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.

Justifications for apparently abnormally low tenders need to be in sync with original tender (T-422/11)

In its Judgment in Computer Resources International (Luxembourg) v Commission, T-422/11, EU:T:2014:927, the General Court (GC) has clarified (although limited if any doubt could be bharboured) that the reasons provided by tenderers to justify the viability of their apparently abnormally low tenders need to be compatible with the terms of their initial tender.
 
In the case at hand, the apparent abnormality of the offer derived from the low manpower costs offered in relation to the provision of IT services in Luxembourg. Upon request of the contracting authority, the participating consortium tried to justify the low cost included in the tender on the basis that the services would (actually) be provided as a mix of presential support in Luxembourg and remote support from Romania. The contracting authority rejected this explanation as inadmissible and rejected the offer for being abnormally low. The GC has confirmed this decision (paras 53-55 and 82 and ff).
 
Maybe more interestingly, the GC also rejected an argument based on a sort of estoppel, whereby the participating consortium challenged the abnormally low consideration of costs that had, however, been accepted by the same contracting authority in a different procurement exercise. As a general point, the GC determined that the contracting authority
correctly took the view that a comparison of the prices proposed in the applicant’s tenders with the prices proposed within the context of other tendering procedures was irrelevant. Contrary to the applicant’s claim that no precedent is irrelevant when it is in the ‘same market’, the content of a tender must be examined in the light of the call for tenders to which it responds (T-422/11, para 69, emphasis added).
In my view, this is the only criticisable point in the Judgment (and an unnecessary one, given the lack of support for the applicant's arguments) and should be limited to the obiter dictum character it has in the specific circumstances of the case. Indeed, looking at the prices the contracting authority has accepted in contemporaneous and comparable procurement exercises would be relevant to the assessment of abnormality--not so much in order to create a (constructive) estoppel, but as an economic benchmark.

Other than that, the Judgment of the GC in Computer Resources International is an interesting summary and case study of the specific obligations imposed on contracting authorities that suspect that an offer (or some of its components) is abnormally low. This should serve as guidance in the interpretation and enforcement of article 69 of Directive 2014/24.