AREU announced an open tendering procedure for the award of a two year contract for the supply of medical transport services which would be awarded on the basis of the 'most economically advantageous tender'. Three of the four bidders in the process were excluded after the technical bids were evaluated and CAO, as the only remaining bidder, was provisionally awarded the contract.
Following the identification of "anomalies" in the bid, while CAO legal representatives were simultaneously the subject of preliminary criminal investigations regarding charges of fraud and for allegedly making intentionally false statements, AREU decided not to proceed to award the contract definitively to CAO. AREU cancelled the tendering procedure and CAO challenged this decision.
The relevant Italian court asked the Court of Justice of the EU (CJEU) for an advisory ruling on whether, in the event that the grounds for exclusion set out in Article 45 of the Directive were not fulfilled, decisions by the contracting authority:
- not to award a contract for which a procurement procedure has been held; or
- not to proceed to contract conclusion when the contract has been provisionally awarded,
The CJEU differentiated the current situation from one in which a bidder is expressly excluded by the terms of Directive 2004/18/EC (the Public Sector Directive). It noted that a decision to withdraw an invitation to tender for a public contract must comply with Articles 41(1) and 43 of the Directive; which require the contracting authority to inform the tenderers of both the decision and the grounds on which it was made as soon as possible. The Directive does not contain any guidance concerning the substantive or formal conditions for such a decision.
The CJEU noted that it had previously ruled that a contracting authority:
- decision not to proceed with the award of a public contract need not be limited to exceptional cases or be based on serious grounds*;
- was under no implied obligation to carry the award procedure to its conclusion; and
- the decision must be open to a review procedure, even where the national legislation gave a wide discretion to the authority.
The CJEU concluded that a contracting authority could not be required to carry to its conclusion an award procedure that had been initiated and to award the contract in question, including where there remained only one tenderer in contention. This included circumstances where the conditions for exclusion in Article 45 of the Directive were not established, if the decision complied with the principles of transparency and equal treatment.
The CJEU was also asked if the national court may conduct a review of a decision of a contracting authority to cancel a tender competition in the exercise of its unlimited jurisdiction. The CJEU noted that it had previously decided, in cases such as the HI Case* and in Koppensteiner,* that such a decision on the part of the contracting authority was one for which Member States are required to establish review procedures to ensure compliance with the relevant rules.
The CJEU further noted that in the absence of specific EU legislation in this field, the detailed provisions governing judicial review could be established by national procedural rules, "subject to compliance with the principles of equivalence and effectiveness"*. Accordingly, the national legislature may grant the competent national courts and tribunals more extensive powers for the purpose of reviewing whether a measure was expedient.
This ruling by the CJEU clarifies the circumstances in which a contracting authority may decide not to proceed with a contract that has been provisionally awarded as well as the circumstances in which it may withdraw a tender, even where only one tenderer remains. National legislation may also grant to the national courts, power to review the decisions of a contracting authority.
The decision accords with the central point of the judgment of the High Court of Northern Ireland in McConnell Archive Storage Ltd v Belfast City Council  NICh 3.
*Case C-27/98 Fracasso and Leitshutz, Case C-27/98
*Case C-92/00 Hospital Ingenieure Krankenhaus Planungs GmbH v Stadt Wien
*Case C-15/04 Koppensteiner at paragraph 29.
*The CJEU cited favourably its judgment in the HI Case at paragraph 67. In this judgment the CJEU held that in the absence of specific community rules to govern the matter, the Member States could determine the matter provided that the relevant national rules "are not less favourable than those governing similar domestic actions (principle of equivalence) and that they do not make it practically impossible or excessively difficult to exercise rights conferred by Community law (principle of effectiveness)".
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.