Tax-Fin-Lex (Public service contracts - Concepts of 'public contract', 'contract for pecuniary interest') - Judgment) [2020] EUECJ C-367/19 (10 September 2020)

Judgment This request for a preliminary ruling concerns the interpretation of Article 2(1)(5) of Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC (OJ 2014 L 94, p. 65), as amended by Commission Delegated Regulation (EU) 2017/2365 of 18 December 2017 (OJ 2017 L 337, p. 19)(‘Directive 2014/24’). The request has been made in proceedings between Tax-Fin-Lex d.o.o., a company established in Slovenia, and Ministrstvo za notranje zadeve (Ministry of the Interior, Slovenia) (‘the Ministry’) concerning the Ministry’s rejection of the tender submitted by that company in a procurement procedure for the award of a public contract. Legal context EU law Recital 2 of Directive 2014/24 states: ‘Public procurement [is] … one of the market-based instruments to be used to achieve smart, sustainable and inclusive growth while ensuring the most efficient use of public funds. For that purpose, the public procurement rules … should be revised and amended in order to increase the efficiency of public spending …’ Under Title I of Directive 2014/24, headed ‘Scope, definitions and general principles’, Article 1(1) and (2) of the directive provides: ‘1. This Directive establishes rules on the procedures for procurement by contracting authorities with respect to public contracts as well as design contests, whose value is estimated to be not less than the thresholds laid down in Article 4. 2. Procurement within the meaning of this Directive is the acquisition by means of a public contract of works, supplies or services by one or more contracting authorities from economic operators chosen by those contracting authorities, whether or not the works, supplies or services are intended for a public purpose.’ As set out in Article 2(1)(5) of Directive 2014/24: ‘1. For the purposes of this Directive: … (5) “public contracts” means contracts for pecuniary interest concluded in writing between one or more economic operators and one or more contracting authorities and having as their object the execution of works, the supply of products or the provision of services’. Article 4 of the directive, headed ‘Threshold amounts’, provides: ‘This Directive shall apply to procurements with a value net of value-added tax (VAT) estimated to be equal to or greater than the following thresholds: … (b) EUR 144 000 for public supply and service contracts awarded by central government authorities and design contests organised by such authorities; … …’ Article 18 of Directive 2014/24, headed ‘Principles of procurement’, provides in paragraph 1: ‘Contracting authorities shall treat economic operators equally and without discrimination and shall act in a transparent and proportionate manner. The design of the procurement shall not be made with the intention of excluding it from the scope of this Directive or of artificially narrowing competition. Competition shall be considered to be artificially narrowed where the design of the procurement is made with the intention of unduly favouring or disadvantaging certain economic operators.’ Title II of Directive 2014/24, relating to the rules on public contracts, contains Chapter III on the conduct of the procedure, Section 3 of which is headed ‘Choice of participants and award of contracts’. Article 69 of the directive, on ‘abnormally low tenders’, which is contained in Section 3, provides: ‘1. Contracting authorities shall require economic operators to explain the price or costs proposed in the tender where tenders appear to be abnormally low in relation to the works, supplies or services. 2. The explanations referred to in paragraph 1 may in particular relate to: (a) the economics of the manufacturing process, of the services provided or of the construction method; (b) the technical solutions chosen or any exceptionally favourable conditions available to the tenderer for the supply of the products or services or for the execution of the work; (c) the originality of the work, supplies or services proposed by the tenderer; … (f) the possibility of the tenderer obtaining State aid. 3. The contracting authority shall assess the information provided by consulting the tenderer. It may only reject the tender where the evidence supplied does not satisfactorily account for the low level of price or costs proposed, taking into account the elements referred to in paragraph 2. …’ Slovenian law Article 2 of the Zakon o javnem naročanju (Law on public procurement) of 30 May 2015 (Uradni list RS, No 91/2015), in the version applicable at the material time in the main proceedings (‘the ZJN’), provides in paragraph 1: ‘Terms used in this law shall have the following meaning: 1. “public contract” means a contract for pecuniary interest concluded in writing between one or more economic operators and one or more contracting authorities and having as its object the execution of works, the supply of products or the provision of services; …’ The main proceedings and the questions referred for a preliminary ruling On 7 June 2018, the Ministry published a contract notice, divided into two lots, for the award of a public contract concerning access to a legal information system for a period of 24 months. The estimated value of the contract, as determined by the Ministry, amounted to EUR 39 959.01. The Ministry received only two tenders for the first lot in the time period prescribed, including that of the applicant in the main proceedings, Tax-Fin-Lex, which proposed a price of EUR 0.00. By decision of 11 January 2019, Tax-Fin-Lex was informed, first, that its tender had been rejected on the ground that the final price of its tender was EUR 0.00, which, in the Ministry’s view, was contrary to the rules on public procurement and, second, that the public contract for the first lot had been awarded to the second tenderer. On 17 January 2019, Tax-Fin-Lex lodged a request that the Ministry review its decision to reject the tender. On 5 February 2019, the Ministry rejected that request and, on 11 February 2019, referred the matter to the referring court, which initiated the review procedure. The referring court states, as a preliminary observation, that although Directive 2014/24 does not directly govern the situation in the main proceedings, the Slovenian legislature decided, when transposing the provisions of that directive into national law, that the expression ‘public contract’ is to apply to contracts whose value is greater than the threshold laid down in the directive as well as to contracts whose value is below that threshold. The Court therefore has jurisdiction to answer the questions referred. On the merits, the referring court states that the Ministry’s decision to reject the tender submitted by Tax-Fin-Lex was based on a single ground relating to the amount of the tender that was proposed. In that regard, it is uncertain, first, whether a contract may be classified as a ‘contract for pecuniary interest’, within the meaning of Article 2(1)(5) of Directive 2014/24, where the contracting authority is not obliged to provide any consideration to the other party to the contract but where the latter, by reason of the contract, obtains access to a new market or to new users and therefore to references, which may constitute a future economic benefit for it. The referring court also wishes to know whether the sole fact that receiving the public contract is itself of economic value to the economic operator, even if it is not possible to express that value in monetary terms at the time the contract is awarded or concluded, may be sufficient for the contract to be characterised as a contract for pecuniary interest within the meaning of that provision. Second, assuming that, in that situation, there is no ‘contract for pecuniary interest’ within the meaning of Article 2(1)(5) of Directive 2014/24, the referring court is uncertain as to whether that provision may constitute an autonomous legal basis for rejecting a tender in which the price is fixed at EUR 0.00. It states that, if such a tender were accepted, the contract concluded could not be considered as a contract for the performance of a public contract. Consequently, the contracting authority would have initiated a public procurement procedure the end result of which would be not the award of a public contract but rather, for example, a gift. Nevertheless, the referring court points out that Article 2(1)(5) of Directive 2014/24 defines the concept of ‘public contract’ in order to specify the cases in which the directive applies, without governing the procedure for the award of a public contract. It states that the contracting authority, when it initiated that procedure in the main proceedings, appreciated that it was going to be required to provide consideration for receiving the services that were the subject matter of the contract. The contracting authority’s preliminary assessment could not be affected by the conduct of the tenderers or the content of their tenders. After initiating the public procurement procedure and receiving the tenders, the contracting authority is obliged to consider those tenders and to examine them solely in the light of the requirements defined in advance. In addition, contracting authorities organise public procurement procedures not with the aim of concluding a contract for pecuniary interest, but in order to obtain goods or services. In the present case, even if it had accepted the tender at a price of EUR 0.00, the contracting authority would still have received the services in respect of which the public contract was put out to tender. In the light of all of those considerations, the Državna revizijska komisija za revizijo postopkov oddaje javnih naročil (State Commission for the supervision of public procurement procedures, Slovenia) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling: ‘(1) Is there a “contract for pecuniary interest” as part of a public contract within the meaning of Article 2(1)(5) of Directive 2014/24, where the contracting authority is not required to provide any consideration but, by performing the public contract, the economic operator obtains access to a new market and references? (2) Is it possible or necessary to interpret Article 2(1)(5) of Directive 2014/24 in such a way that it constitutes a basis for rejecting a bid with a price of EUR 0.00?’ Consideration of the questions referred As a preliminary observation, it should be noted that the amount of the contract at issue in the main proceedings is below the threshold of EUR 144 000 set out in Article 4(b) of Directive 2014/24, with the result that the contract falls outside the scope of the directive. However, as the referring court states, when transposing the provisions of the directive into national law, the Slovenian legislature reproduced in Article 2(1) of the ZJN the definition of the term ‘public contract’ as it appears in Article 2(1)(5) of the directive, and that definition therefore applies to all public contracts governed by the ZJN, irrespective of their amount. According to settled case-law, an interpretation by the Court of provisions of EU law in situations not falling within the scope of those provisions is warranted where such provisions have been made directly and unconditionally applicable to such situations by national law, in order to ensure that those situations and situations falling within the scope of those provisions are treated in the same way (see, to that effect, judgments of 18 October 1990, Dzodzi , C‑297/88 and C‑197/89, EU:C:1990:360, paragraphs 36, 37 and 41, and of 24 October 2019, Belgische Staat , C‑469/18 and C‑470/18, EU:C:2019:895, paragraph 23). The Court must therefore answer the questions referred. By its questions, which it is appropriate to consider together, the referring court asks, in essence, whether Article 2(1)(5) of Directive 2014/24 must be interpreted as constituting a legal basis for rejecting a tenderer’s bid in a public procurement procedure on the sole ground that, since the price proposed in the tender is EUR 0.00, the contracting authority would provide no financial consideration, while by performing the contract the tenderer would merely obtain access to a new market and to references that it could rely on in subsequent calls for tenders. In that regard, it should be recalled that Article 2(1)(5) of Directive 2014/24 defines ‘public contracts’ as ‘contracts for pecuniary interest concluded in writing between one or more economic operators and one or more contracting authorities and having as their object the execution of works, the supply of products or the provision of services’. According to the Court’s case-law, it is clear from the usual legal meaning of ‘for pecuniary interest’ that those terms designate a contract under which each of the parties undertakes to provide one form of consideration in exchange for another (see, to that effect, judgment of 18 October 2018, IBA Molecular Italy , C‑606/17, EU:C:2018:843 , paragraph 28). The synallagmatic nature of the contract is thus an essential element of a public contract (see, to that effect, judgments of 21 December 2016, Remondis , C‑51/15, EU:C:2016:985 , paragraph 43; of 28 May 2020, Informatikgesellschaft für Software-Entwicklung , C‑796/18, EU:C:2020:395 , paragraph 40; and of 18 June 2020, Porin kaupunki , C‑328/19, EU:C:2020:483 , paragraph 47). As the Advocate General observed in point 47 of his Opinion, even if that consideration need not necessarily consist of the payment of a sum of money, so that the supply of the service is compensated for by other forms of consideration, such as reimbursement of the expenditure incurred in providing the agreed service (see, inter alia, judgments of 19 December 2012, Ordine degli Ingegneri della Provincia di Lecce and Others , C‑159/11, EU:C:2012:817 , paragraph 29; of 13 June 2013, Piepenbrock , C‑386/11, EU:C:2013:385, paragraph 31; and of 18 October 2018, IBA Molecular Italy , C‑606/17, EU:C:2018:843 , paragraph 29), the fact remains that the reciprocal nature of a public contract necessarily results in the creation of legally binding obligations on both parties to the contract, the performance of which must be legally enforceable (see, to that effect, judgment of 25 March 2010, Helmut Müller , C‑451/08, EU:C:2010:168 , paragraphs 60 to 62). It follows that a contract under which a contracting authority is not legally obliged to provide any consideration in return for that which the other party to the contract has undertaken to provide does not fall within the concept of ‘contract for pecuniary interest’ within the meaning of Article 2(1)(5) of Directive 2014/24. The fact, referred to by the referring court and inherent in all public procurement procedures, that the award of the contract could be of economic value to the tenderer in that it would open up access to a new market or enable the tenderer to receive references, is too uncertain and is therefore insufficient to characterise the contract as a ‘contract for pecuniary interest’, as the Advocate General stated, in essence, in points 63 to 66 of his Opinion. However, it should be noted that Article 2(1)(5) of Directive 2014/24 defines the concept of ‘public contracts’ merely for the purposes of specifying when the directive applies. As is clear from Article 1(1) of the directive, it does not apply to ‘public contracts’, within the meaning of Article 2(1)(5) ,whose value is estimated to be not less than the thresholds laid down in Article 4. It follows that Article 2(1)(5) of Directive 2014/24 cannot constitute a legal basis capable of justifying the rejection of a tender which proposes a price of EUR 0.00. Accordingly, that provision does not permit the automatic rejection of a tender submitted in a public procurement procedure, such as a tender at a price of EUR 0.00, in which an economic operator offers to supply a contracting authority with the works, supplies or services which that authority wishes to purchase, without seeking consideration. Accordingly, since a tender at a price of EUR 0.00 could be classified as an abnormally low tender within the meaning of Article 69 of Directive 2014/24, where a contracting authority is presented with such a tender, it must follow the procedure provided for in that provision and ask the tenderer to explain the amount of the tender. It follows from the underlying logic of Article 69 of Directive 2014/24 that a tender cannot be automatically rejected on the sole ground that the price proposed is EUR 0.00. Thus it is clear from paragraph 1 of Article 69 that where a tender appears to be abnormally low, contracting authorities are to require the tenderer to provide an explanation for the price or costs proposed in the tender, which could relate, inter alia, to the elements set out in paragraph 2 of that article. The explanation provided is thus to be used in the assessment as to whether the tender is reliable and enables the contracting authority to establish that, although the tenderer proposes a price of EUR 0.00, the tender at issue will not impair the proper performance of the contract. In accordance with paragraph 3 of the same article, the contracting authority must assess the information provided by consulting the tenderer and it may reject such a tender only where the evidence supplied does not satisfactorily account for the low level of price or costs proposed. The assessment of that information must also be carried out in compliance with the principles of equal treatment and non-discrimination between tenderers, and the principles of transparency and proportionality, which are binding on the contracting authority under Article 18(1) of Directive 2014/24. Therefore, the argument made by a tenderer which has submitted a tender at a price of EUR 0.00 that the price proposed in its tender is explained by the fact that it anticipates obtaining access to a new market or references if the tender is accepted must be assessed in the context of the possible application of Article 69 of Directive 2014/24. In the light of all of the above considerations, the answer to the questions referred is that Article 2(1)(5) of Directive 2014/24 must be interpreted as not constituting a legal basis for rejecting a tenderer’s bid in a public procurement procedure on the sole ground that the price proposed in the tender is EUR 0.00. Costs Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable. On those grounds, the Court (Fourth Chamber) hereby rules: Article 2(1)(5) of Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC, as amended by Commission Delegated Regulation (EU) 2017/2365 of 18 December 2017, must be interpreted as not constituting a legal basis for rejecting a tenderer’s bid in a public procurement procedure on the sole ground that the price proposed in the tender is EUR 0.00. [Signatures] * Language of the case: Slovenian. © European Union The source of this judgment is the Europa web site. The information on this site is subject to a information found here: Important legal notice . This electronic version is not authentic and is subject to amendment. BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII