Reg.42 of the Public Contracts Regulations 2015 (PCR2015) transposes the rules of Art 42 of Directive 2014/24 concerning the setting of technical specifications for public procurement purposes. The 2014/2015 provisions recast and recombine the rules previously scattered between specific regulations/articles and annexes and try to concentrate in a single provision all requirements applicable to the setting of technical specifications. They are free of difficulties, though, as Pedro has stressed here.
Regs.42(1) to (7) PCR2015 determine
that the technical specifications need to lay down the characteristics
required of works, services or supplies and be set out in the
procurement documents, and they describe the content the technical specifications may have (also that of Annex VII of Dir 2014/24), which includes an indication whether any transfer of intellectual property rights will be required. The main innovation in these rules is that, according to reg.42(6) PCR2015, technical specifications may also refer to the specific process or method of production or provision of the requested works, supplies or services or to a specific process for another stage of its life cycle even where such factors do not form part of their material substance provided that they are linked to the subject-matter of the contract and proportionate to its value and its objectives. This is a consolidation of the CJEU's case law in Commission v Netherlands (fair trade coffee), C-368/10, EU:C:2012:284 (for a comment, see here).
Regs.42(8) to (13) PCR2015 determine the ways in which technical specifications can be set: ie in terms of performance or functional requirements, by reference to technical specifications, or as a hybrid option mixing up performance and technical elements. Remarkably, the prohibition of making references to a specific make or source, or a particular process which characterises the products or services provided by a specific economic operator, or to trade marks, patents, types or a specific origin or production with the effect of favouring or eliminating certain undertakings or certain products is retained, and only exempted on an exceptional basis, where a sufficiently precise and intelligible description of the subject-matter of the contract is not possible without such reference, in which case it shall be accompanied by the words “or equivalent”.
Overall, and with the exception of specifications that do not form part of the material characteristics of the subject matter of the procurement, the rules governing the setting of technical specifications have not changed significantly in the PCR2015. Being provocative, however, one may consider that, despite its practical importance, the content of reg.42 PCR2015 is quite superfluous as a result of the principles of technical equivalence and competitive neutrality.
As recital (74) of Dir 2014/24 clearly stresses, 'the technical specifications drawn up by public
purchasers need to allow public procurement to be open to competition as
well as to achieve objectives of sustainability ... Consequently, technical specifications
should be drafted in such a way as to avoid artificially narrowing down
competition through requirements that favour a specific economic
operator by mirroring key characteristics of the supplies, services or
works habitually offered by that economic operator. Drawing up the
technical specifications in terms of functional and performance
requirements generally allows that objective to be achieved in the best
way possible. Functional and performance-related requirements are also
appropriate means to favour innovation in public procurement and should
be used as widely as possible' (emphasis added).
This is stressed in reg.42(10) PCR2015, according to which "[t]echnical specifications shall afford equal access of economic operators to the procurement procedure and shall not have the effect of creating unjustified obstacles to the opening up of public procurement to competition." This is supported by detailed rules concerning the application of the technical specifications in regs.42(14) to (16) PCR2015, which prevent contracting authorities from rejecting offers that do not adhere to the published technical specifications if the tenderer can prove by any appropriate means (including those of reg.44 PCR2015), that the solutions proposed satisfy in an equivalent manner the requirements defined by the technical specifications, or that the technical specifications to which its tender adheres address the performance or functional requirements which the contracting authority had laid down.
Thus, as a consequence of this pro-competitive and technically neutral approach, the initial exercise of setting up technical specifications by the contracting authority should only be seen as an attempt to define its needs, which the marketplace can then propose to satisfy in a wide array of alternatives (including, where applicable, variant tenders under reg.45 PCR2015). However, for this open approach to be effective, contracting authorities need to ensure strict adherence to two issues:
Thus, as a consequence of this pro-competitive and technically neutral approach, the initial exercise of setting up technical specifications by the contracting authority should only be seen as an attempt to define its needs, which the marketplace can then propose to satisfy in a wide array of alternatives (including, where applicable, variant tenders under reg.45 PCR2015). However, for this open approach to be effective, contracting authorities need to ensure strict adherence to two issues:
(A) Guaranteeing Neutrality and Flexibility in the Determination of Technical and/or Functional Equivalence of Solutions and, particularly, as regards the Acceptable Means of Proof.
According to the rules of regs.42(14) & (15) and 44 PCR2015, the burden of proving equivalence of the submitted proposal with the technical and performance requirements of the tender lies with the tenderer, who has to discharge it to the satisfaction of the procuring entity, but can in principle choose at its own discretion any adequate means to fulfil this requirement—which mainly includes technical dossiers of the manufacturer and test reports from a recognised body. Therefore, while the discretion of the procuring entity as regards the admissible means of proof seems to be significantly constrained and all (objectively) adequate means should be available to the tenderer to prove that all technical and performance requirements are met, the contracting authority seems to retain a larger degree of discretion in deciding whether, in the light of the available evidence, the proposed solution is actually equivalent to the requirements of the technical specifications. To be sure, the decision regarding these two aspects of technical equivalence—ie, the admissibility or objective suitability of a given means to prove it, and the evaluation of the evidence put forward by those means—are hardly divisible, since the one will significantly affect the other.
In this regard, and in order to prevent the adoption of administrative practices that could jeopardise the objectives of the anti-formalist and functional approach adopted by the directives, an obligation to be neutral and flexible as regards the means of proof and the assessment of the functional and performance equivalence of the bids should be imposed on contracting authorities. This is not intended to mean that they need to be lax in their assessments or waive any of the technical specifications governing the tender, but that they should undertake the equivalence evaluation with a ‘possibilistic approach’ and abandon excessively rigid or formal positions. In this sense, nothing prevents contracting authorities from indicating what means of proof and what kinds of evidence will be of particular importance in conducting this assessment, but they must accept any alternative equivalent means of proof and be prepared to rely on different types of evidence put forward by the tenderers, without restriction and without attaching higher value to the former over the latter. In any case, if contracting authorities decide to set particular means by which functional equivalence or performance suitability can be proven, they must ensure that they are not restrictive and do not discriminate amongst tenderers; and, in any case, they must be prepared to accept alternative means and to attach them with the same evidentiary value.
Regardless of the general approach adopted by contracting authorities in assessing technical and functional equivalence, there are additional restraints on the exercise of such discretion that derive from more general rules and, particularly, from the general principles of non-discrimination and transparency, and from the duty to give reasons [it is noteworthy to stress that the CJEU emphasised that this duty to give reasons must be discharged in a timely manner; see Case C-250/07 Commission v Greece [2009] ECR I-4369 67–72. See also Case T-465/04 Evropaïki Dinamiki (DG FISH) [2008] ECR II-154; and Case C-456/08 Commission v Ireland [2010] ECR I-859.]. As regards the requirements of transparency and non-discrimination, it should be stressed that
In this regard, and in order to prevent the adoption of administrative practices that could jeopardise the objectives of the anti-formalist and functional approach adopted by the directives, an obligation to be neutral and flexible as regards the means of proof and the assessment of the functional and performance equivalence of the bids should be imposed on contracting authorities. This is not intended to mean that they need to be lax in their assessments or waive any of the technical specifications governing the tender, but that they should undertake the equivalence evaluation with a ‘possibilistic approach’ and abandon excessively rigid or formal positions. In this sense, nothing prevents contracting authorities from indicating what means of proof and what kinds of evidence will be of particular importance in conducting this assessment, but they must accept any alternative equivalent means of proof and be prepared to rely on different types of evidence put forward by the tenderers, without restriction and without attaching higher value to the former over the latter. In any case, if contracting authorities decide to set particular means by which functional equivalence or performance suitability can be proven, they must ensure that they are not restrictive and do not discriminate amongst tenderers; and, in any case, they must be prepared to accept alternative means and to attach them with the same evidentiary value.
Regardless of the general approach adopted by contracting authorities in assessing technical and functional equivalence, there are additional restraints on the exercise of such discretion that derive from more general rules and, particularly, from the general principles of non-discrimination and transparency, and from the duty to give reasons [it is noteworthy to stress that the CJEU emphasised that this duty to give reasons must be discharged in a timely manner; see Case C-250/07 Commission v Greece [2009] ECR I-4369 67–72. See also Case T-465/04 Evropaïki Dinamiki (DG FISH) [2008] ECR II-154; and Case C-456/08 Commission v Ireland [2010] ECR I-859.]. As regards the requirements of transparency and non-discrimination, it should be stressed that
in order to be effective, [these principles] must therefore cover not only the initial definition of technical specifications and award criteria by contracting authorities, but also the way in which those specifications and criteria are interpreted and applied during an award procedure [Opinion of AG Sharpston in case C-6/05 Medipac-Kazantzidis 77].As regards the obligation to provide reasons, it is expressly established in reg.55(2)(b) PCR2015 that this specific obligation includes the reasons for a decision of non-equivalence or a decision finding that the works, supplies or services do not meet the performance or functional requirements set by the technical specifications. Therefore, contracting authorities will need to provide specific reasons as regards their assessment of the evidence presented by tenderers and, more importantly, decisions on the equivalence of these solutions shall be based on objective and non-discriminatory criteria, and fully disclosed to the tenderer—in accordance with the transparency obligations.
(B) Stressing the Prohibition on Discriminating against ‘Equivalent’ Solutions in the Evaluation of Tenders and Award of Public Contracts.
Finally, as yet another requirement of the principles of equality and competition, it should be stressed that the criteria established for the evaluation of bids and the award of the contract cannot directly or indirectly discriminate against solutions that do not comply strictly with the technical specifications (‘original solutions’) but that meet their requirements by way of performance or functional equivalence (‘equivalent solutions’). Therefore, all solutions able to satisfy the performance requirements established or derived from the technical specifications, regardless of the specific solutions adopted by the tenderer to reach these output requirements, must be evaluated in the same way.
Evaluation criteria can only treat more favourably solutions that provide additional or enhanced functional and performance characteristics—as long as they are set as such from the outset and duly publicised by the contracting authority—or solutions that refer to derived costs or technical implications of the proposed solutions, such as maintenance costs or expected reliability of the technology, and therefore two solutions that satisfy the same function under equivalent performance terms can be graded differently if they impose different costs or guarantee different levels of availability or produce different levels of errors or failures—but not otherwise. Therefore, award criteria that discriminate between technical solutions as such—ie, that do not rely on additional factors duly set, communicated and applied by the contracting authority—are banned by the consistent application, and the need to guarantee the effectiveness, of the rules of the directives on technical specifications not only at the phase of their setting, but throughout the tender.
Finally, as yet another requirement of the principles of equality and competition, it should be stressed that the criteria established for the evaluation of bids and the award of the contract cannot directly or indirectly discriminate against solutions that do not comply strictly with the technical specifications (‘original solutions’) but that meet their requirements by way of performance or functional equivalence (‘equivalent solutions’). Therefore, all solutions able to satisfy the performance requirements established or derived from the technical specifications, regardless of the specific solutions adopted by the tenderer to reach these output requirements, must be evaluated in the same way.
Evaluation criteria can only treat more favourably solutions that provide additional or enhanced functional and performance characteristics—as long as they are set as such from the outset and duly publicised by the contracting authority—or solutions that refer to derived costs or technical implications of the proposed solutions, such as maintenance costs or expected reliability of the technology, and therefore two solutions that satisfy the same function under equivalent performance terms can be graded differently if they impose different costs or guarantee different levels of availability or produce different levels of errors or failures—but not otherwise. Therefore, award criteria that discriminate between technical solutions as such—ie, that do not rely on additional factors duly set, communicated and applied by the contracting authority—are banned by the consistent application, and the need to guarantee the effectiveness, of the rules of the directives on technical specifications not only at the phase of their setting, but throughout the tender.