (or general) procurement once Directive 2014/24 gets transposed (and, particularly, its rules on the European Single Procurement Document of art 59). The GC sees no breach of the principle of proportionality in the application of very strict standards in the interpretation and enforcement of exclusion grounds (paras 81-91). On that point, some more space may be created in the treatment of non-fully compliant tenderers, in the same way as for abnormally low and non-fully compliant bids [for discussion, see A Sánchez Graells, (2013), 'Rejection of Abnormally Low and Non-Compliant Tenders in EU Public Procurement: A Comparative View on Selected Jurisdictions' in M Comba & S Treumer (eds), Award of Contracts in EU Procurements, vol. 5 European Procurement Law Series, Copenhagen, DJØF, 2013, 267-302].
(3) Euro-Link Consultants and European Profiles v Commission concerned the provision of services related to the 'Crimean tourism diversification and support project', for which the challenging consortium's offer was not selected. Legally, this case is peculiar because the application of the Financial Regulation derives from the Practical Guide to Contract Procedures for EU external actions, in its 2010 version, updated in March 2011 (‘the PRAG’). Generally, the case is interesting because it focusses on the irregular situation where the disappointed tenderer seemed to have gained access to confidential information while the tender procedure was still under way, which triggered the involvement of the European Anti-Fraud Office (OLAF) [however, I could not find public information on that strand of the case].
As procurement is concerned, in the case at hand, Euro-link had access to a version of the CV of the team leader proposed by a competing tenderer and used it to challenge the technical assessment of her experience. Avoiding issues of confidentiality of that document, the GC considered that, even if the two versions of the CV (the one submitted by the competing consortium and the one used by Euro-link in its challenge) were different, this was not relevant. In its words,
As regards the alleged infringement of the principle of equal treatment, it must be noted that, according to settled case-law, that principle requires that comparable situations not be treated differently and different situations not be treated alike unless such treatment is objectively justified (see judgment of 10 October 2013 in Manova, C‑336/12, ECR, EU:C:2013:647, paragraph 30 and the case-law cited). In the present case, it must be noted that the different treatment of the version of Ms T.’s CV submitted to the Evaluation Committee by the consortium led by GDSI and that submitted by the applicants is justified by the different situations in which those two documents were submitted. The first, submitted in the context of the evaluation procedure, was intended to be examined by the contracting authority, whereas the second, submitted after the contract had been awarded, did not constitute, subject to the examinations carried out by the Commission, evidence capable of calling into question the probative value of the first (T-199/12 para 78).
This reasoning based on the principle of equal treatment seems odd and it is submitted that an alternative assessment based on the principle of good administration may have led to the same conclusion. Where the Commission has carried out a proper evaluation procedure and is satisfied that all requirements are met by a given tenderer, there is no breach of its duty of good administration if it does not reassess that position on the basis of (confidential) documentation submitted by a tenderer that does not provide substantial new facts.
As a tentative working conclusion, I think that this group of cases highlight the increasing trend of litigation of procurement decisions based on general principles of EU administrative and public law. Moreover, it makes it clear that contracting authorities will not be blamed for balancing the duty to state the reasons for their decisions with competing needs, even if they: 1) ensure a high level of protection of confidential information, particularly where third party (business) interests are at stake; 2) take proactive steps in the verification of the information provided by candidates (hence, lifting partially the confidentiality of the procedure or seeking access to third party confirmation, provided defence rights are upheld); or 3) disregard competing claims based on confidential information if they have carried out their own verification procedures (at evaluation stage).
Generally, I think that this group of cases should show that contracting authorities that exercise discretion in the management of confidential information are much less open to (viable) legal challenge than could have been though. And this should reduce the existing pressure towards excessive transparency in the public procurement setting, which can ultimately result in a healthier competitive environment. Consequently, this line of legal development must be welcome.