Article(s) in Directive 2014/24/EU: Art. 2.1.(4), Art. 33.2 and Art. 37.2 
Topic: Public authority and framework agreement 
Member State: B 
Court/rev. board: Conseil d’État 

1. IMPLEMENTATION / RELEVANT NATIONAL LEGISLATION

The public authority decides to join the public contract of the central purchasing body in order to place an order for the production and supply of electronic meal vouchers, until the end of the contract and to notify the successful tenderer of this public contract. This is the contested decision

2. FACTS

The public authority decides to join the public contract of the central purchasing body in order to place an order for the production and supply of electronic meal vouchers, until the end of the contract and to notify the successful tenderer of this public contract. This is the contested decision

3. JUDGMENT

In a first ground of appeal, the appellant pretends that the contested decision, in so far as it involves the use of the public procurement procedure of the central purchasing body is unlawful, since that vehicle does not have the status of a contracting authority within the meaning of the Public Procurement Act and cannot, therefore, act as a central purchasing body

within the meaning of that same Act.

A contracting authority may, in respect of works, supplies and/or services, make use of the centralised procurement activities of a central purchasing body and, in such cases, is exempt from the obligation to organise a procurement procedure itself. A central purchasing body must be a contracting authority. The purpose of these rules is to enable contracting authorities to make use of the services of entities specialising in centralised procurement, and thus to be exempt from organising a tender procedure themselves, without the public contracts concerned being exempt from the regulations on public procurement.

The appelant argued that the contracting authority’s decision to use the framework agreement was unlawful because central purchasing body did not qualify as a contracting authority within the meaning of Article 2(1) of the Belgian Public Procurement Act of 17 June 2016.

Article 2(1)(c) of the Public Procurement Act of 17 June 2016 transposes Article 2(1)(4) of Directive 2014/24/EU. A legal person qualifies as a body governed by public law, and therefore as a contracting authority, if three cumulative conditions are satisfied:

1. It was specifically established to meet needs in the general interest having no industrial or commercial character.
2. It has legal personality.
3. It is closely dependent on the State, regional or local authorities, or other contracting authorities.

The third condition is satisfied where at least one of the following alternative criteria is met:

• the entity is financed for the most part by public authorities or other contracting authorities;
• its management is subject to supervision by such authorities or bodies;
• more than half of the members of its administrative, managerial or supervisory board are appointed by such authorities or bodies.

The Council referred to the CJEU judgments in BFI Holding, C-360/96, and NKBM, C-215/17, to confirm that the three principal conditions are cumulative.

The Council then examined each condition separately.

Legal personality

This condition was straightforward. As a Belgian non-profit association, the central purchasing body possessed legal personality.

A need in the general interest having no industrial or commercial character

1. The association’s statutory purpose

According to its articles of association, the central purchasing body was established to assist contracting authorities in applying public procurement legislation. Its activities included:

• helping contracting authorities cope with the complexity of procurement legislation;
• centralising procurement information and analyses;
• supporting external training;
• assisting in the organisation of purchasing services;
• making framework agreements available to its members.

The Council considered, on a prima facie basis, that assisting contracting authorities with legislation applicable specifically to them and making public-procurement framework agreements available to them could constitute the satisfaction of a need in the general interest.

1. Industrial or commercial character

The Council relied on the CJEU’s case law, particularly Korhonen and Adolf Truley. Under that case law, needs in the general interest generally have a non-industrial and non-commercial character where:

• they are met otherwise than through the ordinary market supply of goods or services; and
• for reasons relating to the general interest, the State chooses to meet those needs itself or wishes to retain decisive influence over them.

The assessment must take account of all relevant legal and factual circumstances. Relevant factors include:

• the circumstances in which the entity was created;
• the conditions under which it operates;
• whether it operates under conditions of competition;
• whether its principal purpose is profit-making;
• whether it bears the economic risks associated with its activities;
• whether it receives public financing.

No single factor is necessarily decisive.

First, APPELANT is a non-profit association. Under Article 1:2 of the Belgian Code of Companies and Associations, such an association must pursue a disinterested purpose and may not distribute financial advantages to its founders, members or directors, except in furtherance of that disinterested purpose.

Its articles of association expressly provide that it does not pursue a profit-making objective and that all revenue must be used for its non-profit purpose and for the benefit of its members.

Close dependence on other contracting authorities

The three dependency tests—majority public financing, management supervision or majority appointment of the governing body—are alternative rather than cumulative.

The Council focused primarily on the third criterion: whether more than half of the members of APPELANT’s administrative body were appointed by contracting authorities.

Under the association’s articles:

• there are two categories of members: full members and adhering members;
• adhering members are, in principle, contracting authorities within the meaning of the Public Procurement Act;
• the board includes two directors representing the full members;
• between four and six directors represent the adhering members;
• those directors are elected by the general assembly;
• the general assembly appoints and dismisses directors, approves the budget and accounts, modifies the articles and exercises control over the association’s day-to-day management.

The structure therefore provided that four to six directors representing adhering members would sit alongside two directors representing the full members.

The articles of association provided, at least in principle, that:

• adhering members were contracting authorities;
• the general assembly was composed principally of those members; and
• that assembly appointed between four and six directors, as compared with only two directors representing the full members.

Consequently, the articles ensured that a majority of directors were to be appointed by an assembly composed of contracting authorities.

The association had also expressly stated that, apart from the two full members, its general assembly was entirely composed of contracting authorities and that contracting authorities appointed the majority of the directors. At the provisional stage of the proceedings, no evidence established the contrary.

The Council therefore held that the institutional-dependency condition was prima facie satisfied through the majority-appointment criterion.

In a second ground of appeal, the appelant says the framework agreement fails to take account of the regulations governing public procurement, given that the opposing party was not expressly designated as a contracting authority eligible to benefit from it. A contracting authority may benefit from a framework agreement concluded by a central purchasing body, but only to the extent specified in Article 43, paragraph 1, subparagraph 2 of the Belgian law on public procurement. This latter provision stipulates that ‘contracts based on a framework agreement may only be awarded between, on the one hand, a contracting authority or contracting authorities clearly identified in the call for competition or in the invitation to confirm interest and, on the other hand, one or more economic operators who are parties to the framework agreement as concluded’. It follows from  articles 37(1), first and second subparagraphs, and 33(2), second subparagraph, respectively, of Directive 2014/24/EU – that a contracting authority may benefit from the centralised procurement activities of a central purchasing body only to the extent that it is one of the ‘contracting authorities clearly identified in the call for competition or in the invitation to confirm interest’.

This condition, which relates to the identification of the contracting authorities involved in the award of a framework agreement, must be verified at the point when the contracting authority decides to make use of it. It follows from recital 60 that the obligation to identify the contracting authorities from the outset of the procurement procedure may be fulfilled either by naming them specifically or by defining precise categories, based, for example, on reference to a given category of contracting authorities within a clearly defined geographical area. Annex E of the tender specifications relating to the framework agreement lists in particular, amongst the contracting authorities concerned, the municipalities of the Walloon Region. The opposing party therefore does indeed fall within a specific category of contracting authorities in a clearly defined geographical area. It is therefore indeed covered by the framework agreement.

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