In Belgium, public procurement is regulated by EU law and national (implementing) legislation. The EU Directives on public procurement and remedies are implemented into national legislation by:
Several Royal and Ministerial Decrees further implement this legislation:
The public procurement legislation applies to “contracting authorities”; these are mainly “public authorities”, such as the State, regional and local authorities and so-called bodies governed by public law.
Bodies governed by public law meet the following criteria, they:
The interpretation of these criteria is subject to a dynamic and evolving jurisprudence by the CJEU and the Belgian State Council.
Certain (private) entities can also be subject to procurement regulation, when the contract’s estimated value exceeds the European threshold, the contract is subsidised for more than 50% by a “public authority” and is concluded for works of a civil engineering nature or for services connected to the above-mentioned worked (ie the so-called “subsidised contracts”). In addition to the contracting authorities mentioned above, in the utilities the rules regarding public procurement also apply to “public undertakings”, which is any undertaking over which a contracting authority may exercise directly or indirectly a dominant influence, and entities enjoying special or exclusive rights.
Procurement contracts are contracts of pecuniary interest concluded between one or more economic operators and one or more contracting authorities concerning works, supplies and/or services.
The rules regarding publication and in relation to which type of award procedure can be used depend on the estimated value of the contract. The European minimum value thresholds are relevant in this regard. An overview is provided below of the thresholds applicable to "standard" public procurement contracts (eg not utilities, defence and security sector nor social or other specific services):
For public procurement contracts with a value below these thresholds national publication requirements may apply. Public procurement contracts of so-called "limited value", estimated at EUR30,000, are subject to a less stringent regime.
In addition, the public procurement legislation excludes certain type of contracts from its scope of application, for example, services such as legal services, acquisition of real estate, and certain financial services.
In Belgium, public procurement procedures are in principle open to any interested party from any jurisdiction. The legislation provides that, in principle, “every interested economic operator” is eligible to submit a tender offer or request for participation in a tender procedure. The applicable legislation defines an economic operator as “any natural person or any private or public-law legal entity, or any combination of these entities, including all temporary partnerships of companies that offer works, supplies or services to the market”.
Like the European public procurement legislation, Belgian public procurement law is based on four basic principles that should guide the contracting authorities:
At any stage of the tender process (and also before or after the tender process), the contracting authorities must ensure that they adhere to these principles. They may not in any way attempt to circumvent public procurement law or to distort competition, for example by favouring certain candidates/subscribers.
The above principles are clearly visible in the key obligations under Belgian public procurement legislation. These key obligations are divided into two categories: key obligations that apply throughout the procurement process and key obligations that provide an outline of the procurement process.
Key Obligations throughout the Procurement Process
Key Obligations That Outline the Procurement Process
Public procurement contracts for which the estimated value exceeds the European thresholds should be published in the OJEU and the National Bulletin of Tenders. In principle, the announcement cannot be published in the Bulletin of Tenders before it has been published in the OJEU.
The contract should be advertised using a Uniform European Procurement Form. The announcement should contain the information specified below, as well as the information in Annex 4 to the Royal Decree of 18 April 2017:
The announcement should consist of a tender announcement, an announcement when the tender will be placed and, if applicable, a preliminary announcement.
In principle, tenders that do not exceed the European thresholds should be published in the National Bulletin of Tenders. The announcement should contain the information as specified above.
In line with EU legislation, the Belgian public procurement legislation allows a contracting authority to carry out a preliminary market consultation. This consultation has a double purpose. On the one hand, the contracting authority is able to prepare for placement of the contract and keep up to speed with innovations and developments by collecting advice from private and public institutions, independent experts and market actors. On the other hand, the contracting authority can notify enterprises of her plans and requirements.
However, this consultation may not result in preliminary negotiations with certain enterprises or distorting competition, nor can it result in a violation of the principles of non-discrimination and transparency.
There are different procedures under Belgian public procurement legislation, some of which allow for negotiations between the economic operators and the contracting authority. In case of negotiations, the contracting authority is always obliged to guarantee the main principles of public procurement, such as equal treatment of all subscribers.
The open procedure and the restricted procedure are the two default procedures. The use thereof does not need to be justified by the authority. Whenever the authority decides to use any of the other procedures, it must justify this decision in the procurement documents.
The open procedure entails the publication of a contract notice inviting any interested operator to submit an offer. The subscribers need to submit their offers together with the information needed to assess the fulfilment of the selection criteria. The authority will assess both selection and award in the same phase.
The restricted procedure entails the publication of a contract notice inviting any interested operator to submit a request to participate. At this first phase, the economic operator must submit the information needed to assess fulfilment of the selection criteria. Subsequently, the contracting authority will circulate invitations to tender to the selected candidates. In a second phase, the candidates will need to submit their offer.
Competitive Procedure with Negotiation
The competitive procedure with negotiation can only be used in specific circumstances listed in the legislation. Generally, these circumstances relate to the technical complexity of the assignment. Like the restricted procedure, it consists of a pre-selection phase (for any interested operator) and an offer phase (for the invited candidates). The contracting authority then negotiates with the subscribers on the basis of their initial offer (and potentially subsequent offers). If the authority has included this possibility in the procurement documents, it may award the contract without conducting any negotiations. There can be no negotiation with regard to:
There can be no negotiation regarding the final offer.
The competitive dialogue may be used in similar circumstances as a competitive procedure with negotiation. After a pre-selection phase, only the candidates that are invited by the authority may participate in the dialogue phase. A dialogue is conducted between the candidates and the authority to determine the best solutions for the very specific needs of the authority. Any aspect of the contract and assignment may be discussed during this phase.
The dialogue itself can be organised in several phases if the authority has indicated this in the contract notice or the bidding guidelines. After closure of the dialogue, the participants are invited to submit their final offer on the basis of the discussed solutions. The authority may request for further clarification of the offers. Such clarification may not cause a modification of the essential elements of an offer or the assignment if that would lead to disruption of fair competition or to discrimination.
Further negotiations can be conducted with the bidder that submitted the offer with the most value for money. The negotiations may not lead to a modification of essential elements or to disruption of fair competition or to discrimination. This procedure is often used in the context of public private partnerships.
The innovation partnership is tailored for the situation where the authority is looking for certain products, services or works that are not yet available on the market. It entails a pre-selection phase after which only the candidates that are invited can participate in the procedure. The authority can select one or multiple partners. The award of the contract is based only on the criterion of the best value for money.
Both the development of the relevant products, services or works and the final purchase thereof form the subject of the procedure. Therefore, the procedure is structured in phases that align with the development process. The phases will be linked to specific goals. The procedure can be stopped or certain participants can be excluded on the basis of (non-achievement of) such goals. The authority will negotiate with the participants regarding their offers, except for the final offer. There can be no negotiation with regard to:
Simplified Negotiation Procedure with Prior Publication
The simplified negotiation procedure with prior publication can only be used for purchases of goods and services of which the estimated cost is lower than the thresholds for European publication or for works of which the estimated cost is lower than EUR750,000. Any interested operator can submit an offer, which should also contain the information relevant for the pre-selection. The authority may negotiate with the subscribers regarding all offers except for the final offer. There can be no negotiation with regard to the minimum requirements and the award criteria. The negotiations may be conducted in a phased manner if the authority indicates this in the publication or another procurement document. After the negotiations the authority will invite the remaining subscribers to submit their final offers.
Competitive Procedure without Prior Publication
The competitive procedure without prior publication may only be used in exceptional circumstances. This procedure does not require the prior publication of a contract notice. The specific conditions are listed in the public procurement legislation and mainly relate to low value, extreme urgency, technical specificity, an unsuccessful prior procedure, repeated assignments in the framework of a base project and unusually beneficial terms upon cessation of activities of the contractor.
The authority may negotiate with the subscribers regarding all offers. The award criteria are not negotiable. If the estimated value of the assignment reaches the thresholds for European publication or if the authority has mentioned it in the procurement documents, there will also be no negotiation on the minimum requirements.
If either of the two standard procedures (the open procedure and the restricted procedure) are used, the choice is at the discretion of the awarding authority. The other procedures can only be used in the specific circumstances listed in the public procurement legislation. In such case, the authority will need to justify its choice in the procurement documents.
A contracting authority may publish a prior information notice. The period covered by the prior information notice is a maximum of 12 months from the date the contracting authority transmits the notice for publication. A prior information notice cannot substitute a contract notice.
The legislation does not provide for any other deadlines in relation the contract notice. All procurement documents need to be freely, fully and directly accessible without any cost as of the publication date of the contract notice.
The legislation imposes a minimum duration for the candidates to be able to submit their request to participate or their offer. The most important minimum durations are:
There are exceptions to such rules if the authority has made a pre-notification and in case of urgency.
In addition, all procurement documents need to be freely, fully and directly accessible without any cost as of the publication date of the contract notice.
In line with the EU legislation on public procurement, the Belgian legislation enumerates certain exclusion grounds (such as bribery, participation in a criminal organisation etc) for which it is mandatory to exclude the tenderers that have been convicted of those crimes by a final judgement. In addition, the legislation provides for optional exclusion (such as bankruptcy, grave professional misconduct, distorting of competition, etc) for which a contracting authority may exclude a tenderer.
However, in certain instances, the authority can make an exception for overriding reasons relating to the public interest or if the candidate has taken adequate corrective measures (so-called “self-cleaning measures”).
In addition, contracting authorities can request for certain technical and economic capacity. A tenderer must demonstrate that it meets certain technical and/or economic thresholds in order to be able to participate to the procurement process.
Moreover, for works contracts, the contracting authority can determine that potential contractors must be accredited under national regulation in order to be eligible to be awarded the contract.
In case of a restricted procedure, competitive procedure with negotiation, competitive dialogue and innovation partnership, the authority may decide to limit the number of participants. In such case, the contract notice should include the objective and non-discriminatory criteria on the basis of which the authority will select the limited number of participants. If the contract reaches the thresholds for European publication, the minimum and maximum number of participants it will select also needs to be published.
In a restricted procedure, at least five participants need to be invited. In the other procedures mentioned above, at least three participants will need to be invited. In any case, the number of participants invited needs to suffice to safeguard fair competition. If the number of candidates that fulfil the selection criteria is not sufficient, the authority may proceed with the procurement and only invite those that do fulfil the criteria.
In the course of the competitive procedure with negotiation, the competitive dialogue and the simplified negotiation procedure with publication, the number of offers or solutions to be negotiated or discussed can be further limited on the basis of the award criteria mentioned in the procurement documents. In the final phase, the number of offer/solutions/candidates must still be sufficient to guarantee an actual competition, in so far as sufficient offers/solutions/candidates fulfil the requirements.
The authority must always award the contract to the subscriber with the economically most advantageous offer. This may, at the choice of the authority, be assessed on the basis of :
The award criteria should be included in the procurement documents and should be accompanied by specifications that allow an effective assessment of the information provided by the subscribers against the award criteria.
For contracts that reach the European thresholds, the authority needs to specify the relative weight that is given to each of the award criteria, except if the award is solely determined on the basis of the price.
The criteria for selection and the accepted means of proof regarding fulfilment thereof must be mentioned in the contract notice or, if there is no contract notice, in the other procurement documents.
The award criteria and their relative weight as well as the specifications thereof (see higher) must be disclosed in the contract notice or another procurement document (eg invitation to tender/specifications).
For public procurement contracts and concessions reaching or exceeding the European thresholds, the contracting authority should notify each non-selected tenderer, immediately after the selection decision of, amongst other things:
The notification should be done by fax, email or via the electronic platform for public procurement procedures.
For public procurement contracts and concessions not exceeding the European thresholds similar notification obligations often apply. However, a case-by-cases analysis should be made to determine the exact notification obligations for the contracting authority and the options and time limits for a (non-)selected candidate/tenderer to request for further information and/or documentation.
For public procurement contracts and concessions exceeding the EU thresholds, the contracting authority should notify, immediately after the award decision:
The candidates are notified by fax, email or via the electronic platform for public procurement procedures.
Furthermore, if the contracting authority must respect a standstill period (see 3.4 Requirement for a "Standstill Period"), this notification must also contain:
The notification must also mention the legal remedies, applicable time limits and competent review body with explicit reference to the applicable articles of the legislation. If this information is required but not included, the time limit to submit a claim for annulation will only commence four months after the reasoned decision has been notified.
For contracts exceeding the European thresholds, a minimum standstill period of 15 days from the day of notification of the reasoned award decision to the candidates, participants and tenderers must be respected before closing of the procurement contract. However, the standstill period may be waived when:
For contracts not exceeding the European thresholds and which are subject to Belgian publication, a standstill period of 15 days is also applicable if the value of the tender exceeds half of the minimum value of the thresholds for European publication. In addition, a contracting authority can always decide to voluntarily apply the standstill period if the above-mentioned is not exceeded.
The applicable legislation provides that the following review bodies are competent for reviewing award decisions from contracting authorities:
The judgments of the civil courts can be appealed on the merits, but the decisions of the State Council cannot.
In principle, for contracts exceeding the European thresholds, the legal remedies are as follows.
Additionally, the civil courts can impose alternative sanctions by:
For contracts not exceeding the EU thresholds, only the annulation procedure, suspension procedure and claim for damages are available, meaning that, in principle, these types of contracts cannot be rendered ineffective. However, if the contracting authority should respect a standstill period, proceedings to have the contract rendered ineffective can also be initiated.
Interim measures are available to interested parties, such as suspension proceedings (see 4.2 Remedies Available for Breach of Procurement Legislation). The contracting authority cannot conclude and/or sign the contract while these proceedings are pending;
In principle, every entity which has or has had an interest in obtaining a certain contract and has been or could be disadvantaged by a violation of the applicable procurement law, other relevant law and legal principles applicable to the contract and the contract documents is able to initiate a suspension or annulation procedure.
This is also the case for the procedure to render the contract ineffective and the above-mentioned alternative sanctions. Claims for damages can be initiated by the entities that have been disadvantaged by a violation of the above-mentioned applicable law and documents.
In principle, the time limits for challenging an award decision are:
If the contracting authority does not respect these conditions, the time limit is six months from the date of the closure of the contract.
These time limits are identical for contracts above and below the EU thresholds.
This will depend from the type of procedure, such as annulment, claim for damages, claim for ineffectiveness of the contract or request for suspension of an award decision. Suspension proceedings usually run rather smoothly and are initiated and completed within a matter of weeks, as they follow the format of summary proceedings (before the civil courts) or extreme urgency (before the State Council). The other proceedings, such as annulment, claim for damages or ineffectiveness, take about two years.
The number of procurements claims are not systematically published, nor are the decisions of civil courts. Therefore, it is not possible to provide an average number of procurement claims considered by the review bodies per year. However, most candidates/tenderers do not shy away from launching a claim if the situation warrants it.
Generally, the primary costs involved are lawyer and court fees.
In line with the European legislation on public procurement, the Belgian legislation contains a detailed regime on modifications to contracts during their term (ie, post award).
In principle, no changes are possible without a new procurement procedure, unless they are they meet the specifications provided for in the applicable legislation.
The most relevant possibilities for modifications without a new public procurement procedure are:
In certain cases a publication of the modification to the contract will be required.
As mentioned above, the authority may opt for the competitive procedure without prior publication. In fact, this procedure can lead to a direct award of the contract. This procedure may only be used in specific circumstances that are described in the Law.
This includes the following circumstances:
There have been a number of interesting court decisions on public procurement in the last year, we would like to highlight the following judgments/topics from the case law of the State Council:
The necessary documents, demonstrating that the necessary resources shall be made available in relation to the tender (eg through a commitment letter) should be submitted with the request for participation/offer. A tenderer cannot be allowed to subsequently submit the relevant documentation (if it was not provided in the request for participation/offer) as this would constitute an unauthorised change to the request for participation/offer (16 January 2020 No 246.696).
The following, currently contemplated, legislative initiatives should be highlighted:
2020 was an atypical and interesting year in many aspects for the public procurement sector. In this overview of trends and developments, there will be two main topics of focus ((i) COVID-19, public procurement and the face masks saga; and (ii) the ESPD and “self-cleaning” measures) and some anticipated developments will be considered.
COVID-19, Public Procurement and the Face Masks Saga
The theory and EU Guidance
The COVID-19 pandemic placed the public procurement sector under substantial pressure due to an immense global increase in demand for the same goods and services, causing a disruption of certain supply chains. On 1 April 2020, the European Commission (EC) published its guidance on using the public procurement framework in the emergency situation related to the COVID-19 crisis (the "Guidance").
In its Guidance the EC highlighted the flexible options available under the EU public procurement framework, such as:
In addition, the EC, together with member states, launched joint procurement actions for various medical supplies.
The Guidance specifically focusses on "the negotiated procedure without prior publication", as it allows a contracting authority to acquire supplies and services within the shortest possible timeframe. The EC even makes suggestions on how to approach certain economic operators, including contacting“potential contractors in and outside the EU by phone, e-mail or in person” or sending “representatives directly to the countries that have the necessary stocks and can ensure immediate delivery”.
It was mainly the focus on using the "the negotiated procedure without publication" that sparked attention, as the Guidance provides an (indirect) justification for contracting authorities to use this procedure. Although the Guidance reiterates the case law of the European Court of Justice (ECJ) on this point, mainly that all requirements for using this procedure (“the time limits for the open or restricted procedures or competitive procedures with negotiation cannot be complied with. The circumstances invoked to justify extreme urgency shall not in any event be attributable to the contracting authority”) (see ECJ, C-275/08, Commission v Germany, C-352/12, Consiglio Nazionale degli Ingegneri, C199/85, Commission v Italy) must be cumulatively met, are interpreted restrictively and that the use of this procedure remains the exception, the Guidance identifies the COVID-19 pandemic as a situation that meets these criteria. For example, the Guidance states clearly that the COVID-19 pandemic “has to be considered unforeseeable for any contracting authority".
The specific needs for hospitals, and other health institutions to provide treatment, personal protection equipment, ventilators, additional beds, and additional intensive care and hospital infrastructure, including all the technical equipment could, certainly, not be foreseen and planned in advance, and thus constitute an unforeseeable event for the contracting authorities”. In relation to urgency, the Guidance states that “It cannot be doubted that the immediate needs the hospitals and health institutions […] have to be met with all possible speed”.
After almost one year of lockdown, the Guidance must be viewed in light of the immediate aftermath of the initial lockdowns in member states and the global health care crisis (eg hospitals having insufficient equipment) sparked by the COVID-19 pandemic. In Belgium, a number of "public" public procurement "incidents" have reinforced the understanding and general support for strong public procurement policies and contracts.
The mechanisms in practice
Right from the start, the Belgium government was, as were many others, faced with urgent issues regarding the lack of protective equipment, specifically in relation to face masks. In 2006, the Belgium government had purchased millions of the much coveted FFP2 protective face masks as a strategic investment, specifically to provide Belgium with a strategic stockpile if faced with a pandemic. However foresighted the purchase, by the time Belgium was in fact confronted with an actual pandemic, the strategic stockpile had been destroyed (partially in 2015 and completely by 2018) due to storage and warehousing concerns.
The destruction of millions of face masks gained public attention at the start of the pandemic. In addition, the fact that Belgium had a strategic stockpile of face masks actually calls in to question one of the requirements for the negotiated procedure without publication. As the Belgian government had already anticipated the need for a strategic stockpile of protective health equipment in the case of a pandemic back in 2005, one could debate whether the need for this type of equipment was “unforeseeable for any contracting authority” and whether the lack of such equipment cannot be “attributable to the contracting authority”. Although it is highly unlikely that anyone could criticise governments for not having sufficient protective gear on the eve of the COVID-19 pandemic, it will be more difficult to invoke this type of reasoning in the future.
However, the Belgian government’s subsequent purchase of protective FFP2 face masks (ie to replenish those that had been destroyed a few years earlier) did not proceed smoothly. At the beginning of April 2020, news broke that the Belgian government had purchased protective face masks, through a negotiated procedure without publication, for hospital personnel that did not meet the safety requirements to be used in a medical environment. Various new outlets reported that the selected candidate did not have the required experience of medical equipment, and the Belgian government had allegedly, due to time constraints, conducted insufficient verifications to assess whether the candidates could indeed deliver the required face masks. The purchase of sufficient and adequate face masks will remain an issue in Belgium in the coming months. As the demand for face masks picked up, so did the number of companies and individuals that wished to benefit from the sudden rise in demand (and price), which created a sellers’ market, flooded by companies and individuals who did not have the right credentials (or intentions). Some of the issues could have been avoided if, instead of the negotiated procedure without publication, another public procurement procedure had been applied, as publication leads to increased transparency and scrutiny of not only the procedure applied, but also the tenderers themselves. In addition, these examples have demonstrated that the time that is “gained” by not following a public procurement procedure requiring publication, is often lost when the contract must be re-tendered.
Established case law
There is little case law on the use of the "negotiated procedure without prior publication" in light of the COVID-19 pandemic. However, on 3 July 2020, the Belgian State Council (French-speaking chambers) rendered a judgement on this issue. It related to a tender for the purchase of face masks that would be distributed to the Belgian population free of charge. The Belgian State awarded the contract following a "negotiated procedure without publication". The Belgian State launched the procedure at the end of April 2020.
In its appeal against the tender decision, the appellant stated that the contracting authority incorrectly applied the "negotiated procedure without publication". The appellant stated that this procedure was inappropriate because:
The Belgian State Council found that as at the start of the COVID-19 pandemic the use of face masks was not widely advocated and even the World Health Organization was initially sceptical in relation to their use, it cannot be concluded that the Belgian State had foregone its claim to “extreme urgency” by launching the procedure at the end of April 2020.
It should be pointed out that in its reasoning, the Belgian State Council also refers to the strategic use of face masks in relation to the exit-strategy out of lockdown, which would now (most likely) be evaluated differently than in July 2020. The Belgian State Council found that the legislation allows for a framework agreement to be awarded through a "negotiated procedure without publication", and also noted that the contracting authority conducted a very broad market consultation (more than 190 economic operators active in the manufacturing and supply of fabrics) and provided a justification for the use of a framework agreement structure, ie that it would allow the contracting authority to appoint various economic operators. Consequently, the Belgian State Council ruled that based on a prima facie assessment of the facts and in light of the ongoing public health crisis, the contracting authority could rely on the "negotiated procedure without publication".
Lessons learned and way forward
In light of the above and the various COVID-19 public procurement issues facing the Belgian contracting authorities in the last year, there is optimism that, while contracting authorities took the Guidance to heart, the Guidance did not lead contracting authorities to "inappropriately" award public procurement contracts through "a procedure without prior notification" (or at least not more than was the case before).
While undoubtedly more public contracts will have been awarded through the negotiated procedure without prior publication (unfortunately for Belgium no numbers are yet available) in the light of the COVID-19 pandemic, this will most likely prove to have been a "temporary" trend as the events over the past year have also, and often quite painfully, demonstrated the pitfalls of using this procedure.
The ESPD and “Self-Cleaning” Measures
January 2021 marks five years since the introduction of the European Single Procurement Document ("ESPD"). The ESPD was introduced by the EC’s implementing Regulation 2016/7 of 5 January 2016 establishing the standard form for the ESPD. In addition, Directive 2014/24 of 26 February 2014 on public procurement introduced the concept of “corrective” measures or so-called “self-cleaning” measures. While the ESPD allows an economic operator to more easily submit its declaration in relation to the applicability of (mandatory and/or optional) exclusion grounds, “self-cleaning” measures allow an economic operator to demonstrate that, even though an exclusion ground applies to it, it has taken the necessary measures to be considered a trustworthy contractor to a contracting authority. Five years after their introduction, the first judgments of the ECJ and the Belgian State Council are providing guidance on the practical application and (initial) pitfalls.
The ESPD is a self-declaration form for public procurement procedures introduced to reduce the administrative burden of participating in a public procurement procedure and to simplify access to cross-border tendering opportunities. The ESPD alleviates an economic operator’s administrative burden, because it is no longer required to submit various documents to demonstrate its personal standing to participate in a procurement procedure (eg in relation to the absence of convictions for fraud or human trafficking or lack of tax debts). Instead of submitting various excerpts and/or declarations of honour (whether or not notarised) in relation to the applicable exclusion grounds, economic operators can now prove that they meet these obligations through submitting one single document: the ESPD. Only the tenderer that is awarded the contract will need to provide the underlying documents demonstrating the validity of the assertions in the ESPD.
Together with the ESPD, the option of “self-cleaning” was introduced to provide perspective to economic operators to which exclusion grounds apply. The ESPD includes a section in which an economic operator can state that it has taken “self-cleaning” measures. Such an economic operator has the opportunity, together with its request for participation or offer, to demonstrate that it has taken corrective measures to redeem its past behaviour (that rendered an exclusion ground being applicable to it). Once submitted, the contracting authority will review the “self-cleaning” measures presented by an economic operator and determine whether they suffice to deem the economic operator trustworthy.
Case law of the ECJ and Belgian State Council
On 14 January 2021, the ECJ ruled on a case involving “self-cleaning measures”, which was in the form of preliminary questions submitted by the Belgian State Council.
In May 2016, the Flemish Administration (Vlaams Agentschap Wegen en Verkeer) published a call for tenders for a works contract. The contracting authority chose to exclude the joint venture comprising RTS Infra BVBA and Norré-Behaegel from the tender process because its members had previously committed acts of grave professional misconduct. RTS Infra BVBA and Norré-Behaegel challenged the decision before the Belgium State Council. They claimed that, before being excluded, they should have been allowed to demonstrate that they had taken corrective measures evidencing their reliability, in accordance with the “self-cleaning” measures introduced in 2014 in the Directives on public procurement. The preliminary questions submitted for review were whether:
The ECJ found that the “self-cleaning” measures had direct effect. It raises a question: if a tenderer has not been upfront in relation to “self-cleaning” measures, should a contracting authority give it the opportunity to present evidence of reliability?
The ECJ ruled that requiring the tenderers to adopt a pro-active approach in relation to providing evidence on “self-cleaning” measures is in line with Directive 2014/24 of 26 February 2014 on public procurement if:
The Belgian State Council is yet to provide a judgment in the underlying case.
In addition to the ECJ, the Belgian State Council has in the last five years had a number of opportunities to provide guidance on the use of the ESPD. Below is a short overview of the most relevant guidance provided through the case law of the Belgian State Council.
The Belgian State Council’s judgment, in light of the answers provided by the ECJ, is anticipated (see paragraph 15-18).
Based on the above case law, it is clear that the Belgian State Council interprets the requirement to submit an ESPD quite strictly. Tenderers should always review the tender document in a timely manner to verify whether they require any additional information than that required under the legislation. For example, the tender documents could state that an ESPD must be submitted not only for subcontractors on whom the tenderer relies to meet the technical and/or financial selection criteria, but for subcontractors in general.
If a tenderer is required to submit an ESPD for subcontractors in general (whether they are a relied upon party or not), it is advised that the tenderer requests an ESPD early on in the negotiations with a potential subcontractor, as often while preparing an offer, tenderers will be unsure whether they will use subcontractors in relation to a certain contract, and if there is a last minute change of heart, it is often difficult to obtain an ESPD/correctly completed ESPD or worse it may even lead to a nasty surprise if the potential subcontractor is unable to provide an ESPD.
In addition, ESPDs should be submitted with a required standard of care, as submitting an "erroneous" ESPD leads to the submission of a false statement. Submitting a false statement is in and of itself a ground for exclusion. As the optional exclusion grounds include:
It is not a far stretch of the imagination to see how submitting a false statement could fit into these categories of exclusion grounds.
In relation to “self-cleaning” measures, economic operators are often hesitant to share information on or even state that they have adopted “self-cleaning” measures. Given the sensitive nature of some of the exclusion grounds, this is not surprising. It should be noted that the ECJ did not provide any guidance on the Belgian State Council’s comment that the “self-cleaning” measures include a form of “self-incrimination”, which is an issue many economic operators struggle with in practice.
As the Advocate General stated his opinion to this case, “[t]here is nothing to compel an economic operator to participate in a public procurement procedure. If it does, however, it must comply with the rules of that procedure”. Meaning that if a tenderer finds that an exclusion ground applies to it, but that it does not necessarily wish to submit an officially signed document stating as much (eg like the ESPD), it can simply opt not to participate. In his opinion, the Advocate General also recognises that there could be room for interpretation, for example in relation to “grave professional misconduct”. As this is a broad concept that is open for interpretation, it is not always easy for an economic operator to foresee whether its behaviour qualifies as such.
However, while there are certain situations that are difficult to qualify with certainty, often asking oneself the question is sufficient to report it. In addition, if a situation prompted an economic operator to take certain measures, eg fire certain individuals, introduce new and/or more robust policies, etc (ie take measures that qualify as “corrective” or “self-cleaning” measures) it is likely that the situation could qualify as an (optional) exclusion ground. A careful case-by-case assessment needs to be made, also in light of the tenderer’s general public procurement policies and/or strategies, such as statements submitted in the past, potential consequences for ongoing contracts and/or tender procedures etc.
Although, the ECJ case law above does allow for some flexibility in relation to when underlying evidence must be provided proving that “self-cleaning” measures have been taken. It does not decide the question as to whether there is any flexibility over when an economic operator should state that even though an exclusion ground applies, it has taken “self-cleaning” measures and should be regarded as a trustworthy contractor. In principle, an economic operator makes such a statement in the ESPD submitted with its request for participation (if the procedure requires that an ESPD is submitted), and as has been seen in the case law from the Belgian State Council there are no do-overs when it comes to submitting an ESPD.
On the Horizon
Thus far, 2021 is shaping up to be an equally interesting year in the world of public procurement. It remains to be seen whether the lessons learned from the COVID-19 pandemic will lead to any further guidance from the EC or even regulatory changes in the field of public procurement. One of the public procurement trends that has emerged from the COVID-19 pandemic is the joint tendering by the European Commission together with member states for medical supplies and vaccines, but only time will tell whether this type of procurement (which does not fall under national public procurement legislation) will continue.
The ECJ’s judgment in the case between the EC and Austria (C-537/19) in relation to a lease agreement for a building that has not yet been constructed is anticipated. The case relates to the (by now notorious) tension between real estate transactions (outside of the scope public procurement legislation) and public procurement contracts for works (which fall within the scope of public procurement legislation).
In his opinion of 22 October 2020, the Advocate General found that the main purpose of the contract was in fact the construction of a building and that the contracting authority should have applied an award procedure in line with the EU public procurement directives. The Advocate General came to this conclusion because, among other things, the contracting authority had decisive influence over the final plans and the execution of the works, and the conclusion of the contract with the contracting authority was crucial to the construction of the building.