Decision of the Supreme Administrative Court (1st Section), 21.04.2022 (CASE 03/21.1BEBRG)
Article(s) in Directive 2014/24/EU: Art.18(2), Art.68, Art.69
Topic: Award criteria; exclusion grounds (regarding the offer); abnormally low tenders.
Member State: Portugal
Court/rev. board: Supreme Administrative Court
1. IMPLEMENTATION / RELEVANT NATIONAL LEGISLATION
Art. 18(2) of the Directive can be said to have a national equivalent (even with a slightly different wording) in Art. 1-A(2) of the Portuguese Public Contracts Code (PCC, adopted by Decree Law 18/2008, of 29 January, with amendments, the current version resulting from Decree Law 78/2022, of 7 November). Art. 70(2)(f) of the PCC then provides that if the acceptance of any bid would imply the breach of mandatory provisions in laws or by-laws (which is considered to include Art. 1-A of the Code), the bid must be excluded.
As for Art. 69 of Directive 2014/24/EU (regime on abnormally low tenders), it is transposed into Portuguese Law by Arts. 71 and 70(2)(e) of the PCC.
In an open procedure for a services contract, regarding the implementation of an IT solution for the processing of invoices and integrated management of a water supply and waste management system, one of the bidders challenged the decision of the contracting authority to award the contract to a supplier who had presented an offer in the value of 1€, in one of the two separate prices that the bidders needed to present (the price relating to “installation, configuration, platform availability, training and import process of the data present in the current system”).
The first instance administrative court considered that the price of 1€, even if only for a part of the services to be provided, was self-evidently insufficient to cover the costs of the contract (which implied several staff members working during 11 months of contract). The second instance court took a different view and considered that the only price which could have been considered abnormal or unlawful would have been the overall price; and this was not the case. The aggrieved bidder then appealed to the Supreme Administrative Court, which made the final ruling.
The Court considered that “partial prices” (i.e. prices for only a portion of the goods or services) included in a bid cannot be deemed abnormal or irregular in themselves. They may, at best, serve as indicators of a general/overall abnormally low price, if those partial prices refer to parts of the contract that have a great significance in the overall tasks to be discharged, and therefore, reveal a kind of inconsistency or systemic failure in the offer. The Court decided it was not the case here, considering that “the accusation made by the appellant regards only the partial price (1€) for the initial phase of preparation of contract performance, and not the overall price of the offer (237.313€) – which is actually not distant from the overall price presented by the appelant herself”. The Court considers that this overall price, at no moment, caused doubt to the contracting authority or the other bidders. In addition, the initial phase of the contract had marginal relevance (with the Court saying that the tasks in question amounted to circa 2% of the contents of the contract). In its reasoning, the Supreme Administrative Court relied heavily on the 2016 ruling of the General Court on Agroconsulting, T-570/13.
One wonders – and the Court seems to leave some indication on that regard –, if the decision could have been different, had the award criterion for this open procedure been any different. In fact, the award criterion was, in this case, that of lowest price, considering, of course, the overall price and the irrelevance of partial prices.
As can be seen, this decision deals with issues that have recently been the object of another controversial decision of the ECJ (Tax‑Fin‑Lex d.o.o., case C-367/19). Differently from the Tax-Fin-Lex decision, in which it was the overall price that was 0€, in this case decided by the Portuguese Supreme Administrative Court, it was only a part of the services that had a 1€ value. Notwithstanding, the Tax-Fin-Lex is probably relevant here by majority of reason, since it seems that the ECJ admitted, at least theoretically, that there could be a price of 0€ in a contract, leaving it to the national court to analyze whether there had been an abnormally low tender.
Link to the original judgement (PT) here.