Bid exclusion risks in Public Procurement Procedures With focus on Competition and new Data Protection rules related breaches 11 APRIL 2017

Bid Exclusion: some pertinent examples Peter Trepte University of Nottingham

General comments on bid exclusion Mandatory and Discretionary grounds for exclusion Discretionary exclusion – whose discretion: procuring entity or member state? Exclusion linked to ability to perform contract or general integrity? Transparency requirement Exhaustive list? Joined Cases C-213/07, Michaniki; case C-425/14 Edilux

Examples to be covered grave professional misconduct violation of competition rules poor past performance upstream participation debarment and self-cleaning

Grave Professional Misconduct Art.57(4)(c) provides for a discretionary exclusion “where the contracting authority can demonstrate by appropriate means that the economic operator is guilty of grave professional misconduct, which renders its integrity questionable” Forposta: “all wrongful conduct which has an impact on the professional credibility of the economic operator” (Case C-465/11, Forposta v Poczta Polska)

Issues Need for violation of formal normative rule, not being a criminal offence? Any behaviour amounting to misconduct? extent of ‘gravity’? Individual assessment? Need for violation to be adjudicated by an external body? reliability of evidence (Joined cases C-72/10 and C-77/10, Costa and Cifone)

Violation of Competition Rules Art.57(4)(d): “where the contracting authority has sufficiently plausible indications to conclude that the economic operator has entered into agreements with other economic operators aimed at distorting competition” EU or national competition rules probably ‘grave misconduct’ in any event (Case C-470/13, Biztosító) Similar provisions no conviction or other formal adjudication required sufficiently plausible indications

Poor Past Performance Art.57(4)(g) provides for a discretionary exclusion “where the economic operator has shown significant or persistent deficiencies in the performance of a substantive requirement under a prior public contract, a prior contract with a contracting entity or a prior concession contract which led to early termination of that prior contract, damages or other comparable sanctions” persistent or significant isolated events need for specific link (cf. grave misconduct) by demonstrating effect on contract

Examples of poor performance Recital 101: performance in earlier public contracts has shown failure to deliver or perform significant shortcomings of the product or service delivered, making it unusable for the intended purpose or misbehaviour that casts serious doubts as to the reliability of the economic operator

Upstream Participation Art.57(4)(f). “where a distortion of competition from the prior involvement of the economic operators in the preparation of the procurement procedure, as referred to in Article 41, cannot be remedied by other, less intrusive measures” Historical basis: Cases C-21/03 and C-34/03, Fabricom proportionality and proof of unfair competitive advantage Article 41 candidate or tenderer must be given the opportunity to prove that their involvement in preparing the procurement procedure is not capable of distorting competition.

Self-cleaning Art.57(6) states that any economic operator to which one of the grounds for exclusion applies may: “... provide evidence to the effect that measures taken by the economic operator are sufficient to demonstrate its reliability despite the existence of a relevant ground for exclusion. If such evidence is considered as sufficient, the economic operator concerned shall not be excluded from the procurement procedure.” Grounds include that economic operator has paid or undertaken to pay compensation in respect of any damage caused by the criminal offence or misconduct, clarified the facts and circumstances in a comprehensive manner by actively collaborating with the investigating authorities and taken concrete technical, organisational and personnel measures that are appropriate to prevent further criminal offences or misconduct. The measures taken by the economic operators shall be evaluated taking into account the gravity and particular circumstances of the criminal offence or misconduct.

Actions to be taken Under Recital 102 measures might consist in particular of personnel and organisational measures such as the severance of all links with persons or organisations involved in the misbehaviour, appropriate staff reorganisation measures, the implementation of reporting and control systems, the creation of an internal audit structure to monitor compliance and the adoption of internal liability and compensation rules.

Mechanism For Member States to determine conditions Also to decide whether carried out centrally or by procuring entities themselves Art.57(6) – self-cleaning will not apply in a Member State when an exclusion has been imposed by a “final judgment” of a Member State, in those states in which the judgment is effective

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