Prof. dr. Elisabetta R. Manunza “Relative scoring mechanisms and the limits of the principles of equal treatment and transparency” Prof. dr. Elisabetta R. Manunza Prof. dr. Jan Telgen 12th June 2017 Global Revolution, University of Nottingham

Exception to the general rule “weighting factors fixed during the entire procedure” TN Dimarso (earlier: ATI EAC C-331/05; Dynamiki  C‑252/10): “26. (…) it is possible (..) to determine, after expiry of the time limit for submitting tenders, weighting factors (…) provided that three conditions are met: Subsequent determination does not alter the criteria for the award of the contract set out in the tender specifications or contract notice; does not contain elements which, if they had been known at the time the tenders were prepared, could have affected their preparation; was not adopted on the basis of matters likely to give rise to discrimination against one of the tenderers.”

Outline MEAT and Relative scoring mechanisms: overestimation of the principles of transparency and equal treatment need for objectivity knowledge from decision-making sciences disregarded in PP regulation and case law Concluding remarks and outlook

Problems by evaluating MEAT with relative scoring mechanisms Depending on selected scoring rule: price will play de facto a greater role than quality winner will not always be the tenderer submitting the “best” bid Scoring rule indicated in documents? Principle of transparency has thus be satisfied. MEAT crucial for sustainable, inclusive, smart procurement (EU 2020 strategy)

Need for effective and coherent legal framework: In PP procedures wrong choices are made on a regular basis Effectiveness ex post empirically: how is the compliance of the regulations in practice?” or in advance, ex ante, by testing against principle of non-discrimination, proportionality, equal treatment, transparency.   Coherence / consistency Art. 11, 3 [TEU]: (…) in order to ensure coherent EU actions.(...)” Art. 13, 1 [TEU]: “The Union shall (…) ensure the consistency, effectiveness and continuity of its policies and actions. Art. 7 [TFEU]: “The Union shall ensure consistency between its policies and activities (…)”.

Bottom-up influences “Shared regulation” after Lisbon Treaty Commission obligation to organise consultations (Art. 4, para. 3, Art. 11 para. 3, Art. 13, para. 2 TEU): Influence of lobby of regional and local authorities on final texts three new Directives Introducing larger discretionary power in setting up PP procedures

Risks for incoherent regulation “Shared regulation” after Lisbon Treaty knowledge from decision-making sciences disregarded in PP regulation and case law

Utrecht University and Twente University Not every problem can be solved by rules, Neither are the rules always to blame for the problems: Multi-/ interdisciplinary research method (economics, law, purchase management, mathematics) aims at finding innovative solutions in the PP field

Art. 67, section 5 directive 2014/24/EU: The contracting authority shall specify, in the procurement documents, the relative weighting which it gives to each of the criteria chosen to determine the most economically advantageous tender, except where this is identified on the basis of price alone. Those weightings may be expressed by providing for a range with an appropriate maximum spread. Where weighting is not possible for objective reasons, the contracting authority shall indicate the criteria in decreasing order of importance.

Relative scoring Relative scoring on a criterion: Score of a bid depends on other bids Usually best bid e.g. score = MAX * (best bid/this bid) Example: Price score = 50 * (best price/price) Quality already scored

Who wins? If A does not participate:

Who wins? Note: 13.1 49 62.1 50 41 91 Price score Quality score Total score Supplier A 50 2 52 Supplier B 16.7 41 57.7 Supplier C 14.7 45 59.7 Supplier D 13.1 49 62.1 Note: Same bids, but different winners = rank reversal Depending on participation of non-competitive bidder (collusion?) Changing valuation of price difference between B and D (from 3.6 to 11.6) If A does not participate: Price score Quality score Total score Supplier B 50 41 91 Supplier C 44.1 45 89.1 Supplier D 39.4 49 88.4

Dutch Civil Courts Appeal rejected on procedural grounds Transparency principle was satisfied as long as the scoring rules had been indicated in contract notice or tender document

Hoge Raad (Supreme Court) in Ricoh NL BV v Hoge Raad (Supreme Court) in Ricoh NL BV v. Municipality of Utrecht (9 May 2015) framework agreement for printers supply evaluation based on relative scoring winning bid was later declared invalid; Municipality of Utrecht automatically awarded the contract to the second-best tenderer. Third-best tenderer demanded a recount of the scores and asked in Court: Is relative scoring nature of the scoring system a violation of principle of equal treatment and/or transparency? Result would be different when the invalid bid would have been left out from the beginning.

Hoge Raad (Supreme Court) in Ricoh NL BV v Hoge Raad (Supreme Court) in Ricoh NL BV v. Municipality of Utrecht (9 May 2015) legal reasoning based on usual abstractions: principles of equal treatment and transparency; Hoge Raad: “a relative scoring rule cannot be rejected ‘merely on the basis of the relative nature’, but that it depends ‘on the manner in which a certain scoring system has been applied in the specific case’; Regrettable: no preliminary ruling

Other viewpoint? Recital no. 90 Directive 2014/24/EU: “(..) Public contract should be awarded on: the basis of objective criteria with a view to ensuring an objective comparison of the value of the tenders in order to determine, in conditions of effective competition, which tender is the most economically advantageous tender.”

Art. 1.4 of the Dutch Public Procurement Act 2012 A contracting authority (…) shall determine on the basis of objective criteria: the choice for the award of the contract; the choice for the economic operator or operators.

EUCJ n Concordia Bus Finland (17 september 2002, C-513/99) Para 59: While Article 36(1)(a) of Directive 92/50 leaves it to the contracting authority to choose the criteria on which it proposes to base the award of the contract, that choice may, however, relate only to criteria aimed at identifying the economically most advantageous tender. Since a tender necessarily relates to the subject-matter of the contract, it follows that the award criteria which may be applied in accordance with that provision must themselves also be linked to the subject-matter of the contract.

Definition MEAT CoFi 16 september 2013, T-402/06 Spain/Commission no. 76: (…) the one with the best price-quality ratio, taking into account criteria justified by the subject of the contract. Accordingly, where the contracting authorities choose to award the contract to the MEAT, they must assess the tenders in order to determine the one which offers the best value for money.

EUCJ 7 october 2004, C-247/02, (Sintesi SpA/Autorità per la Vigilanza sui Lavori Pubblici Para. 40: “However, the abstract and general fixing by the national legislature of a single criterion for the award of public works contracts deprives the contracting authorities of the possibility of taking into consideration the nature and specific characteristics of such contracts, taken in isolation, by choosing for each of them the criterion most likely to ensure free competition and thus to ensure that the best tender will be accepted.”

Concluding remarks and outlook Transparency and equality principles not always adequate to resolve certain problems in practice Achieving Europe 2020 goals depends on scoring rules. Essential: to create legal, objective frameworks to make the range of options and broad discretionary powers of the contracting authorities subject to review; to provide affected parties with the possibility to review the limits of the broad discretionary power of a contracting authority in the Courts.

e.r.manunza@uu.nl www.pprc.eu