Across borders
A case against Ireland has shown that where there is cross border interest, general duties of transparency apply even in Part B services contracts situations, writes Jonathan Branton.
The (OJEU) public procurement rules (Public Contracts Regulations 2006 – “PCR”) apply to the procurement of public works services or supplies contracts by public authorities in excess of certain financial thresholds. For services contracts the threshold is currently £156,442 and prior to 1-1-10 was £139,893. The threshold has hovered around a similar level for many years. The rules within the Public Contracts Regulations 2006 do not apply to contracts properly valued below these thresholds.
Services are divided into two lists – Part A and Part B. Even when the financial thresholds are crossed, Part B services are subject to significantly less scrutiny and discipline as opposed to Part A (NB. Part A are subject to the same regime as public works contracts, meaning initial OJEU advert following by a requirement to use particular procedures etc).
Most services perceived as more generic and less locally sensitive are classified within Part A – for example, architects, accountants, management consultants etc. Regulation 2(3) of the PCR states that where Part A and B services are to be provided within the same contract, the classification of the whole contract should be allocated according to which type – A or B – is the majority in value terms.
The lesser regime applicable to Part B goes as far as not to require the publication of an original OJEU advert. However, a long line of caselaw combined with a European Commission “Communication” in 2006 has shown that general EU law principles of non-discrimination and transparency apply to public contracts generally even when exceptions to the normal OJEU rules may be invoked, provided the contract involves “certain cross border interest” (see Commission v Ireland, better known as the An Post case of 2007).
The European Commission brought infringement proceedings to the European Court of Justice (ECJ) against Ireland over the direct award (ie. without OJEU notice or any public competition) it had made to the Irish Post Office (An Post) for the right to dispense social security payments to the public.
The Irish Government maintained that this was a Part B service and only An Post could conceivably have the network to do this effectively on a cross-country basis. The Commission’s claim was that notwithstanding that the services concerned were Part B (which was not in dispute), general principles of EU law as to transparency dictated that such a public contract must at least be subject to some sort of appropriate public competition.
The Court dismissed the claim that EU law applied due to a failure on the part of the European Commission to prove that the Irish authorities should properly have considered that the nationwide dispensing of social security payments (which requires a network of dispensation points throughout the country) should reasonably have been considered by the authorities as having certain cross border interest.
Moreover, the Court noted that there may be no presumption that EU law applies to such a situation. This imposes a high evidential burden on any plaintiff seeking to pursue a remedy on the basis of general EU principles. The Irish authorities had assumed that realistically only An Post would be able and interested to deliver the contract and awarded directly to it accordingly.
In a new case against Ireland however, this time concerning a contract for translation and interpretation services, the ECJ held in November 2010 that the modification of award criteria weightings after initial review of bids was a breach of the general duty of transparency, which very much applied in this case notwithstanding that it was Part B, because the Irish Government had published an OJEU advert for this case anyway and already knew on the basis that a majority of the tenders were from overseas, that it had certain cross border interest (as per An Post). The argument that, in the particular case, the revised weightings would not have changed the ranking of the tenders did not find favour with the ECJ.
It would not raise much news to note that ordinarily, modifying award criteria post submission of bids was a breach of transparency. It has long been clear that an authority has a duty to disclose the award criteria, their respective weightings, and the various sub-criteria that will be employed to score them.
What is interesting here is that this rule – based as it is on a general principle – has been extended to Part B services contracts where there are no set rules on the ranking order of award criteria or as regards their weighting. This is because “certain cross border interest” (as taken from An Post) plainly applied, because the Irish government anticipated as much by publishing an initial OJEU advert in the case even though this was not strictly mandated (on account of being Part B) and the cross border interest was further underlined when the majority of bidders were not from Ireland.
The lesson here is that in a Part B service scenario if certain cross border interest applies then the general principles of the EU Treaty must be taken on board, and in relation to transparency this includes not just publishing some sort of initial advert but also in terms of general issues like communication of award criteria and the detailed workings behind them.
Many authorities seek to avoid competitions by positioning services as Part B. This case serves as a warning not to do this lightly. As a rule of thumb, the bigger the contract the more likely it is to have certain cross border interest, so due care should be taken, especially in bigger procurements.
Jonathan Branton is a partner at Cobbetts. He can be contacted on 0845 165 5025 or by email at This email address is being protected from spambots. You need JavaScript enabled to view it..
