Contracting authorities must now better explain why they do not exclude a tenderer. This follows from a ruling by the European Court of Justice (C-66/22).
Toscca ruling
On Dec. 21, 2023, the European Court of Justice ruled in a Portuguese procurement case. The case involved the company Toscca, which opposed the outcome of a tender for rail infrastructure. It argued that the winning bidder was wrongly not excluded from the tender procedure. An exclusion ground would apply to this winner (cartelization). The contracting authority rejected Toscca’s request, but did not address the reason for not excluding the winner.
The Portuguese court decided to ask the Court of Justice about the extent of a contracting authority’s obligation to state reasons. The ECJ first points to the right to good administration from the Charter of Fundamental Rights of the European Union, which applies to contracting authorities. It follows that decisions must be carefully reasoned. The rationale is that the person to whom a decision is addressed should be able to assess whether there is reason to take the matter to court. This also operates in procurement law. The rejected bidder must be able to assess whether his appeal against a rejection of his bid has a chance of success.
In this particular case, the next issue was whether the non-exclusion of the winner also required justification. The ECJ ruled that it did. Precisely if a ground for exclusion can apply, the non-exclusion of the winner has consequences for the legal position of the other bidders. These are (more) entitled to an explanation in that case.
Trend
This judgment is in line with European case law (see, among others, the judgments Veridos and Sopra) which emphasize the principle of transparency in procurement. As a result, the duty to investigate and the duty to state reasons have been tightened up. The contracting authority may make its own choices, but must also be able to explain them to all candidates. Not a strange idea, but in procurement law this sometimes takes some getting used to.
Questions? Contact one of our procurement specialists.
