Where's the evidence?

Contracting authorities need to be careful when relying on the negotiated procedure without advertisement, write Edward Reynolds and David Hansom.

It can be tempting to award a contract without competition when authorities are under pressure to implement a new contract quickly. Directive 2004/18 and the Public Contracts Regulations 2006 both allow this under certain limited circumstances. However, a recent decision of the European Ombudsman has highlighted the need to take care when doing so.

The facts

In 2007, the Publications Office of the European Union awarded a tendered contract for the maintenance of the EU Bookshop internet portal and other information systems. It then decided to purchase alternative software to underpin the portal and other systems, which it subsequently did.

A decision was made to use the negotiated procedure to award a contract for implementation of the new software. The provider of the existing maintenance service complained to the European Ombudsman after the Publications Office rejected its complaints.

The legal framework

The challenge claimed a breach of the Financial Regulation and its Implementing Rules, which in broad terms apply to EU institutions the same regime as in Directive 2004/18.

Contracting authorities may use the negotiated procedure without publication of a contract notice, where for technical reasons, the contract can be awarded only to a particular economic operator.

Although there are other grounds for justifying use of the procedure, such as reasons of extreme urgency, these were not put forward here.

The decision

The Ombudsman noted that the case law imposes a burden of proof on the authority seeking to rely on the exception, which must be interpreted strictly. It also noted that case law has made it clear:

• there must be technical reasons;
• those reasons must make it absolutely necessary to award to a particular contractor.

In this case, the Ombudsman found against the Publications Office such that the direct award "constitutes an instance of maladministration". The basis of the decision was the lack of evidence provided by the Publications Office that the technical reasons given were sufficiently complicated to justify the use of the negotiated procedure. In other words, it failed to discharge the obligation to justify what it had done and that the contract could not be performed by any other provider.

The lessons

This is an interesting decision as there are not many on the subject, probably because unlike in this case most authorities would not publish a contract award notice to draw attention to the award. The main practical lessons to draw from it are:

• to remember that the burden is squarely on the authority seeking to rely on the exemption
• to ensure robust evidence is on hand to demonstrate exactly why something is so technical only one provider can meet the requirements, which is a high hurdle.  The European Commission has previously expressed the view (in the Quedlingburg infraction proceedings -IP09/437) that such "exclusive rights" are unlikely to apply in a regeneration context.

Edward Reynolds is an Associate and David Hansom is a partner at Veale Wasbrough Vizards. Edward can be reached on 0117 314 5322 or byThis email address is being protected from spambots. You need JavaScript enabled to view it., while David can be contacted on 0207 665 0808 or by email.