• Advocate General hands down an opinion on transparency obligations in procuring low value contracts
  • February 12, 2007
  • Law Firm: Watson, Farley & Williams (New York) LLP - New York Office
  • In Case C-175/04, Commission of the EC v Finland, Advocate General Sharpston gave an opinion on 18 January 2007 in an action brought by the European Commission that Finland had breached the principle of transparency under EU law by virtue of the award of a contract for the supply of catering equipment.  The Advocate General has recommended that the Commission’s claim be rejected.  The facts were that the contracting authority had published a notice in the EU’s Official Journal under the restricted procedure for a contract divided into individual lots.  One of these lots was for the installation of catering equipment and only one tender for this lot was received, which was rejected.  The authority then launched a separate negotiated procedure for the installation of catering equipment by contacting four undertakings directly and inviting them to submit tenders.  These four tenders were rejected due to their high cost.  The authority then initiated a negotiation with one of the tenderers, which led to the contract being entered into.  The Commission argued that the procedure carried out effectively constituted three separate stages and, in the case of the second and third stage, that there was an insufficient degree of advertising and hence a failure to comply with the transparency obligation.  The Advocate General recommended that this argument be rejected and stated that where: (i) a restricted procedure is carried out with publication of a notice which fails due to the absence of any appropriate tenders and (ii) the authority then resorts to a negotiated procedure without advertising the contract, then provided that the terms of the contract under both procedures are substantially the same, the failure to advertise prior to negotiations does not infringe the transparency obligation.  The Advocate General then went on to consider the question of whether issuing invitations to tender was itself sufficient to comply with the transparency obligation and said that there must be some degree of publicity but that, in the case of a contract below the threshold, the type and level of publicity required is a matter for national law.

    Two points of interest emerge from this opinion which, in the absence of a decision from the Court, remains just that.  First, where a negotiated procedure is conducted for a low value contract following an unsuccessful restricted (or open) procedure, provided that the terms of the contract remain substantially the same it will not be necessary to conduct a second round of advertising in order to comply with the transparency obligation.  In coming to this conclusion, the Advocate General referred to the fact that, under the public procurement directives, one of the grounds when it is permitted to use the negotiated procedure without publication of a prior advertisement is where an open or restricted procedure has been used and no suitable tenders have been received.  The second point of interest is the Advocate General’s discussion as to what is actually required to comply with the transparency obligations.  In Teleaustria and Telefonadress, Case C-324/98 [2000]), the European Court of Justice stated that the transparency obligation requires a degree of advertising sufficient to enable the market concerned to be opened up to competition and the impartiality of procurement procedures to be reviewed.  Since the Teleaustria case, there have been a number of pronouncements on the requirements of contracting authorities in relation to contracts which are not subject to full public procurement tendering (see WFW Alert 23/06 covering an opinion of Advocate General Stix-Hackl in relation to a Part B services contract and a verbal contract and WFW Alert 19/06 regarding an Interpretative Communication by the Commission which referred to low value contracts and contracts for Part B services).  Advocate General Sharpston has now added her voice to the debate by opening up a discussion of what constitutes advertising as discussed in the Teleaustria case.  She states that, whilst the use of the word “advertising” in the English version of the judgement implied an obligation to publish, the words used in other languages are more akin to “publicity” and do not necessarily imply a requirement to publish.  The Advocate General considered that where a contract falls outside the scope of the directives, the appropriate degree of publicity is to be determined by the market for that contract, and in regard to that market.  Therefore, there must be some degree of publicity but, it would appear, not necessarily a requirement to advertise.  Further, whilst a contract which is above the threshold would require trans-national publicity in accordance with EU law, a contract below the threshold does not require trans-national publicity, and the degree of publicity is a matter of national law.  Of course different member states will have different publicity requirements and it is perhaps odd that Advocate General Sharpston should argue for a move away from a uniform approach to procurement across the EU in favour of separate rules applying to each member state.  There was of course much talk some years ago of the importance of the principle of “subsidiarity” and possibly this can be seen as a belated but welcome example of it.  It remains to be seen whether Advocate General Sharpton’s approach is approved by the Court.