In its Judgment of 10 October 2012 in case T‑183/10 Sviluppo Globale GEIE v Commission, the General Court has issued a new decision concerned with the extent of the duty to provide reasons to disappointed tenderers on the basis of Article 100(2) of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities (OJ 2002 L 248, p. 1) (‘the Financial Regulation’) [for another recent case on debriefing, see my comments here]. Interestingly, the GC expressly highlights the link between the duty to give reasons and the right to effective judicial protection under Article 47 of the Charter of Fundamental Rights of the European Union.
In the case at hand, the disappointed tenderer received a debriefing letter from the European Commission where the reasons for its non-invitation to present a full bid in a restricted procedure were limited to indicate "failure to comply with the criteria listed in point 23.1.a)" of the call for expressions of interest. According to those requirements, potential tenderers had to justify that, at the time of tendering, they would have completed at least two international projects worth €3.5mn or more, in areas covered by the object of the future contract (ie technical services to support central and local government in Syria).
The disappointed tenderer considered that the mere indication of a 'generic' or 'unspecific' failure to comply with point 23.1.a) of the call for expressions of interest fell short from the duty to give reasons incumbent upon the contracting authority and violated its procedural rights. On the contrary, the European Commission took the view that, given the objective nature of the criteria included in point 23.1.a) of the call, the disappointed tenderer should have been able to understand the reasons behind the decision not to shortlist her for the presentation of a full bid by a simple comparison of its tender with the contractual object.
The GC disagrees with the position of the Commission and finds that:
27 [...] despite the information contained in [debriefing] letters, and taking into account the relevant case law [Evropaïki Dynamiki/OEDT, T-63/06 at para 112, and Evropaïki Dynamiki/Commission, T-300/07 at para 50] the applicant has not received a response from the Commission showing in a clear and unequivocal fashion the reasoning followed in the adoption of the contested decision. [...]30 [...] the Commission has not made a formal comparison of the projects described by the applicant in its expression of interest against the benchmark of the three criteria set out in paragraph 21.3.a) of the contract notice. In particular, it did not explain which of these three criteria was not satisfied by the projects [submitted by the applicant]. In these circumstances, the applicant was not able to know if the reason for the rejection of her expression of interest in the procurement in question concerned the minimum number of projects implemented, their budget, their completion in a timely manner or the areas in which they were executed. [...]35 It should be recalled in this connection that when, as in this case, a European institution has a wide discretion, the guarantees conferred by the Community legal order in administrative procedures is of an even more fundamental relevance. Those guarantees include, in particular, the duty of the competent institution to state sufficient reasons for its decisions (Technische Universität München, C-269/90 at para 14; Le Canne v Commission, T-241/00 at paras 53 and 54, and Evropaïki Dynamiki v Commission, T-300/07 at para 45). [...]40 In light of the foregoing, it must be held that the applicant properly submits that, to the extent that the Commission has not developed further the reasons why her candidacy did not meet the technical selection criteria set in the contract notice, it has not received in a clear and unequivocal fashion the reasoning of the Commission, which would have allowed her to know the reasons for the decision not to be included in the shortlist of the contract at issue. Moreover, she could not sue without knowing what those reasons are. It is noteworthy in this regard that the right to good administration under Article 41 of the Charter of Fundamental Rights of the European Union (OJ 2007 C 303, p. 1) sets an obligation on the administration to justify its decisions and that this motivation is not only in general, the expression of the transparency of administrative action, but it must also allow the individual to decide, with full knowledge of the facts, if it is useful for her to apply to a court. There is therefore a close relationship between the obligation to state reasons and the fundamental right to effective judicial protection and the right to an effective remedy under Article 47 of the Charter of Fundamental Rights. (GC T-183/10, at paras 27 to 40, own translation from French).
The GC then complements this analysis by underlining the relevance of the motivation provided by the European institutions (in general, by the contracting bodies) for the purposes of judicial review and considers that the scant justification provided by a mere reference to some unfulfilled criteria required by the tender documents falls short from ensuring effective judicial review (GC T-183/10, at paras 41 to 46). In view of all those shortcomings in the motivation provided by the Commission, the GC annuls the decision not to invite the applicant to the submission of a full bid in the relevant procurement process.
In my view, this case generates a significant risk of hypertrophy of bid protest mechanisms in cases where contracting authorities use short or not overly detailed explanations in their debriefing correspondence [in my personal view, the Commission was right to assume that a reference to a specific set of objective criteria clearly indicated in the tender documents should provide the disappointed tenderer with sufficient information to, eventually, challenge the decision]. This can simply open a very dangerous door to strategic litigation and to an excessive broadening of 'fair trial' guarantees in an area where the financial drivers of tendering companies can generate perverse incentives to challenge.
At the very least, the decision of the GC in Sviluppo Globale will increase the red tape and administration costs of the public procurement system, since contracting authorities will have a powerful incentive to be extremely cautious in the level of detail they provide in debriefing letters and meetings and, in case of doubt, they may feel that the safer position is to err on the side of providing excessive rather than insufficient information. As recently stressed in relation to case C-629/11 P, contracting authorities and review courts should be particularly careful in not imposing excessive disclosure when there are actual risks of strategic use of challenge procedures or the market structure is such that the increased degree of transparency could (inadvertently) facilitate or reinforce collusion.
However, this message seems not to be reaching the adequate ears and disclosure and transparency requirements are just being significantly expanded in the recent case law of the EU Courts. In my view, this is a dangerous development of EU public procurement law, which may lead to excessive litigation and to a strengthening (or facillitation) of collusion in some public procurement markets. I am just hoping that future practice proves me wrong.